Kuwait Airways Corpn v Iraqi Airways Co (No 2)

A final judgment alleged to have been obtained by fraud should ordinarily be challenged by an appeal or a fresh action to set it aside. The fraud must be particularised exactly and established by strict proof.

Even if the court possesses an exceptional power to reopen its own final decision, it may refuse to exercise that power where resolving the allegation requires a detailed factual inquiry. A fresh action is the appropriate procedure where the court would need to examine extensive evidence, contested knowledge, waiver and the conduct of witnesses.

Kuwait Airways Corporation petitioned the House of Lords to vary its order of 24 July 1995, reported at [1999] 1 WLR 1147. That order had preserved Iraqi Airways Company's immunity for acts concerning aircraft between their removal to Iraq and the commencement of an Iraqi resolution purporting to transfer Kuwait Airways Corporation's assets.

The petition alleged that the earlier decision had been obtained through false and perjured evidence. Documents and testimony subsequently produced were said to show that Iraqi Airways Company had repainted aircraft and prepared them for commercial use during the relevant period, rather than merely performing basic maintenance.

The central issue was whether the House should reopen and vary its final order on the basis of the alleged fraud, or require the allegation to be pursued by a fresh action.

1. Petition refused unanimously. Lord Slynn of Hadley delivered the leading speech. Lord Goff of Chieveley, Lord Jauncey of Tullichettle and Lord Nicholls of Birkenhead agreed with his reasons.

2. Per Lord Slynn, the new allegations were prima facie relevant, serious and substantial. If established, evidence that aircraft had been repainted and prepared for commercial use before the Iraqi resolution took effect could affect whether the relevant conduct was sufficiently connected with Iraq's sovereign seizure to attract state immunity. Kuwait Airways Corporation was therefore entitled to raise the allegations, but not by the petition presented to the House.

3. Per Lord Slynn, established authority required a challenge to a completed judgment alleged to have been obtained by fraud to be made by a fresh action. Flower v Lloyd (1877) 6 Ch D 297 established that an appeal could not be reheard for fraudulent concealment of evidence and that the remedy lay in an original action. Cole v Langford [1898] 2 QB 36 confirmed jurisdiction to set aside a judgment for fraud in a subsequent action. Jonesco v Beard [1930] AC 298 stated the settled practice that fraud must be particularised exactly and proved to the strict standard appropriate to such an allegation. A motion for a new trial might be available in special cases, subject to the same standard of proof. De Lasala v De Lasala [1980] AC 546 confirmed that a final judgment may be challenged by appeal to a higher court or by a fresh action to set it aside.

4. Per Lord Slynn, even assuming that the House possessed a discretion to review its earlier decision, this was not a suitable or convenient case for its exercise. Determination of the allegations required examination of complex written and oral evidence, when the new matters became known, and whether any right to object had been waived. Such a detailed and potentially lengthy inquiry should not be undertaken by the appellate committee or referred to some of its members for investigation. The appropriate course was a separate action, if Kuwait Airways Corporation chose to pursue one.

1. House of Lords: The present petition to vary the House's final order was refused unanimously.
2. House of Lords: By its order of 24 July 1995, reported at [1999] 1 WLR 1147, the House held unanimously that the seizure and transfer of the aircraft between 2 and 9 August 1990 were sovereign acts. By a majority it held that Iraqi Airways Company could not claim sovereign authority for its conduct after the Iraqi resolution took effect. The remaining justiciability question was remitted to the Commercial Court.
3. Court of Appeal: By an order of 3 November 1993, the court held that the English courts lacked jurisdiction over the claim against Iraqi Airways Company on grounds of state immunity. It also set aside permission and service relating to Iraq and dismissed the action against both defendants.
4. High Court: Evans J dismissed Iraqi Airways Company's application challenging service, justiciability and jurisdiction. He set aside the judgment against Iraq because the writ had not been validly served.