Kuwait Airways has been cleared by a Jordanian court to seize money in accounts owned by Iraqi Airways thought to contain tens of millions of dollars.
The seizure follows a series of judgments in English courts that froze US$1.2 billion (Dh4.4bn) of the Iraqi airline's global assets. In a case that lasted two decades in the UK courts, Kuwait Airways won the compensation of 10 aeroplanes and spare parts as a result of Iraq's invasion of Kuwait in 1990.
Christopher Gooding, a partner at the Fasken Martineau law firm in London who has represented the Kuwaiti airline since 1990, said that after all attempts at negotiation had faltered, the only option was to locate and seize assets belonging to the state-owned Iraqi Airways and for the Iraqi state to satisfy the UK courts' judgments.
"Our door has been open for 21 years, and it's difficult to understand why there has not been a commercial solution available," Mr Gooding said. "We are baffled as to why there has not been a serious and sensible approach." The effect of the seizure in Jordan of Iraqi Airways' assets would be "severe", Mr Gooding said. It is unclear exactly how much money remains in the Jordanian accounts, but a court-ordered disclosure of the assets recently showed a balance of about $130 million.
After seizing money in Jordan, Mr Gooding said Kuwait Airways would go after state and airline assets in 15 jurisdictions where English court rulings are enforceable.
He would not say which countries were next, but pointed to soon-to-expire UN restrictions on financial claims against Iraq's oil assets as an opportunity for further seizures. "The main point of this is to serve notice on the Iraqi state that come June 30 when the UN Security Council restrictions disappear on oil assets, we will be seizing oil assets when and where we can," he said. "You can expect other jurisdictions to get hit shortly."
The Kuwaiti airline has also taken its claims to Canada, where courts have cleared the carrier to take office buildings owned by the Iraqi government.
With no end in sight for the dispute - it is the longest-running case to be held in the English commercial courts - the Iraqi government decided last year to put Iraqi Airways into bankruptcy to shield it from legal liability. The carrier is continuing to operate as its finances and legal problems are sorted out.
Iraq and Kuwait have attempted to thaw a sustained period of cool relations that persisted even after the fall of Saddam Hussein in 2003. Despite a number of diplomatic overtures, however, the countries have made little progress in resolving their differences.
Iraqi ministers visited Kuwait last month to talk about the airline dispute and other issues overhanging the countries' strained relations that date to the First Gulf War. Another disagreement brewing over the close proximity of ports along the Iraq-Kuwait border, however, does not bode well for any quick solution.
"We wanted to reach an amicable solution with the Kuwaitis. However, with the eruption of the ports case, it appears that the relationship will continue to be strained for some time," said Nasser al Bandar, the manager of the aviation department at the transport ministry in Baghdad.