Lawyers for Kuwait Airways are warning that aircraft belonging to a newly acquired Iraqi Airways fleet face being impounded to settle the Kuwaiti carrier's drawn-out $1 billion compensation case against the airline.

Both Boeing and Bombardier have confirmed they are in discussions over Iraqi fleet requirements and the government has signalled plans to acquire over 40 aircraft.

But Kuwait Airways' legal team, which has pursued Iraqi Airways through UK courts since the 1990 Gulf conflict, says it is "taken aback" by the suggestion, and warns that the aircraft could be seized.

Christopher Gooding, partner at UK law firm Howard Kennedy, representing Kuwait Airways, says the airline holds final and binding judgements against Iraqi Airways exceeding $1 billion.

"Iraqi Airways currently flies only to 'friendly' jurisdictions," he says. "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."

Ten aircraft belonging to the carrier - five Airbus A310s, three A300s and two Boeing 767s - were plundered by Iraqi armed forces during the August 1990 invasion of Kuwait. The aircraft were flown to Iraq and put into service by Iraqi Airways.

Bombing of Mosul airport in the subsequent US-led military campaign resulted in both 767s and two A300s being destroyed. The six surviving jets were evacuated to Iran and returned to Kuwait Airways in July-August 1992, after the airline agreed to pay $20 million in sheltering costs.

For the past 17 years the two airlines have engaged in a complex to-and-fro compensation battle over the aircraft and their 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 government.

"It is now clear that substantial funds can be made available within Iraq to support Iraqi Airways," says Gooding, following indications that an agreement covering a new Iraqi fleet 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."

Source: Flight International