Lord Aitchison said: ‘The penal laws of foreign countries are strictly local, and affect nothing more than they can reach and can be seized by virtue of their authority; a fugitive who passes hither, comes with all his transitory rights; he may recover money held for his use, stock, obligations and the like; and cannot be affected in this country, by proceedings against him in that which he has left, beyond the limits of which such proceedings do not extend.
Does that rule apply equally to legislation which is not confiscatory or penal in the full sense, but the effect of which is to subject the owner of moveable property in his use and control of that property, to the overriding control of the State where, as in this case, the property is requisitioned by the State for public purposes? There is no direct authority upon the point. The nearest case is perhaps the Jupiter (No. 3),  P. 122. It was there held that the nationalisation decrees of the Union of Socialist Soviet Republics did not operate on moveable property outside the territory of the Republic, whether such property belonged to a Russian citizen or not. It was a fact in that case that the Jupiter was not at the date when the decrees were promulgated within Russian territory. In this case it is expressly conceded that at the date of the requisition the El Condado was not within Spanish territorial waters and she was in the port of Greenock when the de facto possession was taken. In the Jupiter, Hill, J., pointed out that no distinction could be drawn between ships and other chattels and that the same principles were applicable to both, and he reached the conclusion that the decree of nationalisation was ineffectual to transfer the property in the ship, which was not within the jurisdiction at the date of the decree. His judgment both as regards fact and law was affirmed by the Court of Appeal.
The case is not on all fours, but in my opinion the principle of Hill J.’s, judgment applies to the present case. The test to be applied is this: Supposing the Spanish Consul, instead of taking possession of the El Condado brevi manu, had sued the owners in the Courts for the delivery of the ship, could the action have succeeded? I am satisfied it could not. It could no more have succeeded than an action for recovery of moneys belonging to the Spanish owners in a bank in this country and requisitioned for the temporary use of the Spanish Government to finance the war. The conclusive answer would be that it was moveable property that was outwith the territory and jurisdiction of the foreign Sovereign State, and having been so at the date of the decree, it was not capable of being affected by the requisition. That is the ground of the Lord Ordinary’s judgment, and in my opinion he was right in dismissing the action, because if no wrong was committed by the owners of the ship in respect that the Spanish Government had no lawful possession of her, notwithstanding that they could not be impleaded, no liability can attach to the defenders under their bond of caution.’
Lord Mackay: ‘The question of extra-territoriality arises doubly. It is for us a question to be decided on Scots law (in the absence of any averment of a differing Spanish law) whether we are to hold that a decree of a de jure Government (issued in Barcelona or Madrid) can have extra-territorial effect upon (a) a ship situated in our harbours and (b) registered and belonging to a company domiciled under General Franco’s de facto Government’s jurisdiction.
I am of opinion that such extraterritorial validity is not recognised by Scots law. The sealed document exhibited in the former case and lying before us bears in its terms to have ‘requisitioned’ all ships of certain registration. That means, in my opinion, by Scots law, that a requisition of full property was intended in the full sense of the word ‘requisition’ as so well known to our Courts during the years 1914 to 1918.
I am prepared to hold, therefore, that the pretended title of the pursuers was, in fact and in law bad; and that the original owner’s right of ownership was never lost or adversely affected. Hence, no judicial wrong was ever done to the pursuers. I agree on these fuller grounds with the results of the Lord Ordinary, and I agree we should adhere to his judgment.’
‘Requisition is not a legal method in this country of transferring property or rights of user of property, except at the instance of the Crown. It is the prerogative of the Crown in times of imminent national danger to take any steps necessary to secure the defence of the realm, and in 1914 by virtue of that power regulations were made by His Majesty in Council providing (inter alia) for the requisitioning of ships by the competent naval authority. It would be strange, indeed, if a foreign State were allowed to exercise similar powers and by its officials take forcible possession of property requisitioned.’
Lord Wark:‘This means further that they must show that the decree of law enacted on June 28, 1937, was valid and effectual according to the law of the forum to which they applied, namely, Scotland, to entitle them to the possession and control of a ship lying in a Scottish port, and which admittedly at the date of the decree and continuously thereafter had been outwith Spanish territory and territorial waters. I say ‘according to the law of the forum,’ because they make no averments of Spanish law on that matter.
I agree with the Lord Ordinary and with your Lordships that the decree is of no effect outwith Spanish territory and territorial waters, and gave the pursuers no right to requisition the El Condado or to take forcible possession of her as they did. On such a matter as this there is no difference between the law of England and the law of Scotland, and the decisions of the English Courts to which the Lord Ordinary refers, especially the case of the Jupiter (No. 3),  P. 122 and 250, appear to me to be sufficient authority to support his decision. I refer to the judgment of Hill, J., at pp. 138 and 144, and of Atkin, L.J., and Lawrence, L.J., in the Court of Appeal at p. 255. It is true that that case dealt with the question of transfer of property, but the ratio upon which it proceeds is that the decree of a foreign Government has no effect whatever upon moveable property, including ships, outwith the territory. This doctrine rests upon the principle that jurisdiction is limited by effectiveness. It is recognised in several recent cases, notably in Sedgwick, Collins & Co. v. Rossia Insurance Company of Petrograd  1 K.B. 1, by Sargant, L.J., at p. 15, and by the Lord Chancellor in that case in the House of Lords,  A.C. 95, at p. 102, and in Russian Commercial and Industrial Commercial and Industrial Bank v. Comptoir d’Escompte de Mulhouse, &c.  A.C. 112, by Lord Chancellor Cave at p. 125, and Viscount Finlay at p. 137. ‘A State’s authority,’ says Professor Dicey in his Introduction to his treatise on the Conflict of Laws, 5th ed., at p. 20, in the eyes of other States and the Courts that represent them is speaking very generally, coincident with, and limited by, its power. It is territorial. It may legislate for, and give judgments affecting, things and persons within its territory. It has no authority to legislate for, or adjudicate upon, things or persons (unless they are its subjects) not within its territory.’
Lord Aitchison, Lord Mackay
 63 L1L Rep 330,