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    133. The House left open for further consideration the question whether the issues arising from the acts of IAC of which KAC complains are justiciable in the English courts. As Lord Goff explained, at p 1165G, it was not possible at that stage to ascertain with any precision what, on the facts of the case, were the issues raised by KAC's claim against IAC and IAC's defence to that claim. Now these issues are out in the open following the trial of the issues relating to liability by Mance J, on which he gave judgment on 29 July 1998: [1999] CLC 31. The situation which has been revealed by the evidence about the activities of IAC and the Iraqi Government is not perhaps as clear cut as the majority of their Lordships believed it to be when they held that IAC was not acting in the exercise of sovereign immunity after RCC Resolution 369 came into effect. But it is common ground that the focus of attention has now shifted entirely to questions about the effect of the resolution on the remedy which KAC seeks to obtain under domestic law in the English courts.

    134. These questions, which form the subject matter of the first chapter of IAC's appeal, can best be grouped under two main headings which, in their logical order, are as follows: (1) is the effectiveness of Resolution 369 as a legislative act vesting title in the aircraft in IAC justiciable in the English courts? (2) if it is, and Resolution 369 is held to offend against English public policy, does it nevertheless have to be recognised as vesting title to the aircraft in IAC for the purposes of the principle of double actionability? I agree with all that my noble and learned friend Lord Nicholls of Birkenhead has said in answer to these questions. But I should like to add these observations.

    135. Important questions of principle are raised by the highly unusual facts of this case. There is no doubt as to the general effect of the rule which is known as the act of state rule. It applies to the legislative or other governmental acts of a recognised foreign state or government within the limits of its own territory. The English courts will not adjudicate upon, or call into question, any such acts. They may be pleaded and relied upon by way of defence in this jurisdiction without being subjected to that kind of judicial scrutiny. The rule gives effect to a policy of "judicial restraint or abstention": see Buttes Gas and Oil Co v Hammer (No 3) [1982] AC 888, 931F-934C per Lord Wilberforce. As the title to moveable property is determined by the lex situs, a transfer of property effected by or under foreign legislation in the country where the property is situated will, as a general rule, be treated as effective by English law for all relevant purposes.

    136. It would clearly be possible for a "blue pencil" approach to be taken to Resolution 369, by reading it down so that it applied only to the property of KAC that was situated at the time of the resolution within its own territory. The normal rule is that legislative action applied to property within the territorial jurisdiction will be internationally recognised, despite the fact that it has been combined with action which is unenforceable extraterritorially. If this approach is adopted, that part of Resolution 369 which vested title in the aircraft in IAC will provide IAC with a complete defence to this action. Its legality in international law will not be justiciable in these proceedings.

    137. IAC accepts however that the normal rule is subject to an exception on grounds of public policy. The proposition which it accepts is that the exception applies if the foreign legislation constitutes so grave an infringement of human rights that the courts of this country ought to refuse to recognise the legislation as a law at all: Oppenheimer v Cattermole [1976] AC 249, 278, per Lord Cross of Chelsea. The proposition which it disputes is that the public policy exception extends to breaches of international law. IAC's argument is presented as one of principle. Arguments directed to breaches of international law are non-justiciable. The public policy exception must be tightly restricted. The only exception that has been judicially recognised is the human rights exception. As that exception is not invoked in this case, it has a complete defence to these proceedings under the act of state rule.

    138. It is clear that very narrow limits must be placed on any exception to the act of state rule. As Lord Cross recognised in Oppenheimer v Cattermole [1976] AC 249, 277-8, a judge should be slow to refuse to give effect to the legislation of a foreign state in any sphere in which, according to accepted principles of international law, the foreign state has jurisdiction. Among these accepted principles is that which is founded on the comity of nations. This principle normally requires our courts to recognise the jurisdiction of the foreign state over all assets situated within its own territories: see Lord Salmon, at p 282E. A judge should be slow to depart from these principles. He may have an inadequate understanding of the circumstances in which the legislation was passed. His refusal to recognise it may be embarrassing to the executive, whose function is so far as possible to maintain friendly relations with foreign states.

    139. But it does not follow, as Mr Donaldson QC for IAC has asserted, that the public policy exception can be applied only where there is a grave infringement of human rights. This was the conclusion that was reached on the facts which were before the House in the Oppenheimer case. But Lord Cross based that conclusion on a wider point of principle. This too is founded upon the public policy of this country. It is that our courts should give effect to clearly established principles of international law. He cited with approval Upjohn J's dictum to this effect in In re Claim by Helbert Wagg & Co Ltd [1956] Ch 323, 334. As Upjohn J put it, at p 349, the true limits of the principle are to be found in considerations of public policy as understood in the courts. I think that Mr Donaldson sought to achieve a rigidity which is absent from these observations when he said that, whatever norm one finds that has been abused, it cannot be applied in our law if it is a manifestation of international law and does not fall within the recognised exception relating to human rights.

    140. As I see it, the essence of the public policy exception is that it is not so constrained. The golden rule is that care must be taken not to expand its application beyond the true limits of the principle. These limits demand that, where there is any room for doubt, judicial restraint must be exercised. But restraint is what is needed, not abstention. And there is no need for restraint on grounds of public policy where it is plain beyond dispute that a clearly established norm of international law has been violated.

    141. The facts which bear on this issue are quite straightforward. The United Nations Charter and the Security Council Resolutions which were adopted in response to the invasion of Kuwait provide the context. The aims of the Charter as set forth in the Preamble seek to ensure that armed force is not used save in the common interest, and that conditions are established under which justice and respect for the obligations arising from treaties and other sources of international law can be maintained. Membership of the United Nations carries with it the obligation to accept and carry out the decisions of the Security Council, on which members have conferred the primary responsibility for the maintenance of peace and security: Chapter V, articles 24, 25.

    142. Among the resolutions which were adopted by the Security Council after the Iraqi invasion were Resolution 660 on 2 August 1990 which condemned the invasion and demanded that Iraq withdraw from Kuwait immediately and unconditionally, Resolution 661 on 6 August 1990 which called upon all states not to recognise any regime set up by the occupying power, and Resolution 662 on 9 August 1990 which decided that Iraq's annexation of Kuwait under any form and whatever pretext had no legal validity and was considered null and void. Resolution 662 also called upon all states "not to recognise that annexation, and to refrain from any action or dealing that might be interpreted as an indirect recognition of the annexation."

    143. The removal of the aircraft from Kuwait took place on 6-8 August 1990 when 9 KAC aircraft were flown from Kuwait to Basra, and 22 August 1990 when the remaining aircraft was flown to Baghdad. These acts were plainly in breach of the Security Council resolutions. So too was RCC Resolution 369, which purported to vest in IAC all the fixed and liquid assets of KAC including all assets of Kuwait Airways offices abroad. Moreover Resolution 369, which was designed to cement that act by depriving KAC permanently of all its assets wherever situated, was of an exorbitant character. Standing the Security Council resolutions, which as a member of the United Nations Iraq (on 5 March 1991 when RCC Resolution 55 was passed) was later to recognise, these were breaches of international law.

    144. It is not disputed that our courts are entitled on grounds of public policy to decline to give effect to clearly established breaches of international law when considering rights in or to property which is located in England. A state lacks international jurisdiction to take property outside its territory, so acts of that kind are necessarily ineffective: Dr F A Mann, Further Studies in International Law (1990), p 175. There could be no question of Resolution 369 being regarded as effective in the English courts as a transfer to IAC under the lex situs of any of KAC's rights in any property that happened to be situated in this country. IAC could not rely on the act of state doctrine if England was the country of the lex situs at the time when the breaches of international law were committed. But why should effect not also be given here to international law where to do so can be justified on grounds of public policy?

    145. In my search for an answer this question I would take as my guide the observations of Lord Wilberforce in Blathwayt v Baron Cawley [1976] AC 397, 426. He said that conceptions of public policy should move with the times and that widely accepted treaties and statutes may point in the direction in which such conceptions, as applied by the courts, ought to move. It would seem therefore to be contrary to principle for our courts to give legal effect to legislative and other acts of foreign states which are in violation of international law as declared under the Charter of the United Nations: see Dr F A Mann, Further Studies in International Law, p 176; Oppenheim's International Law, 9th ed (1992), vol 1, p 376. The Security Council has played a key role in recent months, following the events of 11 September 2001, by imposing obligations on all states to suppress terrorist financing and deny terrorists safe havens in which to operate. It is now clear, if it was not before, that the judiciary cannot close their eyes to the need for a concerted, international response to these threats to the rule of law in a democratic society. Their primary role must always be to uphold human rights and civil liberties. But the maintenance of the rule of law is also an important social interest.

    146. Security Council Resolution 662 called upon all states to refrain from any action which might be interpreted as an indirect recognition of the annexation. There is no doubt that the responsibility for answering this call lies in the first instance with the executive arm of government. But, in seeking which direction to take in such matters where decisions must be taken on grounds of public policy, the judges should try to work in harmony with the executive. Furthermore, as the Court of Appeal observed [2001] 3 WLR 1117, 1207, para 334, there is nothing precarious or delicate, and nothing subject to diplomacy, which judicial adjudication might threaten in this case. The taking of KAC's property in breach of Iraq's obligations under the Charter of the United Nations was a clear example of an international wrong to which legal effect should not be given.

    147. There could be no embarrassment to diplomatic relations in our taking this view. In his letter of 7 November 1997, which was written in response to a request by Longmore J on 24 October 1997, Sir Franklin Berman, then Legal Adviser to the Foreign and Commonwealth Office, informed the court that the conduct of Her Majesty's Government in the United Kingdom has been strictly in conformity with the requirements of the resolutions and all other pertinent decisions of the Security Council relating to the Iraqi invasion and occupation of Kuwait. Nor can it be said that the court needs to defer to the act of the foreign state because it has an inadequate understanding of the circumstances in which Resolution 369 was passed. The arguments for giving effect to international law as declared by the resolutions of the Security Council could hardly be more compelling.

    148. For these reasons I would hold that a legislative act by a foreign state which is in flagrant breach of clearly established rules of international law ought not to be recognised by the courts of this country as forming part of the lex situs of that state. This was the conclusion that Dr F A Mann advocated in his article International Delinquencies before Municipal Courts (1954) 70 LQR 181; see also his Further Studies in International Law, pp 177-183. At p 202 of the article he said:

"1. When the conflict rule of the forum refers the court to a foreign law (lex causae), the court will not apply the latter if and in so far as it expresses or results from an international delinquency .…5. The question whether an international delinquency has been committed is to be answered according to the generally accepted principles of international law, but a municipal court will not answer it affirmatively except where both the law and the facts are clearly established."

    149. I would endorse everything that is said in that passage, and I would apply it to this case. Respect for the act of state doctrine and the care that must be taken not to undermine it do not preclude this approach. The facts are clear, and the declarations by the Security Council were universal and unequivocal. If the court may have regard to grave infringements of human rights law on grounds of public policy, it ought not to decline to take account of the principles of international law when the act amounts - as I would hold that it clearly does in this case - to a flagrant breach of these principles. As Upjohn J indicated in In re Claim by Helbert Wagg & Co Ltd [1956] Ch 323, 349, public policy is determined by the conceptions of law, justice and morality as understood in the courts. I would hold that the effectiveness of Resolution 369 as vesting title in IAC to KAC's aircraft is justiciable in these proceedings, and that such a flagrant international wrong should be deemed to be so grave a matter that it would be contrary to the public policy of this country to give effect to it.

    150. The acts with which this case is concerned took place before the coming into force of the Private International Law (Miscellaneous Provisions) Act 1995. Section 10 of that Act abolished the common law rule which required actionability under both the law of the forum and the law of the place where the events constituting an alleged tort or delict took place for the purpose of determining whether or not the tort or delict was actionable. So the question which arises under this heading must be determined under the common law.

    151. The argument for IAC is that, irrespective of the view taken of Resolution 369 under the act of state rule, KAC's claim under conversion must fail under the common law rule of double actionability because this rule requires that Iraqi law must be applied to the question whether the acts of IAC would have been actionable in that country. It is said that, in reaching its decision on this question in the autumn of 1990, an Iraqi court would have had to have had regard to the entire corpus of Iraqi law including that part of Resolution 369 which vested the aircraft in IAC. On this view, the Iraqi court would have been bound to hold that IAC was not liable for its alleged acts of usurpation. In response to this argument KAC seek to rely on an exception to the double actionability rule which allowed the law of a single country only to be applied for the purpose of determining the issue, or one of the issues, arising in the case. This rule too was abolished by section 10 of the 1995 Act, but we are concerned here with the common law rules as they stood before the Act came into force.

    152. The common law on this point was examined by Lord Slynn of Hadley in Red Sea Insurance Co Ltd v Bouygues SA [1995] 1 AC 190. The central issue in that case was whether a defendant could rely solely on the lex loci delicti to establish liability in tort when the lex fori did not recognise such liability. The Board held that, while the general rule of English law with regard to foreign torts as explained in Phillips v Eyre (1870) LR 6 QB 1 required the conduct to be both actionable as a tort according to English law if it had been committed in England and actionable in civil proceedings according to the law of the country where the act was done, a plaintiff could rely exceptionally, in an appropriate case, exclusively on the lex loci delicti even if under the lex fori his claim would not be actionable.

    153. The ratio of that decision was that there was a need for some flexibility in the application of the rule, as the majority of this House in Boys v Chaplin [1971] AC 356 recognised: Lord Wilberforce, at pp 391-392, Lord Hodson, at p 378, Lord Pearson, at p 406. The present case raises the same question, but it is the other way round. Here the acts complained of would have been actionable under English law, the lex fori, if committed in this country. But it is said that they were not actionable in Iraq under the lex loci delicti because the effect of Resolution 369 was to vest the aircraft in IAC.

    154. As Lord Slynn said in Red Sea Insurance Co Ltd [1995] 1 AC 190, 197C-D, the question has a long history and has led to considerable discussion in the decisions of the common law courts and in academic writings. After a detailed and careful review of all this material he summed the matter up in this way, at p 206A-D:

"Their Lordships, having considered all of these opinions, recognise the conflict which exists between, on the one hand, the desirability of a rule which is certain and clear on the basis of which people can act and lawyers advise and, on the other, the desirability of the courts having the power to avoid injustice by introducing an element of flexibility into the rule. They do not consider that the rejection of the doctrine of the proper law of the tort as part of English law is inconsistent with a measure of flexibility being introduced into the rules. They consider that the majority in Boys v Chaplin [1971] AC 356 recognised the need for such flexibility. They accept that the law of England recognises that a particular issue between the parties to litigation may be governed by the law of the country which, with respect to that issue, has the most significant relationship with the occurrence and with the parties. They agree with the statement of Lord Wilberforce, at pp 391-392, … as to the extent and application of the exception. They accept, as he did, that the exception will not be successfully invoked in every case or even, probably, in many cases and, at p 391H, that 'The general rule must apply unless clear and satisfying grounds are shown why it should be departed from and what solution, derived from what other rule, should be preferred."

    155. The fact that the question raised in this case is the other way round from that in the Red Sea Insurance Co Ltd case is not in itself an obstacle to the same approach being applied here. This can be seen from the two Australian intranational tort cases which were mentioned by Lord Slynn in the course of his judgment. In Warren v Warren [1972] Qd R 386 the plaintiff was injured in a car accident while on a temporary visit to New South Wales, where she had no right of action in tort against her husband. She began her action in Queensland, where she was ordinarily resident and domiciled where such a right of action did exist. The defendant's application to set aside the writ was dismissed. Matthews J held that there was a degree of flexibility in the rule which admitted of exception where clear and satisfactory grounds were shown why it should be departed from and that, on the facts of that case, it was right to apply the law of the forum even if the acts were not actionable by the law of the locus delicti. A decision to the same effect on similar facts was reached in Corcoran v Corcoran [1974] VR 164.

    156. In John Pfeiffer Pty Limited v Rogerson [2000] HCA 36 the High Court of Australia held that these and other decisions to the like effect did not properly take account of the fact of federal jurisdiction or the nature of the Australian federation, and that the double actionability rule should be discarded with regard to claims brought in an Australian court in respect of a civil wrong arising out of acts or omissions that occurred wholly within one or more of the law areas of the Commonwealth of Australia. The rule now is that the lex loci delicti is to be applied by courts in Australia as the law governing all questions of substance to be determined in a proceeding arising from an intranational tort: joint judgment, para 102. But the double actionability rule survives in the case of a tort committed outside Australia, as the High Court expressly limited its discussion to the issues arising in intranational and not international torts. So the pre-Rogerson cases are still of interest where issues arise under the common law of this country as to whether the rule can be displaced in favour of the law of one country only for the purpose of determining liability for an alleged tort or delict.

    157. The point which requires further examination here is whether the basis in principle for recognising a degree of flexibility in the application of the rule can be applied to the circumstances of this case. It appears from Lord Wilberforce's discussion of this point in Boys v Chaplin [1971] AC 356, 391-392 that the situation which he had in mind was one where to apply the relevant foreign rule would not serve the interests which it was designed to meet. This was likely to be so particularly in cases where the parties had come together for different purposes for different pre-existing relationships and from the background of different legal systems. The solution which he favoured was one which enabled the foreign rule to be displaced in favour of the law of the place which had the most substantial connection with the circumstances of the case.

    158. In Breavington v Godleman (1988) 169 CLR 41 the High Court of Australia was far from unanimous in its support for what Deane J described, at p 127, as "a largely instinctive flexible exception". But Toohey J was in favour of it, provided that it was appreciated that it did not confer an unfettered judicial discretion enabling the rule to be applied in a way that was purely arbitrary. He expressed his understanding of the exception in this way, at p 163:

"It is only in special circumstances where, after examination of the policy underlying the law which may be applied and the interests of the parties to be affected, it is clear that the lex loci delicti has no real connection with the proceedings, that the exception can be invoked, enabling a plaintiff to recover damages available in the lex fori but not available in the lex loci delicti. Such a requirement should do much to alleviate any fears that unacceptable uncertainty will be introduced into this area of the law."

    159. Nevertheless, if the scope for flexibility is as limited as Toohey J indicated it is in this passage, the facts of this case would seem to prohibit its application. It cannot be said that the lex loci delicti has no real connection with these proceedings, as one of the parties to the action has its principal place of business in Iraq where the alleged acts of conversion took place. Nor can it be said, to adopt the test indicated by Lord Slynn in the Red Sea Insurance Co Ltd case [1995] 1 AC 190, 206C, that English law is the system of law which has the most significant relationship with the occurrence and with the parties. The argument in favour of excluding that part of Iraqi law under which it would have been held by an Iraqi court that the title to the aircraft was vested in IAC at the time when the alleged acts of conversion were committed is directed solely to the fact that Resolution 369, upon which that part of Iraqi law would have been founded, was in breach of international law. The question is whether there is sufficient flexibility in the double actionability rule to enable this aspect of the lex loci delicti to be excluded and the question of IAC's title to the aircraft to be decided exclusively by the lex fori.

    160. The Court of Appeal, agreeing with Mance J, held that the answer to this question was provided by argument that to give effect to Resolution 369 would offend against English public policy. It held that, once public policy requires not only that a foreign law or act should not be recognised to the extent that it purports to act extraterritorially but that it should not be recognised at all, then it is impossible to have regard to it for any purpose: [2001] 3 WLR 1117, 1222B-C, paras 391-392. This proposition was restated, at p 1223C, para 394 in these terms:

"Where, however, the foreign act of state plea fails, whether because the act of state purports to legislate extraterritorially or because the English court refuses to recognise the foreign law even though acting territorially, the foreign law ceases to be of relevance whether as lex situs or as lex loci delicti."

    161. I think that this approach has much to commend it. The question of title is normally determined by the lex situs. In this case the question of title has to be addressed to determine whether under the lex loci delicti the alleged tort is actionable. Although the double actionability issue is concerned with the lex loci delicti, the question of title is referred under that law to the lex situs. So the underlying issue as to whether the title conferred on IAC by the lex situs should be recognised in this country is the same, whatever the context. But I think that there are two further problems which need to be addressed.

    162. The first problem arises from the fact that counsel for KAC accepted that Resolution 369 is not wholly irrelevant to application of the lex loci delicti to this case. It was conceded before Mance J that, as IAC acted in the belief that the resolution gave it a good title to the aircraft, the burden of proof that the loss or damage would not have occurred but for the usurpation falls on KAC. So it is not accurate to say that it is impossible to have regard to the effect of Resolution 369 for any purpose whatever in these proceedings. It cannot be treated as if it did not exist. It is accepted that it forms part of the factual background.