Court to hear Kuwait appeal

MONTREAL — Bombardier’s (TSX:BBD.B) efforts to manoeuvre through a global economic slowdown were shaken Thursday after the Supreme Court of Canada gave life to a lawsuit by Kuwait that could decide the fate of an aircraft order the industrial company won from Iraq.

MONTREAL — Bombardier’s (TSX:BBD.B) efforts to manoeuvre through a global economic slowdown were shaken Thursday after the Supreme Court of Canada gave life to a lawsuit by Kuwait that could decide the fate of an aircraft order the industrial company won from Iraq.

The Montreal-based manufacturer said it would suffer financial harm if it is unable to deliver a firm order for 10 CRJ900 NextGen aircraft to Iraq with a total list price of US$398 million. The contract would rise to US$573 million if options for 10 additional aircraft are exercised.

“We could be impacted significantly by financial setbacks and layoffs if the agreement continues to be imperilled like that,” spokesman Marc Duchesne said in an interview.

Bombardier last fall shipped the first of 10 CRJ900 NextGen regional jets ordered by the Iraqi government in March 2008. It was able to deliver the aircraft before a court order was reinstated preventing other planes from being shipped to the Middle East.

Duchesne wouldn’t say how many of the ordered aircraft have been completed, nor where they are being kept.

On Thursday, the high court granted leave to appeal a Quebec Court of Appeal’s ruling dismissing Kuwait Airways’ efforts to recognize a British judgment that would allow it to seize Iraqi government assets in Canada, including two Quebec properties.

The order may have been salvaged had the court refused to hear the case.

At issue is Iraq’s ability to claim jurisdictional immunity involving a foreign judgment.