Conversion

Kuwait Airways Corporation v Iraqi Airways Company (No 4 and 5) (TLR 21 November CA)

When Iraq invaded Kuwait in 1990 the Iraqi government directed IAC to remove ten aircraft belonging to KAC which were at Kuwait Airport. Four of the aircraft were taken to Mosul, where they were destroyed by coalition bombing, and the remaining six were taken to Iran. The Iraqi government passed Resolution 369 purporting to dissolve KAC and transfer its assets to IAC. This was in breach of clearly established principles of international law and in these circumstances the court was entitled to decline to recognise the Resolution. However, KAC were not entitled to recover damages in respect of the four aircraft at Mosul because they were not able to show that the physical damage to the aircraft would not have occurred but for the usurpation. IAC were only liable for losses flowing naturally and directly from their tort and such liability was subject to questions of remoteness, foreseeability and new intervening acts. In respect of the six aircraft flown to Iran, KAC were entitled to recover their losses consequential on their unlawful detention until the aircraft were returned to them. It was not open to IAC to argue that but for their intervention these aircraft also would have been destroyed by coalition bombing. The test of ‘but for’ was not known to English law and in respect of usurped and converted goods which had not been physically lost or damaged there was no material distinction between the Iraqi law of usurpation and English law of conversion, which was a tort as strict liability. The action was therefore remitted to the Commercial Court for an assessment of the damages flowing naturally and directly from the wrongful usurpation and conversion of the Iran six.