Kuwait Airways Corp v Iraqi Airways Corp

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.

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 17^th September 1990.

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 9^th August 1990 (when most of the aircraft had been flown into Iraq proper from Kuwait) and the 17^th 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.

In particular, KAC contended that IAC’s earlier evidence that the acts done in the period from the 9^th August to the 17^th 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 Baghdad-Kuwait route by early September.

Their Lordships concluded ([2001] 1 WLR 429) that, whilst the issues raised in the petition were “prima facie relevant, serious and substantial”, it was not appropriate

On the 2^nd August 1990, Iraq invaded Kuwait. The occupation was complete on the 5^th August. On the 8^th/9^th 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…..”

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 767’s. On the 6^th 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”.

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 22^nd August when it was flown direct to Baghdad. By the 17^th 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.

In the meantime, the Revolutionary Command Council had passed Resolution 369. It was passed on the 9^th September and came into force on the 17^th 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.”

Military action by coalition forces began on the 17^th 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 2^nd 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 2^nd and the 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 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.”

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 13^th January 1991.

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 4^th February. By this time, at least, all these had been repainted to a material extent in IAC’s livery.

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.

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 17^th 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.

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 17^th 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.

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.

IAC responded to the statements made by the Kuwaiti engineers by tendering two additional affidavits dated the 20^th November made by Mr Al Shaikhly and Mr Abbo. On the 21^st November IAC applied for an order for cross examination of KAC’s witnesses. Meanwhile, the hearing continued. It terminated on the 3^rd December being the seventh day of the hearing. At this stage, having regard to the observations of Kerr LJ in J H Rayner v Dept of Trade and Industry [1989] 1 Ch. 72 at p.194 that the issue of sovereign immunity should be decided as a preliminary issue and not on the basis of good arguable case, Evans J ordered that all 5 deponents should attend for cross examination.

The KAC witnesses were cross examined on the 10^th December and Mr Abbo and Mr Al Shaikhly on the 11^th December. There was then a gap until the 29^th 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, a

KAC’s case on the facts for the period leading up to the 17 September was based on the evidence of the engineers and was summarised in the KAC skeleton argument as follows:-

“The evidence is consistent with the conclusion that at all material times the aircraft were in the possession and control of IAC and that both Iraq and IAC acted together throughout on the footing that that was so. To that end the aircraft had been flown to civilian airports, steps were immediately taken to recruit staff, the log books were kept in safe keeping, steps were made to prepare for the registration of the aircraft in Iraq and in due course for the obtaining of the airworthiness certificates. The decree which came which came into force on September 17 merely purported to formalise or legitimise what was happening already.”

This reflected KAC’s pleaded case (which, in essence, has remained KAC’s case throughout). But IAC challenged the evidence of the Kuwaiti engineers. If and in so far as efforts had been made to contact and engage engineers that was all with a view, it was contended, to their recruitment if and when the KAC aircraft were transferred to IAC. Further, it was argued, it was not made out that any steps had been taken to repaint the aircraft in IAC livery or to register them as IAC aircraft prior to the 17^th September.

Evans J recorded in his judgment that the oral evidence had put some aspects of the case in a “fresh light” such that his conclusions were dependent “primarily on the oral evidence”. He expressly put out of account the documentation that had been disclosed relating to what he regarded as preliminary enquiries, made in late August, for the registration of the KAC aircraft “not regarded as urgent in the conditions prevailing during August and September”. He concluded that “a clear general picture emerged”. So far as directly material that picture was:-

The judge went on to describe the essential issue on sovereign immunity in this way at p.12:-

“The underlying issue is whether IAC, under Mr Saffi’s direction, was keeping the aircraft and recruiting these 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.”

Having posed the issue in that form he concluded at p.14:-

“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 air force of the 5 KAC aircraft which it required for other and possibly non-commercial uses, and it directed IAC to take possession of the 10 KAC aircraft which were to be used for commercial purposes, and to 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 the 17^th.”

In those circumstances, the learned judge concluded that IAC was not entitled to sovereign immunity.

In the Court of Appeal (reported at [1995] 1 Lloyds Rep.25), IAC successfully obtained an order reversing the decision of Evans J on the claim to immunity. However, it is to be noted the court did not disturb any of the findings of fact. The essence of the criticism directed at the judge’s conclusions was the apparent reliance

KAC had developed a new argument in the Court of Appeal to the effect that, following the implementation of Resolution 369, the acts of IAC were simply acts in consequence of the vesting of title, not the exercise of sovereign authority. The Court of Appeal rejected that submission. Simon Brown LJ expressed himself as follows at p.37:-

“The answer is, I believe, this: that on the particular facts of this case, it is unreal and impermissible to seek to separate out IAC’s eventual use of the disputed aircraft pursuant to the State’s decree from the circumstances of their initial acquisition. The reality is, as already indicated, that IAC was intimately involved throughout the entire expropriatory process: the planes were spoils of war and IAC was party to their taking.”

As already observed, the matter went on further appeal to the House of Lords: [1995] 1 WLR 1147. The facts as found by Evans J were by now encapsulated in an agreed statement of facts. However, annexed to that statement was a list of findings of fact by the judge which had been challenged by IAC’s notice of appeal in the Court of Appeal but which that court had not found it necessary to consider. It is notable that, in particular, the following findings were said to be wrong:-

“(ii)

That the enquiries made by IAC during August 1990 with regard to the procedures for registering aircraft of foreign registration were in the nature of preliminary enquiries regarding the KAC aircraft.

(v)

That the decision to recruit key specialist maintenance personnel for an airbus fleet and the steps taken to implement this decision from mid August 1990 confirmed that IAC was engaged, on the Minister’s instructions, in the preliminary stages of establishing an airbus operation and to this extent IAC was anticipating the transfer of ownership of the aircraft which became effective, so it was believed, on the 17^th September 1990.”

The Hon Mr Justice David Steel Approved Judgement

Kuwait Airways Corporation - v – Iraqi Airways Corp

As regards the period after Resolution 369 came into effect, the majority in the House of Lords concluded that it could not be said that IAC’s retention and use of the aircraft as its own constituted acts done in the exercise of sovereign authority: per Lord Goff at p.1163 C – D. Lord Goff ’s speech then goes on at p. 1164 A as follows:-

“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 arrival in Iraq and the coming into effect of RCC Resolution 369, involving no more than basic maintenance of the aircraft, constituted acts done by IAC in the exercise of sovereign immunity (sic). On the assumption that these acts constituted acts of conversion and as such are of relevance in these proceedings, I would hold that, like the acts of IAC in flying the aircraft out of Kuwait, these acts were still sufficiently related to the act of seizure of the aircrfaft by Iraq to amount to acts jure imperii and so would attract immunity under section 14 (2).”

It is this passage which is the focal point of this action for it is KAC’s case that the factual basis for the conclusion is wholly misfounded. In the light of the evidence now available, the inaccuracy, or at least lack of completeness, in the findings of fact is to a large extent common ground. The primary issue for my determination is the extent of the error and whether that error was deliberately induced by IAC.

The issues of liability and quantum were subjected to split trials. Questions related to title, justiciability and recognition of foreign law, together with the matter of conversion “on the facts” were determined by Mance J : [1999] CLC 31. He also made findings on the required nature of the causal link and the burden of proof under Iraqi law. The issues of causation and remoteness under English law were left over to a stage two trial before Aikens J: [2002] 2 All E.R.(Comm) 360.

Before going onto the subsequent history, it is necessary to say a little more about the issue of justiciability. As clearly foreshadowed in Mr Saffi’s affidavits, it was IAC’s case that, whether or not it was not entitled to sovereign immunity, the issues arising from the acts of which KAC complained were not justiciable in the English courts by reason of the doctrine of act of state. The factual basis for this plea, as already indicated, was that the effect of Resolution 369 was to pass legal title to IAC and that all IAC’s activity with regard to the fleet of aircraft was post the date when the Resolution came into force. It was IAC’s argument that the doctrine of act of state

This issue was canvassed in the House of Lords but their Lordships concluded that the state of the pleadings necessitated the matter being remitted to the Commercial Court. Mance J concluded, however, that Resolution 369 was in breach of clearly established principles of international law:

“Having removed KAC’s aircraft from Kuwait by force of arms and in breach of international law, Iraq cannot claim the protection of any principle of international law which might allow a state in some circumstances to expropriate property, even though belonging to the nationals of other states, which happen to be within its jurisdiction”: see Mance LJ at p 73.

The Court of Appeal ([2001] 3 WLR 1117) agreed with that conclusion putting the matter this way at p.1219:-

“We agree with Mance J that Resolution 369 is in breach of clearly established principles of international law. It merely sought to put on a formal and convenient basis (so far as Iraqi law and administration were concerned) what had always been the position, namely that the KAC fleet had been taken by force following the invasion of Kuwait, as part of and pursuant to Iraq’s policy of annexation and plunder, and had been put de facto into the operational hands of IAC.”

It followed that, as a matter of English public policy, the Resolution should be denied recognition. Mance J so found and this conclusion was approved by the Court of Appeal at p.1220:-

“To put the matter the other way round, if this court were to recognise Resolution 369, it would be recognised of exorbitant dealing with property stolen out of a sovereign and independent state, in breach…… of the obligations imposed on this nation by the UN Resolutions….”

These findings were in turn approved when the appeals from Mance J and Aikens J reached the House of Lords: [2002] UK HL 19. Their Lordships also reiterated that public policy considerations were equally fatal to any submission under the double actionability rule that, in applying the second rule, it was appropriate to consider whether an Iraqi court would have recognised the Resolution as a bar to a claim for usurpation.

The origins of the present action are to be found in the preparations for the trials before Mance J and Aikens J. Indeed Aikens J was told that KAC was contemplating seeking to set aside the decision of the House of Lords at least in part: see para 94 of his judgment. The materials that provoked this proposal were contained in some of the following documents:-

As explained in the judgment of the Court of Appeal, this material created a difficulty. By reason of the decision of the House of Lords, the period prior to the 17^th September was one in which any activity on the part of IAC in relation to the aircraft was protected by state immunity. Thus any such activities were only of marginal relevance in the context of the issues that remained to be determined. But the new material referred to above appeared to reveal that IAC’s activity prior to the 17^th September was much more extensive than had been found by Evans J and summarised in the agreed statement of facts lodged on the appeal to the House of Lords. In the result KAC lodged their petition to rescind the decision in the House of Lords shortly before the hearing of the Court of Appeal and the response of the House

The evidence of IAC as presented before Evans J in 1991 was to the effect that it had not been involved with KAC aircraft after their arrival in Iraq proper other than in terms of very limited and basic maintenance pursuant to instructions from the Minister of Communications and Transport. This evidence was accurately summarised by Lord Goff in the House of Lords at p. 1161 :-

“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 IAC are i. the removal of the aircraft from Kuwait airport to Iraq, and ii. the treatment of the aircraft by IAC as part of its fleet after the coming into force of the RCC Resolution 369.”

By the end of the hearing before me, it was accepted even by IAC that some steps had been taken prior to Resolution 369, in regard to at least two or three of the aircraft, to register them, insure them and paint them, all in furtherance of a Presidential instruction to prepare them for operation on the Baghdad to Kuwait route. Nonetheless a substantial gulf remains as to what actually happened in August and early September 1990 and what IAC concedes.

In order to embark on the task of determining the nature and scale of any disparities between the evidence adduced before Evans J and that adduced in this action, it is necessary to focus on those parts of the earlier evidence which KAC alleges were untrue.

Evans J expressly placed considerable emphasis on the oral evidence and it is thus convenient to consider each of the witnesses in turn. But on any view, I agree with the claimants that the general theme of their evidence can be fairly summarised as follows:-

The starting point is the two affidavits made by Mr Saffi in 1991. The first affidavit, made in July, sets out IAC’s stall in regard to the company’s status and its entitlement to immunity as “a separate entity” under the 1978 Act. It also prays in aid the doctrine of act of state in regard to the transfer of title to IAC pursuant to Resolution 369. As regards the factual events post invasion, he simply stated: -

“16 (i) On the 6^th August 1990, the Iraqi Minister of Transport and Communications gave me oral instructions in Baghdad as Director-General of IAC that IAC should instruct its pilots to remove certain aircraft, including the 10 aircraft in question in this action, from Kuwait to various airports in Iraq…… for safe keeping. In compliance with that government instruction I gave such instructions to IAC pilots and during the following days the aircraft were removed to those airports in Iraq and handed over to the Ministry of Transport and Communications…..

(ii)

All the aircraft then remained at those airports in Iraq in possession and custody of the Iraqi Ministry of Transport and Communications until the implementation of RCC Resolution 369 on the 17^th September 1990. I have been advised by IAC’s Iraqi legal experts that it was at that date that the aircraft came into the ownership of IAC for the time being; and the aircraft were only handed over by the Ministry of Transport and Communications to IAC at that time.”

No other instruction by the Minister is referred to in the affidavit save the order given in January 1991 to arrange for some of the aircraft to be flown to Iran.

This picture was reinforced in Mr Saffi’s second affidavit made in October. He repeated the nature of the oral instruction from the Minister. As regards events after arrival of the aircraft in Iraq, he said this: -

“5.

Upon arrival at the Iraqi airports of final destination, the IAC aircrews parked the aircrafts and simply left them at the stands to which they had been directed by the Airforce controllers. ……….. Thereafter, until after Resolution 369 of the 9^th September 1990 came

The Hon Mr Justice David Steel Approved Judgement

Kuwait Airways Corporation - v – Iraqi Airways Corp

into effect, IAC ground crews had nothing to do with the aircraft; indeed no-one from IAC was involved in any activity concerning these aircraft.”

Mr Saffi went on to deal with the question of registration and insurance. As regards registration, he said that applications for the certificates of airworthiness were made on the 29^th September which were duly granted on the 2^nd October. The relevant section of the affidavit reads:

In apparent support of this statement Mr Saffi exhibited three documents. Since they played a significant part in the cross-examination of the three witnesses before Evans J, it is desirable I should identify them :-

As regards insurance, Mr Saffi’s affidavit went on :-

“Also, once the aircraft became the property of IAC under Iraqi law (and not before then) IAC informed its Iraqi insurers that these aircraft had become the responsibility and property of IAC under Iraqi law.”

The Hon Mr Justice David Steel Approved Judgement

Kuwait Airways Corporation - v – Iraqi Airways Corp

Mr Al Shaikhly also made two affidavits. The first, dated 20^th November 1991 was primarily directed to challenging the evidence of the two KAC engineers. He confirmed that IAC had received a Ministerial instruction to maintain the aircraft. He emphasised that amalgamation of KAC and IAC did not occur until the 17^th September. He went on to make it clear, no less than six times, that no KAC equipment or spares were removed from Kuwait prior to the 17^th September. Further Mr Al Shaikhly made a particular point to challenge the assertion of one of the KAC engineers that he had seen 4 ex KAC aircraft in IAC livery before the 17^th September. It is fair to say that one of them was said to be a Boeing 767 which on any view had not been repainted by the time it was destroyed at Mosul during the war. But the affidavit went on to state in terms: -

“None of the aircraft referred to by Mr Muhsi had been overpainted by the 16 September 1990”.

Mr Abbo also made two affidavits. In his first affidavit dated 20^th November, he made the following points :-

The first witness to be cross examined was Mr Al Shaikhly. The bulk of it was directed to the detail of meetings and discussions with the Kuwaiti engineers. But in other respects Mr Al Shaikhly insisted: -

Mr Abbo was called to give evidence. He claimed in cross examination that: -

Mr Abbo was particularly insistent that applications for certificates of airworthiness were not made before the 17^th September nor had there been any correspondence on that topic. The following is an extract from his cross-examination by Mr Clarke QC:-

Inevitably he was asked about the documents exhibited to Mr Saffi’s affidavit. He accepted that there must have been an earlier letter to that of the 27^th September giving notification of the registration markings allocated to AHD and AHB in like form to the letter of the 23^rd October. As regards the reference in the Ministry’s letter to the letter of the 23^rd August, Mr Abbo suggested that this had been in a response to an earlier inquiry emanating from the planning department of IAC about registration requirements generally, unrelated to the Kuwaiti aircraft.

Mr Saffi in his cross examination: -

It is to be noted that only documentary material put to Mr Saffi by way of challenge to his evidence on these matters was a newspaper report dated the 17^th September to the effect that “several Kuwait Airways planes including Airbuses and Boeings had already been moved to Baghdad and repainted in the green and white colours of Iraqi airways along with the Iraqi flag……” This was put to Mr Saffi in cross-examination:-

As already noted it was with particular reliance upon this oral evidence that Evans J made the findings of fact set out earlier. He accepted that the activities of IAC were restricted to basic maintenance and a search for qualified engineers to that end. As regards painting, he simply recorded that the evidence showed that, after the decree took effect, at least two of the aircraft were repainted in IAC livery.

So far as Mr Saffi’s evidence on these topics was concerned, the judge’s only critical observation was to the effect that Mr Saffi had been somewhat reticent about his relations with the Minister between the 8^th August and the date when he became aware of the decree. Evans J regarded his evidence as somewhat contradictory in the sense that, on the one hand, he had denied having any communication with the Minister or having any fore knowledge of the decree, but on the other hand that, prior to the decree, he had told the Minister he did not want the KAC aircraft, that he would prefer new aircraft, and that in any event IAC had no need of any aircraft until such time as international flights could resume.

There remains the question of registration. Mr Saffi appears to have arrived in England with three additional documents, although somewhat astonishingly he asserted that he had not read them. During the course of his cross examination, counsel for IAC interposed to put the documents in evidence. The first was a letter dated 15^th August 1990 from Mr Nekash to Mr Abbo which read: -

“Would you kindly ask the air safety division to give us a list of the necessary requirements for registration of aircraft in the Iraqi Civil Register, as it is intended to purchase or lease a cargo plane from another company.”

The second letter was from Mr Abbo to the DGCA under reference MSA/1/1901 dated 23^rd August 1990. This read: -

“With reference to the letter from Technical Planning No 580 dated 15/8/1990 kindly inform us the necessary requirements for registration with the Iraqi Civil Register of foreign registered aircraft and also for granting for these aircraft an airworthiness certificate. It is intended to purchase or lease a cargo plane from a foreign airline.”

The Hon Mr Justice David Steel Approved Judgement

Kuwait Airways Corporation - v – Iraqi Airways Corp

In due course the authenticity of these two letters came to be challenged by KAC. Mr Saffi’s evidence in 1992 was to the effect that these letters were prompted by a proposed charter of two airbuses from Royal Jordanian Airlines albeit that he accepted that these aircraft were passenger planes and that negotiations had been on hold since the outbreak of the war.

The third letter was a letter written to Mr Abbo on the 23^rd August 1990 by the DGCA dated 23^rd August 1990 (and copied to the General Manager’s office). It read: -

“With reference to your letter No MSA 1/1901 dated 23^rd August 1990, we list below the requirements needed for registration of aircraft mentioned in your letter in the Iraqi Civil Register under Iraqi Civil Aviation Rule No 148…..”

Various requirements were then set out including the requirements for a valid airworthiness certificate, evidence of appropriate maintenance and evidence of appropriates licences held by the crew and maintenance engineers.

Mr Saffi’s evidence in 1992 was that, whilst this was indeed the letter referred to in the Ministry’s letter of the 23^rd October quoted above, it was in fact a reply to the enquiry contained in the second letter and was not related to the Kuwaiti aircraft.

It was no doubt the apparent inconsistencies in this material which led to the tentative conclusion of Evans J (challenged by the defendants on appeal) that the reply was in fact to a preliminary enquiry about the Kuwaiti aircraft, albeit that the learned judge did not regard it as necessary to place any reliance upon this finding in reaching his conclusions on the facts.

The trial before me began on the 13^th May 2002. IAC called a number of witnesses. In order of appearance they were: -

Mr Na’ama completed his evidence on the 27^th May 2002. There then ensued a prolonged adjournment, the original estimate for the trial period having been overrun . It was contemplated at that stage that the court would reconvene for the purposes of hearing expert evidence on painting.

In addition, it was also anticipated that Mr Nekash might also be called at the resumed hearing. He had been in England before the time of the original hearing but had fallen seriously ill. I am sorry to say that he later died and was thus never cross examined. In contrast, although it had earlier been suggested that Mr Saffi was not well enough to travel to England, before the resumed hearing IAC applied to call him after all and I duly gave leave. He gave evidence over some four days.

I have had very much in mind that the trial was taking place nearly 12 years after the events leading up to Resolution 369. The witnesses’ actual recollection of events must predictably have dimmed, giving rise to inevitable inconsistencies and gaps. In any event, there would have been an understandable temptation for those witnesses being recalled simply to repeat what had been said on the earlier occasion or, in the event that the newly disclosed documentary material was inconsistent with their earlier evidence, to effect a reconstruction explaining the disparity.

In these circumstances I respectfully endorse the observations of Robert Goff LJ in The Ocean Frost [1985] 1 Lloyd’s Rep.1 at p.57: -

“It is frequently very difficult to tell whether a witness is telling the truth or not; and where there is a conflict of evidence such as there was in the present case, reference to the objective facts and documents, to the witness’s motives, and to the overall probabilities, can be of very great assistance to a judge in ascertaining the truth.”

My position is in stark contrast to that in which Evans J was placed. At the time of the hearing before him, there had been very little by way of disclosure. As he stated in terms he necessarily had to make his findings of fact in reliance on the oral evidence, illuminating as it did the affidavit evidence that had been furnished. But my task of determining the extent and scope of the activity on the part of IAC (albeit many years ago) is rendered easier by virtue of the availability of many of the

That said, the oral evidence was tendered by way of supplement and amplification to the documents and I must consider its reliability in terms of revealing the full picture. In particular, KAC contend that two documents have been fabricated. There is also the important issue as to whether any disparities between the evidence given on the earlier occasion in comparison with the true picture is attributable to the fact that the earlier evidence was knowingly false. In this context, it is right that I should express some comments about the witnesses as they struck me: -

Three statements were prepared by Mr Nekash. Sadly he was not available for cross examination and I must approach the contents of those statements on that basis. Nevertheless, I feel it right also to bear in mind the observation of Aikens J, before whom Mr Nekash did give oral evidence in 2000, that “he was not entirely open about his knowledge of the overpainting….”.

Prior to the war, IAC had ambitions to expand its passenger fleet. In June 1990, it had entered into a purchase contract with Airbus for the delivery of five A310’s to add to its existing Boeing fleet. The first of these airbuses was due to be delivered in April 1992.

Anxious to gain familiarity with such aircraft meanwhile, IAC had been looking to wet lease two 310’s. Mr Abbo told the court that he had had a discussion with KAC with a view to leasing some of their aircraft. This was vigorously denied by Mr Saffi, but an entry in the Na’ama diary on the 23^rd June tends to confirm Mr Abbo’s account.

In the event, Royal Jordanian was also approached and a letter of intent relating to two aircraft was signed on the 16^th July 1990 with a view to negotiations being completed within two weeks and for delivery to occur in September and November respectively. The invasion, of course, intervened.

I accept that on the 6^th August, Mr Saffi received a direct oral instruction from the Minster of Transport and Communication to arrange for the KAC aircraft to be flown into Iraq. But much more significantly on the 7^th August, the Presidency Secretariat sent the following message to the Ministry marked Top Secret – Personal – Urgent: -

“It has been decided to repair Kuwait airport so as to make it suitable for flying and to enable Iraqi pilots to fly Kuwaiti aircraft for internal transport (between Kuwait airports and Iraqi airports). Please take necessary action and confirm.”

This was copied to a number of parties including IAC with the added specific requirement “to take necessary action”. (This message was not disclosed until after the Aikens J trial in April 2000.)

Over the next few days, IAC was also notified by the Presidency Secretariat of Resolutions 312 and 313 which prescribed the integration of Kuwait into Iraq and the assumption of responsibility for all Kuwaiti financial obligations with the added notation: -

“Kindly take appropriate action for implementation thereof”.

IAC reacted quickly. On the 9^th August an IAC delegation went to Kuwait airport. It was led by Mr Abbo. His letter reporting on the visit is incomplete. Nonetheless, the

The next day, the 10^th August, Mr Saffi flew to Kuwait to see the position for himself. The Na’ama diary records instructions given by him on his return to the effect that Kuwait airport would operate as “second airport after Basra for domestic transport”. The thrust of the presidential order of the 7^th August was duly recorded in the diary “Repairing Kuwait airport – Iraqi pilots – domestic transport”, this being confirmed again in an entry on the 17^th August.

On the 13^th August, the Na’ama diary records Mr Saffi’s order that a “full inventory” of stores and equipment at Kuwait should be prepared. Indeed some details of engines, tyres, brakes and other items were already recorded in the diary on the 14^th August. On the 16^th August, IAC resumed scheduled services to Kuwait using an IAC Boeing 727. IAC Boeing 737’s were added on the 21^st August.

In the meantime, preparations began in earnest with a view to using KAC airbuses for the service. The next fortnight saw the following developments.

On the 18^th August Mr Saffi chaired a meeting which arranged for Mr Al Shaikhly to take up station in Kuwait, so as to supervise the stores there and engage suitable airbus staff. Mr Al Shaikhly left the following day.

On the 20^th August, the first of KAC’s airbuses (AHD) was relocated to Baghdad and on the 22^nd August, its engine problems having been overcome, AHI was brought into Baghdad direct from Kuwait. The entries in the Na’ama diary for that day speak for themselves: -

“General managers instructions: airbus total 8

Paint aircraft. Work 24 hours……..

Engineering to prepare aircraft as soon as possible Baghdad Kuwait.

Domestic transport – Iraqi pilots.

Train engineers/approval crash course….

Bravo to those who finish quicker. Within one week only, after that it is negligence.

Priority to 310. 5 off…..”

The Hon Mr Justice David Steel Approved Judgement

Kuwait Airways Corporation - v – Iraqi Airways Corp

These instructions were, in my judgment, a direct and accurate reflection of the presidential order to the effect that the Kuwaiti aircraft were to be urgently prepared for commercial service between Iraq and Kuwait flown by Iraqi pilots.

On the 23^rd August, Mr Abbo prepared a letter to the DGCA seeking advice on registration requirements. This was only disclosed in July 1996. It was marked “Urgent”. It read: -

“Pursuant to the instructions that was issued from the office of the Minster of Transport and Communication, it has been decided to put the airbus (A310 – 200) (formerly Kuwaitia) into service on domestic routes between Kuwait and Baghdad.

Please let us know the requirements for registering these aircraft as Iraqi and give the matter your utmost attention.”

Precisely when that letter was signed and/or sent remains a matter of controversy. But it is unquestionably clear that that same day Mr Abbo was informed of the registration requirements as set out in the letter of the DGCA quoted in paragraph 60 above. Indeed Mr Abbo duly annotated a copy of that letter in manuscript noting that both insurance and maintenance programmes were “pending” and stating: “the technical assistant general manager: to be informed of the above regarding registration of airbus A310 – 200 aircraft (formerly of Kuwaitia) and your instructions please.” (This annotated copy was not disclosed until July 2000 after the hearing before the Court of Appeal.)

Also on the 23^rd August, the Na’ama diary records that AHD had entered the hanger for painting work to commence at 12.30. The note goes on to record the availability of enough paint for one aircraft, with a balance of 4 gallons of dark green, 4 gallons of light green and 5 gallons of light grey available for the second aircraft. (The need for further supplies of paint is recorded in the Na’ama diary for the 25^th August).

On the 25^th August Mr Saffi wrote a memorandum to all employees of IAC. This was disclosed in September 1997. It read as follows: -

“After the announcement of the merging unification with Kuwait and the joining of the Kuwaiti aircraft fleet with the Iraqi Airways Company all the employees are requested to take care of the aircrafts and not to touch the material which are inside them and Nobody is allowed to go near them but those who are specialists to work on them and finalise all the requirements shown in the civil aviation regulations

The Hon Mr Justice David Steel Approved Judgement

Kuwait Airways Corporation - v – Iraqi Airways Corp

to make them fit for flying and to be given the Iraqi certificates by the hands of Iraqi pilots and engineers.

We hope that everybody will be in compliance with these instructions to prove the efficiency of our employees to operate these aircraft with the same efficiency that you exercised before”.

I accept the submission made by KAC that Mr Saffi, as the author of this letter, was proceeding on the basis that, in responding to the instruction to implement Resolution 312 and 313, IAC could properly regard the effect of the merger and integration as being that the KAC fleet was to all intents and purposes part of, and to be operated with, IAC’s fleet. This view receives further support from the content of the Na’ama diary in the period between the 24^th August and 9^th September from which it would appear that KAC stores and equipment were systematically removed from Kuwait and brought into Iraq.

Insurance matters were also active at this stage. The Na’ama diary records that it was contemplated on the 25^th August that cover for AHD (AOA) would be in place by the 30^th August. To that end, Mr Abbo’s assistant wrote (pp. Mr Abbo) to IAC’s insurance manager on the 25^th August as regards AOA stating: -

“Kindly take the necessary action to insure the above aircraft noting that it is being operated for commercial uses on internal flights”.

(Notably this letter whilst disclosed in September 1997, was not tendered with an accurate translation until August 2001).

From an IAC internal memorandum dated the 25^th August, it is clear that the National Insurance Company had already been given informal notice of the need for insurance cover for two airbus 310s, the first of which was to be AOA. Confirmation that the registration label AOA had been allocated by the DGCA was contained in a letter (disclosed in September 1997) also dated 25^th August and received on the 27^th August. This read: -

“ Your letter….dated 25.8.1990 [not disclosed].

The registration label (YI AOA) have been reserved for the airbus (A310 – 222) which is serialised under number 318. Kindly complete all the requirements shown in our letter number 1019 dated 23.8.1990.”

(A similar letter relating to AOB was received the same day although notably neither letter was exhibited to Mr Saffi’s second affidavit. As already noted, the affidavit

On the 26^th August Mr Saffi reported on progress to the Presidency Secretariat (in a letter disclosed in May 2000): -

“With reference to your letter….. dated ….. 7^th August 1990 - we started to transfer the Kuwaiti aircraft to the Iraqi register and preparing the personnel of pilots and technical staff to operate these aircraft for internal transport only. The number of aircraft that had been brought in are 11 while 8 aircraft were left outside Kuwait in outside stations. ….”

On the 27^th August painting work on AOA was completed and AOB entered the hanger in its stead at 1600.

On the 28^th August, the Minister issued an order, copied to Mr Saffi for “confirmation”, establishing a joint committee of the DGCA and IAC to prepare an inventory of items at Kuwait so as, amongst other things, to identify items belonging to the “former” KAC and transferred to IAC.

The next day Mr Saffi appears to have written to the Deputy Prime Minster Mr Sa’adoon Hammadi on the general topic of the transfer of KAC’s assets to IAC. This letter has not been disclosed. It lead in turn to contact with the Deputy Prime Minster by the Presidency Office (in a letter dated the 1^st September which has also not been disclosed).

The outcome was the following letter (only disclosed in October 2001) to the Presidency Office from the Deputy Prime Minister dated the 5^th September: -

“Having considered the matter attached to your above letter on the transfer of fixed and liquid assets of the Kuwaiti Airways Corporation to the ownership of Iraqi Airways Company and having considered the contents of the Iraqi Airways Company letter No1828 dated the 29/8/1990 relating to the above matter and further to other related matters regarding the assets of the Kuwaiti Airways Corporation, we enclose herewith a Draft Resolution to be issued by the Revolutionary Command Council after approval to deal with this matter in a comprehensive manner……..”

This Draft Resolution was in due course to become Resolution 369.

In the meantime, on the 30^th August, the Na’ama diary records that a delegation led by Mr Saffi visited Kuwait in one of the airbuses. On the 31^st August work on painting AOB was completed at 1300. The Egyptian airbus (AHI/AOC) entered the hanger for painting at 1400 on the 1^st September. That same day insurance cover for AOA was confirmed as included with IAC’s existing fleet.

On the 2^nd September, a board meeting of IAC dealt with the question of fares between Baghdad and Kuwait. The board’s decision was to the effect that government employees and military personnel should be offered a discounted fare on production of an official letter.

Following interviews conducted by Mr Saffi whilst he had been in Kuwait on the 30^th August, two former KAC engineers were recommended for employment by Mr Abbo in his letter to the administrative department dated 6^th September “in view of the company’s need for their services to operate the aircraft”. This proposal was endorsed by Mr Saffi on terms that the engineers should continue to work for IAC “on the same basis as their previous contract”.

As already recorded Resolution 369 was passed on the 9^th September and sent to IAC. IAC in turn sent a copy to the Ministry. The Resolution came into force on the 17^th September.

IAC’s case as to the true state of affairs that prevailed in the crucial month between the 7^th August and the 9^th September became somewhat of a moving target. In the event, the extent of the concessions made by IAC seemed to amount to this. Contrary to the evidence produced by IAC before Evans J, there was some activity with regard to the aircraft and in particular steps were taken to register and insure 2 or 3 of them and to use some form of paint to hide their KAC livery. All this was said to be in response to an oral instruction given by the minister some time in late August to prepare 3 airbuses on behalf of the government for non-commercial services to Kuwait.

The extent of these admissions, whilst themselves demonstrating a marked contrast with the evidence given only 18 months after the event, is wholly lacking in realism. They fly in the face of the contemporary documentation.

First, despite Mr Saffi’s persistent assertion to that effect in his oral evidence, there is no basis for the contention that, on the instructions of the minister, flights were to be commenced but restricted to the carriage of those on official business: -

In the second place, it was fully apparent that the aircraft were being treated as part of IAC’s fleet rather than that IAC were merely engaged in conducting activity on behalf of the government: -

Given the content of the documentation there could be no serious issue as to the extent of the steps taken by IAC to insure the aircraft or, subject to the controversy about the letters to the DGCA asking for registration requirements, the extent to which steps were taken to register the aircraft. However, there was a wide ranging dispute as to the extent to which the aircraft were overpainted before the 17^th September.

I suspect that this is somewhat of an arid dispute. Some degree of overpainting on three of the aircraft prior to the 17^th September is conceded. My initial reaction is that the nature of the paint used, and the extent to which overpainting took place, are not determinative of the decisions I have to reach. But I must make my findings on the issue.

Mr Saffi’s witness statement for this trial conceded that overpainting commenced before the 17^th September with green paint, with the purpose of obscuring KAC’s name and logo. Mr Ali’s recollection as the man in charge of the paint shop, as recorded in his statement, was that there had been some overpainting with green and/or white paint.

It was this latter evidence which underwent such a drastic change when Mr Ali gave oral evidence. I unhesitatingly reject his evidence that the only material applied to the aircraft was primer:-

As regards to the degree of overpainting, the probabilities are that, although hurriedly and sloppily effected, the three aircraft did emerge from the hanger in what would pass for IAC livery: -

Before turning to the issues relating to the contemporary knowledge of the witnesses of the true facts and whether they had had them in mind when they gave evidence in 1992, I must turn to an issue which straddles the parties’ contentions as to the true facts and the honesty or otherwise of the witnesses.

In the bundle of contemporary documents there were two whose authenticity was vigorously challenged by KAC. On their face, they were written shortly before the draft letter prepared by Mr Abbo on the 23^rd August and quoted at paragraph 85 above. I set them out in full once again.

The first is a memorandum dated 15^th August from Mr Nekash to Mr Abbo. It reads: -

“Would you kindly ask the Air Safety Division to give us a list of the necessary requirements for registration of aircraft in the Iraqi Civil Register, as it is intended to purchase or lease a cargo plane from another company.”

The second letter is dated 23^rd August 1990 from Mr Abbo to the DGCA which reads:-

“With reference to the letter from Technical Planning No.580 dated 15/8/1990 kindly inform us the necessary requirements for registration with the Iraqi Civil Register of foreign registered aircraft and also for granting for these aircraft an airworthiness certificate…….. It is intended to purchase or lease cargo plane from a foreign airline…..”

The claimants’ primary case is that these two letters were forgeries prepared by IAC in 1992 and brought to London by Mr Saffi for the purpose of explaining the origin of the letter from the DGCA dated 23^rd August referred to in the letter which had been disclosed and attached to Mr Saffi’s second affidavit of the 23^rd October 1990.

In the alternative KAC contended that even if the letter of the 15^th August was genuine, nonetheless the second letter was a forgery prepared for the same purpose taking advantage of the fact that action had not been taken on the earlier one.

In the further alternative, KAC contended that, if the letters were genuine, nonetheless, the DGCA letter of the 23^rd August was, contrary to IAC’s case, written in response, not to the enquiry originally promulgated by Mr Nekash, but in reply to the letter enquiring about the registration of Kuwait aircraft (a letter which KAC contends (i) was sent on the 23^rd August and not on the 27^th or 28^th and (ii) was deliberately suppressed by IAC for the purposes of the sovereign immunity hearings).

In an attempt to avoid confusion, I propose to refer to Mr Abbo’s letter of the 23^rd August referring to a cargo plane as “Abbo 1” and the letter that was drafted (even if not sent) on the same day relating to the Kuwait aircraft as “Abbo 2”.

Mr Nekash’s letter of the 15^th August 1990 unquestionably has some oddities:

Turning to Abbo 1, its contents are equally surprising since Mr Abbo would be unlikely not to observe the “error” of Mr Nekash in referring to an intention to obtain a “cargo plane” from a foreign airline. Furthermore, treating the letter from the DGCA dated the 23^rd August as a response to Abbo 1 creates certain striking inconsistencies: -

In contrast, Abbo 2 fits happily with the DGCA letter in that: -

Indeed, the fact that the letter from the DGCA dated the 23^rd August was dealing with an inquiry about the Kuwaiti aircraft is clearly demonstrated by a later letter from the DGCA dated the 29^th September which stated: -

“We refer you to our letter …….dated 23.8.1990 addressed to Quality Control on the requirements of the registration of the planes belonging to the Kuwaiti Airways Company (defunct) in the Iraqi civil aviation register….. .”

However, in assessing the authenticity of Abbo 1 it remains necessary to subject Abbo 2 to careful scrutiny because the copy available has various dates and references on it all of which have been extensively considered in the trial: -

Mr Abbo was inevitably and properly cross examined at some length about the preparation of this correspondence. In summary, his account, as finally formulated, was as I understood it as follows.

By any standards, this was an improbable tale, bearing all the hall marks of an attempt to effect a reconstruction consistent with the documents rather than any genuine recollection: -

I have referred to the anomalies as regards the dates and reference numbers on Abbo 2. The fact that the signature and dates had been added to the carbon copy if anything undermines any reliance that I might otherwise place on them in identifying the nature of the documents.

Against this background I unhesitatingly reject much of Mr Abbo’s account. It is not just improbable; it is absurd. The only possible sequence is that Abbo 2 was sent on

Was Abbo 1 a forgery? The whole subterfuge with regard to the sequence of events on the 23^rd August and thereafter casts great suspicion on the authenticity of Abbo 1. One possibility is that although drafted on the 23^rd in furtherance of the 15^th August letter, Abbo 1 was not sent since matters had been overtaken by the urgent need to arrange registration of the Kuwaiti aircraft. But this was not canvassed in the evidence. Futhermore:-

I confess that, in my judgment, the circumstances of the disclosure of this letter also invites suspicion. Given the theme of the evidence of Mr Abbo and Mr Al Shaikhly that no activity had occurred prior to the 17^th September, some explanation of the reference to registration enquiries in August as contained in an attachment of Mr Saffi’s second affidavit was called for. Mr Saffi was called in January and on the way to England brought with him three new documents, albeit he was notably minded to distance himself from them. Indeed, as described, they were adduced in evidence in a very unusual way.

By that time Mr Abbo had returned to Iraq. He was best placed to go through the quality control department files. Indeed, Mr Saffi accepted in his evidence in chief that Mr Abbo looked the documents out. The outcome, whoever conducted the process, was with the benefit of hindsight astonishing. All the documents which were difficult to reconcile with Abbo 1 and the alleged reply to it were not disclosed at that stage including in particular the order of the 7^th August, the annotated version of the DGCA reply dated the 23^rd August, the DGCA notice of allocation of registration

These suspicions are heightened by another respect in which the attachments to Mr Saffi’s second affidavit were selective. As is perhaps already apparent, it is, to put it conservatively, striking that whilst the documents relating to the application for and granting of a certificate of airworthiness for AOA were exhibited, the DGCA notification of the allocation of registration letters relating to that aeroplane (dated 25^th August) was not. In its place was the DGCA letter of the 23^rd October relating to registration letters allocated to other aircraft.

I have come to the conclusion, bearing well in mind the high standard of proof called for in resolving issues of this kind, that Abbo 1 was not a genuine contemporary document. The only letter written and sent to the DGCA on the 23^rd August by Mr Abbo was Abbo 2 to which the DGCA replied the same day. I am also satisfied that Mr Saffi and Mr Abbo were fully aware of the true position as regards the correspondence and were, perhaps with others, both directly involved in the preparation of Abbo 1.

The claimants recognise that the position as regards the 15^th August letter might be different in the sense that it was possible that it was a genuine letter advantage of which was taken in preparing Abbo 1 to accord it greater verisimilitude. Indeed, Mr Abbo asserted a recollection of some form of inquiry when he gave evidence in 1991.

I also appreciate that the untimely death of Mr Nekash has meant that he has not been cross examined as regards to the 15^th August letter. In addition, I bear in mind that the allegation that both letters were forged involves a widening of the conspiracy to an extent that might seem unnecessary. Abbo 1 would be enough to seek to explain the DGCA’s exposition of registration requirements without more.

That said, I have already identified the surprising nature of the content and timing of the 15^th August letter: see para 118 above. Indeed it is ironic that Mr Abbo’s oral evidence was to the effect that the 15^th August letter, given its timing, could not relate to the Royal Jordanian aircraft and must have been referring to an even earlier proposal to wet-lease some KAC aircraft, a plan the existence of which was vigorously denied by Mr Saffi. In short, it is impossible to discern any legitimate reason why the inquiry regarding registration of a cargo plane should have been initiated.

The overwhelming probability is that the letter of the 15^th August was created to explain the sequence leading up to a letter dealing with registration requirements prior to the 17^th September. It was appreciated that Abbo 1 in isolation would undoubtedly be perceived as a strange enquiry arising out of the blue. This in turn necessitated the creation of the 15^th August letter to add a degree of apparent legitimacy. Equally it was appreciated that it could not refer to earlier leasing negotiations as they had run their course. I am in summary persuaded to the required standard of proof that the 15^th August letter is not genuine either.

I should add that the resolution of the issue is perhaps of less significance than might otherwise appear. On the assumption that I am wrong and both letters were genuine, I have no doubt nonetheless that Mr Saffi was fully aware at the time when he came to give evidence before Evans J that vital correspondence was being suppressed and that the documents brought with him were misleading. In the event, whilst the learned judge was minded to reject the evidence adduced by IAC as regards the absence of inquiries made prior to Resolution 369 about registration of the Kuwaiti aircraft, he was deceived into according little significance to such steps as were taken.

I do not propose to dwell on the knowledge of Mr Al Shaikhly of the events leading up to the 17^th September or his recollection of them when he gave evidence in 1991, since it is sufficient for the purposes of this judgment to consider the position of Mr Saffi and Mr Abbo, the Director General and the newly appointed Assistant Director General (Technical) respectively.

Mr Al Shaikhly was significantly below them in the managerial structure. Furthermore, he was posted to Kuwait as from the 19^th August and was thus less well placed to become acquainted with any activity in regard to the aircraft that had by then all been flown to Iraq. It would also appear that he was not likely to have been directly concerned in preparations for Mr Saffi giving evidence in January 1992.

I accept the submission made by KAC that Mr Abbo must have been fully aware of the plans to make use of the aircraft for domestic flights to Kuwait. Mr Abbo was a very senior figure in IAC with frequent contact with Mr Saffi. The order of the Presidency Secretariat was unquestionably brought to Mr Abbo’s prompt attention – certainly no later than the 12^th August and probably before going to Kuwait on the 9^th August. He was clearly also aware of the steps taken in furtherance of that, particularly registration, insurance and employment of engineers. Indeed he was the author of the key letters on those topics on the 23^rd August, 25^th August and the 6^th September.

As regards registration, he was the author of the contemporary note on the DGCA letter of the 23^rd August. He was also the addressee of the DGCA notification of the registration letters for AOA sent on the 25^th August. As regards insurance, telephone contact between him and the insurance manager on the 25^th August was recorded in the memorandum prepared by the insurance manager that day (in which the proposed usage is described as “trade”). Furthermore I find that his deputy’s letter of the 25^th August requiring action to insure AOA for commercial use could only have been written with his express approval. The announcement dated the 4^th September of the fact that AOA was covered was sent to him personally.

Mr Saffi’s position is a fortiori. He was Director General of IAC. He was in direct contract with the Presidency Secretariat and with the Minister of Transport. He duly gave instructions to his subordinates as regards the preparation of the Kuwaiti aircraft for use on the Baghdad/Kuwait route; such is fully evident from the content of the Na’ama diary. His direct involvement in the process of absorbing the Kuwaiti aircraft within the IAC fleet is demonstrated by the fact that he was the recipient of the Presidency Secretariat order dated the 7^th August and the author of the message to all employees dated the 25^th August, not forgetting the report to the Presidency Secretariat of the 26^th August. Reflecting his hands on approach to the detailed arrangements, he was copied into the correspondence regarding insurance, registration, the preparation of inventories and the engagement of the engineers.

In their evidence before Evans J neither Mr Abbo nor Mr Saffi suggested that the events of August 1990 were difficult to recall, even if they might not have been expecting to deal with some of them. Indeed the scope of their personal involvement with the KAC aircraft in August 1990 renders it wholly improbable that they could have conceivably forgotten about almost every aspect of those remarkable events a year or so later.

To the contrary their evidence was firm and unequivocal to the effect that, save in respect of very basic maintenance, KAC had had no involvement in any activity pertaining to the KAC aircraft prior to the 17^th September. Furthermore, it is clear from my summary of the proceedings before Evans J that the suggestion by these witnesses that they had not been asked about the material matters must be rejected.

Mr Saffi, arriving as he did some two months after Mr Abbo had given oral evidence, was in an unusually good position to correct any misconceptions that might have arisen. He did not do so. Indeed there is a striking entry in the Na’ama diary for the

In any event, my findings as regards forgery imports with it a finding that Mr Abbo and Mr Saffi were only too aware of the Presidency Secretariat order of the 7^th August and the steps taken in response to it at the time of the Evans J trial. I accept that these witnesses in fact got their heads together in order to seek to support the position that IAC’S activities only began after property in the aircraft was transferred to IAC by virtue of Resolution 369. On the legal advice that had been received by IAC, this would enable IAC to avoid exposure to KAC’S claim. There was accordingly a strong motive to distort the evidence in this way.

There was no dispute between the parties as to the relevant legal principles to be applied in an application to set aside a judgment for fraud:-

On my findings so far, it is axiomatic that:-

As regards whether either or both were to be treated as IAC itself, it was common ground that Mr Saffi was the directing mind and will of IAC. If the issue was determinative, I would hold that Mr Abbo also had the status and authority to be treated as the company: R v Andrews-Weatherfoil Ltd [1972] 1 WLR 118 at p.124. At the material time he had been the Director of Quality Control with responsibility for all safety issues, including maintenance scheduling and liaison with the DGCA. By the time he gave evidence in 1991 he had been promoted to Assistant Director General (Technical) reporting direct to Mr Saffi.

I turn now to consider whether the disparity between the perjured evidence and the new evidence entirely changes the nature of the case in regard to sovereign immunity during the relevant period, being that between the arrival of the aircraft in Iraq and Resolution 369. I have already quoted from Lord Goff’s speech in respect of this

Lord Goff summarised the test at page 1160 A as follows:-

“It is apparent from Lord Wilberforce’s statement of principle that the ultimate test of what constitutes an act jure imperii is whether the act in question is of its own character a governmental act, as opposed to an act which any private citizen can perform. It follows that, in the case of acts done by a separate entity, it is not enough that the entity should have acted on the directions of the state, because such an act need not possess the characteristic of a governmental act. To attract immunity under Section 14(2), therefore, what is done by the separate entity must be something which possesses that character”.

In reality, far from IAC confining itself to basic maintenance, IAC was responding to a government instruction to prepare the aircraft for commercial flights to Kuwait. Given the steps taken by way of a response, it is no longer arguable, in my judgment, that they were sufficiently related to the act of seizure to attract immunity. Per contra, IAC was, even during this interim phrase, engaged in the process of absorbing the KAC fleet and, to that end, had commenced changing the aircraft livery, re-registering them, insuring them and employing maintenance personnel. This in my judgment wholly changes the nature of the case. These acts of IAC, albeit on the direction of the Iraqi state, were not acts jure imperii.

Put another way, the basis for denying immunity in respect of the period after the 17^th September applies with equal force to the interim period. Lord Goff summarised the features of the later period as follows at page 1151D:-

“On 17^th September there came into effect RCC Resolution 369 which purported to dissolve KAC and to transfer all its assets to IAC. Until then, although IAC had carried out the basic maintenance referred to above, it had made no use of the KAC aircraft. Thereafter, however, IAC treated the aircraft as its own, incorporating them into its fleet and making such uses of them as it could in the prevailing circumstances, although such use was very

The Hon Mr Justice David Steel Approved Judgement

Kuwait Airways Corporation - v – Iraqi Airways Corp

limited because of the almost complete cessation of international flights to and from Iraq. After RCC Resolution 369 to come into effect, at least one of the KAC aircraft was used for internal flights and at least two of the aircraft were re-painted with IAC livery.”

In reality there was no sea change as a consequence of RCC Resolution 369 coming into effect. It merely purported to give legitimacy to the process of absorption, which was already well under way, as a matter of internal Iraqi law.

I have not forgotten the submission made by IAC that it is inappropriate to treat the KAC aircraft as a fleet but that the question of the immunity must be assessed by reference to the acts undertaken in regard to each individual aircraft. However, I regard that submission as unrealistic. Whilst the process of registration, insuring and re-painting had only progressed so far as some of the aircraft were concerned, the reality is that the process was an on-going one in the context of effecting the absorption of the whole fleet. As Lord Wilberforce put it in Il Congreso del Partido [1983] AC 244 at 268:-

“The conclusion which emerges is that in considering under the ‘restrictive’ theory whether state immunity should be granted or not, the court must consider the whole context in which the claim against the state is made, with a view to deciding whether the relevant acts upon which the claim is based, should in that context, be considered as fairly within an area of activity, trading or commercial, or otherwise of a private law character, in which the state has chosen to engage, or whether the relevant act should be considered as having been done outside that area, and within the sphere of governmental or sovereign activity.”

There remains the final question as to whether the nature of the case is changed in respect of the entire period from the 9^th August to the 17^th September. There was little, if any, argument on this issue. As I see it, IAC had already commenced activity unrelated to the original seizure when Mr Abbo and Mr Saffi flew to Kuwait on the 9^th and 10^th August respectively. As already noted, the thrust of the Presidential Order of the 7^th August was already recorded in the Na’ama diary on the 12^th August. Although the first airbus was not relocated to Baghdad until the 20^th August for painting, I do not regard it as appropriate against this background that KAC should be bound by a finding that accords sovereign immunity to IAC in respect of any activities from the 9^th August onwards.