Summary

Keywords

Courts - Jurisdiction - Private international law - Extraterritoriality - Civil procedure - Provisional remedies - Seizure before judgment - Garnishment - Dutch company seeking enforcement in Quebec of international arbitration awards issued against Iraq - International Air Transport Authority (IATA) based in Montreal and collecting fees on behalf of Iraqi Civil Aviation Authority for use of Iraqi airspace by international airlines - Fees deposited in IATA bank account in Switzerland -Writ of seizure before judgment by garnishment issued against IATA as garnishee - Whether Quebec courts have territorial jurisdiction to garnish funds held outside Quebec by garnishee located within Quebec - Whether funds collected and held by mandatary on behalf of third party and deposited in mandatary bank account are property of mandatary or third party

Summary

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Instrubel, N.V., a Dutch company, is suing the Republic of Iraq to recover the price of weapons and other war-related equipment it sold to Iraq during Sadam Hussain’s regime. Instrubel’s claim was recognized by the International Court of Arbitration in Paris, which issued two arbitral awards in 1996 and 2004. The value of these awards was approximately $32 million as of March 12, 2003. Thus far, Iraq has not paid any moneys due. Instrubel filed a motion for recognition and enforcement of the two arbitral awards in Quebec, alleging that Iraq has significant assets in Quebec; specifically, the International Air Transport Association (“IATA”), whose headquarters are based in Montreal, bills and collects air navigation and aerodrome charges payable by various worldwide airlines to the Iraqi Civil Aviation Authority (“ICAA”), in order to be permitted to fly over Iraq’s airspace. Instrubel therefore sought to enforce the arbitral award by seizing funds collected by IATA - which Instrubel argues IATA holds for the ICAA, for the benefit of Iraq.

Instrubel then obtained (from a judge of the Superior Court of Quebec) a writ of seizure before judgment, by means of garnishment from IATA as a third party garnishee, pending final judgment of Instrubel’s overall claim against Iraq. The writ of seizure ordered IATA to declare all amounts of money it held for the benefit of Iraq, worldwide. In response, the Iraqi appellants filed a motion seeking to quash the writ of seizure, citing various grounds including a lack of jurisdiction by Quebec courts over property located outside Quebec, given that the funds collected and held by IATA were in fact deposited and located in a bank account outside the province, in Switzerland.

The Superior Court of Quebec granted the motion to quash in part, finding that the writ of seizure was invalid insofar as it related to property located outside the province. The Quebec Court of Appeal set aside the Superior Court’s decision, reinstated the scope of the writ of seizure in full, and dismissed the motion to quash, finding that the Quebec courts did have jurisdiction to issue and enforce the writ, even with respect to property located outside the province. Both IATA and the Iraqi appellants appeal the Court of Appeal’s decision.

Lower Court Rulings