Supreme Court of Canada (“SCC”) in its judgment released on October 21, 2010, in Kuwait Airways Corp. v. Iraq, 2010 SCC 40, allowed Kuwait Airways Corp. (“KAC”)’s appeal from the Quebec Court of Appeal’s decision dismissing KAC’s application to enforce a UK judgment against Iraq based on the ground of state immunity.

The action arises out of Iraq’s invasion of Kuwait and seizure of KAC’s aircraft. KAC succeeded in proceeding against the Iraqi Airways Company (“IAC”) for damages and then initiated an action against Iraq for the costs of that action on the grounds that Iraq “funded, supervised and controlled all the litigation”.

KAC then sought recognition and enforcement of the UK judgment in Canada.

In its reasons, SCC stated that the rule of state immunity and exceptions to this rule must be considered under Canadian law, but based on finding of facts by the UK.

SCC found that the said litigation in which Iraq intervened to defend IAC concerned the retention of KAC’s aircraft after seizure, was a commercial act as opposed to a sovereign act and thus the commercial activity exception provided in section 5 of Canada’s State Immunity Act, R.S.C. 1985, c. S-18 applies.

David Alderson, LL.B, LL.M (Lond.)

Masha Loftus, M.A., J.D

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