Judgments - Societe Eram Shipping Company Limited (Respondents) and others v. Hong Kong and Shanghai Banking Corporation Limited (Appellants)

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    108. This is an important qualification. Just as the English court would not regard a foreign court as being a court of competent jurisdiction to discharge a debt recoverable here, so a foreign court would not regard our court as competent to discharge a debt recoverable there; and that was sufficient in itself to preclude the making of the order in respect of a foreign debt. Although in places this was described as a matter of discretion and in other places as a matter of principle, I think that the rationale was based on principle.

    109. However that may be, I have no doubt that the issue should be regarded as one of principle. Our courts ought not to exercise an exorbitant jurisdiction contrary to generally accepted norms of international law and expect a foreign court to sort out the consequences. I do not share the Court of Appeal's confidence that the bank would have a restitutionary remedy under the law of Hong Kong. The cases indicate that it would not have such a remedy under English law in the converse case; compulsion of law connotes compliance with the order of a court of competent jurisdiction. It cannot safely be assumed that a foreign court would regard compliance with an order of a court whose jurisdiction it did not recognise as a sufficient basis for a restitutionary claim. Nor do I understand how a bank can properly debit a customer's account if it is not authorised to do so by the law which governs the account.

    110. But it goes further than this. A restitutionary claim normally yields a personal remedy not a proprietary one. If the third party debt order does not have extraterritorial effect in the place where the account is kept, then the account itself is not affected by the order. Such an order cannot give priority in the judgment debtor's bankruptcy or over other execution creditors in the foreign jurisdiction. Indeed, having regard to the terms of section 183 of the Insolvency Act 1986, I do not see how it would prevail even against an English bankruptcy. The order must, as the Court of Appeal appreciated, operate in personam and compel the third party to make payment out of its own money with only such rights of recourse against the judgment debtor as the foreign court or the English law of bankruptcy may allow.

    111. But this would not be to execute the judgment against the assets of the judgment debtor. It would not be a process of execution at all. As I have explained, the discharge of the debt owed by the third party to the judgment debtor is not merely a normal consequence of the order but the critical feature which makes the process one of execution. If the court cannot discharge the debt by force of its own order, it cannot make the order. If the debt is situate abroad, the court should not seek to evaluate the risk of the third party being compelled to pay twice. The only relevant question is whether the foreign court would regard the debt as automatically discharged by the order of the English court. Since this would be most unusual, it would be for the judgment creditor to establish.

    112. I wish to add one thing more. RSC, Order 49 has now been replaced by Part 72 of the Civil Procedure Rules, which is cast in more modern language. It is common ground that, as the editorial introduction states, the basic purpose of the rule remains unchanged. Unfortunately all reference to attachment has been dropped, and there is no longer any indication that the order has proprietary consequences. The words which formerly created an equitable charge at the interim stage have been replaced by a power to grant an injunction, which is normally a personal remedy. The straightforward language of Part 72 is deceptive. Its true nature cannot easily be understood without a knowledge of its history and antecedents. I do not, with respect, regard this as an altogether satisfactory state of affairs.

    113. For these reasons, and for the further reasons contained in the speeches of my noble and learned friends Lord Bingham of Cornhill and Lord Hoffmann, I would allow the appeal, set aside the order of the Court of Appeal, and dismiss the application for a garnishee order.

 
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