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Fernando Morales/The Globe and Mail

The verdict is in, but the uncertainty continues.

Efforts by Bombardier Inc. to complete the sale of 10 of its regional jets to Kuwait Airways Corp. remain grounded - two years after initial delivery began - after the Supreme Court of Canada rendered a key decision in a bitter, drawn-out feud over compensation related to the Iraqi invasion of Kuwait in 1990.

In a unanimous (9-0) judgment, the Supreme Court on Thursday overturned two Quebec lower court rulings that said Iraq enjoys state immunity against Kuwait Airway's attempts to confiscate Bombardier regional jets sold to Iraq. The action is part of Kuwait Airway's move to recover up to $1.2-billion (U.S.) in losses from Iraq's wartime seizure and plunder of its fleet of jetliners.

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As part of its efforts to win compensation, Kuwait Airways has been trying to seize the new Bombardier planes sold to Iraq. The case spilled over from Great Britain to Canada, where Bombardier is based, but the Quebec Superior Court and the Quebec Court of Appeal both said Iraq enjoyed state immunity.

Bombardier managed to ship four of the CRJ-900s to Iraq but was prevented from proceeding with the rest of the order because of the court battle.

On Thursday, the Supreme Court ruled that Canada's State Immunity Act, which protects sovereign entities from legal decisions in other countries, does not apply in this particular case because the act clearly exempts commercial activity.

The ruling means that Kuwait Airways can go ahead with its appeal of the Quebec court decision upholding Iraq's right to state immunity.

It also leaves Bombardier in limbo as to whether it will be able to ship the remaining six jets ordered by Iraq.

Total value of the 10-plane deal is about $400-million.

"Bombardier is reviewing the court ruling. We are also in discussions with our customer," said Bombardier Aerospace spokesman John Arnone. "This is a complex situation that requires further study and consultation."

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Bombardier has said it will suffer financial harm if it is unable to deliver the CRJ-900s ordered by Iraq.

Christopher Gooding, a London-based lawyer acting for Kuwait Airways, said in an interview he is reassured by the Supreme Court decision.

Not to have overturned the lower-court decisions from Quebec would have "taken Canada on a path that was 180 degrees opposite to the rest of the world" in terms of the issue of state immunity, he said.

Kuwait Airways launched its legal battle in January 1991, just before a U.S.-led international coalition forced the Iraqi invaders out of the tiny Gulf state.

Iraqi officials have stated publicly that the actions being taken by Kuwait Airways are unfair because the government now being sued for reparations is part of a reconstructed democratic country and has nothing to do with the dictatorship of Saddam Hussein.







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