Kuwait Airways Corp v Iraqi Airways Corp

A judgment obtained by deliberate concealment of material documents or knowingly false evidence may be set aside in the affected part. The claimant must show both the fraud and its material effect on the earlier court’s essential findings. Materiality is assessed by asking whether the fresh evidence fundamentally undermines the approach and conclusions of the earlier judgment, not by predicting the result of a retrial. Where a wrongful interference claim turns on a counterfactual burden of proof, fraud which induced the allocation of that burden may entirely change the nature of the case. Contemporary documents may carry greater weight than later witness recollection, particularly where principal witnesses have been discredited.

The claimants challenged findings in earlier aircraft litigation concerning the destruction of four aircraft at Mosul. Those findings had been reached after earlier decisions on sovereign immunity, liability and causation, followed by appellate decisions. The claimants alleged that the defendants had obtained the relevant findings through perjury, forgery and deliberate concealment of documents.

The central issues were whether the earlier findings concerning the aircraft’s incorporation into the defendant’s fleet and the counterfactual location of the aircraft should be set aside, and whether the defendant could establish that the aircraft would have been destroyed at Mosul even without its wrongful interference.

1. The court held that the scope of the proceedings was not confined to setting aside the earlier judgments in their entirety. Findings could be set aside in part where fraud materially affected particular conclusions.

2. The proper sequence was: first, establish deliberate concealment or specific lies; secondly, show how those matters undermined the essential findings; and thirdly, determine the appropriate substitute findings on all the evidence.

3. Materiality required the fresh evidence to have fundamentally changed the way the earlier court approached and decided the relevant issue. The inquiry concerned the impact on the original decision, rather than the result which might follow from an honest retrial. The concealed documents and false evidence materially affected both the incorporation issue and the burden of proof.

4. The court found that IAC had begun absorbing the KAC fleet from 9 August 1990. The process included arranging personnel, movements, painting, registration, insurance and preparations for use. RCC Resolution 369 formalised a process already under way; it did not begin the transfer.

5. IAC had acted in bad faith because it knew that the aircraft belonged to KAC. Under the Iraqi law of usurpation, the burden therefore rested on IAC to establish that the Mosul Four would have been destroyed at Mosul even without its interference.

6. The court placed substantially greater weight on contemporary documents than on later witness statements. IAC failed to establish that the initial dispersal from Basra, the selection of A310 aircraft for the Baghdad–Kuwait route, and the later movements would have occurred in the same way without IAC’s usurpation.

7. The findings of Mance J and Aikens J were accordingly set aside insofar as they concerned the probable positioning of the Mosul Four absent IAC’s usurpation. IAC had not established that any of the Mosul Four would have been situated at Mosul in any event.

The judgment described earlier decisions in the same litigation, but this was a first-instance fraud challenge. The earlier sovereign-immunity and aircraft claims had proceeded through the Court of Appeal and the House of Lords. The present court set aside the affected findings of the earlier first-instance judgments to the extent required by the proved fraud.