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Kuwait Airways Corpn v Iraqi Airways Company (No 1)

Weekly Law Reports The Times Law Reports International Law Reports Cited authorities 66 Cited in 105 Precedent Map Related
JurisdictionUK Non-devolved
Judgment Date24 July 1995
CourtHouse of Lords
Date24 July 1995
[HOUSE OF LORDS] KUWAIT AIRWAYS CORPORATION Appellant and Cross-Respondent and IRAQI AIRWAYS CO. and Another Respondents and Cross-Appellants 1995 Jan. 16, 17, 18, 19, Jan. 23, 24, 25; July 24 Lord Goff of Chieveley, Lord Jauncey of Tullichettle, Lord Mustill, Lord Slynn of Hadley, Lord Nicholls of Birkenhead

Conflict of Laws - Sovereign immunity - Exercise of sovereign authority - Iraq occupying Kuwait by military action - Plaintiffs' civil aircraft removed to Iraq by defendants on Iraqi government orders - Aircraft retained and used by defendants following laws passed by Iraq - Service of writ on defendants in London - Whether proper service - Whether defendants' actions covered by state immunity - State Immunity Act 1978 (c. 33), ss. 12(1), 14(1)(2) - R.S.C., Ord. 65, r. 3(1)

In August 1990 Iraq invaded and occupied Kuwait and passed resolutions proclaiming its integration into Iraq. At that time civil aircraft belonging to the plaintiffs were at Kuwait airport. Pursuant to ministerial directions the Director-General of the first defendants, I.A.C., made arrangements to transport aircraft belonging to the plaintiffs to Iraq. The plaintiffs were purportedly dissolved by Resolution 369 on 17 September. Thereafter I.A.C. treated the aircraft as its own, incorporating them into its own fleet and using them for its own flights. Subsequently four of the aircraft were destroyed and six were sent to Iran, where they were impounded before being returned to the plaintiffs in August 1992. On 11 January 1991 the plaintiffs issued a writ seeking the delivery up of the aircraft. They also sought damages resulting from the defendants' wrongful interference, or alternatively, payment of the value of the aircraft. Since at that time there was no British diplomatic presence in Iraq the plaintiffs lodged the necessary documents pursuant to R.S.C., Ord. 11, r. 7 at the Central Office. They were sent by the Senior Master to the Secretary of State for Foreign Affairs for service under section 12(1) of the State Immunity Act 1978.F1 The Foreign and Commonwealth Office sent the documents to the Iraqi Embassy in London requesting them to forward them to the Ministry of Foreign Affairs in Baghdad. The accredited diplomat at the Embassy faxed a copy to the Iraqi Embassy in Jordan for transmission to Baghdad. He did not receive any reply. No documents were sent to Baghdad direct. The writ was served on a junior employee of I.A.C., then in charge of the London office, under R.S.C., Ord. 65, r. 3.F2 On 11 February and 24 May judgments were entered against I.A.C. and Iraq in default of appearance. As a consequence of those judgments damages were assessed at about U.S. $500m. On 16 April 1992 Evans J. dismissed I.A.C.'s summons under R.S.C., Ord. 12, r. 8, challenging the jurisdiction, but set aside the service of the writ on Iraq. I.A.C. appealed and the plaintiffs cross-appealed against that order. The Court of Appeal held that I.A.C. was entitled to immunity under section 14(2) of the State Immunity Act 1978 but had not submitted to the jurisdiction, and did not consider further points.

On appeal by the plaintiffs and cross-appeal by the defendants:—

Held, (1) that although the employee on whom the writ was served was a junior employee of I.A.C. at its London office, since he was in charge of operations at that office, he had the capacity of “other similar officer” within R.S.C., Ord. 65, r. 3(1) and that, accordingly, the writ had been effectively served on I.A.C. (post, pp. 1154F–G, G–1155A, 1168D–F, 1172G, 1175G).

Dunlop Pneumatic Tyre Co. Ltd. v. Actien-Gesellschaft fuer Motor und Motorfahrzeugbau Vorm. Cudell & Co. [1902] 1 K.B. 342, C.A. considered.

(2) That the delivery of the writ by the Foreign and Commonwealth Office to the Iraqi Embassy in London was a request to the Embassy to forward the writ to the Iraqi Ministry of Foreign Affairs; and that, accordingly, since that was not done the writ was never served within section 12(1) of the Act of 1978 (post, pp. 1156C–D, 1168D–F, 1172G, 1175G).

(3) That to attract immunity under section 14(2) of the Act of 1978 the acts done by I.A.C., as a separate entity, had to be such that of their own character they were governmental acts; that where a separate entity's acts, although done on the directions of the state, did not have that character there was no entitlement to state immunity; that since I.A.C.'s acts, in taking the aircraft and removing them from Kuwait to Iraq for use as directed by the government of Iraq, were acts in the exercise of sovereign authority those acts would attract immunity under section 14(2); but that (Lord Mustill and Lord Slynn of Hadley dissenting) after Resolution 369 came into force the retention and use of the aircraft were not acts done in the exercise of sovereign authority and thus were not covered by state immunity (post, pp. 1160A–B, 1161E–G, 1163C, E–H, 1168D–F, 1172G, 1175G).

The Philippine Admiral [1977] A.C. 373, P.C.; Trendtex Trading Corporation v. Central Bank of Nigeria [1977] Q.B. 529, C.A. and I Congreso del Partido [1983] 1 A.C. 244, H.L.(E.) considered.

(4) That since on the pleadings it was impossible to arrive at a decision as to the justiciability of the issues between the parties the matter should be remitted to the Commercial Court (post, pp. 1165F–G, 1167H–1168B, 1168D–F, 1175G).

Order of the Court of Appeal [1995] 1 Lloyd's Rep. 25 varied.

The following cases are referred to in their Lordships' opinions:

Alcom Ltd. v. Republic of Colombia [1984] A.C. 580; [1984] 2 W.L.R. 750; [1984] 2 All E.R. 6, H.L.(E.)

Anglo-Iranian Oil Co. Ltd. v. Jaffrate (The Rose Mary) [1953] 1 W.L.R. 246

Arango v. Guzman Travel Advisors Corporation (1980) 621 F.2d 1371

Banco Nacional de Cuba v. Sabbatino (1964) 376 U.S. 398

Brunswick (Duke of) v. King of Hanover (1848) 2 H.L.Cas. 1, H.L.(E.)

Buttes Gas and Oil Co. v. Hammer [1982] A.C. 888; [1981] 3 W.L.R. 787; [1981] 3 All E.R. 616, H.L.(E.)

Claim against the Empire of Iran (1963) 45 I.L.R. 57

Congreso del Partido, I [1978] Q.B. 500; [1977] 3 W.L.R. 778; [1978] 1 All E.R. 1169; [1983] 1 A.C. 244; [1981] 3 W.L.R. 328; [1981] 2 All E.R. 1064, H.L.(E.)

Czarnikow (C.) Ltd. v. Centrala Handlu Zagranicznego Rolimpex [1979] A.C. 351; [1978] 3 W.L.R. 274; [1978] 2 All E.R. 1043, H.L.(E.)

Dunlop Pneumatic Tyre Co. Ltd. v. Actien-Gesellschaft fuer Motor und Motorfahrzeugbau Vorm. Cudell & Co. [1902] 1 K.B. 342, C.A.

Helbert Wagg & Co. Ltd., In re Claim by [1956] Ch. 323; [1956] 2 W.L.R. 183; [1956] 1 All E.R. 129

Oppenheimer v. Cattermole [1976] A.C. 249; [1975] 2 W.L.R. 347; [1975] 1 All E.R. 538, H.L.(E.)

Philippine Admiral, The [1977] A.C. 373; [1976] 2 W.L.R. 214; [1976] 1 All E.R. 78, P.C.

Trendtex Trading Corporation v. Central Bank of Nigeria [1977] Q.B. 529; [1977] 2 W.L.R. 356; [1977] 1 All E.R. 881, C.A.

Underhill v. Hernandez (1897) 168 U.S. 250

The following additional cases were cited in argument:

A. Co. Ltd. v. B. Co. Ltd. (unreported), 1 April 1993, Saville J.

Aksionairnoye Obschestvo A.M. Luther v. James Sagor & Co. [1921] 3 K.B. 532, C.A.

Al-Adsani v. Government of Kuwait (unreported), 21 January 1994; Court of Appeal (Civil Division) Transcript No. 65 of 1994, C.A.

Alberti v. Empresa Nicaraguense de la Carne (1983) 705 F.2d 250

Andersen v. Christensen (1947) 14 A.D. 275

Austrian Treasury (Postal Administration) v. Auer (1947) 14 A.D. 276

Blad v. Bamfield (1674) 3 Swans. 604

Compania Naviera Vascongado v. S.S. Cristina [1938] A.C. 485; [1938] 1 All E.R. 719, H.L.(E.)

Cook v. Sprigg [1899] A.C. 572, P.C.

Drexel Burnham Lambert Group Inc. v. Committee of Receivers for A. W. Galadari [1994] I.L.Pr. 655

Forth Tugs Ltd. v. Wilmington Trust Co., 1987 S.L.T. 153

Haggin v. Comptoir d'Escompte de Paris (1889) 23 Q.B.D. 519, C.A.

International Tin Council, In re [1987] Ch. 419; [1987] 2 W.L.R. 1229; [1987] 1 All E.R. 890

Littrell v. United States of America (No. 2) [1995] 1 W.L.R. 82; [1994] 4 All E.R. 203, C.A.

Mackereth v. Glasgow and South Western Railway Co. (1873) L.R. 8 Exch. 149

Martin v. Bank of Spain (1952) 19 I.L.R. 202

Mortier v. Lauret (1947) 14 A.D. 274

Newby v. Von Oppen (1872) L.R. 7 Q.B. 293

Paley Olga (Princess) v. Weisz [1929] 1 K.B. 718, C.A.

Planmount Ltd. v. Republic of Zaire [1981] 1 All E.R. 1110

Rahimtoola v. Nizam of Hyderabad [1958] A.C. 379; [1957] 3 W.L.R. 884; [1957] 3 All E.R. 441, H.L.(E.)

Rayner (J.H.) (Mincing Lane) Ltd. v. Department of Trade and Industry [1989] Ch. 72; [1988] 3 W.L.R. 1033; [1988] 3 All E.R. 257, C.A.; [1990] 2 A.C. 418; [1989] 3 W.L.R. 969; [1989] 3 All E.R. 523, H.L.(E.)

Reg. v. Boal [1992] Q.B. 591; [1992] 2 W.L.R. 890; [1992] I.C.R. 495; [1992] 3 All E.R. 177, C.A.

Saudi Arabia v. Nelson (1993) 113 S.Ct. 1471

Stanley, In re; Tennant v. Stanley [1906] 1 Ch. 131

Statens Jordlovsudvalg v. Petersen (1948) 16 A.D. 506

Tamlin v. Hannaford [1950] 1 K.B. 18; [1949] 2 All E.R. 237, C.A.

Vajesingji Joravarsingji v. Secretary of State for India (1924) L.R. 51 I.A. 357

Westland Helicopters Ltd. v. Arab Organisation for Industrialisation [1995] 2 W.L.R. 126; [1995] 2 All E.R. 387; [1994] 2 Lloyd's Rep. 608

Westminster City Council v. Government of Islamic Republic of Iran [1986] 1 W.L.R. 979; [1986] 3 All E.R. 284

Williams and Humbert Ltd. v. W. & H. Trade Marks (Jersey) Ltd. [1986] A.C. 368; [1986] 2 W.L.R. 24; [1986] 1 All E.R. 129, H.L.(E.)

APPEAL and CROSS-APPEALS from the Court of Appeal.

These were an appeal by the plaintiffs, Kuwait Airways Corporation (“K.A.C.”), and cross-appeals by the defendants, Iraq Airways Co. (“I.A.C.”) and the Republic of Iraq (“Iraq”), pursuant to leave of the Appeal Committee of the House of Lords (Lord Jauncey of Tullichettle, Lord Slynn of Hadley and Lord Nolan) granted on 16 June 1994 from a decision dated 21 October 1993 of the Court of Appeal (Nourse, Leggatt and Simon Brown L.JJ.) allowing an appeal of I.A.C. and dismissing a cross-appeal by K.A.C. against a decision dated 16 April 1992 of Evans J.

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