Kuwait Airways Corpn v Iraqi Airways Company (No 8)

JurisdictionUK Non-devolved
JudgeLORD SLYNN OF HADLEY,LORD GOFF OF CHIEVELEY,LORD JAUNCEY OF TULLICHETTLE,LORD NICHOLLS OF BIRKENHEAD
Judgment Date08 February 2001
Judgment citation (vLex)[2001] UKHL J0208-1
Date08 February 2001
CourtHouse of Lords
Kuwait Airways Corporation
(Appellants)
and
Iraqi Airways Company

(Body Corporate) &Others

(Respondents)

[2001] UKHL J0208-1

Lord Slynn of Hadley

Lord Goff of Chieveley

Lord Jauncey of Tullichettle

Lord Nicholls of Birkenhead

HOUSE OF LORDS

LORD SLYNN OF HADLEY

My Lords,

1

The Kuwait Airways Corporation ("KAC") issued proceedings against Iraq Airways Company ("IAC") and the Republic of Iraq ("Iraq") claiming that on 2 August 1990 Iraq invaded Kuwait, took control of the airport and deprived KAC of the possession and control of 10 aircraft, the insurance value of which was US $630 million. Thereafter between 2 and 9 August 1990 the aircraft were removed from Kuwait Airport and between 9 August and 17 September Iraq transferred possession and control of them to IAC with the intention that they should be used for commercial purposes as part of IAC's fleet. Resolution 369 of the Revolutionary Command Council of Iraq of 9 September 1990 purported to dissolve KAC and to transfer all its assets to IAC with effect from 17 September 1990. IAC and Iraq have refused to deliver up the aircraft to KAC and have, it is alleged, unlawfully interfered with them. KAC claimed an order for delivery up and damages.

2

KAC entered judgment against IAC for US$489 m in default of notice of intention to defend. IAC applied to set aside that judgment and sought an order that the writ was not validly served on IAC, that the claim was not justiciable in the courts of England and Wales and that the High Court of Justice had no jurisdiction over IAC in respect of KAC's claim. Iraq applied to set aside service of the writ and to defend the action out of time.

3

Evans J by order of 3 July 1992 dismissed IAC's application which was pursued before the Court of Appeal. Evans J further held that the writ had not been validly served on Iraq and judgment entered against Iraq on 24 May 1991 was set aside.

4

By order of 3 November 1993 the Court of Appeal allowed IAC's appeal and declared that the court did not have jurisdiction in respect of KAC's claim against IAC on the grounds of state immunity. On Iraq's appeal it was held that leave granted to KAC on 11 January 1992 to issue concurrent writs on Iraq out of the jurisdiction be set aside and that service after 3 July 1992 be also set aside. The action against both IAC and Iraq was dismissed. A number of consequential orders were made. On appeal your Lordships held on 24 July 1995 that KAC's appeal in relation to Iraq be dismissed and that the order of the Court of Appeal be affirmed. The writ had not been validly served.

5

Your Lordships declared, however, that the writ had been validly served on IAC but that the appeal by KAC on the issue of state immunity be allowed to the extent indicated in the speech of my noble and learned friend Lord Goff of Chieveley [1999] 1WLR 1147. A fuller background to the case is set out at pp 1150-1151 of that speech to which I refer.

6

The House held unanimously that the seizure of the aircraft and their transfer to IAC between 2 and 9 August were acts done in the exercise of sovereign authority. Your Lordships further held by a majority that the position after Resolution 369 came into effect on 17 September 1990 was different in respect of the retention and use of the aircraft after that date. Sovereign authority could not be claimed in respect of acts alleged to have been done by IAC after Resolution 369 came into effect transferring KAC's property to IAC.

7

The House referred to the commercial court the question whether in respect of allegations not covered by state immunity the alleged acts by IAC complained of by KAC were justiciable in the English courts or whether the courts would decline to deal with them as a matter of judicial restraint as explained by Lord Wilberforce in 1 Buttes Gas&Oil Co v Hammer [1982] AC 888.

8

By judgment dated 29 July 1998 Mance J held that acts done by IAC to the 10 aircraft and identified in his judgment–insuring, registration, repainting and use of airbus 9K AHD, acts of repainting 5 aircraft flown to Iran, the registration of other aircraft–amounted to wrongful interference with the aircraft by IAC since neither Resolution 369 nor any Presidential or other direction to implement it was capable of recognition by an English court.

9

Questions of causation, remoteness and quantum of damage were left over to a subsequent trial and Aikens J adjudicated on these in a judgment given on 5 April 2000. He concluded that KAC had failed to establish the necessary causation.

10

There were appeals against both judgments but before the Court of Appeal gave its judgment, KAC petitioned your Lordships on 17 May 2000 for an order that the order of the House of 24 July 1995 be varied so as to declare that "so far as it relates to [IAC], the appeal on the issue of state immunity be allowed to the extent that it concerns alleged acts of wrongful interference of [IAC] both in the period from 9 August 1990 to 16 September 1990 and thereafter".

11

The purpose of the petition is thus to deprive IAC of the benefit of the ruling that acts done between 9 August by which time nine of the aircraft had been flown to Basra in Iraq and 17 September 1990 when Resolution 369 came into force ("the period") were covered by the principle of state immunity.

12

Lord Goff's conclusion as to this period is based on the findings of fact by Evans J which depended largely on oral evidence given by the Director General of IAC, Mr Nor Aldin Saffi. Lord Goff said at p 1161 F-H:

"Thereafter IAC, on the directions of the minister, looked after the aircraft by carrying out basic maintenance on them, until after the coming into effect of RCC Resolution 369 when IAC treated the aircraft as part of its fleet and made what use of them it could in the prevailing circumstances. In particular, IAC used at least one of the aircraft for internal flights, and repainted at least two of the aircraft in the IAC livery. These matters throw light (inter alia) on the nature of the interference with the aircraft alleged by KAC in the points of claim.

Of these events, the basic maintenance carried out after the aircraft had been removed from Kuwait Airport seems to be of little or no significance. The essential things done which constitute the gravamen of the proceedings against I.A.C. are (1) the removal of the aircraft from Kuwait Airport to Iraq, and (2) the treatment of the aircraft by I.A.C. as part of its fleet after the coming into force of R.C.C. Resolution 369.1"

Lord Goff further said at p.1164 A-B:

"There remains the question (which may well be of no relevance) whether the acts performed by IAC in looking after the aircraft between the date of their...

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