Recognition and Enforcement of Foreign Judgments –
At the time of Iraq's invasion of Kuwait in 1990 and
subsequent occupation, the Iraqi government ordered its national
airline, the Iraqi Airways Company ("IAC"), to
appropriate the aircraft, equipment and parts inventory of the
Kuwait Airways Corporation ("KAC"). KAC brought an action
against IAC in the U.K. for damages as a result of the
appropriation of its property. After lengthy proceedings, the U.K.
courts awarded judgment against IAC for over $1 billion Canadian.
KAC then had the Republic of Iraq joined as a second defendant in
order to claim costs of the actions in the U.K. The U.K. High Court
of Justice made a further order requiring Iraq to pay $84 million
Canadian in costs.
KAC sought to have the costs order recognized in Quebec. At
issue was whether the Sovereign Immunity Act applied, and
if it did, whether or not the actions by Iraq fell into the
"commercial activity" exception in that Act. The Court
held that all actions by a foreign state are prima facie entitled
to protection under the Act, and that the onus was on KAC in this
case to show that the actions of Iraq fell within one of the
Act's exceptions. The only exception argued in this case was
the "commercial activity" exception.
The Court held that it was not enough to determine whether the
acts complained of were authorized or desired by Iraq, but rather
that the nature of the acts must be examined to carefully ensure a
proper legal characterization. To do so, it is necessary that the
findings of fact made by the British judge be accepted. In this
case, the U.K. court found that Iraq, the sole proprietor of IAC,
controlled and funded IAC's defence throughout the proceedings
and participated in the commercial litigation in the hope of
protecting its interest in IAC. In doing so, it was responsible for
numerous acts of forgery, concealing evidence, and lies. While the
initial seizure of the aircraft was a sovereign act, the U.K.
litigation in which Iraq intervened concerned the retention of the
aircraft, which was unconnected to the seizure of the aircraft.
Therefore, the actions fell within the exception, and Iraq could
not rely on the protection of the SIA.
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