Kuwait Airways Corpn v Iraqi Airways Company (No 1)

Introduction

On 2nd August 1990 Iraq invaded Kuwait. Between 6th and 8th August Iraqi Airways Corporation ("IAC"), a corporation owned and controlled by the Republic of Iraq, at the direction of the Iraqi Minister of Transport and Communications, arranged for IAC personnel to fly ten civilian aircraft owned by Kuwait Airways Corporation ("KAC") from Kuwait airport to Iraq, six of them later being flown to Iran, where they were interned until August 1992, and the other four being later destroyed in Iraq by United Nations aircraft. On 11th January 1991 KAC issued the writ in this action against IAC and the Republic of Iraq claiming, pursuant to section 3(2)(a) and (c) of the Torts (Interference with Goods) Act 1977 and at common law, delivery of the surviving aircraft with consequential damages and, in respect of those that had been destroyed, payment of their value by way of damages. The procedural history to date is complicated. At this point it is enough to say that no defences have yet been served.

We are primarily concerned with IAC, which objects to the continuation of the action against it on a number of grounds. In the court below Mr Justice Evans, although he did not decide every point adversely to IAC, allowed the action to proceed against it. On the other side, he held that the writ had not been validly served on Iraq. With the leave of the judge, IAC has appealed to this court and KAC has entered a cross-appeal against Iraq. By appeal, cross-appeal and respondent's notices in each, all the questions were again put in issue by one side or the other. However, after hearing argument on questions of immunity and submission to the jurisdiction, we informed the parties that the views we had formed on them were determinative of the appeal and cross-appeal in favour of IAC and Iraq respectively. We now give judgment on those questions.

The first main question is whether IAC, admittedly a "separate entity" for the purposes of the State Immunity Act 1978 ("the Act"), is immune from the jurisdiction of the English courts by virtue of section 14(2), which, so far as material, provides:

"A separate entity is immune from the jurisdiction of the courts of the United Kingdom if, and only if, -

(a) the proceedings relate to anything done by it in the exercise of sovereign authority;

(b) the circumstances are such that a state …. would have been so immune".

The second main question is whether, if IAC was immune, it has lost its immunity by submitting to the jurisdiction of the English courts.

The facts

The facts on which the questions of immunity depend are in part matters of record about which there has been no dispute and in part facts found by the learned judge after hearing oral evidence. The matters in the first category are these. The military occupation of Kuwait airport was completed by 5th August at the latest. Among the aircraft there were 15 owned by KAC, five of which were removed from Kuwait to Iraq by the Iraqi Air Force. The remaining ten, being those removed between 6th and 8th August, consisted of two Boeing 767s and eight Airbuses. On 8th and 9th August the Revolutionary Command Council of Iraq ("the RCC") published Decrees numbered 313 and 312 respectively proclaiming the integration of Kuwait with Iraq. By a presidential decree made on 26th August Kuwait was later designated to be a Governate forming part of Iraq. After the ten aircraft had been removed to Iraq they remained in the custody of IAC. By a further Decree of the RCC numbered 369, which was made on 9th September and took effect on 17th September, KAC was dissolved and all of its movable and immovable assets, rights and obligations were transferred to IAC.

The material facts found by the judge are as follows. After 17th September IAC made what use of the aircraft it could in the prevailing circumstances, but that use was limited by the almost complete cessation of international flights to and from Iraq. Two of the aircraft were overpainted in IAC livery and one was used for certain internal flights. At p.33 of the core bundle, the judge stated the clear general picture that had emerged from the evidence:

"By August 6th the Iraqi authorities regarded the occupation as complete, hence the broadcast to the Kuwait people that they should return to work and the Decrees (dated 8th/9th August) claiming the integration of Kuwait as a province of Iraq and as a triumph for Arab nationalism. On that day the Minister of Transport and Communications, as the Minister responsible for Civil Aviation, directed Mr Saffi as the Director General of the national airline, IAC, to arrange for the KAC fleet of Airbuses and Boeing 767s to be brought to Iraq. Mr Saffi gave the necessary instructions to his Chief Pilot and to Mr Abbo [the Assistant Director General (Technical) of IAC], and soon afterwards the necessary pilots and three ground engineers made their way to Kuwait. This was in no sense a military operation, even though Kuwait Airport was under military control. They travelled by road to Basra and then by helicopter, or by light plane —the details are unclear. When they arrived at Kuwait the engineers carried out the basic checks necessary before the aircraft could fly. Then the pilots took them the short distance to Basra, a civilian airport. Then they were disposed between Saddam Hussein Airport at Baghdad, also a civilian Airport and the home base for IAC, which was already crowded with the grounded IAC fleet, and at Mosul and Takrete which are civilian/military airports, as well as some remaining at Basra."

Between pp.34 and 35, the judge referred to the earlier removal of the five other KAC aircraft by pilots of the Iraqi Air Force; to four foreign aircraft (including a British Airways Jumbo 747) which were not removed from Kuwait Airport; to the Minister's instructions to Mr Saffi to "maintain" or "look after" the ten KAC aircraft that had been brought to Iraq; to the kind of maintenance required; and to the recruitment by Mr Saffi of five Kuwaiti qualified Airbus engineers. The judge continued:

"The underlying issue is whether IAC, under Mr Saffi's direction, was keeping the aircraft and recruiting the ex-KAC personnel with a view to operating the aircraft as part of its fleet at some future date, or whether it was doing so at the behest of the Iraqi Government so that the aircraft would be available to the Government for some other kind of operation at some future date."

At p.36 the judge said that Mr Saffi was in something of a dilemma. He described his earlier attempts to provide IAC with a fleet of new Airbuses, an ambition that was taking shape when the invasion of Kuwait took place. He then found himself with eight Kuwaiti Airbuses, which were not, however, new and for which at that time he had no pilots, no engineers and no passengers. At p.37, the judge said that Mr Saffi had been reticent and that his evidence had been contradictory regarding his relations with the Minister during the period from 8th August until the time he knew of Decree 369. Having said that the evidence showed that, after that Decree took effect on 17th September, at least two of the aircraft were repainted in the IAC livery and that at least one of the ex-KAC aircraft was used on internal flights, the judge continued:

"The evidence is compelling, in my judgment, that when the occupation of Kuwait was regarded as complete the Iraqi Government arranged for the removal by the Iraqi Airforce of the five KAC aircraft which it required for other and possibly non-commercial uses, and it directed IAC to take possession of ten KAC aircraft which were to be used for commercial purposes, and look after them until such time as commercial operations could resume. This was the object of the 'safe-keeping' which Mr Saffi was instructed to achieve. The decision to recruit key specialist personnel for an Airbus fleet and the steps taken to implement this decision from mid-August onwards confirm that IAC was engaged, on the Minister's instructions, in the preliminary stages of establishing an Airbus operation and to this extent was anticipating the transfer of ownership of the aircraft which became effective, so it was believed, on September 17th."

At p.39, the judge also found that regular commercial flights by IAC between Iraqi airports and Kuwait airport, which were regarded as internal flights, took place from about 14th August.

Immunity under section 14(2)

On those findings Mr Justice Evans held that IAC was not immune from the jurisdiction of the English courts under section 14(2) of the Act and thus decided the first main question in favour of KAC. I am unable to agree with him. Although the question was argued at length and with much citation of authority and international and academic material, it is, as I see it, both...