May 29 (Bloomberg) -- Iraqi Airways will appeal a court order to freeze its bank accounts in Jordan following a lawsuit by Kuwait Airways Corp., Karim al-Nuri, a spokesman for the Iraqi Minister of Transport, said.
“We are preparing to appeal the Jordanian court order,” he said in a phone interview from Baghdad today. “Our appeal is based on the fact that Iraqi Airways is a state company and thus enjoys immunity and cannot have its offices seized.”
The Iraqi national carrier’s offices in Amman were seized three day ago and assets of $1.5 million were frozen after the May 10 order by a Jordanian court, he said.
State-run Kuwait Airways is seeking $1.2 billion in compensation for 10 aircraft taken when Iraq, under the rule of former President Saddam Hussein, invaded Kuwait in August 1990. Kuwait Airways won a U.K. court order to freeze the Baghdad-based airline’s global assets on April 25 last year, the same day as an Iraqi Airways flight landed in London for the first time in 20 years.
The Iraqi government decided in May 2010 to dissolve Iraqi Airways within three years because of the legal battle with Kuwait. The airline has cancelled flights to Europe since last year and continues to fly to destinations in the Middle East.
Iraqi Airways is planning to pursue negotiations with Kuwaiti officials in order to find a solution to the conflict that would benefit both parties, al-Nuri said.
The Iraqi airliner is also still considering government plans to operate under a new company to avoid the legal dispute and compensation claims raised by Kuwait, he said. “We are considering some contracts with local and foreign companies, although there is nothing final for now,” he said.
Kuwait Airways “seized multi-million dollar funds in various Iraqi Airways bank accounts in Amman,” following the May 10 Jordanian court order, Kuwait Airways lawyer Christopher Gooding of law firm Fasken Martineau said in an e-mailed statement on May 24.
The claim is in addition to $40 billion in debt amassed by Iraq under the regime of Saddam Hussein. The country, holder of the world’s fifth-largest crude reserves, is struggling to rebuild its damaged infrastructure and continues to allocate 5 percent of its annual oil revenue to repay the debt, roughly half of which it owes to Kuwait.
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