Kuwait Airways Case: An Update From Germany

Kuwait Airways 777 on the runway

I’ve written a bunch about the Kuwait Airways litigation. The airline had refused to carry Israeli nationals. In the US case, which was an administrative proceeding before the Department of Transportation, the airline refused to carry an Israeli from New York to London. The airline shamefully dropped the route rather than obey an administrative order requiring it to comply with US antidiscrimination laws. In the UK case, the airline settled a case brought by an Israeli refused passage from London to Bangkok. And most recently, a German appellate court rejected a claim by an Israeli refused passage from Frankfurt to Bangkok via Kuwait City.

In my post on the German decision, I reluctantly said that it seemed rightly decided, because Kuwait law does not allow Israelis to enter the country. But in a recent article noted on Conflict of Laws, Prof. Dr. Marc-Philippe Weller and Markus Lieberknecht of Heidelberg University have opined that the decision was wrong. They focus on Article 9(3) of the Rome I regulation, which reads:

Effect may be given to the overriding mandatory provisions of the law of the country where the obligations arising out of the contract have to be or have been performed, in so far as those overriding mandatory provisions render the performance of the contract unlawful. In considering whether to give effect to those provisions, regard shall be had to their nature and purpose and to the consequences of their application or non-application.

They say that under Article 9(3), “German courts are precluded from applying foreign overriding mandatory provisions with an anti-Semitic objective, such as Kuwait’s boycott statute.” I will leave that to the German lawyers. The authors also mention an easier point that I find persuasive—Kuwait Airways is state-owned:

Kuwait Airways is a state enterprise owned by Kuwait, i.e. the very creator of the legal impediment (the boycott statute). Hence, it should not be allowed to rely on a self-created obstacle to refuse performance.

I think the distinction between Kuwait Airways and non-national carriers here is useful. It is not clear to me that if, say, Lufthansa refused to carry an Israeli from Frankfurt to Bangkok via Kuwait because it is following Kuwait law, it should be liable. But the authors are right to say that the Kuwaiti government itself should not be able to point to an legal impossibility it created.

The real answer, of course, is for Arab states to stop discriminating against Israelis on the basis of nationality.

3 responses to “Kuwait Airways Case: An Update From Germany”

  1. Lukas

    “But the authors are right to say that the Kuwaiti government itself should not be able to point to an legal impossibility it created.”

    I do have a question on this matter regarding its relation to the question of state immunity:

    If we were to allow compensation for refusal of service on the grounds that the state party is ultimately responsible for the impossibility, would we not break the principle that one country’s courts cannot decide upon the legality of another states’ laws?

    The ban of Israelis in Kuwait is not (as far as I understand it) specific to Kuwait Airlines but is enforced for everything (in 2014 there were, apparently, allegations that potatoes from Israel were sold in Kuwait which resulted in an investigation).

    It seems to me that expanding the scope of the commercial exception to immunity so far as to apply to the laws of the country in question is not the correct way to solve this problem.

    However, if Kuwait cannot be persuaded to stop such boycotts, the obvious decision to me would be to revoke Kuwait Airlines’ right to operate in Germany, if it cannot do so in a way that complies with German law. That way, there is no intrusion into Kuwait’s immunity but also no discrimination violation.

    1. Thanks, Lukas, for the comment. It seems to me you are really asking whether the lawsuit would be based on the foreign state’s commercial activity abroad (acting as a common carrier, refusing to sell a ticket) or whether it is instead based on its policymaking at home (enacting a boycott law). This is the Saudi Arabia v. Nelson issue about the gravamen of an FSIA case. My own view is that foreign states that act commercially generally shouldn’t be able to point to their own policymaking rationales, because (at least in the US) to determine whether an act or omission is commercial, you have to look at its nature, not its purpose.

    2. And I agree with you that the airline could and maybe should be prohibited from doing business in Germany on Kuwait’s terms. This was the solution in the US when the Department of Transportation brought an administrative proceeding.

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