Kuwait Airways Corp v Iraqi Airways Corp [2003] EWHC 31 (Comm)

Case No 2000 Folio No. 1137

[2003] EWHC 31 (Comm)

IN THE HIGH COURT OF JUSTICE

QUEENS BENCH DIVISION

COMMERCIAL COURT

Venue Royal Courts of Justice, Strand, London, WC2A 2LL

Date Date: 24th January 2003

Before

THE HONOURABLE MR JUSTICE DAVID STEEL

Between

KUWAIT AIRWAYS CORPORATIONClaimants

IRAQI AIRWAYS CORPORATIONDefendants

-Christopher Greenwood QC, Joe Smouha and Samuel Wordsworth (instructed by Howard Kennedy) for Claimant

David Donaldson QC and Stephen Nathan QC (instructed by Landau & Scanlan) for Defendant

Approved Judgment

I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.

.............................

[1]In Action 1991 Folio No 69, the claimants (“KAC”) sought damages from the defendants (“IAC”) amounting to something over $800 million for losses allegedly sustained as a result of the wrongful interference by IAC with ten KAC aircraft by reason of their removal from Kuwait International Airport in August 1990 and their subsequent retention.

[2]A preliminary issue arose as to whether IAC was entitled to sovereign immunity by virtue of section 14(2) of the State Immunity Act 1978. This issue reached the House of Lords in January 1995. Their Lordships concluded that IAC was entitled to immunity in respect of its acts in taking and removing the aircraft from Kuwait, but (by a majority) that IAC was not covered by state immunity in respect of the retention and/or use of the aircraft after Resolution 369 of the Revolutionary Command Council of Iraq (which purported to dissolve KAC and transfer all its assets to IAC) came into effect on the 17th September 1990.

[3]In May 2000, KAC petitioned the House of Lords for a variation of their earlier order so as to deprive IAC of the benefit of sovereign immunity in respect of the period between the 9th August 1990 (when most of the aircraft had been flown into Iraq proper from Kuwait) and the 17th September. The basis of the petition was that, in the light of documentary material produced in the action since 1995, it was clear that the factual basis for the decision of the House of Lords depended upon false and perjured evidence deployed by IAC.

[4]In particular, KAC contended that IAC’s earlier evidence that the acts done in the period from the 9th August to the 17th September 1990 were limited to basic maintenance, and thus were of no significance, was false and had been given with the intention of deceiving the court. It was said that the new material established that elaborate steps had been taken during that period, on the instructions of the highest levels of the government, to transfer the aircraft to IAC so that they could be absorbed as part of IAC’s fleet. This was evidenced, it was submitted, by the measures taken by IAC, as revealed by the newly disclosed material, to paint, insure and register the aircraft, as well as engage engineering staff, all with a view to their commercial use on the Baghdad-Kuwait route by early September.

[5]Their Lordships concluded (

[2001] 1 WLR 429

) that, whilst the issues raised in the petition were “prima facie relevant, serious and substantial”, it was not appropriate The Hon Mr Justice David Steel Approved Judgement Kuwait Airways Corporation - v – Iraqi Airways Corp for them to be pursued in that manner but that they should be raised by a separate claim alleging fraud. The present action (2000 Folio 1137) is the outcome.

The procedural history

[6]On the 2nd August 1990, Iraq invaded Kuwait. The occupation was complete on the 5th August. On the 8th/9th August, the Revolutionary Command Council of Iraq, under the Chairmanship of President Saddam Hussain, passed Resolution 313 proclaiming the sovereignty of Iraq over Kuwait and its annexation into Iraq. Resolution 312, made the same date, provided :- “Following the complete integration unity between Iraq and Kuwait on 8.8.1990 the Revolutionary Command Council declares the acceptance by Iraq of all the financial and economic obligations of Kuwait vis a vis all countries, public and private institutions and foreign companies, regardless of whether such obligations are correctly owed to Kuwait or by it, provided that they are not contrary to the sovereignty of Iraq…..”

[7]At the time of the invasion, there were ten civil aircraft belonging to KAC standing at Kuwait International Airport. These ten aircraft consisted of eight Airbuses (5 type A310 – 200 and 3 type A300 – 600) and two Boeing 767’s. On the 6th August 1990, the Iraqi Minister of Transport and Communications, Mr Mohammed Hamza Al-Zubaidi (“Mr Al-Zubaidi”), instructed Mr Nor Aldin Saffi (“Mr Saffi”), the Director General and Chairman of the Board of the IAC, that he should arrange to fly these ten aircraft to Iraq for “safe keeping”.

[8]Pursuant to that order, all but one of the aircraft were flown to Basra. Airbus AHI (which was in Egypt air livery) was under repair and did not leave Kuwait until the 22nd August when it was flown direct to Baghdad. By the 17th August some of the nine aircraft that had already been flown to Basra were redeployed to Mosul and Tekrit. By the end of August, following further movements, all 10 were deployed at three bases, namely Baghdad, Basra and Mosul. By November, four of the aircraft (two Airbuses and two Boeings) were at Mosul, still in their KAC livery. The remaining six were by then all at Baghdad: the extent to which any of them had been repainted by mid-September was a matter of great controversy. The Hon Mr Justice David Steel Approved Judgement Kuwait Airways Corporation - v – Iraqi Airways Corp

[9]In the meantime, the Revolutionary Command Council had passed Resolution 369. It was passed on the 9th September and came into force on the 17th September. It provided as follows:- “Kuwaiti Airways Corporation is hereby dissolved and all of its moveable and immoveable assets, rights and obligations are transferred to Iraqi Airways Company which shall in accordance with domestic and international law requirements duly register such assets.”

[10]Military action by coalition forces began on the 17th January 1991. By this time the writ in action 1991 Folio 69 had already been issued. IAC was the first defendant and the Republic of Iraq was the second defendant. Endorsed on it was a commendably succinct Points of Claim, the thrust of which was contained in the particulars to the allegation of interference:- “(a) On the 2nd August 1990 the second defendants invaded Kuwait, took control of the airport and deprived the plaintiffs of possession and control of inter alia the aircraft particularised above. (b) Between the 2nd and the 9th August the aircraft were removed from the airport. (c) On a date or dates between the 9th August and 17th September the second defendants unlawfully transferred possession and control of the aircraft to the first defendants. The stated intention of the defendants was to incorporate the aircraft within the first defendant’s fleet and to use them for commercial purposes. (d) The first and second defendants have continued wrongfully to interfere with the aircraft by their unlawful possession and control of the aircraft and refusal and/or failure to deliver up the aircraft to the plaintiffs.”

[11]The writ was served that same day on IAC’s offices in Lower Regent Street pursuant to section 695 (2) of the Companies Act 1985. The legitimacy of this service was challenged but in due course it was held to be valid. Accordingly, I need say no more about it, save that it is to be noted that IAC became aware of the proceedings on receipt of a letter from their London office enclosing the writ on the 13th January 1991.

[12]As the war progressed, the four aircraft at Mosul were destroyed or damaged beyond repair. The remaining six were flown from Baghdad to Iran, the last arriving on the 4th February. By this time, at least, all these had been repainted to a material extent in IAC’s livery. The Hon Mr Justice David Steel Approved Judgement Kuwait Airways Corporation - v – Iraqi Airways Corp

[13]In November 1991, Evans J began the hearing of a number of applications made by IAC in relation to the claim. The material one raised the issue of sovereign immunity. It is necessary to consider the progress of this application in some detail in order to focus on the significance of the evidence adduced by each side.

[14]It was the thrust of IAC’s case that, following their initial involvement in supplying pilots on the order of the Minister to fly aircraft from Kuwait airport to Basra in the immediate aftermath of the occupation, it was only after obtaining title to the aircraft under Iraqi law with effect from the 17th September that IAC had any further significant involvement with the aircraft. The factual basis for this proposition was supplied by two affidavits of Mr Saffi.

[15]KAC, however, had served two affidavits from members of their engineering staff. Their evidence was to the effect that, in mid August 1990, representatives of IAC had made a determined effort to recruit KAC engineers for maintenance work on the KAC airbuses. They also gave evidence to the effect that some of the KAC aircraft had been seen to have been repainted in IAC livery before the 17th September and further that KAC ground equipment and spares had been observed being loaded onto an IAC freighter at Kuwait and/or already situated at Baghdad before that date.

[16]The recruiting efforts were said to have been undertaken by three particular individuals, Mr Saffi, the Director-General, assisted by Mr Amer Al Shaikhly (“Mr Al Shaikhly”), the Line maintenance Manager, and Mr Sabah Abbo (“Mr Abbo”), the then Director of Quality Control.

[17]IAC responded to the statements made by the Kuwaiti engineers by tendering two additional affidavits dated the 20th November made by Mr Al Shaikhly and Mr Abbo. On the 21st November IAC applied for an order for cross examination of KAC’s witnesses. Meanwhile, the hearing continued. It terminated on the 3rd December being the seventh day of the hearing. At this stage, having regard to the observations of Kerr LJ in J H Rayner v Dept of Trade and Industry

[1989] 1 Ch. 72

at p.194 that the issue of sovereign immunity should be decided as a preliminary issue and not on the basis of good arguable case, Evans J ordered that all 5 deponents should attend for cross examination.

[18]The KAC witnesses were cross examined on the 10th December and Mr Abbo and Mr Al Shaikhly on the 11th December. There was then a gap until the 29th January 1991 when Mr Saffi, who had been unwell, attended for cross examination. During the course of his cross examination some additional documents were adduced by IAC, a The Hon Mr Justice David Steel Approved Judgement Kuwait Airways Corporation - v – Iraqi Airways Corp matter to which I will have to revert. There then ensued final submissions on the 30th January.

[19]KAC’s case on the facts for the period leading up to the 17 September was based on the evidence of the engineers and was summarised in the KAC skeleton argument as follows:- “The evidence is consistent with the conclusion that at all material times the aircraft were in the possession and control of IAC and that both Iraq and IAC acted together throughout on the footing that that was so. To that end the aircraft had been flown to civilian airports, steps were immediately taken to recruit staff, the log books were kept in safe keeping, steps were made to prepare for the registration of the aircraft in Iraq and in due course for the obtaining of the airworthiness certificates. The decree which came which came into force on September 17 merely purported to formalise or legitimise what was happening already.”

[20]This reflected KAC’s pleaded case (which, in essence, has remained KAC’s case throughout). But IAC challenged the evidence of the Kuwaiti engineers. If and in so far as efforts had been made to contact and engage engineers that was all with a view, it was contended, to their recruitment if and when the KAC aircraft were transferred to IAC. Further, it was argued, it was not made out that any steps had been taken to repaint the aircraft in IAC livery or to register them as IAC aircraft prior to the 17th September.

[21]Evans J recorded in his judgment that the oral evidence had put some aspects of the case in a “fresh light” such that his conclusions were dependent “primarily on the oral evidence”. He expressly put out of account the documentation that had been disclosed relating to what he regarded as preliminary enquiries, made in late August, for the registration of the KAC aircraft “not regarded as urgent in the conditions prevailing during August and September”. He concluded that “a clear general picture emerged”. So far as directly material that picture was:- i) Mr Saffi was instructed to “maintain” or “look after” the KAC aircraft that had been brought to Iraq. ii) The kind of basic maintenance required was limited to checking the tyre pressures, moving each aircraft so that its tyres did not become distorted, checking for oil and fuel leaks and removing and replacing engine cowlings and such like from time to time The Hon Mr Justice David Steel Approved Judgement Kuwait Airways Corporation - v – Iraqi Airways Corp iii) It was doubtful whether this work required specialist qualifications but unsuccessful attempts were made to recruit airbus qualified engineers, including one of the witnesses called by KAC. iv) Two of the aircraft were repainted in IAC livery but only after the decree came into effect.

[22]The judge went on to describe the essential issue on sovereign immunity in this way at p.12:- “The underlying issue is whether IAC, under Mr Saffi’s direction, was keeping the aircraft and recruiting these ex KAC personnel with a view to operating the aircraft as part of its fleet at some future date, or whether it was doing so at the behest of the Iraqi government so that the aircraft would be available to the government for some other kind of operation at some future date.”

[23]Having posed the issue in that form he concluded at p.14:- “The evidence is compelling, in my judgment, that when the occupation of Kuwait was regarded as complete, the Iraqi government arranged for the removal by the Iraqi air force of the 5 KAC aircraft which it required for other and possibly non-commercial uses, and it directed IAC to take possession of the 10 KAC aircraft which were to be used for commercial purposes, and to look after them until such time as commercial operations could resume. This was the object of the “safe keeping” which Mr Saffi was instructed to achieve. The decision to recruit key specialist personnel for an airbus fleet and the steps taken to implement this decision from mid-August onwards confirm that IAC was engaged, on the Minister’s instructions, in the preliminary stages of establishing an airbus operation and to this extent was anticipating the transfer of ownership of the aircraft which became effective, so it was believed, on September the 17th.”

[24]In those circumstances, the learned judge concluded that IAC was not entitled to sovereign immunity.

[25]In the Court of Appeal (reported at [1995] 1 Lloyds Rep.25), IAC successfully obtained an order reversing the decision of Evans J on the claim to immunity. However, it is to be noted the court did not disturb any of the findings of fact. The essence of the criticism directed at the judge’s conclusions was the apparent reliance The Hon Mr Justice David Steel Approved Judgement Kuwait Airways Corporation - v – Iraqi Airways Corp on the purpose or motive of the IAC when, as stated by Nourse LJ, “it is the nature of the act and not its purpose that is decisive”. Nourse LJ went on at p.29:- “Here, I repeat, the aircraft was subjected to a forcible confiscation which could only have been carried out by or at the behest of a sovereign state in exercise of its sovereign authority. The intention to use them for commercial purposes, as and when practicable, and to keep them safe meanwhile could not and did not transform the essential nature of that act.”

[26]KAC had developed a new argument in the Court of Appeal to the effect that, following the implementation of Resolution 369, the acts of IAC were simply acts in consequence of the vesting of title, not the exercise of sovereign authority. The Court of Appeal rejected that submission. Simon Brown LJ expressed himself as follows at p.37:- “The answer is, I believe, this: that on the particular facts of this case, it is unreal and impermissible to seek to separate out IAC’s eventual use of the disputed aircraft pursuant to the State’s decree from the circumstances of their initial acquisition. The reality is, as already indicated, that IAC was intimately involved throughout the entire expropriatory process: the planes were spoils of war and IAC was party to their taking.”

[27]As already observed, the matter went on further appeal to the House of Lords:

[1995] 1 WLR 1147

. The facts as found by Evans J were by now encapsulated in an agreed statement of facts. However, annexed to that statement was a list of findings of fact by the judge which had been challenged by IAC’s notice of appeal in the Court of Appeal but which that court had not found it necessary to consider. It is notable that, in particular, the following findings were said to be wrong:- “(ii) That the enquiries made by IAC during August 1990 with regard to the procedures for registering aircraft of foreign registration were in the nature of preliminary enquiries regarding the KAC aircraft. (v) That the decision to recruit key specialist maintenance personnel for an airbus fleet and the steps taken to implement this decision from mid August 1990 confirmed that IAC was engaged, on the Minister’s instructions, in the preliminary stages of establishing an airbus operation and to this extent IAC was anticipating the transfer of ownership of the aircraft which became effective, so it was believed, on the 17th September 1990.” The Hon Mr Justice David Steel Approved Judgement Kuwait Airways Corporation - v – Iraqi Airways Corp

[28]As regards the period after Resolution 369 came into effect, the majority in the House of Lords concluded that it could not be said that IAC’s retention and use of the aircraft as its own constituted acts done in the exercise of sovereign authority: per Lord Goff at p.1163 C – D. Lord Goff ’s speech then goes on at p. 1164 A as follows:- “There remains the question (which may well be of no relevance) whether the acts performed by IAC in looking after the aircraft between the date of their arrival in Iraq and the coming into effect of RCC Resolution 369, involving no more than basic maintenance of the aircraft, constituted acts done by IAC in the exercise of sovereign immunity (sic). On the assumption that these acts constituted acts of conversion and as such are of relevance in these proceedings, I would hold that, like the acts of IAC in flying the aircraft out of Kuwait, these acts were still sufficiently related to the act of seizure of the aircrfaft by Iraq to amount to acts jure imperii and so would attract immunity under section 14 (2).”

[29]It is this passage which is the focal point of this action for it is KAC’s case that the factual basis for the conclusion is wholly misfounded. In the light of the evidence now available, the inaccuracy, or at least lack of completeness, in the findings of fact is to a large extent common ground. The primary issue for my determination is the extent of the error and whether that error was deliberately induced by IAC.

The Liability Trials

[30]The issues of liability and quantum were subjected to split trials. Questions related to title, justiciability and recognition of foreign law, together with the matter of conversion “on the facts” were determined by Mance J : [1999] CLC 31. He also made findings on the required nature of the causal link and the burden of proof under Iraqi law. The issues of causation and remoteness under English law were left over to a stage two trial before Aikens J: [2002] 2 All E.R.(Comm) 360.

[31]Before going onto the subsequent history, it is necessary to say a little more about the issue of justiciability. As clearly foreshadowed in Mr Saffi’s affidavits, it was IAC’s case that, whether or not it was not entitled to sovereign immunity, the issues arising from the acts of which KAC complained were not justiciable in the English courts by reason of the doctrine of act of state. The factual basis for this plea, as already indicated, was that the effect of Resolution 369 was to pass legal title to IAC and that all IAC’s activity with regard to the fleet of aircraft was post the date when the Resolution came into force. It was IAC’s argument that the doctrine of act of state The Hon Mr Justice David Steel Approved Judgement Kuwait Airways Corporation - v – Iraqi Airways Corp required recognition of that Resolution and that, accordingly, IAC’s conduct could not be treated as constituting wrongful interference.

[32]This issue was canvassed in the House of Lords but their Lordships concluded that the state of the pleadings necessitated the matter being remitted to the Commercial Court. Mance J concluded, however, that Resolution 369 was in breach of clearly established principles of international law: “Having removed KAC’s aircraft from Kuwait by force of arms and in breach of international law, Iraq cannot claim the protection of any principle of international law which might allow a state in some circumstances to expropriate property, even though belonging to the nationals of other states, which happen to be within its jurisdiction”: see Mance LJ at p 73.

[33]The Court of Appeal (

[2001] 3 WLR 1117

) agreed with that conclusion putting the matter this way at p.1219:- “We agree with Mance J that Resolution 369 is in breach of clearly established principles of international law. It merely sought to put on a formal and convenient basis (so far as Iraqi law and administration were concerned) what had always been the position, namely that the KAC fleet had been taken by force following the invasion of Kuwait, as part of and pursuant to Iraq’s policy of annexation and plunder, and had been put de facto into the operational hands of IAC.”

[34]It followed that, as a matter of English public policy, the Resolution should be denied recognition. Mance J so found and this conclusion was approved by the Court of Appeal at p.1220:- “To put the matter the other way round, if this court were to recognise Resolution 369, it would be recognised of exorbitant dealing with property stolen out of a sovereign and independent state, in breach…… of the obligations imposed on this nation by the UN Resolutions….”

[35]These findings were in turn approved when the appeals from Mance J and Aikens J reached the House of Lords: [2002] UK HL 19. Their Lordships also reiterated that public policy considerations were equally fatal to any submission under the double actionability rule that, in applying the second rule, it was appropriate to consider whether an Iraqi court would have recognised the Resolution as a bar to a claim for usurpation. The Hon Mr Justice David Steel Approved Judgement Kuwait Airways Corporation - v – Iraqi Airways Corp

The present action

[36]The origins of the present action are to be found in the preparations for the trials before Mance J and Aikens J. Indeed Aikens J was told that KAC was contemplating seeking to set aside the decision of the House of Lords at least in part: see para 94 of his judgment. The materials that provoked this proposal were contained in some of the following documents:- i) Various witness statements were prepared by IAC for the purposes of the trial before Mance J, albeit their content was more pertinent to the issues that were to arise at stage two. These included one from Mr Saffi dated 14th June 1997 and two each from Mr Samir Kadhim Sadek Nekash (“Mr Nekash”), the Director of Technical Planning, and from Mr Mouad Al Hakim (“Mr Al Hakim”), Director of Technical Contracts dated 14th June 1997 and the 15th December 1997 respectively, together with a statement from Mr Al-Zubaidi dated 15th June 1997. (It should be noted that none of these persons gave oral evidence at the trial before Mance J). ii) As regards the second trial before Aikens J, Mr Nekash prepared a number of additional statements. Of particular note is his statement dated 12th October 1999 which disclosed a copy of Mr Nuaman Na’ama’s diary for the relevant period. Mr Na’ama was the Director of Engineering. (Mr Nekash, but none of the other witnesses named above, gave oral evidence at the second stage trial). iii) Many of the documents dated prior to the 17th September which are to be found in bundle D were disclosed for the first time in the period between July 1995 (when the House of Lords handed down its judgment) and October 2000 (when the claim form in the present action was issued).

[37]As explained in the judgment of the Court of Appeal, this material created a difficulty. By reason of the decision of the House of Lords, the period prior to the 17th September was one in which any activity on the part of IAC in relation to the aircraft was protected by state immunity. Thus any such activities were only of marginal relevance in the context of the issues that remained to be determined. But the new material referred to above appeared to reveal that IAC’s activity prior to the 17th September was much more extensive than had been found by Evans J and summarised in the agreed statement of facts lodged on the appeal to the House of Lords. In the result KAC lodged their petition to rescind the decision in the House of Lords shortly before the hearing of the Court of Appeal and the response of the House The Hon Mr Justice David Steel Approved Judgement Kuwait Airways Corporation - v – Iraqi Airways Corp of Lords, to the effect that any challenge should be by way of separate action, was handed down shortly after the completion of that hearing.

The disparity between the true position and the evidence presented to Evans J

[38]The evidence of IAC as presented before Evans J in 1991 was to the effect that it had not been involved with KAC aircraft after their arrival in Iraq proper other than in terms of very limited and basic maintenance pursuant to instructions from the Minister of Communications and Transport. This evidence was accurately summarised by Lord Goff in the House of Lords at p. 1161 :- “Of these events, the basic maintenance carried out after the aircraft had been removed from Kuwait airport seems to be of little or no significance. The essential things done which constitute the gravamen of the proceedings against IAC are i. the removal of the aircraft from Kuwait airport to Iraq, and ii. the treatment of the aircraft by IAC as part of its fleet after the coming into force of the RCC Resolution 369.”

[39]By the end of the hearing before me, it was accepted even by IAC that some steps had been taken prior to Resolution 369, in regard to at least two or three of the aircraft, to register them, insure them and paint them, all in furtherance of a Presidential instruction to prepare them for operation on the Baghdad to Kuwait route. Nonetheless a substantial gulf remains as to what actually happened in August and early September 1990 and what IAC concedes.

The evidence available in 1991/1992

[40]In order to embark on the task of determining the nature and scale of any disparities between the evidence adduced before Evans J and that adduced in this action, it is necessary to focus on those parts of the earlier evidence which KAC alleges were untrue.

[41]Evans J expressly placed considerable emphasis on the oral evidence and it is thus convenient to consider each of the witnesses in turn. But on any view, I agree with the claimants that the general theme of their evidence can be fairly summarised as follows:- a) Apart from basic maintenance, IAC was not involved in any activity in relation to the aircraft until September 17th: in particular no steps were taken to register, insure or paint the aircraft. The Hon Mr Justice David Steel Approved Judgement Kuwait Airways Corporation - v – Iraqi Airways Corp b) No government instructions were given in that regard save for the requirement of basic maintenance nor was IAC aware of government intentions with regard to the use of the aircraft until RCC 369 was promulgated.

[42]The starting point is the two affidavits made by Mr Saffi in 1991. The first affidavit, made in July, sets out IAC’s stall in regard to the company’s status and its entitlement to immunity as “a separate entity” under the 1978 Act. It also prays in aid the doctrine of act of state in regard to the transfer of title to IAC pursuant to Resolution 369. As regards the factual events post invasion, he simply stated: - “16(i) On the 6th August 1990, the Iraqi Minister of Transport and Communications gave me oral instructions in Baghdad as Director-General of IAC that IAC should instruct its pilots to remove certain aircraft, including the 10 aircraft in question in this action, from Kuwait to various airports in Iraq…… for safe keeping. In compliance with that government instruction I gave such instructions to IAC pilots and during the following days the aircraft were removed to those airports in Iraq and handed over to the Ministry of Transport and Communications…..

(ii) All the aircraft then remained at those airports in Iraq in possession and custody of the Iraqi Ministry of Transport and Communications until the implementation of RCC Resolution 369 on the 17th September 1990. I have been advised by IAC’s Iraqi legal experts that it was at that date that the aircraft came into the ownership of IAC for the time being; and the aircraft were only handed over by the Ministry of Transport and Communications to IAC at that time.” No other instruction by the Minister is referred to in the affidavit save the order given in January 1991 to arrange for some of the aircraft to be flown to Iran.

[43]This picture was reinforced in Mr Saffi’s second affidavit made in October. He repeated the nature of the oral instruction from the Minister. As regards events after arrival of the aircraft in Iraq, he said this: - “5. Upon arrival at the Iraqi airports of final destination, the IAC aircrews parked the aircrafts and simply left them at the stands to which they had been directed by the Airforce controllers. ……….. Thereafter, until after Resolution 369 of the 9th September 1990 came The Hon Mr Justice David Steel Approved Judgement Kuwait Airways Corporation - v – Iraqi Airways Corp into effect, IAC ground crews had nothing to do with the aircraft; indeed no-one from IAC was involved in any activity concerning these aircraft.”

[44]Mr Saffi went on to deal with the question of registration and insurance. As regards registration, he said that applications for the certificates of airworthiness were made on the 29th September which were duly granted on the 2nd October. The relevant section of the affidavit reads: 9. Following RCC Resolution 369 of the 9th September 1990, the Kuwaiti aircraft became the property of IAC under Iraqi law as from the 17th September 1990. As a result, IAC was then charged with having to do something about the aircraft. The first thing, therefore, which IAC did was to make the aircraft acceptable for registration by the Iraqi Civil Aviation Authority.

[45]In apparent support of this statement Mr Saffi exhibited three documents. Since they played a significant part in the cross-examination of the three witnesses before Evans J, it is desirable I should identify them :- i. An application by IAC for a certificate of airworthiness for Airbus A310 serial No 318 (i.e. AOA formerly AHD) signed by Mr Abbo and dated 27th September 1990. ii. Certificates of airworthiness and registration for the same aircraft dated the 2nd October 1990. iii. A letter from the Civil Aviation Registration section of the Ministry (the “DGCA”) to IAC dated 23rd October prescribing the Iraq registration letters to be allocated to all of the fleet (except AHA, AHB and AHC). The letter concluded : “You are requested to complete the requirements referred to in our letter…….. dated 23/8/1990.”(This letter, however, was not produced.)

[46]As regards insurance, Mr Saffi’s affidavit went on :- “Also, once the aircraft became the property of IAC under Iraqi law (and not before then) IAC informed its Iraqi insurers that these aircraft had become the responsibility and property of IAC under Iraqi law.” The Hon Mr Justice David Steel Approved Judgement Kuwait Airways Corporation - v – Iraqi Airways Corp

[47]Mr Al Shaikhly also made two affidavits. The first, dated 20th November 1991 was primarily directed to challenging the evidence of the two KAC engineers. He confirmed that IAC had received a Ministerial instruction to maintain the aircraft. He emphasised that amalgamation of KAC and IAC did not occur until the 17th September. He went on to make it clear, no less than six times, that no KAC equipment or spares were removed from Kuwait prior to the 17th September. Further Mr Al Shaikhly made a particular point to challenge the assertion of one of the KAC engineers that he had seen 4 ex KAC aircraft in IAC livery before the 17th September. It is fair to say that one of them was said to be a Boeing 767 which on any view had not been repainted by the time it was destroyed at Mosul during the war. But the affidavit went on to state in terms: - “None of the aircraft referred to by Mr Muhsi had been overpainted by the 16 September 1990”.

[48]Mr Abbo also made two affidavits. In his first affidavit dated 20th November, he made the following points :- i) He was aware of the oral instruction from the Minister given on the 6th August to make arrangements for the maintenance of the aircraft although he quotes “the instruction was not in fact carried out before RCC Resolution 369 of the 9th September came into effect because IAC did not have the qualified personnel…….” ii) At the time of the meeting of the KAC engineers on the 29 and 30th August 1990, nothing had been announced about any amalgamation of KAC with IAC. iii) None of the aircraft were repainted until after the 17th September: the first aircraft that had been painted was AHD (AOA) painting having started on the 23rd September.

[49]The first witness to be cross examined was Mr Al Shaikhly. The bulk of it was directed to the detail of meetings and discussions with the Kuwaiti engineers. But in other respects Mr Al Shaikhly insisted: - The Hon Mr Justice David Steel Approved Judgement Kuwait Airways Corporation - v – Iraqi Airways Corp a) The government had only given oral orders to fly the aircraft into Kuwait to avoid them being harmed. b) No specific instructions about the aircraft were given initially although it was inferred that the government wanted them in good condition. c) Instructions however were given to recruit engineers on behalf of the government, such efforts commencing in late August, albeit that no engineer was in fact engaged by IAC until after the 17th September. d) IAC formed no intention to operate the aircraft until after the 17th September. e) He had no idea that the aircraft were to form part of IAC’s fleet until after the 17th September.

[50]Mr Abbo was called to give evidence. He claimed in cross examination that: - a) The Minister had merely ordered that the aircraft should be taken to Iraq for safekeeping. b) There was no intention to operate the aircraft. c) He only became aware of Resolution 369 after the 17th September and he had not heard about it or its contents before. d) Efforts were made to recruit engineers for maintenance but no engineer was engaged by KAC until late September.

[51]Mr Abbo was particularly insistent that applications for certificates of airworthiness were not made before the 17th September nor had there been any correspondence on that topic. The following is an extract from his cross-examination by Mr Clarke QC:- Q. Did you apply on behalf of Iraqi Airways for airworthiness certificates in the case of the KAC aircraft? A. After the 17th September. Q. The answer is “yes”, is it? A. Yes. The Hon Mr Justice David Steel Approved Judgement Kuwait Airways Corporation - v – Iraqi Airways Corp Q. After the 17th September? A. Yes. Q. Did you write any letter in relation to these aircraft before the 17th September? A. No. Q. Did you receive any letter in relation to these aircraft before the 17th September? A. No. Q. Relating to their airworthiness or to their registration? A. No. Q. Or anything at all? A. Not at all. Q. Are you sure about that? A. I am sure about that.

[52]Inevitably he was asked about the documents exhibited to Mr Saffi’s affidavit. He accepted that there must have been an earlier letter to that of the 27th September giving notification of the registration markings allocated to AHD and AHB in like form to the letter of the 23rd October. As regards the reference in the Ministry’s letter to the letter of the 23rd August, Mr Abbo suggested that this had been in a response to an earlier inquiry emanating from the planning department of IAC about registration requirements generally, unrelated to the Kuwaiti aircraft.

[53]Mr Saffi in his cross examination: - i) Confirmed that he had received an oral instruction from the Minister during the night of the 6th August to provide pilots to remove the aircraft from Kuwait. ii) Re-affirmed that shortly afterwards the Minister gave instructions that IAC should undertake basic maintenance on them in the form of checking tyre pressures, inspecting for leaks, effecting movements to prevent distortion of tyres and so on. iii) Explained that he had tried to recruit 5 trained people for maintenance purposes but none were engaged until after the 17th September. iv) Accepted that he went to Kuwait on the 10th August but not with a view to resuming commercial flights. The Hon Mr Justice David Steel Approved Judgement Kuwait Airways Corporation - v – Iraqi Airways Corp v) Asserted that there was no discussion with the Minister about adding to the KAC aircraft to the IAC fleet until after the 17th September and denied that the Minister had said that the aircraft were to be operated by IAC prior to that date. To the contrary, his evidence was that the Minister had insisted that he did not want the aircraft used at all:- A……He say:

“Keep them to the absolute minimum. We do not want to fly the aircraft. It is just to look after them. That is all. Mr Clarke: When did he tell you: “We do not want to fly the aircraft”? A. Pardon. Q. I do not think you have ever said that before. When did he say: “We do not want to fly the aircraft”? A. We are coming back again. ………. Q. So he said: “We do not want to fly the aircraft”, on the 30th did he? A. Yes. He said: “Look after them” and I told him: “The difficulty now is these boys they want hard currency”

. They say: “Keep them to the absolute minimum. I do not want to fly the aircraft….” vi) No steps were taken to repaint or insure the aircraft before the 17th September. For instance in re-examination, he said this:- Q. When did IAC first form [an] intention, if ever, to operate the aircraft? A. When after the 17th September we start. Number one we apply ….to get the registration. We told the insurance to work. We put one of our aircraft…to be painted….

[54]It is to be noted that only documentary material put to Mr Saffi by way of challenge to his evidence on these matters was a newspaper report dated the 17th September to the effect that “several Kuwait Airways planes including Airbuses and Boeings had already been moved to Baghdad and repainted in the green and white colours of Iraqi airways along with the Iraqi flag……” This was put to Mr Saffi in cross-examination:- The Hon Mr Justice David Steel Approved Judgement Kuwait Airways Corporation - v – Iraqi Airways Corp Q. ….That is right, is it not? That had already happened? A. After the 17th, Mr Clarke, we start painting. Painting an aircraft, it takes time.

[55]As already noted it was with particular reliance upon this oral evidence that Evans J made the findings of fact set out earlier. He accepted that the activities of IAC were restricted to basic maintenance and a search for qualified engineers to that end. As regards painting, he simply recorded that the evidence showed that, after the decree took effect, at least two of the aircraft were repainted in IAC livery.

[56]So far as Mr Saffi’s evidence on these topics was concerned, the judge’s only critical observation was to the effect that Mr Saffi had been somewhat reticent about his relations with the Minister between the 8th August and the date when he became aware of the decree. Evans J regarded his evidence as somewhat contradictory in the sense that, on the one hand, he had denied having any communication with the Minister or having any fore knowledge of the decree, but on the other hand that, prior to the decree, he had told the Minister he did not want the KAC aircraft, that he would prefer new aircraft, and that in any event IAC had no need of any aircraft until such time as international flights could resume.

[57]There remains the question of registration. Mr Saffi appears to have arrived in England with three additional documents, although somewhat astonishingly he asserted that he had not read them. During the course of his cross examination, counsel for IAC interposed to put the documents in evidence. The first was a letter dated 15th August 1990 from Mr Nekash to Mr Abbo which read: - “Would you kindly ask the air safety division to give us a list of the necessary requirements for registration of aircraft in the Iraqi Civil Register, as it is intended to purchase or lease a cargo plane from another company.”

[58]The second letter was from Mr Abbo to the DGCA under reference MSA/1/1901 dated 23rd August 1990. This read: - “With reference to the letter from Technical Planning No 580 dated 15/8/1990 kindly inform us the necessary requirements for registration with the Iraqi Civil Register of foreign registered aircraft and also for granting for these aircraft an airworthiness certificate. It is intended to purchase or lease a cargo plane from a foreign airline.” The Hon Mr Justice David Steel Approved Judgement Kuwait Airways Corporation - v – Iraqi Airways Corp

[59]In due course the authenticity of these two letters came to be challenged by KAC. Mr Saffi’s evidence in 1992 was to the effect that these letters were prompted by a proposed charter of two airbuses from Royal Jordanian Airlines albeit that he accepted that these aircraft were passenger planes and that negotiations had been on hold since the outbreak of the war.

[60]The third letter was a letter written to Mr Abbo on the 23rd August 1990 by the DGCA dated 23rd August 1990 (and copied to the General Manager’s office). It read: - “With reference to your letter No MSA 1/1901 dated 23rd August 1990, we list below the requirements needed for registration of aircraft mentioned in your letter in the Iraqi Civil Register under Iraqi Civil Aviation Rule No 148…..”

[61]Various requirements were then set out including the requirements for a valid airworthiness certificate, evidence of appropriate maintenance and evidence of appropriates licences held by the crew and maintenance engineers.

[62]Mr Saffi’s evidence in 1992 was that, whilst this was indeed the letter referred to in the Ministry’s letter of the 23rd October quoted above, it was in fact a reply to the enquiry contained in the second letter and was not related to the Kuwaiti aircraft.

[63]It was no doubt the apparent inconsistencies in this material which led to the tentative conclusion of Evans J (challenged by the defendants on appeal) that the reply was in fact to a preliminary enquiry about the Kuwaiti aircraft, albeit that the learned judge did not regard it as necessary to place any reliance upon this finding in reaching his conclusions on the facts.

The witnesses

[64]The trial before me began on the 13th May 2002. IAC called a number of witnesses. In order of appearance they were: - a) Mr Amer Muhi Al Din Ali (“Mr Ali”). He had been the manager of IAC’s sheet metal workshop and as such had been in immediate charge of IAC’s painting team. b) Mr Abbo. The Hon Mr Justice David Steel Approved Judgement Kuwait Airways Corporation - v – Iraqi Airways Corp c) Mr Al Shaikhly. d) Mr Na’ama. e) Mr Saffi

[65]Mr Na’ama completed his evidence on the 27th May 2002. There then ensued a prolonged adjournment, the original estimate for the trial period having been overrun . It was contemplated at that stage that the court would reconvene for the purposes of hearing expert evidence on painting.

[66]In addition, it was also anticipated that Mr Nekash might also be called at the resumed hearing. He had been in England before the time of the original hearing but had fallen seriously ill. I am sorry to say that he later died and was thus never cross examined. In contrast, although it had earlier been suggested that Mr Saffi was not well enough to travel to England, before the resumed hearing IAC applied to call him after all and I duly gave leave. He gave evidence over some four days.

[67]I have had very much in mind that the trial was taking place nearly 12 years after the events leading up to Resolution 369. The witnesses’ actual recollection of events must predictably have dimmed, giving rise to inevitable inconsistencies and gaps. In any event, there would have been an understandable temptation for those witnesses being recalled simply to repeat what had been said on the earlier occasion or, in the event that the newly disclosed documentary material was inconsistent with their earlier evidence, to effect a reconstruction explaining the disparity.

[68]In these circumstances I respectfully endorse the observations of Robert Goff LJ in The Ocean Frost [1985] 1 Lloyd’s Rep.1 at p.57: - “It is frequently very difficult to tell whether a witness is telling the truth or not; and where there is a conflict of evidence such as there was in the present case, reference to the objective facts and documents, to the witness’s motives, and to the overall probabilities, can be of very great assistance to a judge in ascertaining the truth.”

[69]My position is in stark contrast to that in which Evans J was placed. At the time of the hearing before him, there had been very little by way of disclosure. As he stated in terms he necessarily had to make his findings of fact in reliance on the oral evidence, illuminating as it did the affidavit evidence that had been furnished. But my task of determining the extent and scope of the activity on the part of IAC (albeit many years ago) is rendered easier by virtue of the availability of many of the The Hon Mr Justice David Steel Approved Judgement Kuwait Airways Corporation - v – Iraqi Airways Corp contemporary documents, including Mr Na’ama’s diary. Whilst some of the potentially relevant items of correspondence referred to in the documents were not disclosed, I am satisfied that (subject to resolving KAC’s challenge to the authenticity of two of them) it is possible from the documents to reconstruct most of the events with some degree of confidence.

[70]That said, the oral evidence was tendered by way of supplement and amplification to the documents and I must consider its reliability in terms of revealing the full picture. In particular, KAC contend that two documents have been fabricated. There is also the important issue as to whether any disparities between the evidence given on the earlier occasion in comparison with the true picture is attributable to the fact that the earlier evidence was knowingly false. In this context, it is right that I should express some comments about the witnesses as they struck me: - a) Mr Ali, whose evidence was directed primarily to the question of painting, managed to undermine my confidence in his evidence in a devastating and irredeemable manner at a very early stage. A supplementary statement was furnished by him dated only three weeks before the hearing in which he purported to give some further detail about the painting of the aircraft and the sourcing of additional supplies of paint. This was by way of elaboration of his first statement which dealt with the scope of the repainting undertaken using white, dark green and light green paint. However, he was asked in his evidence in chief about an understanding that he desired to correct this evidence. This he duly did by saying that no such paint was ever applied before mid September, only primer. This evidence having regard to his earlier evidence and to the content of the Na’ama diary was wholly incredible and as such it rendered it difficult to place any reliance on his evidence save where corroborated by another and reliable source. b) Mr Abbo spoke very good English (indeed he has now lived in the United States for some 8 years or more). He gave his evidence fluently and with apparent confidence. Whether it was reliable depends to a significant extent on my findings as to the circumstances surrounding the preparation and subsequent late disclosure of his letter to the DGCA said to have been prepared on the 23rd August and whether or not the letter from the DGCA of the 23rd August was a reply thereto. This issue I deal with later. The Hon Mr Justice David Steel Approved Judgement Kuwait Airways Corporation - v – Iraqi Airways Corp c) As regards Mr Al Shaikhly, even allowing for the fact that his command of English was less secure than some of his colleagues, the impression left by him was that he was less than frank in recounting events at Kuwait airport where he had been stationed, particularly as regards to the alleged transfer of KAC’s spares to Baghdad. He was also markedly unconvincing in seeking to explain the disparity between his asserted recollection and the content of the Na’ama diary. Just as Aikens J regarded the diary as comprehensive and reliable with regard to the movement of the aircraft, so also I regard it as equally comprehensive and reliable in most other respects. d) Mr Na’ama was called next. Re-reading the transcript merely confirms my contemporary impression that Mr Na’ama was a distinctively evasive witness, an attitude all the more indefensible given the detailed and contemporary notes in his diary, the broad reliability of which I have just referred to. e) As explained earlier, Mr Saffi was somewhat of a surprise, albeit very important, witness. It was clear that, whilst not in the best of health, Mr Saffi was able to cope with four days in the witness box with considerable vigour. He had gone to considerable lengths in preparing for the hearing, including listening to a taped version of the evidence that he gave in 1992. No doubt he also took the trouble to absorb what the other IAC witnesses had said in this action in May this year. Despite all that, he was not really willing to face up to the difficulties of reconciling his evidence with the contemporary material. Indeed his introduction of a new theme for the pre September 17 period, to the effect that ownership of the aircraft had been vested in the Ministry and that IAC had received instructions from the Minister to prepare three of the airbuses on the government’s behalf for non-commercial flights to Kuwait, had all the appearance of being simply a new attempt to explain away documentary evidence that sat very uncomfortably with his earlier protestations of IAC’s lack of involvement.

[71]Three statements were prepared by Mr Nekash. Sadly he was not available for cross examination and I must approach the contents of those statements on that basis. Nevertheless, I feel it right also to bear in mind the observation of Aikens J, before whom Mr Nekash did give oral evidence in 2000, that “he was not entirely open about his knowledge of the overpainting….”. The Hon Mr Justice David Steel Approved Judgement Kuwait Airways Corporation - v – Iraqi Airways Corp

Actual chronology

[72]Prior to the war, IAC had ambitions to expand its passenger fleet. In June 1990, it had entered into a purchase contract with Airbus for the delivery of five A310’s to add to its existing Boeing fleet. The first of these airbuses was due to be delivered in April 1992.

[73]Anxious to gain familiarity with such aircraft meanwhile, IAC had been looking to wet lease two 310’s. Mr Abbo told the court that he had had a discussion with KAC with a view to leasing some of their aircraft. This was vigorously denied by Mr Saffi, but an entry in the Na’ama diary on the 23rd June tends to confirm Mr Abbo’s account.

[74]In the event, Royal Jordanian was also approached and a letter of intent relating to two aircraft was signed on the 16th July 1990 with a view to negotiations being completed within two weeks and for delivery to occur in September and November respectively. The invasion, of course, intervened.

[75]I accept that on the 6th August, Mr Saffi received a direct oral instruction from the Minster of Transport and Communication to arrange for the KAC aircraft to be flown into Iraq. But much more significantly on the 7th August, the Presidency Secretariat sent the following message to the Ministry marked Top Secret – Personal – Urgent: - “It has been decided to repair Kuwait airport so as to make it suitable for flying and to enable Iraqi pilots to fly Kuwaiti aircraft for internal transport (between Kuwait airports and Iraqi airports). Please take necessary action and confirm.”

[76]This was copied to a number of parties including IAC with the added specific requirement “to take necessary action”. (This message was not disclosed until after the Aikens J trial in April 2000.)

[77]Over the next few days, IAC was also notified by the Presidency Secretariat of Resolutions 312 and 313 which prescribed the integration of Kuwait into Iraq and the assumption of responsibility for all Kuwaiti financial obligations with the added notation: - “Kindly take appropriate action for implementation thereof”.

[78]IAC reacted quickly. On the 9th August an IAC delegation went to Kuwait airport. It was led by Mr Abbo. His letter reporting on the visit is incomplete. Nonetheless, the The Hon Mr Justice David Steel Approved Judgement Kuwait Airways Corporation - v – Iraqi Airways Corp second page refers to “the possibility of making use of the ground support equipment for aircraft maintenance”.

[79]The next day, the 10th August, Mr Saffi flew to Kuwait to see the position for himself. The Na’ama diary records instructions given by him on his return to the effect that Kuwait airport would operate as “second airport after Basra for domestic transport”. The thrust of the presidential order of the 7th August was duly recorded in the diary “Repairing Kuwait airport – Iraqi pilots – domestic transport”, this being confirmed again in an entry on the 17th August.

[80]On the 13th August, the Na’ama diary records Mr Saffi’s order that a “full inventory” of stores and equipment at Kuwait should be prepared. Indeed some details of engines, tyres, brakes and other items were already recorded in the diary on the 14th August. On the 16th August, IAC resumed scheduled services to Kuwait using an IAC Boeing 727. IAC Boeing 737’s were added on the 21st August.

[81]In the meantime, preparations began in earnest with a view to using KAC airbuses for the service. The next fortnight saw the following developments.

[82]On the 18th August Mr Saffi chaired a meeting which arranged for Mr Al Shaikhly to take up station in Kuwait, so as to supervise the stores there and engage suitable airbus staff. Mr Al Shaikhly left the following day.

[83]On the 20th August, the first of KAC’s airbuses (AHD) was relocated to Baghdad and on the 22nd August, its engine problems having been overcome, AHI was brought into Baghdad direct from Kuwait. The entries in the Na’ama diary for that day speak for themselves: - “General managers instructions: airbus total 8 Paint aircraft. Work 24 hours…….. Engineering to prepare aircraft as soon as possible Baghdad Kuwait. Domestic transport – Iraqi pilots. Train engineers/approval crash course…. Bravo to those who finish quicker. Within one week only, after that it is negligence. Priority to 310. 5 off…..” The Hon Mr Justice David Steel Approved Judgement Kuwait Airways Corporation - v – Iraqi Airways Corp

[84]These instructions were, in my judgment, a direct and accurate reflection of the presidential order to the effect that the Kuwaiti aircraft were to be urgently prepared for commercial service between Iraq and Kuwait flown by Iraqi pilots.

[85]On the 23rd August, Mr Abbo prepared a letter to the DGCA seeking advice on registration requirements. This was only disclosed in July 1996. It was marked “Urgent”. It read: - “Pursuant to the instructions that was issued from the office of the Minster of Transport and Communication, it has been decided to put the airbus (A310 – 200) (formerly Kuwaitia) into service on domestic routes between Kuwait and Baghdad. Please let us know the requirements for registering these aircraft as Iraqi and give the matter your utmost attention.”

[86]Precisely when that letter was signed and/or sent remains a matter of controversy. But it is unquestionably clear that that same day Mr Abbo was informed of the registration requirements as set out in the letter of the DGCA quoted in paragraph 60 above. Indeed Mr Abbo duly annotated a copy of that letter in manuscript noting that both insurance and maintenance programmes were “pending” and stating: “the technical assistant general manager: to be informed of the above regarding registration of airbus A310 – 200 aircraft (formerly of Kuwaitia) and your instructions please.” (This annotated copy was not disclosed until July 2000 after the hearing before the Court of Appeal.)

[87]Also on the 23rd August, the Na’ama diary records that AHD had entered the hanger for painting work to commence at 12.30. The note goes on to record the availability of enough paint for one aircraft, with a balance of 4 gallons of dark green, 4 gallons of light green and 5 gallons of light grey available for the second aircraft. (The need for further supplies of paint is recorded in the Na’ama diary for the 25th August).

[88]On the 25th August Mr Saffi wrote a memorandum to all employees of IAC. This was disclosed in September 1997. It read as follows: - “After the announcement of the merging unification with Kuwait and the joining of the Kuwaiti aircraft fleet with the Iraqi Airways Company all the employees are requested to take care of the aircrafts and not to touch the material which are inside them and Nobody is allowed to go near them but those who are specialists to work on them and finalise all the requirements shown in the civil aviation regulations The Hon Mr Justice David Steel Approved Judgement Kuwait Airways Corporation - v – Iraqi Airways Corp to make them fit for flying and to be given the Iraqi certificates by the hands of Iraqi pilots and engineers. We hope that everybody will be in compliance with these instructions to prove the efficiency of our employees to operate these aircraft with the same efficiency that you exercised before”.

[89]I accept the submission made by KAC that Mr Saffi, as the author of this letter, was proceeding on the basis that, in responding to the instruction to implement Resolution 312 and 313, IAC could properly regard the effect of the merger and integration as being that the KAC fleet was to all intents and purposes part of, and to be operated with, IAC’s fleet. This view receives further support from the content of the Na’ama diary in the period between the 24th August and 9th September from which it would appear that KAC stores and equipment were systematically removed from Kuwait and brought into Iraq.

[90]Insurance matters were also active at this stage. The Na’ama diary records that it was contemplated on the 25th August that cover for AHD (AOA) would be in place by the 30th August. To that end, Mr Abbo’s assistant wrote (pp. Mr Abbo) to IAC’s insurance manager on the 25th August as regards AOA stating: - “Kindly take the necessary action to insure the above aircraft noting that it is being operated for commercial uses on internal flights”. (Notably this letter whilst disclosed in September 1997, was not tendered with an accurate translation until August 2001).

[91]From an IAC internal memorandum dated the 25th August, it is clear that the National Insurance Company had already been given informal notice of the need for insurance cover for two airbus 310s, the first of which was to be AOA. Confirmation that the registration label AOA had been allocated by the DGCA was contained in a letter (disclosed in September 1997) also dated 25th August and received on the 27th August. This read: - “ Your letter….dated 25.8.1990 [not disclosed]. The registration label (YI AOA) have been reserved for the airbus (A310 – 222) which is serialised under number 318. Kindly complete all the requirements shown in our letter number 1019 dated 23.8.1990.” (A similar letter relating to AOB was received the same day although notably neither letter was exhibited to Mr Saffi’s second affidavit. As already noted, the affidavit The Hon Mr Justice David Steel Approved Judgement Kuwait Airways Corporation - v – Iraqi Airways Corp merely exhibited the letter notifying registration letters for the rest of the fleet dated after the 17th September.)

[92]On the 26th August Mr Saffi reported on progress to the Presidency Secretariat (in a letter disclosed in May 2000): - “With reference to your letter….. dated ….. 7th August 1990 - we started to transfer the Kuwaiti aircraft to the Iraqi register and preparing the personnel of pilots and technical staff to operate these aircraft for internal transport only. The number of aircraft that had been brought in are 11 while 8 aircraft were left outside Kuwait in outside stations. ….”

[93]On the 27th August painting work on AOA was completed and AOB entered the hanger in its stead at 1600.

[94]On the 28th August, the Minister issued an order, copied to Mr Saffi for “confirmation”, establishing a joint committee of the DGCA and IAC to prepare an inventory of items at Kuwait so as, amongst other things, to identify items belonging to the “former” KAC and transferred to IAC.

[95]The next day Mr Saffi appears to have written to the Deputy Prime Minster Mr Sa’adoon Hammadi on the general topic of the transfer of KAC’s assets to IAC. This letter has not been disclosed. It lead in turn to contact with the Deputy Prime Minster by the Presidency Office (in a letter dated the 1st September which has also not been disclosed).

[96]The outcome was the following letter (only disclosed in October 2001) to the Presidency Office from the Deputy Prime Minister dated the 5th September: - “Having considered the matter attached to your above letter on the transfer of fixed and liquid assets of the Kuwaiti Airways Corporation to the ownership of Iraqi Airways Company and having considered the contents of the Iraqi Airways Company letter No1828 dated the 29/8/1990 relating to the above matter and further to other related matters regarding the assets of the Kuwaiti Airways Corporation, we enclose herewith a Draft Resolution to be issued by the Revolutionary Command Council after approval to deal with this matter in a comprehensive manner……..” This Draft Resolution was in due course to become Resolution 369. The Hon Mr Justice David Steel Approved Judgement Kuwait Airways Corporation - v – Iraqi Airways Corp

[97]In the meantime, on the 30th August, the Na’ama diary records that a delegation led by Mr Saffi visited Kuwait in one of the airbuses. On the 31st August work on painting AOB was completed at 1300. The Egyptian airbus (AHI/AOC) entered the hanger for painting at 1400 on the 1st September. That same day insurance cover for AOA was confirmed as included with IAC’s existing fleet.

[98]On the 2nd September, a board meeting of IAC dealt with the question of fares between Baghdad and Kuwait. The board’s decision was to the effect that government employees and military personnel should be offered a discounted fare on production of an official letter.

[99]Following interviews conducted by Mr Saffi whilst he had been in Kuwait on the 30th August, two former KAC engineers were recommended for employment by Mr Abbo in his letter to the administrative department dated 6th September “in view of the company’s need for their services to operate the aircraft”. This proposal was endorsed by Mr Saffi on terms that the engineers should continue to work for IAC “on the same basis as their previous contract”.

[100]As already recorded Resolution 369 was passed on the 9th September and sent to IAC. IAC in turn sent a copy to the Ministry. The Resolution came into force on the 17th September.

IAC’s case on the true state of affairs

[101]IAC’s case as to the true state of affairs that prevailed in the crucial month between the 7th August and the 9th September became somewhat of a moving target. In the event, the extent of the concessions made by IAC seemed to amount to this. Contrary to the evidence produced by IAC before Evans J, there was some activity with regard to the aircraft and in particular steps were taken to register and insure 2 or 3 of them and to use some form of paint to hide their KAC livery. All this was said to be in response to an oral instruction given by the minister some time in late August to prepare 3 airbuses on behalf of the government for non-commercial services to Kuwait.

[102]The extent of these admissions, whilst themselves demonstrating a marked contrast with the evidence given only 18 months after the event, is wholly lacking in realism. They fly in the face of the contemporary documentation. The Hon Mr Justice David Steel Approved Judgement Kuwait Airways Corporation - v – Iraqi Airways Corp

[103]First, despite Mr Saffi’s persistent assertion to that effect in his oral evidence, there is no basis for the contention that, on the instructions of the minister, flights were to be commenced but restricted to the carriage of those on official business: - a) There is nothing in the contemporary documentation to support the suggestion that the airbuses were to be used solely for governmental transport. To the contrary, the board minutes demonstrate that transportation of government and military personnel was to be a revenue earning exercise at a discount to otherwise normal passenger traffic. Indeed, the steps taken to insure the aircraft were solely on the basis of their being employed for commercial use. b) Furthermore, there is nothing in the contemporary documents to support the suggestion that there was in fact any ministerial instruction in late August to supplement the original order from the Presidency Secretariat dated 7th August for all the aircraft to be used for “internal transport”. c) The origin of this alleged instruction from the minister in late August is to be found in Mr Saffi’s statement prepared in June 1997. The purpose of the flights was described as “domestic” generally, without any suggestion (as contended in Mr Al Zubaidi’s statement in February 2001) that the flights would only be available for official government business. Indeed, before Aikens J, it was IAC’s case that the aircraft were for internal flights in contra distinction to governmental use.

[104]In the second place, it was fully apparent that the aircraft were being treated as part of IAC’s fleet rather than that IAC were merely engaged in conducting activity on behalf of the government: - a) The starting points here are Resolutions 312 and 313. The instruction to IAC to take the necessary action for implementation of those Resolutions can be fairly construed as an invitation to IAC to absorb its Kuwaiti counterpart. This is how IAC viewed it, as is confirmed by Mr Abbo’s letter enquiring about registration requirements for “formerly Kuwaitia” aircraft. On the same basis steps were taken to insure the aircraft as part of IAC’s fleet. The Hon Mr Justice David Steel Approved Judgement Kuwait Airways Corporation - v – Iraqi Airways Corp b) Indeed it was notable that in his evidence in chief, Mr Abbo was asked about the manuscript notes that he had added to the DGCA letter of the 23rd August: - Q: You have asked for some instructions; did you get any instructions back? A: The instructions say “OK. start the process” the process of incorporating KAC into IAC which requires – you know – the first thing is to reserve a registration, then get the certificate of airworthiness, and so on and so on. Q: Are you saying that the phraseology that you were given at that time was to begin the process of incorporating KAC into IAC? A: Yes. We know to incorporate them we have to register them. c) This analysis is fully confirmed by Mr Saffi’s letter to all employees dated 25th August which describes the joining of the two fleets as a fait accompli. d) If further confirmation was required, Mr Saffi’s letter to the Presidency Secretariat of the 26th August establishes that the transfer to the Iraqi register being arranged by IAC was being pursued so as to put into effect the instructions contained in the Presidency Secretariat letter of the 7th August. e) Thus, in commenting on the Deputy Prime Minister’s letter of the 5th September copied to IAC, Mr Saffi realistically observed: - “This letter comes from higher authority they are the people - this letter came from RCC which is the uppermost authority in the State. It is decided that KAC things go to IAC. This is something natural and correct, a 100 per cent, because birds of a feather flock together: the aircraft of the military go to the military; medical staff should go to the ministry of health; and civil aircraft which are from Kuwait which look like 100 percent look like IAC aircraft, we had agreements between IAC and KAC. So this is an order from the President and it is correct and has to be implemented.” The Hon Mr Justice David Steel Approved Judgement Kuwait Airways Corporation - v – Iraqi Airways Corp f) Whilst the legal position was only perfected by Resolution 369, it is accordingly clear that there was an acceptance of a de facto transfer much earlier. Indeed, in his oral evidence, Mr Saffi said that the catalyst for the resolution was not the desire to accomplish the transfer but simply the need to enable IAC to stamp out theft at the airport.

Painting

[105]Given the content of the documentation there could be no serious issue as to the extent of the steps taken by IAC to insure the aircraft or, subject to the controversy about the letters to the DGCA asking for registration requirements, the extent to which steps were taken to register the aircraft. However, there was a wide ranging dispute as to the extent to which the aircraft were overpainted before the 17th September.

[106]I suspect that this is somewhat of an arid dispute. Some degree of overpainting on three of the aircraft prior to the 17th September is conceded. My initial reaction is that the nature of the paint used, and the extent to which overpainting took place, are not determinative of the decisions I have to reach. But I must make my findings on the issue.

[107]Mr Saffi’s witness statement for this trial conceded that overpainting commenced before the 17th September with green paint, with the purpose of obscuring KAC’s name and logo. Mr Ali’s recollection as the man in charge of the paint shop, as recorded in his statement, was that there had been some overpainting with green and/or white paint.

[108]It was this latter evidence which underwent such a drastic change when Mr Ali gave oral evidence. I unhesitatingly reject his evidence that the only material applied to the aircraft was primer:- a) At no stage prior to Mr Ali’s oral evidence had anyone (let alone himself) or any document suggested that primer rather than paint had been applied. b) The instruction emanating from the minister which was relied upon and said to have been given at the end of August, actually called for repainting. The Hon Mr Justice David Steel Approved Judgement Kuwait Airways Corporation - v – Iraqi Airways Corp c) There was no need to apply primer since the work consisted of overpainting not application of a livery to bare metal. d) Furthermore, the application of primer would not have achieved the object of obscuring the Kuwaiti livery unless a large number of coats was applied. e) The entries in the Na’ama diary as regards painting were accepted by IAC as probably correct before Aikens J. Indeed, in those proceedings, Mr Nekash said that overpainting had started before the 17th September.

[109]As regards to the degree of overpainting, the probabilities are that, although hurriedly and sloppily effected, the three aircraft did emerge from the hanger in what would pass for IAC livery: - a) Although time was short, Mr Saffi’s instructions were to undertake painting round the clock under the threat of extreme sanctions. b) The scale of the task was significantly limited by the fact that the grey underbody and the white superstructure did not need covering. c) Supplies of dark and light green paint and of grey paint were available for at least one aircraft as recorded in the Na’ama diary. d) I am not persuaded that the absence of specialised docking equipment would have significantly inhibited the painting process. e) The Na’ama diary records that painting was completed on all three aircraft (and indeed started on a fourth in the form of Emirate 727 on September 12th). f) It can be safely inferred that additional supplies of paint as called for on the 25th August were obtained. g) Indeed, it is common ground that all six aircraft were repainted in IAC livery by the time of their departure to Iran: the Na’ama diary also The Hon Mr Justice David Steel Approved Judgement Kuwait Airways Corporation - v – Iraqi Airways Corp records the painting of the other three (in respect of which a further supply of paint was obtained in Amman): there would not appear to have been time for all six of the aircraft to have been repainted after the 15th September. h) In short, the finding made by Aikens J that three of the airbuses had been overpainted in IAC livery before the 17th September was, in the light of the new evidence, manifestly correct.

The alleged forgeries

[110]Before turning to the issues relating to the contemporary knowledge of the witnesses of the true facts and whether they had had them in mind when they gave evidence in 1992, I must turn to an issue which straddles the parties’ contentions as to the true facts and the honesty or otherwise of the witnesses.

[111]In the bundle of contemporary documents there were two whose authenticity was vigorously challenged by KAC. On their face, they were written shortly before the draft letter prepared by Mr Abbo on the 23rd August and quoted at paragraph 85 above. I set them out in full once again.

[112]The first is a memorandum dated 15th August from Mr Nekash to Mr Abbo. It reads: - “Would you kindly ask the Air Safety Division to give us a list of the necessary requirements for registration of aircraft in the Iraqi Civil Register, as it is intended to purchase or lease a cargo plane from another company.”

[113]The second letter is dated 23rd August 1990 from Mr Abbo to the DGCA which reads:- “With reference to the letter from Technical Planning No.580 dated 15/8/1990 kindly inform us the necessary requirements for registration with the Iraqi Civil Register of foreign registered aircraft and also for granting for these aircraft an airworthiness certificate…….. It is intended to purchase or lease cargo plane from a foreign airline…..”

[114]The claimants’ primary case is that these two letters were forgeries prepared by IAC in 1992 and brought to London by Mr Saffi for the purpose of explaining the origin of the letter from the DGCA dated 23rd August referred to in the letter which had been disclosed and attached to Mr Saffi’s second affidavit of the 23rd October 1990. The Hon Mr Justice David Steel Approved Judgement Kuwait Airways Corporation - v – Iraqi Airways Corp

[115]In the alternative KAC contended that even if the letter of the 15th August was genuine, nonetheless the second letter was a forgery prepared for the same purpose taking advantage of the fact that action had not been taken on the earlier one.

[116]In the further alternative, KAC contended that, if the letters were genuine, nonetheless, the DGCA letter of the 23rd August was, contrary to IAC’s case, written in response, not to the enquiry originally promulgated by Mr Nekash, but in reply to the letter enquiring about the registration of Kuwait aircraft (a letter which KAC contends(i) was sent on the 23rd August and not on the 27th or 28th and

(ii) was deliberately suppressed by IAC for the purposes of the sovereign immunity hearings).

[117]In an attempt to avoid confusion, I propose to refer to Mr Abbo’s letter of the 23rd August referring to a cargo plane as “Abbo 1” and the letter that was drafted (even if not sent) on the same day relating to the Kuwait aircraft as “Abbo 2”.

[118]Mr Nekash’s letter of the 15th August 1990 unquestionably has some oddities: a) By the time it was written, Iraq was isolated internationally. Indeed on the 9th August the Security Council had passed its Resolution 662 whereby the annexation of Kuwait was declared as being of no legal validity and calling upon states not to recognise the annexation and to refrain from any dealings which might be interpreted as recognition of it. Accordingly the expectation of leasing or purchasing an aircraft from a foreign airline is rather surprising. b) In any event, such planes as had been in contemplation prior to the outbreak of war (the purchase from Airbus or the leases from KAC or Royal Jordanian) all related to two or more passenger aircraft and not a single cargo plane.

[119]Turning to Abbo 1, its contents are equally surprising since Mr Abbo would be unlikely not to observe the “error” of Mr Nekash in referring to an intention to obtain a “cargo plane” from a foreign airline. Furthermore, treating the letter from the DGCA dated the 23rd August as a response to Abbo 1 creates certain striking inconsistencies: - a) It is marked “immediate” although there is no suggestion in Abbo 1 that there was any need for dispatch. The Hon Mr Justice David Steel Approved Judgement Kuwait Airways Corporation - v – Iraqi Airways Corp b) It refers to the requirement for registering “aircraft” not a single cargo plane. c) It refers to the need for insurance cover for “passengers” d) The copy disclosed in July 2000 has Mr Abbo’s manuscript note referring to registration of Kuwaiti Airbus A300’s.

[120]In contrast, Abbo 2 fits happily with the DGCA letter in that: - a) It is marked “urgent” b) It refers to the need to register a number of aircraft. c) Those aircraft are passenger aircraft. d) The aircraft were formerly owned by KAC.

[121]Indeed, the fact that the letter from the DGCA dated the 23rd August was dealing with an inquiry about the Kuwaiti aircraft is clearly demonstrated by a later letter from the DGCA dated the 29th September which stated: - “We refer you to our letter …….dated 23.8.1990 addressed to Quality Control on the requirements of the registration of the planes belonging to the Kuwaiti Airways Company (defunct) in the Iraqi civil aviation register….. .”

[122]However, in assessing the authenticity of Abbo 1 it remains necessary to subject Abbo 2 to careful scrutiny because the copy available has various dates and references on it all of which have been extensively considered in the trial: - a) There is a notation at the bottom whereby (and I believe this is common ground) Mr Abbo’s secretary records the date of preparation as the 23rd August. b) There is an Arabic calendar date in the heading the equivalent to the 23rd August. The Hon Mr Justice David Steel Approved Judgement Kuwait Airways Corporation - v – Iraqi Airways Corp c) There is a western calendar date in the heading which appears to be the 28th August corrected to the 23rd August (or possibly vice-versa). d) There is a date probably applied at the time of the signature (albeit the only version disclosed is a carbon copy) of the 27th August. e) In addition there is a reference number in the heading which is 1909, corrected in manuscript on the carbon copy to 1901 – the same reference number as on Abbo 1.

[123]Mr Abbo was inevitably and properly cross examined at some length about the preparation of this correspondence. In summary, his account, as finally formulated, was as I understood it as follows. a) Having received Mr Nekash’s memorandum of the 15th August, Mr Abbo’s prepared Abbo 1 on the morning of the 23rd August. The original was sent by hand to the DGCA. The copy in the papers was the top carbon copy from the file at IAC. b) At about noon, he learned from Mr Saffi of the Minister’s instructions to operate the KAC aircraft between Baghdad and Kuwait. By virtue of that instruction, he perceived the need to register the aircraft. He then dictated Abbo 2 to his secretary. c) But before it had been sent, the answer to Abbo 1 arrived from the DGCA. Having read it, he realised that the requirements set out in the letter would apply equally to the KAC aircraft so he decided not to send Abbo 2 but merely annotated the reply in manuscript with the manuscript note referred to earlier on in this judgment. d) A few days later, Mr Saffi asked Mr Abbo whether he (Mr Abbo) had sent any message to the DGCA arising out of the Minister’s instructions. When Mr Abbo said that he had not done so because the DGCA had already given him details of the registration requirements, Mr Saffi told him nonetheless to send a letter to the DGCA in the context of the Minister’s instructions in order “to protect his neck”. e) Accordingly, Mr Abbo signed Abbo 2 on the 27th August. At some later stage his secretary put on the date of the 28th and sent it to the DGCA. The version in the bundle was the top carbon copy. The Hon Mr Justice David Steel Approved Judgement Kuwait Airways Corporation - v – Iraqi Airways Corp f) Mr Abbo was unable to help as to why or when the date had been altered to the 23rd or why and when the reference number had been changed from 1909 (a reference number the same as an undisclosed letter from the quality control department of the 25th August) to 1901 (the same reference number as that contained Abbo 1).

[124]By any standards, this was an improbable tale, bearing all the hall marks of an attempt to effect a reconstruction consistent with the documents rather than any genuine recollection: - a) The premise for the whole account is that it was not until the 23rd August (by chance just after the despatch of Abbo 1) that Mr Saffi told Mr Abbo about the Minister’s instructions. But, as I have already held, the underlying instructions were the Presidency Secretariat’s written order dated 7th August. Mr Saffi’s evidence was that he would have told Mr Abbo about it straight away. I accept that that is what occurred; indeed it led to the departure of Mr Abbo for Kuwait on the 9th August. Furthermore the Na’ama diary reveals that the instruction was common currency by the 12th August. b) Mr Abbo’s contention that the reason for not sending Abbo 2 was the receipt of the answer to Abbo 1 must be rejected simply on the grounds that, as already outlined, the DGCA’s letter was manifestly an answer to Abbo 2. It dealt (on an immediate basis) with passenger aircraft not a single cargo plane. Indeed the DGCA confirmed as such in their letter of the 29th September. c) Mr Abbo’s manuscript notes on the DGCA letter were dated the 23rd August. There was nothing in the notes suggesting that he was merely proceeding on the assumption that the registration requirements for a cargo plane bought from a foreign airline were the same as the registration requirements for passenger aircraft that “formerly” belonged to KAC. Indeed my own impression from the evidence generally is that bureaucracy was an art form in Iraq – even in a time of war – and that Mr Abbo would never have jumped to any such conclusion on his own initiative. d) Mr Abbo’s contention that on or about the 27th August, Mr Saffi had instructed him to write to the DGCA regarding registration of the KAC aircraft must also be rejected:- The Hon Mr Justice David Steel Approved Judgement Kuwait Airways Corporation - v – Iraqi Airways Corp i) It involves the proposition that Mr Abbo delayed sending what he regarded as an urgent message for 4 days (simply on the basis that he had received a response to a completely different enquiry) and then received no reply to his “urgent message” at all. ii) It involves the DGCA allocating new registration letters to AHD and AHB on the 25th and 27th August respectively before it had even received the initial enquiry. Furthermore the notification from the DGCA of the new registration letters, in expressly referring back to the letter of the 23rd August, would on this basis be identifying a response to a completely different enquiry without any explanation. iii) The account of the conversation with Mr Saffi is very sketchy – not least the extent of Mr Saffi’s knowledge of the correspondence, both final and in draft. It is difficult to see why Mr Saffi would be concerned to send a letter regarding registration of the KAC aircraft if he had in fact been given details of Abbo 1 and the alleged reply to it. Equally, it remains wholly obscure as to how and in what manner the topic came to be raised on the 27th August. iv) Most significantly Mr Saffi denied that he was aware of the correspondence, let alone that he intervened. On this topic, I prefer Mr Saffi’s evidence (albeit there were certain variations to it in his oral evidence) not least because he felt able to respond to the Presidency Secretariat on the 26th August as to the steps taken to transfer the aircraft to the Iraqi register before, on Mr Abbo’s evidence, any contact with the DGCA had been made.

[125]I have referred to the anomalies as regards the dates and reference numbers on Abbo 2. The fact that the signature and dates had been added to the carbon copy if anything undermines any reliance that I might otherwise place on them in identifying the nature of the documents.

[126]Against this background I unhesitatingly reject much of Mr Abbo’s account. It is not just improbable; it is absurd. The only possible sequence is that Abbo 2 was sent on The Hon Mr Justice David Steel Approved Judgement Kuwait Airways Corporation - v – Iraqi Airways Corp the 23rd August and was replied to by the DGCA “urgently” the same day. Mr Abbo’s account is at best imaginative reconstruction.

[127]Was Abbo 1 a forgery? The whole subterfuge with regard to the sequence of events on the 23rd August and thereafter casts great suspicion on the authenticity of Abbo 1. One possibility is that although drafted on the 23rd in furtherance of the 15th August letter, Abbo 1 was not sent since matters had been overtaken by the urgent need to arrange registration of the Kuwaiti aircraft. But this was not canvassed in the evidence. Futhermore:- a) If, as I have found, Abbo 2 was written that day, it would be a remarkable coincidence that Mr Abbo should concurrently be making the same enquiry in regard to other planes, plans for which on any view had been overtaken by events. b) There is the additional oddity that Mr Abbo’s secretary allocated the same reference number to both letters. c) In striking contrast she used completely different headed carbon paper for the two letters on the same topic written on the same day. d) If I am right about the DGCA’S letter being a reply to Abbo 2, there was no reply at any stage to Abbo 1.

[128]I confess that, in my judgment, the circumstances of the disclosure of this letter also invites suspicion. Given the theme of the evidence of Mr Abbo and Mr Al Shaikhly that no activity had occurred prior to the 17th September, some explanation of the reference to registration enquiries in August as contained in an attachment of Mr Saffi’s second affidavit was called for. Mr Saffi was called in January and on the way to England brought with him three new documents, albeit he was notably minded to distance himself from them. Indeed, as described, they were adduced in evidence in a very unusual way.

[129]By that time Mr Abbo had returned to Iraq. He was best placed to go through the quality control department files. Indeed, Mr Saffi accepted in his evidence in chief that Mr Abbo looked the documents out. The outcome, whoever conducted the process, was with the benefit of hindsight astonishing. All the documents which were difficult to reconcile with Abbo 1 and the alleged reply to it were not disclosed at that stage including in particular the order of the 7th August, the annotated version of the DGCA reply dated the 23rd August, the DGCA notice of allocation of registration The Hon Mr Justice David Steel Approved Judgement Kuwait Airways Corporation - v – Iraqi Airways Corp letters on the 25th August, Mr Saffi’s report to the Minister on the 26th August and the DGCA letter of the 29th September specifying the planes to which it was referring in its earlier 23rd August letter.

[130]These suspicions are heightened by another respect in which the attachments to Mr Saffi’s second affidavit were selective. As is perhaps already apparent, it is, to put it conservatively, striking that whilst the documents relating to the application for and granting of a certificate of airworthiness for AOA were exhibited, the DGCA notification of the allocation of registration letters relating to that aeroplane (dated 25th August) was not. In its place was the DGCA letter of the 23rd October relating to registration letters allocated to other aircraft.

[131]I have come to the conclusion, bearing well in mind the high standard of proof called for in resolving issues of this kind, that Abbo 1 was not a genuine contemporary document. The only letter written and sent to the DGCA on the 23rd August by Mr Abbo was Abbo 2 to which the DGCA replied the same day. I am also satisfied that Mr Saffi and Mr Abbo were fully aware of the true position as regards the correspondence and were, perhaps with others, both directly involved in the preparation of Abbo 1.

[132]The claimants recognise that the position as regards the 15th August letter might be different in the sense that it was possible that it was a genuine letter advantage of which was taken in preparing Abbo 1 to accord it greater verisimilitude. Indeed, Mr Abbo asserted a recollection of some form of inquiry when he gave evidence in 1991.

[133]I also appreciate that the untimely death of Mr Nekash has meant that he has not been cross examined as regards to the 15th August letter. In addition, I bear in mind that the allegation that both letters were forged involves a widening of the conspiracy to an extent that might seem unnecessary. Abbo 1 would be enough to seek to explain the DGCA’s exposition of registration requirements without more.

[134]That said, I have already identified the surprising nature of the content and timing of the 15th August letter: see para 118 above. Indeed it is ironic that Mr Abbo’s oral evidence was to the effect that the 15th August letter, given its timing, could not relate to the Royal Jordanian aircraft and must have been referring to an even earlier proposal to wet-lease some KAC aircraft, a plan the existence of which was vigorously denied by Mr Saffi. In short, it is impossible to discern any legitimate reason why the inquiry regarding registration of a cargo plane should have been initiated. The Hon Mr Justice David Steel Approved Judgement Kuwait Airways Corporation - v – Iraqi Airways Corp

[135]The overwhelming probability is that the letter of the 15th August was created to explain the sequence leading up to a letter dealing with registration requirements prior to the 17th September. It was appreciated that Abbo 1 in isolation would undoubtedly be perceived as a strange enquiry arising out of the blue. This in turn necessitated the creation of the 15th August letter to add a degree of apparent legitimacy. Equally it was appreciated that it could not refer to earlier leasing negotiations as they had run their course. I am in summary persuaded to the required standard of proof that the 15th August letter is not genuine either.

[136]I should add that the resolution of the issue is perhaps of less significance than might otherwise appear. On the assumption that I am wrong and both letters were genuine, I have no doubt nonetheless that Mr Saffi was fully aware at the time when he came to give evidence before Evans J that vital correspondence was being suppressed and that the documents brought with him were misleading. In the event, whilst the learned judge was minded to reject the evidence adduced by IAC as regards the absence of inquiries made prior to Resolution 369 about registration of the Kuwaiti aircraft, he was deceived into according little significance to such steps as were taken. Contemporary knowledge of facts.

[137]I do not propose to dwell on the knowledge of Mr Al Shaikhly of the events leading up to the 17th September or his recollection of them when he gave evidence in 1991, since it is sufficient for the purposes of this judgment to consider the position of Mr Saffi and Mr Abbo, the Director General and the newly appointed Assistant Director General (Technical) respectively.

[138]Mr Al Shaikhly was significantly below them in the managerial structure. Furthermore, he was posted to Kuwait as from the 19th August and was thus less well placed to become acquainted with any activity in regard to the aircraft that had by then all been flown to Iraq. It would also appear that he was not likely to have been directly concerned in preparations for Mr Saffi giving evidence in January 1992.

[139]I accept the submission made by KAC that Mr Abbo must have been fully aware of the plans to make use of the aircraft for domestic flights to Kuwait. Mr Abbo was a very senior figure in IAC with frequent contact with Mr Saffi. The order of the Presidency Secretariat was unquestionably brought to Mr Abbo’s prompt attention – certainly no later than the 12th August and probably before going to Kuwait on the 9th August. He was clearly also aware of the steps taken in furtherance of that, particularly registration, insurance and employment of engineers. Indeed he was the author of the key letters on those topics on the 23rd August, 25th August and the 6th September. The Hon Mr Justice David Steel Approved Judgement Kuwait Airways Corporation - v – Iraqi Airways Corp

[140]As regards registration, he was the author of the contemporary note on the DGCA letter of the 23rd August. He was also the addressee of the DGCA notification of the registration letters for AOA sent on the 25th August. As regards insurance, telephone contact between him and the insurance manager on the 25th August was recorded in the memorandum prepared by the insurance manager that day (in which the proposed usage is described as “trade”). Furthermore I find that his deputy’s letter of the 25th August requiring action to insure AOA for commercial use could only have been written with his express approval. The announcement dated the 4th September of the fact that AOA was covered was sent to him personally.

[141]Mr Saffi’s position is a fortiori. He was Director General of IAC. He was in direct contract with the Presidency Secretariat and with the Minister of Transport. He duly gave instructions to his subordinates as regards the preparation of the Kuwaiti aircraft for use on the Baghdad/Kuwait route; such is fully evident from the content of the Na’ama diary. His direct involvement in the process of absorbing the Kuwaiti aircraft within the IAC fleet is demonstrated by the fact that he was the recipient of the Presidency Secretariat order dated the 7th August and the author of the message to all employees dated the 25th August, not forgetting the report to the Presidency Secretariat of the 26th August. Reflecting his hands on approach to the detailed arrangements, he was copied into the correspondence regarding insurance, registration, the preparation of inventories and the engagement of the engineers. Knowledge and recollection of the true facts at the time of the hearing before Evans J.

[142]In their evidence before Evans J neither Mr Abbo nor Mr Saffi suggested that the events of August 1990 were difficult to recall, even if they might not have been expecting to deal with some of them. Indeed the scope of their personal involvement with the KAC aircraft in August 1990 renders it wholly improbable that they could have conceivably forgotten about almost every aspect of those remarkable events a year or so later.

[143]To the contrary their evidence was firm and unequivocal to the effect that, save in respect of very basic maintenance, KAC had had no involvement in any activity pertaining to the KAC aircraft prior to the 17th September. Furthermore, it is clear from my summary of the proceedings before Evans J that the suggestion by these witnesses that they had not been asked about the material matters must be rejected.

[144]Mr Saffi, arriving as he did some two months after Mr Abbo had given oral evidence, was in an unusually good position to correct any misconceptions that might have arisen. He did not do so. Indeed there is a striking entry in the Na’ama diary for the The Hon Mr Justice David Steel Approved Judgement Kuwait Airways Corporation - v – Iraqi Airways Corp 3rd November 1991, shortly after the second affidavit of Mr Saffi and shortly before the affidavits of Mr Abbo and Mr Al Shaikhly. The entry contains a transcription of the earlier entries referred to above for the 22nd August (the General Manager’s instructions to paint 8 airbuses round the clock), the 28th August (the roll-out of AOA), the 31st August (the roll –out of AOB) and the 15th October (the first revenue flight for AOA). This entry coincided with a meeting at the Ministry of Foreign Affairs attended by both Mr Saffi and Mr Nekash. I consider it proper to infer that Mr Saffi was not only fully aware of the existence of the diary (which was not disclosed until October 1999) but also reminded of parts of its content which were entirely inconsistent with his evidence.

[145]In any event, my findings as regards forgery imports with it a finding that Mr Abbo and Mr Saffi were only too aware of the Presidency Secretariat order of the 7th August and the steps taken in response to it at the time of the Evans J trial. I accept that these witnesses in fact got their heads together in order to seek to support the position that IAC’S activities only began after property in the aircraft was transferred to IAC by virtue of Resolution 369. On the legal advice that had been received by IAC, this would enable IAC to avoid exposure to KAC’S claim. There was accordingly a strong motive to distort the evidence in this way.

The law

[146]There was no dispute between the parties as to the relevant legal principles to be applied in an application to set aside a judgment for fraud:-(a) A judgment obtained by perjury is a judgment obtained by fraud for this purpose.

(b) The action seeking an order setting aside the earlier judgment must be based on new evidence which was not before the court that first heard the action and which the claimant could not with reasonable diligence have placed before that court.

(c) The new evidence must establish perjury in the sense that a person or persons sworn as a witness in the earlier action who could properly be treated as the The Hon Mr Justice David Steel Approved Judgement Kuwait Airways Corporation - v – Iraqi Airways Corp successful party itself wilfully made a statement in those proceedings which statement the person knew to be false or did not believe to be true.

(d) The burden is on the claimants to establish perjury as “distinctly more probable than not”.

(e) The disparity between the perjured evidence and the new evidence would be material if it ‘entirely changed the nature of the case’. See Hunter v Chief Constable of West Midlands

[1982] AC 529

, Odyssey Re v OIC Runoff (Langley J) 11th February 1999, Odyssey Re v OIC Runoff (Court of Appeal) 13th March 2000, Halsburys Laws of England, 4th Edition, Vol. 26, para 560-561, Spencer Bower: Res Judicata para 372.

[147]On my findings so far, it is axiomatic that:-a. The claimants have produced fresh evidence which was not before the court which first tried the action and which the claimants could not with reasonable diligence have adduced at that time.

b. Both Mr Saffi and Mr Abbo gave perjured evidence relating to the activities of IAC in regard to the Kuwaiti aircraft between 9th August and 16th September 1990.

[148]As regards whether either or both were to be treated as IAC itself, it was common ground that Mr Saffi was the directing mind and will of IAC. If the issue was determinative, I would hold that Mr Abbo also had the status and authority to be treated as the company: R v Andrews-Weatherfoil Ltd

[1972] 1 WLR 118

at p.124. At the material time he had been the Director of Quality Control with responsibility for all safety issues, including maintenance scheduling and liaison with the DGCA. By the time he gave evidence in 1991 he had been promoted to Assistant Director General (Technical) reporting direct to Mr Saffi.

[149]I turn now to consider whether the disparity between the perjured evidence and the new evidence entirely changes the nature of the case in regard to sovereign immunity during the relevant period, being that between the arrival of the aircraft in Iraq and Resolution 369. I have already quoted from Lord Goff’s speech in respect of this The Hon Mr Justice David Steel Approved Judgement Kuwait Airways Corporation - v – Iraqi Airways Corp period: see para. 28 above. As is apparent, that speech was based upon findings of fact made in reliance on IAC’s account that it had not been involved with the KAC aircraft to any material extent prior to RCC 369. As I have found, this account was entirely false. The obvious question arises whether, now that it is clear from the fresh evidence that IAC had gone well beyond the trivial acts bound up with the initial seizure of the aircraft and their removal to Iraq, the acts undertaken were carried out in the exercise of sovereign authority.

[150]Lord Goff summarised the test at page 1160 A as follows:- “It is apparent from Lord Wilberforce’s statement of principle that the ultimate test of what constitutes an act jure imperii is whether the act in question is of its own character a governmental act, as opposed to an act which any private citizen can perform. It follows that, in the case of acts done by a separate entity, it is not enough that the entity should have acted on the directions of the state, because such an act need not possess the characteristic of a governmental act. To attract immunity under Section 14(2), therefore, what is done by the separate entity must be something which possesses that character”.

[151]In reality, far from IAC confining itself to basic maintenance, IAC was responding to a government instruction to prepare the aircraft for commercial flights to Kuwait. Given the steps taken by way of a response, it is no longer arguable, in my judgment, that they were sufficiently related to the act of seizure to attract immunity. Per contra, IAC was, even during this interim phrase, engaged in the process of absorbing the KAC fleet and, to that end, had commenced changing the aircraft livery, re-registering them, insuring them and employing maintenance personnel. This in my judgment wholly changes the nature of the case. These acts of IAC, albeit on the direction of the Iraqi state, were not acts jure imperii.

[152]Put another way, the basis for denying immunity in respect of the period after the 17th September applies with equal force to the interim period. Lord Goff summarised the features of the later period as follows at page 1151D:- “On 17th September there came into effect RCC Resolution 369 which purported to dissolve KAC and to transfer all its assets to IAC. Until then, although IAC had carried out the basic maintenance referred to above, it had made no use of the KAC aircraft. Thereafter, however, IAC treated the aircraft as its own, incorporating them into its fleet and making such uses of them as it could in the prevailing circumstances, although such use was very The Hon Mr Justice David Steel Approved Judgement Kuwait Airways Corporation - v – Iraqi Airways Corp limited because of the almost complete cessation of international flights to and from Iraq. After RCC Resolution 369 to come into effect, at least one of the KAC aircraft was used for internal flights and at least two of the aircraft were re-painted with IAC livery.” In reality there was no sea change as a consequence of RCC Resolution 369 coming into effect. It merely purported to give legitimacy to the process of absorption, which was already well under way, as a matter of internal Iraqi law.

[153]I have not forgotten the submission made by IAC that it is inappropriate to treat the KAC aircraft as a fleet but that the question of the immunity must be assessed by reference to the acts undertaken in regard to each individual aircraft. However, I regard that submission as unrealistic. Whilst the process of registration, insuring and re-painting had only progressed so far as some of the aircraft were concerned, the reality is that the process was an on-going one in the context of effecting the absorption of the whole fleet. As Lord Wilberforce put it in Il Congreso del Partido

[1983] AC 244

at 268:- “The conclusion which emerges is that in considering under the ‘restrictive’ theory whether state immunity should be granted or not, the court must consider the whole context in which the claim against the state is made, with a view to deciding whether the relevant acts upon which the claim is based, should in that context, be considered as fairly within an area of activity, trading or commercial, or otherwise of a private law character, in which the state has chosen to engage, or whether the relevant act should be considered as having been done outside that area, and within the sphere of governmental or sovereign activity.”

[154]There remains the final question as to whether the nature of the case is changed in respect of the entire period from the 9th August to the 17th September. There was little, if any, argument on this issue. As I see it, IAC had already commenced activity unrelated to the original seizure when Mr Abbo and Mr Saffi flew to Kuwait on the 9th and 10th August respectively. As already noted, the thrust of the Presidential Order of the 7th August was already recorded in the Na’ama diary on the 12th August. Although the first airbus was not relocated to Baghdad until the 20th August for painting, I do not regard it as appropriate against this background that KAC should be bound by a finding that accords sovereign immunity to IAC in respect of any activities from the 9th August onwards.