Société Eram Shipping Co Ltd v Cie Internationale de Navigation

An English court may garnish a debt situated abroad where the garnishee is within the jurisdiction. The decisive question is whether, as a practical matter, there is a real risk that the garnishee will have to pay twice. The court should consider the effects of payment under the order, including restitutionary rights and contractual set-off or protection, rather than require the foreign court to recognise the proprietary or discharging effects of an English garnishee order itself. Relief remains exceptional and requires caution, particularly at the without-notice stage. Alternative enforcement proceedings do not preclude garnishee relief where the court is satisfied that double jeopardy will not arise.

Société Eram Shipping obtained registration in England of a French judgment against Société Oceanlink Ltd and Yoon Sei Wha. It sought to make absolute a garnishee order directed to HSBC's London branch in respect of a credit balance held at HSBC's Hong Kong branch.

HSBC argued that the debt was situated in Hong Kong, that Hong Kong would not recognise the English order, and that HSBC faced a real risk of liability to its customers and to the judgment creditor. Tomlinson J refused to make the order absolute and set it aside, subject to a stay pending appeal. The central issue was whether the foreign situs and the absence of recognition in Hong Kong prevented relief, or whether the court should assess the practical risk of double payment.

1. Appeal allowed. The garnishee order to show cause dated 4 April 2000 was made absolute.
2. The jurisdictional requirements under RSC O.49 r.1 were that the garnishee was within the jurisdiction and that the subject matter was a debt due or accruing due to the judgment debtor. The foreign situs of the debt was not an automatic jurisdictional bar.
3. The applicable discretionary test was whether there was, as a practical matter, a real risk that the garnishee would have to pay twice if the order were made absolute. A requirement of a virtually automatic discharge arising from the garnishee order itself was too narrow.
4. The court could consider private-law consequences of payment. Payment under compulsion of the English order would give HSBC a restitutionary claim against the judgment debtors. HSBC's terms also protected it before payment through contingent and actual liabilities, set-off and related rights. Those matters would be recognised under the presumed application of Hong Kong law as English law in the absence of contrary proof.
5. The limited evidence of Hong Kong law established only that an English garnishee order would not automatically bind or discharge the Hong Kong account under Hong Kong procedural or proprietary law. It did not establish that Hong Kong law would reject HSBC's restitutionary claim or the contractual protections. No actual threat or exposure to double payment had emerged during the period in which the order had been in force.
6. An applicant seeking relief in relation to a foreign debt bears the practical onus of showing good cause for the order. This may be demonstrated by foreign recognition, the absence of realistic enforcement exposure outside England, or restitutionary and contractual arrangements eliminating double jeopardy.
7. Alternative proceedings in Hong Kong were relevant but did not preclude English garnishee relief once the court was satisfied that there was no real risk of double jeopardy.

• Court of Appeal: Allowed the appeal from Tomlinson J's judgment dated 23 January 2001 and order dated 2 February 2001. The order to show cause was made absolute.
• Commercial Court: Refused to make the garnishee order absolute and set it aside, subject to a stay pending appeal.