Norton Rose blocks Iraqi lawsuit over medical supplies

City firm Norton Rose has helped scupper a potential 500 million 'avalanche of claims' by the Iraqi state bank for funds blocked as a result of the Gulf War, following a House of Lords decision last week.

The ruling follows an eight-year legal battle between Shanning International - which was set to supply medical equipment for an Iraqi teaching hospital - and Rasheed, the Iraqi state bank.

The company suffered from the freeze on Iraqi-related deals imposed due to the invasion of Kuwait, and also lost 1 million which it had deposited with Lloyds Bank as cash collateral for bank guarantees contained in the chain of contracts.

It went into liquidation in 1992 as a result.

Acting for the liquidators, PricewaterhouseCoopers, Norton Rose argued that the 1 million should be released to Shanning's creditors under a European Community regulation.

This was designed post-war to ensure that Iraq would not benefit commercially from its invasion of Kuwait, and that European companies would not be penalised because they could not fulfil contracts.

Paula Rohan