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Public international law - Private international law - Jurisdictional immunity - Commercial activity - Foreign judgments - Does the State Immunity Act, R.S.C. 1985, c. S-18 (“SIA”) apply in the context of proceedings to recognize a foreign judgment, especially where the issue of state immunity has already been addressed and decided upon by the foreign court in the judgment whose recognition is being sought? - On which party lies the burden of establishing entitlement to immunity pursuant to the SIA and/or the commercial exception set forth at s. 5 of the SIA? - Does the notion of “commercial activity” (jure gestionis) encompass every act which may not properly be characterized as a sovereign act (jure imperii) or is the “commercial activity” exception different under Canadian law as compared to customary international law, British law and American law? - What are the criteria that are to be used to determine if an act is jure gestionis? - When a state has been condemned for actions which bring the administration of justice into disrepute, such as perjury and the forging of false documents, is it entitled to claim state immunity?

In 1991, the Appellant Kuwait Airways Corporation (“KAC”) brought proceedings in England against the Iraqi Airways Company (“IAC”) and the Respondent Republic of Iraq, the owner of IAC. KAC claimed the return of ten of its aircraft and aircraft parts that had been appropriated by IAC during the Gulf War. The question of jurisdictional immunity arose in relation to both IAC and Iraq. As of 1993, Iraq was no longer directly a party to the proceedings because the writ had not been validly served on it. The English courts initially found that IAC had limited jurisdictional immunity but set aside that decision following additional proceedings and found that it had no immunity. In 2005, the English courts ordered IAC to pay KAC more than $1 billion Canadian in principal and interest. In accordance with English law, KAC then applied to add Iraq as a second defendant, but only for the costs of the actions, which amounted to about $84 million Canadian. The English court allowed the application, finding that Iraq did not have jurisdictional immunity in the circumstances because it had funded, supervised and controlled the litigation with KAC and all the defences raised by IAC, which was a “commercial transaction” within the meaning of the State Immunity Act 1978 (U.K.), 1978, c. 33. KAC then applied to have the English judgment recognized in Quebec. It also arranged for the seizure before judgment of two immovables owned by Iraq in Montreal and some aircraft built for Iraq by the Respondent Bombardier Aerospace that had not yet been delivered. Iraq filed a motion for declinatory exception, asking that the proceedings be dismissed for lack of jurisdiction because of the immunity provided for in s. 3 of the State Immunity Act. The courts below allowed Iraq’s application and refused to recognize the English judgment. They found that funding, supervising and controlling the litigation and the defences raised by IAC was not a “commercial activity” within the meaning of the State Immunity Act. The exception to jurisdictional immunity was therefore inapplicable.