Kuwait Airways Corp v Iraqi Airways Co & Anor [2002] UKHL 19

'the court would be asked to review transactions in which four sovereign states were involved, which they had brought to a precarious settlement, after diplomacy and the use of force and to say that at least part of these were "unlawful" under international law.'

'conversion is an act of deliberate dealing with a chattel in a manner inconsistent with another's right whereby that other is deprived of the use and possession of it .' (Emphasis added)

'The board resolution makes it completely clear that as soon as RCC resolution 369 came into effect IAC resolved to treat these ten aircraft as their own and to exercise dominion over them in denial of KAC's rights, and this continuing usurpation and conversion of KAC's aircraft subsisted right up to the issue of the writ in this action by which KAC demanded the return of all these aircraft.'

'I think, however, of late the tendency of the courts has been to treat this action with more common sense than it had been previously treated. Just as in other actions of tort it is held that a person to whom a wrong has been done can only recover the damages which flow from the wrong; so in an action of trover it is the tendency of the courts to apply the same rule.'

'You do not give damages in an action for detention in poenam; it is not a paternal correction inflicted by the court, but simply compensation for the loss. … I cannot think that the law could really lay down anything so ridiculous as that a man should be compensated whether he suffered damages or not.'

'[d]amages in tort are awarded by way of monetary compensation for a loss or losses which a plaintiff has actually sustained'

'In many cases the value of the chattel itself will either represent this loss or form an important element in its calculation; but consideration of the value of the chattel should not be allowed to obscure the principle that what the plaintiff is entitled to recover is his true loss.'

'persons deal with the property in chattels or exercise acts of ownership over them at their peril'

"I.(1) That the Kuwait Airways Corporation be dissolved and all its fixed and liquid assets, rights and liabilities be transferred to the Iraqi Airways Co, who will register all assets in accordance with domestic and international laws. (2) All assets belonging to Kuwait Airways are to be transferred to the Iraqi Airways Co, as soon as this resolution comes into effect." "

"1. By this judgment of the court, the Court of Appeal upheld the judgment of Mance J. In particular, it ruled that an English court was entitled to decline to recognise Resolution 369 of the Revolutionary Command Council of Iraq. It held that . . . the resolution was extraterritorial in its effect and that it would be contrary to English public policy to grant recognition to a resolution which was in breach of clearly established principles of international law . . . 2. The court also upheld that part of the judgment of Aikens J in which he found that KAC could not recover damages in respect of the loss of the Mosul Four . . . The court upheld the ruling on the facts and upheld his decision on the law because, as required by Iraqi law, KAC was not able to show that the physical damage to the aircraft would not have occurred but for the usurpation . . . 3. The court allowed KAC's appeal against that part of the judgment of Aikens J in which he held that KAC was not entitled to recover loss flowing naturally and directly from IAC's wrongful usurpation and conversion of the Iran Six. Although it upheld his findings of fact in all material respects, it held that he was wrong to apply a 'but for' test as a matter of English law, and that in relation to usurped and converted goods which had not been physically lost or damaged there was no material distinction between the Iraqi law of usurpation and the English law of conversion, which is a tort of strict liability . . . 4. The action will therefore be remitted to the Commercial Court for an assessment of the damages flowing naturally and directly from the wrongful usurpation and conversion of the Iran Six."

"Resolution 369 opens with the provision for KAC's dissolution. It is in that context that all its rights and liabilities, and all its assets, are to be transferred to IAC. If, however, the provision for KAC's dissolution is ineffective for recognition in this forum, it is hard to see why a limited transfer of such assets as happened to be situate in Iraq at the relevant time should be recognised. Moreover, there is no separate provision for transfer of KAC's assets located in Iraq. It is not therefore as though the application of a blue pencil rule to extraterritorial assets could save a provision dealing with assets within Iraq."

"But I think - as Upjohn J thought (see In re Claim by Helbert Wagg & Co Ltd [1956] Ch 323, 334) - that it is part of the public policy of this country that our courts should give effect to clearly established rules of international law. Of course on some points it may be by no means clear what the rule of international law is. Whether, for example, legislation of a particular type is contrary to international law because it is 'confiscatory' is a question upon which there may well be wide differences of opinion between communist and capitalist countries. But what we are concerned with here is legislation which takes away without compensation from a section of the citizen body singled out on racial grounds all their property on which the state passing the legislation can lay its hands and, in addition, deprives them of their citizenship. To my mind a law of this sort constitutes so grave an infringement of human rights that the courts of this country ought to refuse to recognise it as a law at all."

"the very matters which are before the court, and which KAC seek to rely on for the purpose of showing that Resolution 369 should not be recognised, have already been determined, if not by an international court, at any rate by an international forum, of which nearly all the nations of the world are members, and whose decisions are binding on all those nations, including the United Kingdom and Iraq."

"1. When the conflict rule of the forum refers the court to a foreign law (lex causae), the court will not apply the latter if and in so far as it expresses or results from an international delinquency .…5. The question whether an international delinquency has been committed is to be answered according to the generally accepted principles of international law, but a municipal court will not answer it affirmatively except where both the law and the facts are clearly established."

"Their Lordships, having considered all of these opinions, recognise the conflict which exists between, on the one hand, the desirability of a rule which is certain and clear on the basis of which people can act and lawyers advise and, on the other, the desirability of the courts having the power to avoid injustice by introducing an element of flexibility into the rule. They do not consider that the rejection of the doctrine of the proper law of the tort as part of English law is inconsistent with a measure of flexibility being introduced into the rules. They consider that the majority in Boys v Chaplin [1971] AC 356 recognised the need for such flexibility. They accept that the law of England recognises that a particular issue between the parties to litigation may be governed by the law of the country which, with respect to that issue, has the most significant relationship with the occurrence and with the parties. They agree with the statement of Lord Wilberforce, at pp 391-392, … as to the extent and application of the exception. They accept, as he did, that the exception will not be successfully invoked in every case or even, probably, in many cases and, at p 391H, that 'The general rule must apply unless clear and satisfying grounds are shown why it should be departed from and what solution, derived from what other rule, should be preferred."

"It is only in special circumstances where, after examination of the policy underlying the law which may be applied and the interests of the parties to be affected, it is clear that the lex loci delicti has no real connection with the proceedings, that the exception can be invoked, enabling a plaintiff to recover damages available in the lex fori but not available in the lex loci delicti. Such a requirement should do much to alleviate any fears that unacceptable uncertainty will be introduced into this area of the law."

"Where, however, the foreign act of state plea fails, whether because the act of state purports to legislate extraterritorially or because the English court refuses to recognise the foreign law even though acting territorially, the foreign law ceases to be of relevance whether as lex situs or as lex loci delicti."

"the liability of the appellants, and the right of the respondents to recover damages from them, as the owners of the Halley , if such liability or right exists in the present case, must be the creature of the Belgian law . . . ."

"the English court admits the proof of the foreign law . . . as one of the facts upon which the existence of the tort, or the right to damages, may depend, and it then applies and enforces its own law so far as it is applicable to the case thus established; but it is . . . alike contrary to principle and authority to hold that an English court of justice will enforce a foreign municipal law, and will give a remedy in the shape of damages in respect of an act which, according to its own principles, imposes no liability on the person from whom the damages are claimed."

"We cannot doubt that in such a case no right of action would arise here. It appears to us clear that where by the law of another country an act complained of is lawful, such act, though it would have been wrongful by our law if committed here, cannot be made the ground of an action in an English court."

"A right of action, whether it arise from contract governed by the law of the place or wrong, is equally the creature of the law of the place and subordinate thereto . . . . [T]he civil liability arising out of a wrong derives its birth from the law of the place, and its character is determined by that law."

"Because the thing done, though contrary to our English law, was, according to the law of Jamaica at that time, a lawful act, and therefore no complaint in respect of the supposed tort committed in Jamaica could have been made a subject of action in this country."

"[The Sultan] has authorised it and declared authoritatively that it was a perfectly lawful act according to the law of Muscat, and I am of opinion that no English tribunal is capable of going behind that declaration and saying that the Sultan of Muscat was wrong in his exposition of his own law . . . . [I]t appears to me that any other decision would be open to very serious questions of policy if, in every case where the lord of a country has declared what the law of his own country is, it were open to an English tribunal to enter into the question and to determine, as against him, what was the law of his country."

"[Their Lordships] accept that the law of England recognises that a particular issue between the parties to litigation may be governed by the law of the country which, with respect to that issue, has the most significant relationship with the occurrence and with the parties."

"To my mind a law of this sort constitutes so grave an infringement of human rights that the courts of this country ought to refuse to recognise it as a law at all."

"Our courts would certainly refuse to entertain an action by the Ruritanian state to obtain possession of the traitor's property here; but I can see no sufficient reason why we should continue to regard him as a Ruritanian citizen for the purpose of deciding whether or not he was entitled to property here, his right to which depended on his being or not being a Ruritanian citizen at some point of time."