Bombardier releases Iraqi aircraft

KAC take the position that by doing so Bombardier has assumed the role of personal debtor to Kuwait Airways (KAC).

KAC on 27th August 2008, obtained orders seizing the interests of IAC and the State of Iraq in the new Bombardier aircraft recently commissioned in a $5bn deal. The orders were made in support of earlier judgments handed down by the English High Court.

The State of Iraq raised the defence of State immunity and on October 1, 2008, Chaput J. allowed Iraq's motion and lifted the seizure against Iraq (but not IAC). KAC has appealed the Chaput J. decision and the effect of the judgement is suspended during appeal. Despite KAC's seizure remaining in full force, Bombardier has now delivered the first aircraft to Iraq/IAC.

By releasing that aircraft, of which, under the terms of the order, it was the guardian, before any final judgment rendered on the seizure, Bombardier has exposed itself to become the personal debtor of KAC for an amount of up to the value of the aircraft delivered to Iraq/IAC.

The dispute between KAC and IAC, which commenced in 1990, has been the longest running commercial case in the history of the English Courts, mainly due to a series of findings of perjury against Iraqi Airways which led to an overthrowing of twelve years of previous decisions. Judgments have been given against IAC on the correct facts, totalling some $1.2bn. A Judgment for $85m of costs was awarded against Iraq.

Christopher Gooding of the London Law Firm of Howard Kennedy has represented Kuwait Airways since the 3rd August 1990, the day after the invasion of Kuwait by Iraq.

Mr Gooding stated:

"Whilst we were surprised by Bombardier's willingness to swap Iraqi liability for its own, we are, from a credit point of view, happy to accept the swap! We have always said that we would be pleased to see IAC build up its assets and, thus, its capability to satisfy the judgments against it. The new aircraft, delivered in IAC new livery, will be arrested in satisfaction of those judgments as soon as it flies to a suitable jurisdiction. The delivered aircraft was only the first in a large order and proceedings against IAC and an appeal against the Iraq decision continue in Canada."