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20-year legal battle shows no signs of ending Add to ...

It has already provided two decades of international intrigue worthy of a John le Carré novel. Now, with renewed court battles in London and Quebec - where corporate giant Bombardier Inc. is caught in the middle - a tangled dispute between the state airlines of old enemies Iraq and Kuwait shows no sign of ending soon.

The case dates back to the invasion of Kuwait by Saddam Hussein's Iraq in 1990. During its brief occupation, Iraq seized 10 airplanes owned by Kuwait Airways Corp. for its own airline, Iraqi Airways Co. In January, 1991, just before U.S.-led coalition forces launched the ensuing Persian Gulf war, lawyers for Kuwait Airways in London filed a lawsuit demanding restitution.

The resulting legal battle has become the longest commercial court fight in British history, according to Christopher Gooding, the London-based partner with Canada's Fasken Martineau DuMoulin LLP who has been steering the litigation since the beginning.

"The extraordinary thing is the fortitude and the determination of the Kuwaitis to have gone through all this," said Mr. Gooding, who has at times needed the protection of an armed security team because of fears of Iraqi reprisals as a result of his involvement in the case.

The marathon fight spilled over into Canada in 2008.

After winning judgments in London that awarded Kuwait Airways $1.2-billion in compensation and $84-million in legal costs (so far unpaid), lawyers for the airline tried to seize four planes that had been newly ordered by the Iraqis from Montreal-based Bombardier Aerospace.

Kuwait Airways argued the four planes would offset part of the unpaid British judgment. But Quebec's Court of Appeal blocked that attempt, ruling that Iraq enjoyed state immunity that made it unlawful to seize its planes. That ruling was overturned last October by the Supreme Court of Canada, which agreed with British court decisions that Iraq could not claim state immunity for a commercial activity.

Mr. Gooding praised two subsequent rulings from the Quebec Court of Appeal this month that dismissed other objections raised by Iraq; he described them as victories that pave the way for the case to be decided on its merits.

The case now returns to Quebec Superior Court and lawyers are expected to meet soon with a judge to set dates for trial.

The four Bombardier planes, which were part of a 10-aircraft order worth $400-million, have actually been delivered to Iraq, but Mr. Gooding said Kuwait Airways has received letters of credit from Iraq, guaranteeing that the airline will be paid if it wins its Canadian court case. The other six planes haven't been manufactured, nor has Bombardier been paid for them.

Mr. Gooding said the case in London, meanwhile, has to start again almost from scratch. Last May, Iraq announced that it was dissolving its lawsuit-plagued airline. The move came after Iraqi Airways attempted to restart service to London, an effort that ended with its maiden flight impounded at the behest of Kuwait Airways' legal team.

Months later, Iraqi Airways continues to fly to several Middle Eastern destinations. Mr. Gooding said the move to dissolve the carrier was nothing more than an attempt to avoid paying up, but it made his case even more complex. The judgment he won that had awarded Kuwait Airways $84-million in legal costs was actually against the Iraqi government - but the $1.2-billion award was against Iraq's airline.

So Mr. Gooding must now go back to court in London to try to force Iraq to cover its airline's liabilities. He said the Canadian court fight may also hinge on a similar problem: whether Bombardier's contract to buy the planes is with Iraq's airline, or with the government itself.

Many of the details of the case have the feel of a thriller waiting to be written. Britain's high court found that Iraqi Airways had committed perjury, forging documents detailing what happened to millions of spare aircraft parts. In the dying days of Mr. Hussein's regime, officials hid other key airline documents in the walls of Iraqi houses, some of which were found and turned over to Kuwaiti Airways lawyers only after the 2003 U.S. invasion of Iraq.

(Of the 10 planes that were originally seized by Iraq in 1990 - eight Airbuses and two Boeing 767s - four were destroyed on the tarmac at Mosul in the war in 1991. The other six were spirited away to Iran for safekeeping, but were later returned by Iran to the Kuwaitis.)

Lawyers in Canada for Iraq could not be reached for comment on Tuesday. But Iraqi officials have said publicly in the past that they should not pay for the actions of the former Hussein regime, having emerged from U.S. occupation as a newly democratic government.

Bombardier's contract for the remaining six new planes ordered by the Iraqis remains a question mark, and the company says it would still like to fill the order. "We find ourselves in the middle, and we are paralyzed by this ongoing dispute," spokesman John Arnone said.

Mr. Gooding said the airplane fight is just one of countless reparations questions that remain between Iraq and Kuwait, even two decades after the invasion.

Although he declined to give details about the risk to his personal safety as a result of the case, Mr. Gooding said it has rewarding. "It's an extraordinary story. And it's been a real privilege to be involved in the events of our times so closely."

 

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