The CRL900 aircraft has been delivered to the northern Iraqi city of Irbil in IAC livery. However, Kuwait Airways (KAC) says this contravenes a court order issued by the Superior Court in Montreal on 27 August.

KAC is claiming $1.2bn in compensation for aircraft and equipment stolen during the 1990 Iraqi invasion of Kuwait.

The CRL900 is one of ten Bombardiers purchased by Iraq as part of a $5.5bn order of new planes earlier in 2008. KAC is seeking to seize the planes to settle the $1.2bn debt.

The question of a breach of the order hinges on a technicality. KAC obtained orders seizing the interests of IAC and the state of Iraq in Canada.

However the Canadian courts overruled the order against the state - though not the airline - on 1 September, prompting KAC to appeal, thereby keeping the order in place.

Iraq however, claims there was a brief window between the court overturning the order and KAC lodging its appeal, and that Bombardier flew the aircraft out of Canada during that time.

KAC says that by breaching the order, Bombardier has assumed the role of personal debt to the Kuwaiti national carrier.

“While we were surprised by Bombardier’s willingness to swap Iraqi liability for its own, we are, from a credit point of view, happy to accept the swap,” says Chris Gooding of the UK law firm, Howard Kennedy, who has represented KAC since 1990.

“The new aircraft will be arrested in satisfaction of those judgments as soon as it flies to a suitable jurisdiction," he says.

Bombardier was not available for comment.