Neutral Citation Number: [2007] EWHC 1474 (Comm)
Case No: 2003 FOLIO 223
IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
COMMERCIAL COURT

Royal Courts of Justice
Strand, London, WC2A 2LL

Date: 21/06/2007

Before :

MR JUSTICE DAVID STEEL
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Between :

	KUWAIT AIRWAYS CORPORATION	Claimant	
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	IRAQI AIRWAYS COMPANY	Defendant	

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Sam Wordsworth (instructed by Howard Kennedy) for the Claimant

Hearing dates: 22 May 2007
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Judgment
Mr Justice David Steel: 
1.	These proceedings see the end of this remarkable litigation which commenced in January 1991. The present action concerns aspects of quantum, focussing on five heads of claim. The Defendant (IAC) has not participated in the proceedings and indeed has never made any response to the Claimant’s (KAC) Particulars of Quantum served in January 2006. Nor has IAC attended the trial on 22 May 2007 despite having been notified of the trial date in March. Nonetheless KAC has, through its counsel Mr. Wordsworth, presented its claim in a fair and thorough manner.
2.	It is not necessary to rehearse the background facts or the course of the litigation. They are summarised in the judgment of Mr. Justice Cresswell dated 12 November 2004 and the judgment of Mr. Justice David Steel dated 14 November 2005.
3.	The five heads of claim are in summary as follows:
i)	a claim for user damages in respect of the Mosul Four aircraft in the period prior to their destruction in the amount of $19,990,476.
ii)	a substitute capacity claim in respect of the two Boeing 767 aircraft which formed part of the Mosul Four in the period leading up to the date when replacement aircraft would have become operationally efficient in the amount of $8,576,410.
iii)	 a loss of profit claim in respect of the two Airbus A300 C’s (through until  the date of operationally efficient replacement of the aircraft on 31 December 1991) which were the other two aircraft forming part of the Mosul Four over the same period in the amount of about $28,323,000 (or alternatively $22,271,078).
iv)	a claim for user damages in respect of the Iran 6 for the period between 9 August and 17 September 1991 in the amount of $6,561,668.
v)	a claim to reflect an adjustment to a head of damage found proved by Langley J  in respect of one aircraft (namely AHI) from the earlier date of 9 August 1990 in the sum of $624,780.
4.	 I propose to discuss each claim very briefly.
A.	User damages for Mosul Four
These aircraft were incorporated into the IAC fleet as from the 9 August. During the period leading up to their destruction, the Claimant is entitled to user damages: see KAC v IAC (No 4 & 5) [2002] 2 A.C. 883 at p1094, Strand Electric and Engineering Co. Ltd v Brisford Entertainments Ltd [1952] 2 Q.B. 246 and Inverugie Investments Ltd v Hackett [1995] 3 All E.R. 841. In considering the rate at which to calculate the user damages it is appropriate to have regard to all the surrounding circumstances: see Experience Hendrix v PPX Enterprises Inc [2003] EWCA Civ 323.  For present purposes, this includes the area in which the aircraft were being used (a war zone), the short period involved and the poor credit rating of the lessees (IAC).  The quantum of the claim is evidenced by an expert’s report of Barbara Beyer dated 14 March 2006. She makes a premium allowance for these special factors and assesses the rate as 2.2% of market value. The resulting figure is $19,990,476 which I accept.
	B. Substitute capacity
This claim by way of substitute capacity covers the claim in respect of the two Boeing 767 aircraft up to the notional date of replacement. The starting point is March 2001 when KAC learned of the destruction of the Mosul Four and the departure of the Iran 6 to Iran. The dry lease claim reflects a proportion of the costs of leasing 5 substitute aircraft (the balance having been recovered in other proceedings) plus a pro-rata adjustment to reflect the work needed to refurbish the aircraft on their return to the owners. The figure involved I find to be $3,789,312. In addition a wet lease claim is advanced in respect of two aircraft in performing flights that would otherwise have been undertaken by the Iran 6 between June and August 1991 in respect of one aircraft and between August and October 1991 in respect of the other.  This is 	supported by the evidence of Sheikh Talal, the Chairman of KAC. The sum involved I find to be $4,787,098.  This makes a total of $8,576,410.
C. Loss of profit	
On the Claimant’s primary case this claim for loss of profit is put forward on the basis that leases would have been entered into with the Kuwaiti Government for the carriage of passengers which, in the circumstances prevailing after the war, would have been at premium rates. In this regard, I accept the evidence of Sheikh Talal that the two aircraft would have leased out at $5,500 per hour, on the basis of 300 hours per month.  This rate was accepted as appropriate by Mr. Al-Hunaif who had been Undersecretary of the Ministry of Finance of Kuwait at the relevant time.  The quantum of the claim is calculated in the expert’s report of Andrew Charlton dated 23 April 2007 (as corrected by him in oral evidence). The total claim amounts to $28,323,080 which I accept. This makes it unnecessary to consider the alternative claim based on cargo operations.
D.	 User damages for the Iran 6
Similar considerations to those spelt under claim A apply to this claim.  It covers the period up to 17 September. I find the claim duly proved in the sum of $6,561,668.
E.	 Claim for AHI
This is a small claim by way of adjustment of lost profits in respect of the lease out of Aircraft AHI. The claim has already been allowed as from 17 September 1990. This must now run from 9 August 1990. I find the sum involved to be $624,780.