New Iraqi fleet risks seizure to pay Kuwait Airways war debts

London
Source: Flightglobal.com
This story is sourced from Flightglobal.com

Lawyers acting for Kuwait Airways are warning that any aircraft that Iraqi Airways acquires face being impounded to settle the drawn-out $1 billion compensation case brought by the Kuwaiti flag-carrier following the Iraqi invasion of 1990.

Iraq’s Government is in discussions with Boeing and Bombardier and has indicated plans to acquire more than 40 aircraft for Iraqi Airways. Both airframers have confirmed they are in talks over fleet requirements.

But Kuwait Airways’ legal team, which has pursued Iraqi Airways through UK courts for years, says it is “taken aback” by the suggestion, and warns that the aircraft could be seized.

UK law firm Howard Kennedy partner Christopher Gooding, representing Kuwait Airways, says: “Kuwait Airways holds judgements against Iraqi Airways in excess of $1 billion. All appeal procedures have been exhausted and these judgements are final and binding.

“Iraqi Airways currently flies only to ‘friendly’ jurisdictions. The moment those destinations are expanded, Iraqi Airways’ aircraft will be arrested and its assets seized in satisfaction of outstanding judgements. There should be no doubt about the determination of my clients in this regard.”

Kuwait Airways’ claim dates back to the Iraqi invasion in August 1990. Ten aircraft belonging to the carrier – five Airbus A310s, three A300s and two Boeing 767s – were plundered by Iraqi armed forces and nine were flown within days to Basra. The tenth jet, undergoing maintenance at the time, was subsequently flown to Baghdad.

Forty-six days after the invasion, on 17 September, the Iraqi Revolutionary Command Council – the country’s highest governing entity – implemented Resolution 369 which dissolved Kuwait Airways and transferred its assets to Iraqi Airways. Kuwait Airways, which valued the aircraft at $630 million, began legal proceedings the following January for their return.

But the US-led military campaign to evict Iraqi forces from Kuwait resulted in four of the aircraft – both 767s and two of the A300s – being destroyed during bombing of Mosul Airport in northern Iraq. The other six jets were evacuated to Iran for storage and returned to Kuwait Airways in July-August 1992, after the airline agreed to pay $20 million in sheltering and maintenance costs.

For the past 17 years Kuwait Airways and Iraqi Airways have been engaged in a complex to-and-fro court battle over costs associated with the lost aircraft, the aircraft flown to Iran, and stocks of spares, which has reached the highest judicial levels in the UK.

The legal wrangling has centred on such issues as whether Iraqi Airways was acting with sovereign immunity when it put the commandeered aircraft into commercial operation, and whether Kuwait Airways validly served writs against the Iraqi carrier and the Iraqi Government. Proceedings have been drawn out by rulings of perjury against Iraqi Airways.

Kuwait Airways has obtained a number of judgements in its favour and its lawyers believe that Iraqi Airways’ ordering a new fleet of aircraft will demonstrate that the carrier has the financial reserves to meet its legal obligations.

“It is now clear that substantial funds can be made available within Iraq to support Iraqi Airways,” says Gooding, following the indications that a fleet agreement could be worth $6 billion.

“Kuwait Airways welcomes and will support a new, independent Iraqi Airways. However, Iraqi Airways must recognise its debts and clear the decks before embarking on the road to a new future. If it does not, the past will haunt it.”

While there are few details about the Iraqi Airways fleet-acquisition plan, Boeing says: “We are engaged with the Government of Iraq and airline officials to assist them with their fleet-renewal plans. We’re pleased they have announced their intent to purchase Boeing aircraft and we look forward to finalising our commercial negotiations.”

Bombardier has similarly acknowledged that it is “in discussions” with Iraqi Airways. The carrier also has an outstanding order for five Airbus A310s on the European airframer’s backlog, an agreement which has never formally been cancelled.


Source: flightglobal.com's sister premium news site Air Transport Intelligence news

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