## Facts

- In August 1990 Iraq invaded and occupied Kuwait and took control of Kuwait’s airport.
- Iraqi forces seized ten Kuwait Airways Corporation (KAC) aircraft and rapidly moved them to Iraq.
- Iraq’s Revolutionary Command Council issued Resolution 369, purporting to dissolve KAC and transfer all its property worldwide, including the aircraft, to Iraqi Airways Company (IAC).
- The UN Security Council condemned the invasion and annexation as unlawful, declared Iraq’s measures “null and void,” and called on states not to recognize the annexation or measures implementing it.
- IAC treated the aircraft as its own by re-registering and repainting them, obtaining airworthiness certificates and insurance, and using them in commercial operations.
- During coalition military action in early 1991, four aircraft moved to Mosul were destroyed by coalition bombing (“Mosul four”).
- Six aircraft were flown to Iran and later returned to KAC in 1992 after negotiations that involved a US$20 million payment (“Iran six”).
- KAC sued in England for return/value of the aircraft and damages; earlier proceedings removed Iraq as an effective defendant on immunity grounds while allowing claims to proceed against IAC for post-decree conduct.

## Issues

1. Whether an English court should recognize Resolution 369 as transferring title to IAC, or refuse recognition on public policy grounds because it was part of an unlawful invasion/annexation condemned by the UN Security Council.
2. Whether KAC’s tort claims satisfied the common-law “double actionability” rule requiring actionability under both English law and the law of the place of the wrong (Iraq).
3. Whether IAC’s post-decree acts of dominion over the aircraft amounted to conversion (and an equivalent civil wrong under Iraqi law), notwithstanding that IAC did not carry out the initial armed seizure.
4. Whether, and to what extent, IAC was liable in damages for (a) losses connected to the Iran six and (b) the destruction of the Mosul four by coalition bombing.

## Decision

- The House of Lords refused to recognize Resolution 369 as effective to transfer title, holding that giving effect to the decree would offend public policy where it formed part of a flagrant breach of fundamental international law norms and a UN-backed policy of non-recognition.
- The House rejected non-justiciability/act-of-state objections insofar as the court was applying clear and authoritative international consensus reflected in UN Security Council resolutions.
- The double actionability requirement was satisfied: once Resolution 369 was disregarded for public policy, IAC’s conduct was actionable as conversion under English law and as a civil wrong under Iraqi law.
- IAC’s deliberate assertion of dominion—re-registering, repainting, insuring, and commercially operating the aircraft—constituted conversion because it was inconsistent with KAC’s ownership and extensive enough to exclude KAC from possession and use.
- For damages, KAC recovered substantial damages relating to the Iran six (including loss of use and consequential losses), subject to credits for return of the aircraft and sums paid to obtain their return.
- KAC largely failed to recover the value of the Mosul four because their destruction by coalition bombing was treated as an intervening cause breaking the chain of causation from IAC’s conversion to the ultimate loss.

## Legal Principles

- A forum court may refuse to recognize a foreign legislative act in private litigation when recognition would give effect to a measure integral to a serious breach of established international law and contrary to a strong international policy of non-recognition.
- Where international law norms are clear and authoritatively affirmed (including through UN Security Council resolutions), determining their legal consequences need not be treated as non-justiciable political controversy.
- Under the common-law double actionability rule, a court may apply the lex loci delicti while excluding a specific foreign decree on forum public policy grounds; the excluded decree cannot be used indirectly to defeat liability.
- Conversion can be committed by deliberate acts asserting ownership or control inconsistent with the true owner’s rights, even if the defendant did not physically seize the goods; conduct may constitute conversion if it effectively excludes the owner from possession and use.
- Damages in conversion follow ordinary compensatory principles, including recovery for loss of use and consequential losses where causation is established, but are limited where an independent intervening event (such as wartime destruction by third parties) breaks causation.

## Conclusion

The House of Lords held that English public policy required refusing recognition of Iraq’s confiscatory decree enacted as part of an unlawful annexation, found IAC liable in conversion for its post-decree dominion over KAC’s aircraft under double actionability principles, awarded substantial damages for the Iran six, and denied recovery for the Mosul four where coalition bombing was an intervening cause.


Kuwait Airways Corp. v. Iraqi Airways Co., [2002] UKHL 19 (H.L. 2002)