July 27 (Bloomberg) -- The German government is liable for damages and compensation caused by an air collision over German territory in which 71 people died, a court ruled, ending a four- year dispute over liability for the disaster.

On the evening of July 1, 2002, a Tupolev Tu-154 passenger plane owned by Russia's Bashkirian Airlines collided in midair over southern Germany with a Boeing Co. 757 freighter operated by Deutsche Post AG's DHL Worldwide Express Inc., killing everyone on board both planes. Most of the passengers were Russian children traveling on vacation to Barcelona from Moscow.

Germany bears sole liability for financial claims brought by Bashkirian, the German civil court sitting in the town of Constance, near the Swiss border, said in a faxed statement. Germany was legally responsible for air traffic control failures that contributed to the mid-air collision near the Lake Constance site, it stated. The court rejected a claim that the pilot of the Bashkirian plane was jointly responsible for the collision.

The disaster highlighted legal and operational gaps in air safety cooperation over Europe's skies. In its judgment, the court cited ``grave organizational deficiencies'' in Germany's reliance on Skyguide AG, a Swiss-owned air traffic control company that issued directions to pilots before the crash.

Just one air traffic controller was on duty at the Skyguide center in Zurich to monitor the two planes' movements that night. The operator, a Dane, was later murdered by a relative of a crash victim.

Provisions Lacking

Legal provisions assigning responsibility for air safety in the crash region to Swiss authorities were lacking, the court said. Germany ``has to legally answer for these shortfalls.''

The German government says it has improved cross-border air traffic safety since the collision. Aircraft in the skies above Germany had half as many near-collisions last year than in 2004, the public-owned DFS air traffic control group said on Feb. 27.

Aircraft in 2005 flew too close to one another on three occasions, two of which were categorized as near misses and one as a breach of safety, the DFS said. That compares with six incidents in 2004, half involving pilot error and half mistakes by DFS.

The court today did not rule on compensation amounts. Bashkirian has sought damages of 2.5 million euros ($3.2 million) for its lost plane, the court said on Feb. 8.

Claimants in several compensation suits launched against Germany include relatives of victims, two airlines and 19 insurance companies from eight countries including the U.S., the U.K., France, Switzerland and Sweden.

To contact the reporter on this story: Brian Parkin in Berlin at bparkin@bloomberg.net.

Last Updated: July 27, 2006 10:07 EDT