Kuwait Airways Corp v Iraqi Airways Corp

A judgment obtained by perjury may be set aside where fresh evidence, unavailable with reasonable diligence at the original trial, establishes deliberate false evidence and the disparity is material enough to change the nature of the case. In determining state immunity under section 14(2) of the State Immunity Act 1978, the court must examine whether the relevant act is governmental in character, not merely whether it was performed on state instructions. A separate entity does not obtain immunity simply because it acted at the direction of a state. Commercial preparations to absorb and operate another entity’s aircraft were not transformed into sovereign acts by the state’s direction or by a later decree purporting to transfer ownership.

The claimant sought to reopen the sovereign-immunity determination in earlier proceedings concerning Iraqi Airways’ removal, retention and use of Kuwait Airways aircraft after Iraq’s invasion of Kuwait. The House of Lords had held that immunity applied to the removal and to the relevant pre-17 September 1990 activity, on the factual basis that this activity was limited to basic maintenance. Following the decision reported at [2001] 1 WLR 429, the claimant brought a separate action alleging fraud.

After later disclosure, the claimant alleged that Iraqi Airways’ evidence before Evans J and the appellate courts had been deliberately false. The central issues were whether fresh evidence established perjury, whether the disparity was material, and whether the pre-17 September acts were governmental acts attracting immunity.

1. Fresh evidence and fraud. The claimant satisfied the requirements for setting aside a judgment obtained by fraud. The fresh material could not reasonably have been adduced earlier. The court found that Mr Saffi and Mr Abbo had knowingly given false evidence about Iraqi Airways’ activities between 9 August and 16 September 1990. The evidence was distinctly more probable than not to establish perjury, and the disparity entirely changed the nature of the sovereign-immunity case.
2. Nature of the pre-17 September activity. Iraqi Airways had acted on instructions to prepare the aircraft for commercial internal flights between Baghdad and Kuwait. Before Resolution 369 took effect, it had begun to absorb the fleet by repainting and re-registering aircraft, arranging insurance and employing maintenance personnel. These were not merely acts of basic maintenance connected with the original seizure.
3. State immunity. The relevant test under section 14(2) of the State Immunity Act 1978 was whether the acts were governmental in character, as opposed to acts which a private citizen could perform. Direction by the Iraqi state was insufficient. Applying the whole-context approach in Il Congreso del Partido [1983] AC 244, the activity was commercial or private in character and did not attract immunity.
4. Effect of Resolution 369. The decree did not mark a real change in the nature of the activity. It purported to legitimise under Iraqi law an absorption process already well under way. The relevant conduct was therefore not protected by sovereign immunity from 9 August 1990 onwards. The court also rejected the attempt to assess immunity aircraft by aircraft, since the activity formed part of an ongoing process affecting the fleet as a whole.

The judgment records earlier decisions in the same litigation, including the House of Lords’ sovereign-immunity decision and later decisions on liability, justiciability and recognition of Resolution 369. Those decisions were not the subject of an appeal in this judgment. The present action was brought following the House of Lords’ direction that any challenge based on alleged fraud should proceed by separate claim.