Iraqi Airways continues to operate flights into Dubai and other international destinations more than eight months after the company was dissolved under orders from the Iraqi government.
The airline was dissolved as a result of a US$1.2 billion (Dh4.4bn) judgment obtained by Kuwait dating back to the First Gulf War.
Aqeel Kawthar, a spokesman for the airline, acknowledged its continuing operations and said dissolving Iraqi Airways could take "years". "Dissolving a company cannot happen over a day or night," he said.
What is more, the Iraqi government says it has no plans to pay Kuwait the judgment.
"We have hope that we can solve this issue by finding a meaningful solution and cancel these debts," said Nasser al Bandar, the manager of the aviation department at the ministry of transport in Baghdad. "We don't believe in the entire case, and we haven't paid any amount."
Iraq owes Kuwait the money after a series of UK court judgments stemming from the alleged theft of 10 aircraft and spare parts during Iraq's brief occupation of the neighbouring country, but it has failed to pay and instead has asked for its debts to be written off.
The Kuwaiti carrier has rejected those appeals, and criticised Iraq's refusal to make good on the legal award. "They seem to have one defence, which is 'we don't pay'," said Christopher Gooding, a lawyer representing Kuwait Airways.
Mr Gooding's team has attempted asset seizures in the UK, Germany and Sweden, including successfully blocking the aircraft manufacturer Bombardier in Canada from fulfilling Iraq's order for 10 CRJ900 short-range commercial jets.
As a result of the legal pressure, the government of Iraq officially dissolved the carrier in May, saying the flights would be replaced by private airline operators.
While the move was seen as a way for Iraq to avoid its legal obligations to Kuwait, Mr Gooding saidKuwait Airlines had commenced proceedings against the state of Iraq, holding it liable for the carrier's debts.
The dissolution announcement was followed by the immediate cancellation of Iraqi Airways flights to the UK and Sweden, two countries where the risk of asset seizure were regarded as highest. Soon after, a privately owned carrier, Alnaser Airlines, was created in Iraq. It flies to Europe and Kuwait and has outlined plans to open services to China, India and the US this year.
Using leased planes, Iraqi Airways continues operating its regional network with destinations including Amman, Damascus, Tehran, Istanbul and Dubai, where it operates from Terminal 2.
"They are operating blatantly and turning around to the world and saying 'we're just not going to pay'," Mr Gooding said.
The lawyer did not say whether there were plans to open further legal proceedings in the Gulf, but he did say Kuwait would not abandon the legal judgments against the airline. "Iraqi Airways needs to bear in mind the GCC's Reciprocal Enforcement Treaty," he said.