Kuwait Airways Corporation v Iraqi Airways Company

The fraud exception applies to litigation privilege as well as legal advice privilege. Communications and documents created to further a criminal or fraudulent purpose fall outside legal professional privilege, even where litigation has begun and the solicitor acts innocently.

Where the alleged fraud is itself an issue in the proceedings, disclosure ordinarily requires a strong, or very strong, prima facie case. A lesser prima facie case may suffice where the fraud is not an issue in the action. Ordinary false instructions about a disputed issue do not alone remove privilege. A freestanding conspiracy to deceive the court may do so.

Iraqi Airways Company appealed against David Steel J's order requiring inspection of documents for which it claimed litigation privilege. Kuwait Airways Corporation alleged that the documents had been generated in furtherance of forgery, perjury and a conspiracy to deceive the courts in earlier aircraft litigation.

A previous unappealed judgment had established that important witnesses for Iraqi Airways had given perjured evidence and relied on forged documents to obtain state immunity. The present action sought to revisit the causation finding concerning four aircraft destroyed at Mosul.

The central issue was whether the fraud exception to legal professional privilege applies to litigation privilege and, if so, whether the established fraud justified inspection.

1. Appeal dismissed. The fraud exception applies to litigation privilege as fully as it applies to legal advice privilege. It would be illogical for communications furthering a criminal purpose to fall outside privilege before litigation was contemplated but acquire protection when litigation began. Documents created to further the fraud never attract privilege, so the maxim that documents once privileged remain privileged does not arise.

2. False instructions given about an issue in ordinary civil or criminal proceedings do not, without more, remove privilege merely because acting on them might result in perjury. A freestanding criminal conspiracy, including one formed after proceedings begin, falls outside legitimate professional business. The solicitor's innocence does not confer privilege upon communications made to further the client's criminal purpose.

3. Courts must exercise caution before ordering disclosure. Where fraud is itself an issue in the action, there must ordinarily be a strong, and preferably very strong, prima facie case. Where fraud is not an issue in the action, an ordinary prima facie case may suffice. Evidence which is freestanding and independent makes the question easier to determine, but independence from the issues for trial is not a legal precondition.

4. The earlier fraud had already been established by a final judgment. It comprised forged documents, perjury and a widespread conspiracy which successfully deceived the courts. The case therefore went far beyond conflicting accounts or ordinary false instructions. No further caution about the standard of proof was required.

5. No privilege attached to communications between Iraqi Airways and its former English solicitors concerning the tactics and evidence in the main aircraft proceedings or the first perjury action. The fraud continued during the latter action in an attempt to prevent the original wrongdoing from being uncovered. David Steel J's inspection order was upheld.

1. Court of Appeal (Civil Division): The court dismissed Iraqi Airways Company's appeal and upheld the inspection order: [2005] EWCA Civ 286.
2. High Court, Queen's Bench Division (Commercial Court): David Steel J ordered Iraqi Airways Company to permit inspection of disclosed documents over which litigation privilege had been claimed. The judgment was dated 16 February 2005; no citation is stated.