Lloyd's Maritime and Commercial Law Quarterly
GARNISHMENT OF ENGLISH DEBT: FOREIGN COMPLICATIONS
Deutsche Schachtbau v. S.I.T. Co.
Another conflict in The Gulf recently reached the House of Lords in Deutsche Schachtbau v. S.I.T. Co.,1 where the House was called upon to give guidance on the conflict of laws rules upon the making of garnishee orders, and in particular in cases where an English garnishee order might not be recognized overseas.2 In so doing, it reversed the decision of the Court of Appeal3 on the garnishment point, and reversed in consequence part of the earlier upholding by the Court of Appeal4 of a Mareva injunction freezing the debt in question within the jurisdiction. The garnishment point being the main issue in the House of Lords, it is proposed to concentrate upon it here.
In the usual garnishment case, there will be two parties opposing each other, and a third party more or less unhappily trapped in the middle. So, again more or less, was the position here. On the one hand stood Deutsche Schachtbau-und Tiefbohr-Gesellschaft m.b.H. (here DST) and on the other the Ras al-Khaimah National Oil Company (Rakoil). Caught in the crossfire was the Shell International Trading Company (Sitco). At stake was a debt (the English debt) owed by Sitco to Rakoil, amounting to U.S.$4.8 million, which was payable in respect of oil bought by Sitco from Rakoil but not yet paid for. The debt was, according to English law, situated in
1. Deutsche Schachtbau-und Tiefbohr-Gesellschaft m.b.H. v. Shell International Petroleum Co. Ltd. (Trading as Shell International Trading Co.) [1988] 3 W.L.R. 230 (also reported sub. nom. Deutsche Schachtbau-und Tiefbohrgesellschaft m.b.H. v. Ras Al Khaimah National Oil Co. (D.S.T. v. Rakoil) [1988] 2 All E.R. 833).
2. For the sparse state of existing law on the point, see Dicey and Morris on The Conflict of Laws, 11th edn. (1987), pp. 966–968. See also Employers’ Liability Ass. Corp. Ltd. v. Sedgwick, Collins & Co. Ltd. [1927] A.C. 95; Swiss Bank Corp. v. Boehmische Industrial Bank [1923] 1 K.B. 673. It may be that the immediate significance of Deutsche Schachtbau v. S.I.T. Co. will be small if the extraordinary behaviour of the executive and judicial authorities—if they be separate—of the Emirate of Ras al-Khaimah are a small exception to the rules generally adopted by civilized states, though the case makes some important new law on the distinction between different kinds of pressure on the garnishee.
3. sub. nom. Deutsche Schachtbau-und-Tiefbohrgesellschaft m.b.H. v. Ras al Khaimah National Oil Co. (No. 2) (D.S.T. v. Rakoil (No. 2)) [1988] 1 Lloyd’s Rep. 164.
4. [1987] 3 W.L.R. 1023. See M. Hunter [1987] 3 LMCLQ 277.
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