Kuwait Airways Corpn v Iraqi Airways Corpn
| Jurisdiction | England & Wales |
| Judge | Mr Justice David Steel |
| Judgment Date | 24 January 2003 |
| Neutral Citation | [2003] EWHC 31 (Comm) |
| Docket Number | Case No: 2000 Folio No. 1137 |
| Court | Queen's Bench Division (Commercial Court) |
| Date | 24 January 2003 |
[2003] EWHC 31 (Comm)
The Honourable Mr Justice David Steel
Case No: 2000 Folio No. 1137
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISON
COMMERCIAL COURT
Royal Courts of Justice
Strand, London WC2A 2LL
Christopher Greenwood QC, Joe Smouha and Samuel Wordsworth (instructed by Howard Kennedy) for the Claimant
David Donaldson QC and Stephen Nathan QC (instructed by Landau & Scanlan) for the Defendant
APPROVED JUDGMENT
I direct that pursuant to CPR PD 39A para 6.I no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.
INTRODUCTION
1. In Action 1991 Folio No 69, the claimants (“KAC”) sought damages from the defendants (“IAC”) amounting to something over $800 million for losses allegedly sustained as a result of the wrongful interference by IAC with ten KAC aircraft by reason of their removal from Kuwait International Airport in August 1990 and their subsequent retention.
2. A preliminary issue arose as to whether IAC was entitled to sovereign immunity by virtue of section 14(2) of the State Immunity Act 1978. This issue reached the House of Lords in January 1995. Their Lordships concluded that IAC was entitled to immunity in respect of its acts in taking and removing the aircraft from Kuwait, but (by a majority) that IAC was not covered by state immunity in respect of the retention and/or use of the aircraft after Resolution 369 of the Revolutionary Command Council of Iraq (which purported to dissolve KAC and transfer all its assets to IAC) came into effect on the 17th September 1990.
3. In May 2000, KAC petitioned the House of Lords for a variation of their earlier order so as to deprive IAC of the benefit of sovereign immunity in respect of the period between the 9th August 1990 (when most of the aircraft had been flown into Iraq proper from Kuwait) and the 17th September. The basis of the petition was that, in the light of documentary material produced in the action since 1995, it was clear that the factual basis for the decision of the House of Lords depended upon false and perjured evidence deployed by IAC.
4. In particular KAC contended that IAC's earlier evidence that the acts done in the period from the 9th August to the 17th September 1990 were limited to basic maintenance and thus were of no significance, was false and had been given with the intention of deceiving the court. It was said that the new material established that elaborate steps had been taken during that period, on the instructions of the highest levels of the government, to transfer the aircraft to IAC so that they could be absorbed as part of IAC's fleet. This was evidenced, it was submitted, by the measures taken by IAC, as revealed by the newly disclosed material, to paint, insure and register the aircraft, as well as engage engineering staff, all with a view to their commercial use on the route by early September.
5. Their Lordships concluded ([200I] 1 WLR 429) that, whilst the issues raised in the petition were prima facie relevant, serious and substantial”, it was not appropriate for them to be pursued in that manner but that they should be raised by a separate claim alleging fraud. The present action (2000 Folio 1137) is the outcome.
THE PROCEDURAL HISTORY
6. On the 2nd August 1990, Iraq invaded Kuwait. The occupation was complete on the 5th August. On the 8th/9th August, the Revolutionary Command Council of Iraq, under the Chairmanship of President Saddam Hussain, passed Resolution 313 proclaiming the sovereignty of Iraq over Kuwait and its annexation into Iraq. Resolution 312, made the same date, provided :-
“Following the complete integration unity between Iraq and Kuwait on 8.8.1990 the Revolutionary Command Council declares the acceptance by Iraq of all the financial and economic obligations of Kuwait vis a vis all countries, public and private institutions and foreign companies, regardless of whether such obligations are correctly owed to Kuwait or by it, provided that they are not contrary to the sovereignty of Iraq …”
7. At the time of the invasion, there were ten civil aircraft belonging to KAC standing at Kuwait International Airport. These ten aircraft consisted of eight Airbuses (5 type A310 – 200 and 3 type A300 – 600) and two Boeing 767s. On the 6th August 1990, the Iraqi Minister of Transport and Communications Mr Mohammed Hamza Al-Zubaidi (“Mr Al-Zubaidi”) instructed Mr Nor Aldin Saffi (“Mr Saffi”) the Director General and Chairman of the Board of the IAC, that he should arrange to fly these ten aircraft to Iraq for “safe keeping”.
8. Pursuant to that order, all but one of the aircraft were flown to Basra. Airbus AHI (which was in Egypt air livery) was under repair and did not leave Kuwait until the 22nd August when it was flown direct to Baghdad. By the 17th August some of the nine aircraft that had already been flown to Basra were redeployed to Mosul and Tekrit. By the end of August, following further movements, all 10 were deployed at three bases, namely Baghdad, Basra and Mosul. By November, four of the aircraft (two Airbuses and two Boeings) were at Mosul, still in their KAC livery. The remaining six were by then all at Baghdad: the extent to which any of them had been repainted by mid-September was a matter of great controversy.
9. In the meantime, the Revolutionary Command Council had passed Resolution 369. It was passed on the 9th September and came into force on the 17th September. It provided as follows: -
“Kuwaiti Airways Corporation is hereby dissolved and all of its moveable and immoveable assets, rights and obligations are transferred to Iraqi Airways Company which shall in accordance with domestic and international law requirements duly register such assets.”
10. Military action by coalition forces began on the 17th January 1991. By this time the writ in action 1991 Folio 69 had already been issued. IAC was the first defendant and the Republic of Iraq was the second defendant. Endorsed on it was a commendably succinct Points of Claim, the thrust of which was contained in the particulars to the allegation of interference:–
(a) On the 2nd August 1990 the second defendants invaded Kuwait, took control of the airport and deprived the plaintiffs of possession and control of inter alia the aircraft particularised above.
(b) Between the 2nd and the 9th August the aircraft were removed from the airport.
(c) On a date or dates between the 9th August and 17th September the second defendants unlawfully transferred possession and control of the aircraft to the first defendants. The stated intention of the defendants was to incorporate the aircraft within the first defendant's fleet and to use them for commercial purposes.
(d) The first and second defendants have continued wrongfully to interfere with the aircraft by their unlawful possession and control of the aircraft and refusal and/or failure to deliver up the aircraft to the plaintiffs.”
11. The writ was served that same day on IAC's offices in Lower Regent Street pursuant to section 695 (2) of the Companies Act 1985. The legitimacy of this service was challenged but in due course it was held to be valid. Accordingly, I need say no more about it, save that it is to be noted that IAC became aware of the proceedings on receipt of a letter from their London office enclosing the writ on the 11 January 1991.
12. As the war progressed, the four aircraft at Mosul were destroyed or damaged beyond repair. The remaining six were flown from Baghdad to Iran, the last arriving on the 4th February. By this time, at least, all these had been repainted to a material extent in IAC's livery.
13. In November 1991, Evans J began the hearing of a number of applications made by IAC in relation to the claim. The material one raised the issue of sovereign immunity. It is necessary to consider the progress of this application in some detail in order to focus on the significance of the evidence adduced by each side.
14. It was the thrust of IAC's case that, following their initial involvement in supplying pilots on the order of the Minister to fly aircraft from Kuwait airport to Basra in the immediate aftermath of the occupation, it was only after obtaining title to the aircraft under Iraqi law with effect from the 17th September that IAC had any further significant involvement with the aircraft. The factual basis for this proposition was supplied by two affidavits of Mr Saffi.
15. KAC, however, had served two affidavits from members of their engineering staff. Their evidence was to the effect that, in mid August 1990, representatives of IAC had made a determined effort to recruit KAC engineers for maintenance work on the KAC airbuses. They also gave evidence to the effect that some of the KAC aircraft had been seen to have been repainted in IAC livery before the 17th September and further that KAC ground equipment and spares had been observed being loaded onto an IAC freighter at Kuwait and/or already situated at Baghdad before that date.
16. The recruiting efforts were said to have been undertaken by three particular individuals, Mr Saffi, the Director-General, assisted by Mr Amer Al Shaikhly (“Mr Al Shaikhly”), the Line maintenance Manager, and Mr Sabah Abbo (“Mr Abbo”), the then Director of Quality Control.
17. IAC responded to the statements made by the Kuwaiti engineers by tendering two additional affidavits dated the 20th November made by Mr Al Shaikhly and Mr Abbo. On the 21st November IAC applied for an order for cross examination of KAC's witnesses. Meanwhile, the hearing continued. It terminated on the 3rd December being the seventh day of the hearing. At this stage, having regard to the observations...
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