The plaintiff an Egyptian national bought insurance from the defendant Canadian company (MLI) with branches inter alia in Egypt. When the policies matured, Rassano brought an action in England claiming the money due under them. In defence, MLI argued, inter alia, that it was not liable to pay Rossano such sums as garnishee orders had been served upon MLI’s Egyptian branch by the Egyptian tax department in respect of tax alleged to be due by Rassano and that payment to Rossano would expose MLI to the risk of having to pay the money twice. The policies prescribed the mode of payment as by banker’s demand draft on London ‘on New York’ ie, the situs of the debt was not Egypt.
Held: McNair J relied refused recognition of the validity of the garnishment orders, saying that recognition of those orders would offend against the well-settled principle that an English court would not enforce a foreign revenue law.
However, McNair J addressed the parties following arguments on the choice of law question outlined by the learned judge. On behalf of MLI it was submitted (1) that whatever be the proper law of the contract, the debt is and was situated in Cairo and that debt has been validly attached in the country where it was situated; (2) that an English court will as a matter of private international law recognise and give effect to the validity of that attachment and not put a garnishee in peril of having to pay twice, and that it does not matter whether the attachment proceedings are in respect of a revenue claim; (3) that if the debt is not situated in Egypt, the English court will as a matter of comity give effect to the proceedings and will not put the garnishee in peril of having to pay twice if the court is satisfied (a) that by the law of the place of attachment the situs of the debt is in that place, that is, Egypt; or (b) that by the law of the place of attachment there is jurisdiction over the debtor, Rossano, the garnishee, MLI, and the garnishor, the Egyptian tax department.
Rossano had submitted (1) that the situs of the debt was not Egypt; (2) that the garnishee orders were invalid (3) that the garnishee orders provide no defence since (a) no payment has been made under either or (b) Neither of them was made until after the maturity date on which MLI should have paid; (4) that the court should not recognise the garnishee order as to do so would be indirectly at least to enforce a foreign revenue law; and (5) that the orders being in the nature of administrative orders and not orders of any court, an English court will not enforce them. McNair J said: ‘Many of the points raised in these submissions raise difficult questions of private international law upon which English authority is scanty. But as I have reached the conclusion that the fundamental objection to the recognition of these orders is that their recognition would offend against the well-settled principle that the English court will not recognise or enforce directly or indirectly a foreign revenue law or claim, it is not necessary for me as a matter of decision to deal with many of the other points raised.’ He went on to observe obiter: ‘on the assumption that the garnishee orders or either of them are valid by Egyptian law, and by that law binding upon [MLI] . . being garnishee or sequestration orders imposed by the act of the executive, and not the result of any judicial proceedings, must or should an English court afford them recognition . . The editors of Dicey when stating in rule 92 that the validity and effect of an attachment or garnishment of a debt is governed by the lex situs of the debt are clearly referring to garnishee orders made by a competent court. I should not be disposed on general principles to extend the recognition further.’
Judges:
McNair J
Citations:
[1963] 2 QB 352
Jurisdiction:
England and Wales
Cited by:
Cited – Revenue and Customs and Another v Ben Nevis (Holdings) Ltd and Others ChD 20-Jul-2012
The claimant sought to make arrangements with a view to collecting substantial arrears of tax due to South Africa. The revenue said that it had that power by virtue of the double taxation treaty with South Aftrica. The company replied that the . .
Lists of cited by and citing cases may be incomplete.
Taxes Management, International
Updated: 04 May 2022; Ref: scu.519311
