12 Jul 2012

Long-running aviation battle set to continue

The longest running legal dispute in English history - a battle between Kuwait Airways Corporation (KAC) and Iraqi Airways (IAC) - is set to rumble on after an attempted agreement stalled within the last few days.

Kuwait Airways: two decades of litigation

Kuwait Airways: two decades of litigation

The London office of Canadian business law and litigation firm Fasken Martineau has represented KAC since August 1990 in its attempt to win compensation from the Iraqis for alleged theft of its fleet and spare parts during the first Gulf war.
The initial claim was issued in the UK on 11 January 1991; however, a series of incidents – including perjury and fraud, according to the law firm – led to 12 years of previous decisions being overturned. In current proceedings, KAC seeks to render the Iraqi state liable for the payment of judgments against IAC.
A recent proposal by the countries’ transport ministries to settle the matter has also seemingly failed.

Unable to agree

Faskin partner Christopher Gooding commented: ‘The terms, which are far from clear, appear to provide for a payment of $300 million plus the right to receive the first $200m profits from an unspecified joint venture in which Kuwait is expected to invest an unspecified amount, which, in order to arrive at profits of $200m would presumably be substantial.’
Mr Gooding explained that lawyers acting for IAC and Iraq had been pressing since March for hearings to continue; they confirmed to the court at the end of June that no payment has been made and the parties had been unable to agree detailed terms, meaning there was little chance of a settlement.
Both sides now agree that a scheduled trial date in November for a hearing of preliminary issues is ‘almost certain to go ahead’.
Commented Mr Gooding: ‘My clear instruction from Kuwait Airways, as claimant in all actions, is to continue to preserve the rights of the airline totalling $1.2 billion – being assets of the state – against Iraqi Airways and the state of Iraq.’

Dissolved parliament

He pointed out that a further stumbling block to an out-of-court deal was that under Kuwait law, any final settlement must be ratified by parliament, which was dissolved last month after more than half of its MPs resigned in protest at a court's decision to annul an election that had given the Islamist-led opposition a majority.
Meanwhile, the Blog of Legal Times reports that a 30-year old dispute over interests in an Iranian dairy is nearing settlement.
The case – dubbed a ‘Sisyphean labour’ by the US Court of Appeals for the DC Circuit – began in 1982 when New York-based pharmaceutical company  McKessen sued the Iranian government  after partnering with Iranian investors in the 1960s to create a dairy in Iran. McKesson personnel fled the country during the Iranian Revolution in 1979.

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