From the DOT link posted above:

"For most INTERNATIONAL flights, a treaty called the Montreal Convention applies to the carriage of baggage. The maximum baggage liability for flights covered by the Montreal Convention is currently 1,288 Special Drawing Rights (approximately $1,700.00 US) per passenger. This is the most that airlines must pay a passenger for a lost, damaged, or delayed bag. Airlines are free to pay more than the limit, but are not required to do so."