Kuwait Oil Tanker Company SAK 7 Ors v UBS AG

Factual and Procedural Background

Plaintiff obtained a judgment for more than US $130 million against Judgment Debtor for fraud. Having recovered only a small fraction of the sum, Plaintiff sought to enforce the judgment against any monies standing to Judgment Debtor’s credit with Defendant, an international bank that maintains branches in both The City and Switzerland. In December 2000 Plaintiff obtained a nisi (provisional) garnishee order in England under RSC Ord 49 calling on Defendant to show cause why the order should not be made absolute.

Defendant replied that it held no relevant accounts in England and, under Swiss law, could not disclose whether Judgment Debtor had accounts in Switzerland. At first instance Judge [Last Name] dismissed the application, holding that the relevant debts were situated in Switzerland and that the English court should not make the order. The Court of Appeal reversed, relying on its earlier decision in Société Eram, and remitted the matter for further consideration. Defendant appealed to the House of Lords.

Legal Issues Presented

1. Whether, in light of Article 16(5) of the Lugano Convention, the English courts possessed jurisdiction to make a garnishee (third-party debt) order absolute over a debt situated in Switzerland.
2. Whether, even if jurisdiction existed, the order should be refused on discretionary grounds because it could expose Defendant to double liability in Switzerland.

Arguments of the Parties

Appellant's (Defendant's) Arguments

• Article 16(5) of the Lugano Convention confers exclusive jurisdiction on the courts of the Contracting State where enforcement will occur; because the debt is situated in Switzerland, only Swiss courts may order attachment.
• The proposed order would not discharge the Swiss debt under Swiss law, leaving Defendant at risk of paying both Plaintiff (under the English order) and Judgment Debtor (under Swiss proceedings).

Respondent's (Plaintiff's) Arguments

• The garnishee order operates in personam against Defendant in England; therefore enforcement occurs in England, bringing the case within Article 16(5) in favour of English jurisdiction.
• Any risk of double payment could, in principle, be mitigated by restitutionary claims or set-off recognised by Swiss law.

Table of Precedents Cited

Court's Reasoning and Analysis

The House held that a garnishee or third-party debt order is a form of in rem enforcement against the debt itself, not merely a personal claim against the garnishee. Because the debt is recoverable only in Switzerland, that country is the place of enforcement. Article 16(5) of the Lugano Convention therefore assigns exclusive jurisdiction to Swiss courts. Section 3A of the Civil Jurisdiction and Judgments Act 1982 gives that Convention force of law in the United Kingdom, removing any residual discretion the English court might otherwise have exercised.

Even aside from jurisdiction, the House agreed with Judge [Last Name] that compelling Defendant to pay Plaintiff could leave Defendant vulnerable to a second claim by Judgment Debtor in Switzerland, as compliance with an English order would not discharge the Swiss debt under Swiss law. Consequently, equitable considerations also militated against granting the order.

Holding and Implications

APPEAL ALLOWED. The order of Judge [Last Name] discharging the garnishee order was restored.

Directly, Plaintiff cannot execute its English judgment against any Swiss-situs debts through the English courts; it must proceed in Switzerland. More broadly, the decision underscores that, under the Lugano Convention, enforcement jurisdiction lies exclusively with the courts of the state where the asset is located, limiting the reach of English third-party debt orders and reinforcing principles of international comity.