Kuwait Airways Corporation v Iraqi Airways Company (Body Corporate) & Ors

The House considered a petition to vary its earlier order concerning whether acts relating to ten Kuwait Airways aircraft seized during Iraq's 1990 invasion were covered by state immunity. The key legal principles were the distinction between acta jure imperii (sovereign acts attracting state immunity) and acts of a commercial character, and the established rule that a final court decision allegedly obtained by fraud is not re-opened by the court which gave it but must generally be challenged by a fresh action. The House held that the new material and allegations of perjury, though prima facie serious and potentially relevant to whether acts in the relevant period were immune, did not justify the House exercising a power to vary its earlier decision. Authorities such as Flower v Lloyd, Jonesco v Beard and De Lasala v De Lasala require a fresh action or appeal to impeach a final judgment on the ground of fraud. The petition was therefore refused and KAC was directed to raise its allegations, if at all, in separate proceedings.

This case arises from proceedings by Kuwait Airways Corporation seeking delivery up and damages for ten aircraft allegedly seized and appropriated by Iraqi forces in August 1990. The aircraft were removed from Kuwait and ultimately came under the control of Iraqi Airways Company and the Republic of Iraq. The litigation traversed several courts: initial judgments and contested service, questions of state immunity before the Court of Appeal, and an earlier House of Lords decision addressing immunity in part. The House referred certain issues to the Commercial Court, where Mance J and subsequently Aikens J decided issues of justiciability and causation.

Nature of the application: KAC petitioned the House to vary its earlier order so that the appeal ruling on state immunity in respect of Iraqi Airways Company should be allowed insofar as it concerned alleged acts of wrongful interference both in the period from 9 August to 16 September 1990 and thereafter. KAC relied on material revealed at a later trial which it said showed that IAC treated the aircraft as part of its fleet and gave false evidence in earlier proceedings.

Issues framed:

• Whether acts by IAC between 9 August and 17 September 1990 were sovereign acts attracting state immunity or were commercial acts not immune.
• Whether the House could, by petition, vary its prior final order on the basis that it had been obtained by fraud or perjured evidence.
• Whether the new evidence was sufficiently material to justify review by the House rather than by fresh proceedings.

Court’s reasoning: The House accepted that the new evidence and allegations were prima facie serious and potentially material to the immunity question. However, longstanding authority requires that a final judgment alleged to have been obtained by fraud should be impeached by a fresh action or by appeal, not by re-opening the deciding court’s own final order. The House further held that it would be inappropriate and inconvenient for it to conduct the necessary complex and detailed fact-finding into the alleged fraud; the appropriate forum was a fresh action where issues could be fully pleaded and proved. For these reasons the petition to vary the earlier order was refused.

The petition to vary the House's earlier order was refused. The House held that where a final decision is alleged to have been obtained by fraud the proper remedy is by appeal or by bringing a fresh action to impeach the judgment; it was neither appropriate nor convenient for the House to undertake the detailed investigation required. Although the new evidence and allegations were prima facie serious and potentially material to the question of state immunity, KAC must pursue those allegations in separate proceedings rather than by petition to the House.

Proceedings began with KAC claiming delivery up and damages for ten aircraft seized in August 1990. Evans J made interlocutory findings and judgments; the Court of Appeal (3 November 1993) held that the court lacked jurisdiction over IAC on grounds of state immunity and made consequential orders. The House of Lords on 24 July 1995 allowed KAC's appeal in part in relation to IAC (see speech of Lord Goff, [1999] 1 WLR 1147) and referred certain issues to the Commercial Court. Mance J (29 July 1998) found some acts by IAC not protected by state immunity and remitted causation and quantum to trial. Aikens J (5 April 2000) decided causation and remoteness against KAC. KAC petitioned the House on 17 May 2000 seeking variation of the House’s earlier order; the petition was refused by the House (decision given 8 February 2001).