KAC awaits $300m compensation from Iraqi Airways

Christopher Gooding, of Fasken Martineau, London, who has been representing Kuwait Airways Corporation (KAC) since 2nd August 1990 in its legal fight to obtain compensation from Iraqi Airways (IAC) for the theft of its fleet and spare parts, said that fate of the case was yet to be decided.

The dispute between KAC and IAC is the longest running commercial case in the history of the English Courts, the writ was issued on 11 January 1991, mainly due to a series of findings of perjury and fraud against IAC which led to an over throwing of 12 years of previous decisions. In current proceedings KAC seek to render the State of Iraq liable for the payment of the judgments against IAC.

In a press release issued last Sunday the Iraqi Ministry of Transport said that the agreement concluded in March 2012 by the Iraqi government with its counterpart in Kuwait to attempt to settle the dispute between Kuwait Airways and Iraqi Airways, neither of which were parties to the agreement, had not been formalized.

The press release suggested the agreement provides for payment of $300million in cash to Kuwait and $200million to set up a joint airline: against a liability in excess of $1.2 billion.

“The terms of the proposed settlement are not as set out by Iraq. The terms, which are far from clear, appear to provide for a payment of $300million plus the right to receive the first $200million profits from an unspecified joint venture in which Kuwait is expected to invest an unspecified amount, which, in order to arrive at profits of $200million would presumably be substantial,” Christopher Gooding, said.

“The lawyers acting for IAC and Iraq, who, even from March have been pushing for hearings to continue, confirmed to the English High Court on 29th June that no payment has been made pursuant to the proposed “broad terms” agreement, the parties had been unable to agree detailed terms and that there was, in any event, no settlement agreement in existence between the primary parties to the action – Iraqi Airways and Kuwait Airways. Counsel for Iraq stated that the trial on preliminary issues, set to re-start in November, “was almost certain to go ahead.

“Identical indications have been made by counsel for IAC and Iraq to the Canadian Courts with regards to the trial due to start in Montreal in January.

“In the circumstances, my clear instructions from Kuwait Airways, as claimant in all actions, is to continue to preserve the rights of the airline totaling $1.2 billion – being assets of the State – against Iraqi Airways and the State of Iraq. Under the laws of Kuwait any finalized settlement would require ratification by Parliament – which has recently been dissolved.”

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