Kuwait Airways Corporation v Iraqi Airways Corporation
| Jurisdiction | England & Wales |
| Judge | Mr Justice David Steel |
| Judgment Date | 14 November 2005 |
| Neutral Citation | [2005] EWHC 2524 (Comm) |
| Court | Queen's Bench Division (Commercial Court) |
| Docket Number | Case No: 2003/223 |
| Date | 14 November 2005 |
[2005] EWHC 2524 (Comm)
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT
Mr Justice David Steel
Case No: 2003/223
"PERJURY II ACTION"
Joe Smouha QC and Sam Wordsworth (instructed by Howard Kennedy) for the Claimants
Robert Hildyard QC, Stephen Nathan QC and Max Mallin (instructed by Teacher Stern Selby) for the Defendants
Approved Judgment
Introduction
A detailed description of the extraordinary history of this litigation is set out in Paragraphs 35 – 155 of the judgment of Cresswell J in the "Spares Action": [2004] EWHC 2603 (Comm). The present action, known for short as the "Perjury II Action", focuses primarily on one of the conclusions of Aikens J in the second part of the "Main Aircraft Action" which dealt with questions of causation: [2002] 2 All ER (Comm) 360. He held that the claimants ("KAC") had failed to establish that the loss of a group of its aircraft ("the Mosul Four"), which had been destroyed or damaged beyond repair in the bombing of Mosul by coalition forces in the first Gulf war, had been caused by wrongful interference with them by the defendants ("IAC"). The principal thrust of the claim advanced by KAC in the present proceedings is that this decision (together with the rejection of KAC's appeal on the issue by both the Court of Appeal and the House of Lords) was obtained by fraud.
The background
On 2 August 1990 Iraq invaded Kuwait. The occupation was complete on 5 August. At the time of the invasion there were 10 civil aircraft belonging to KAC standing at Kuwait International Airport ("KIA"). These 10 aircraft consisted of 8 Airbuses (5 type A310–200 and 3 type A300–600) and 2 Boeing 767's. On 6 August 1990 the Iraqi Minister of Transport and Communication, Mr Mohamed Hamza Al–Zubaidi ("Mr Al-Zubaidi") instructed Mr Nor Aldin Saffi ("Mr Saffi"), the then Director General and Chairman of the Board of IAC, that he should arrange to fly these 10 aircraft to Iraq for "safe keeping".
Pursuant to that order, all but one of the aircraft were flown to Basra. The exception was Airbus A-300 AHI (which was in Egypt Air livery). It was under repair and did not leave Kuwait until 20 August when it was flown direct to Baghdad. Meanwhile, by 17 August six of the nine aircraft that had been flown to Basra were redeployed to Mosul and Tekrit. By 17 November, following a number of further movements between these various airfields, four of the aircraft (two Airbus A300–600s and the two Boeings) ended up at Mosul, still in their KAC livery. These made up the Mosul Four. The remainder were by then all at Baghdad. The latter had been progressively repainted in IAC livery.
In the meantime, the Revolutionary Command Council of Iraq ("RCC") had passed Resolution 369. It was passed on 9 September and came in to force on 17 September. It provided as follows: —
"Kuwaiti Aircraft Corporation is hereby dissolved and all of its moveable and immovable assets, rights and obligations are transferred to Iraqi Airways Company which shall in accordance with domestic and international law requirements duly register such assets."
Military action by coalition forces began on 17 January 1991. As the war progressed, the four aircraft at Mosul were destroyed or damaged beyond repair. The remaining six KAC aircraft were flown from Baghdad to Iran, the last arriving on February 4.
Procedural history: sovereign immunity
By this time the writ (the claim form in modern terminology) in what became classified as the Main Aircraft Action had already been issued, with IAC as the first defendant and the Republic of Iraq as the second defendant. Endorsed on it was a succinct points of claim alleging wrongful interference with all the aircraft. The particulars of this allegation of interference read as follows: —
a) On the 2 nd August 1990 the second defendants invaded Kuwait, took control of the airport and deprived the plaintiffs of possession and control if inter alia the aircraft particularised above.
b) Between the 2 nd and 9 th August the aircraft were removed from the airport.
c) On a date or dates between the 9 th August and 17 th 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 defendants' 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 the aircraft to the plaintiffs".
This writ was served on IAC's offices in London. The legitimacy of that service was challenged but in due course it was held to be valid. In November 1991 Mr Justice Evans began hearing a number of applications made by IAC in relation to the claim. The material one for present purposes raised the issue of sovereign immunity. It was the thrust of IAC's case that, following their initial involvement in supplying pilots on the order of the Minister to fly the KAC aircraft from Kuwait Airport to Basra in the immediate aftermath of the occupation, IAC had no further significant involvement with the aircraft until after obtaining title to the aircraft under Iraqi law with effect from 17 September (pursuant to Resolution 369). Accordingly, it was submitted, IAC was entitled to claim immunity from suit.
This position was challenged by KAC. KAC served witness statements from members of their engineering staff to the effect that some of the KAC aircraft had been seen to have been repainted in IAC livery before 17 September. KAC's witness statements also contained evidence to the effect that in mid August 1990 representatives of IAC had made a determined effort to recruit KAC engineers for maintenance work on KAC airbuses. The recruiting effort was said to have been undertaken by three individuals, Mr Saffi, the Director General, assisted by Mr Amer Al Shaikhly ("Mr Al Shaikhly"), described as the Line Maintenance Manager and Mr Sabah Abbo ("Mr Abbo"), the then Director of Quality Control.
It was also contended by KAC that some KAC ground equipment and spares had been observed being loaded onto an IAC freighter at KIA and that some were already situated at Baghdad before 17 September. Indeed on 1 December 1991 KAC issued another writ against the same two defendants seeking similar relief in relation to the spares to that sought in the Main Aircraft Action and this became known as the "Spares Action".
In the Main Aircraft Action, IAC responded to the statements made by the Kuwaiti engineers by tendering two supplementary statements made by Mr Al Shaikhly and Mr Abbo. In the result, Evans J ordered that the issue of sovereign immunity should be decided as a preliminary issue and that all the statement makers should attend for cross-examination. The KAC witnesses were cross-examined on 10 December and Mr Abbo and Mr Al Shaikhly on the following day. There was then a gap until 29 January 1991 when Mr Saffi, who had been unwell, attended for cross-examination. During the course of his cross-examination some additional documents were adduced by IAC which were later to play a significant part in the proceedings referred to as the "Perjury I Action".
KAC'S case on the preliminary issue as regards sovereign immunity (which in essence has remained KAC's case throughout) was that at all material times from 9 August the aircraft were not merely in the possession and control of IAC but being absorbed into the IAC fleet. To that end, it was submitted, the aircraft had been flown to civilian airports and steps had been immediately taken to recruit staff and to prepare for their painting, registration, insurance and provision of airworthiness certificates. Thus, it was said, the decree that came into force on 17 September merely purported to recognise and legitimise what had happened already.
In his judgment dated 16 April 1992, Evans J said that a clear general picture had emerged from the oral evidence. Part of that picture was that Mr Saffi had been instructed to "maintain" or "look after" the KAC aircraft which had been brought to Iraq but that this maintenance was of a basic character, limited to checking tyre pressures, moving each aircraft so that its tyres did not become distorted, checking for oil and/or fuel leaks and removing and replacing engine cowlings and such like from time to time.
As regards sovereign immunity, Evans J concluded that the object of the safekeeping which Mr Saffi had been instructed to achieve was to look after the aircraft until such time as IAC could resume commercial operations with them. Consequently it was his judgment that IAC was not immune from jurisdiction pursuant to the State Immunity Act 1978: —
"The decision to recruit key specialist personnel for an airbus fleet and the steps taken to implement this decision from mid August onwards confirmed that IAC was engaged, on the Minster's instructions, in the preliminary stages of establishing an air-bus operation and to this extent was anticipating the transfer of ownership of the aircraft which became effective, so it was believed, on September 17."
IAC appealed and successfully obtained an order from the Court of Appeal reversing the decision of Evans J on the claim to immunity: [1995] 1 Lloyds Rep 25. Lord Justice Nourse said this at p.29: —
"Here, I repeat, the aircraft was subjected to a forcible confiscation which could only have been carried out by or at the behest of a sovereign state in exercising its sovereign authority. The intention to use them for commercial purposes, as and when practicable, and to keep them safe...
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