Kuwait Oil Tanker Co SAK v Qabazard

In garnishee proceedings against a bank with foreign branches, jurisdiction under Article 16(5) of the Lugano Convention depends on where the judgment is to be enforced, not simply on the situs of the debt. A foreign debt does not create an automatic bar to relief. The court must assess the real risk of double payment and any relevant foreign-law sanctions, including the garnishee’s restitutionary rights. A bank that denies liability at one branch must address whether it is indebted elsewhere. Where foreign banking secrecy prevents direct disclosure but local procedures can obtain the relevant accounts, the English court should co-operate with the foreign court and defer the final garnishee decision.

Kuwait Oil Tanker Company and Sitka Shipping obtained an English judgment for approximately $130 million against Hassan Qabazard. They obtained a garnishee order nisi against UBS concerning debts allegedly owed to him, including funds transferred from London to Geneva.

Langley J refused to make the order absolute. He considered that Swiss-law evidence showed real risks of double payment and sanctions against UBS. The appeal concerned whether Article 16(5) of the Lugano Convention gave exclusive jurisdiction to the Swiss courts, and whether the English court should determine the garnishee application without evidence establishing the extent and location of UBS’s indebtedness.

1. Disposition. The court made no order on the appeal at that stage. KOTC was to apply to the Swiss courts for disclosure of Qabazard’s UBS account records. If no such application was made within 28 days, the appeal would be dismissed with costs. Further proceedings were remitted to the Commercial Court, with liberty to apply.
2. Jurisdiction. Article 16(5) of the Lugano Convention gives exclusive jurisdiction to the courts of the state in which the judgment is to be enforced. In garnishee proceedings, this means the state in which the garnishee order is to operate. It does not mean the state where the debt is situated. The English court therefore had jurisdiction to consider an English garnishee order against UBS, even if the debt was Swiss or otherwise foreign. UBS could not establish a Swiss jurisdictional bar merely by saying that a debt was most likely to exist there.
3. Extent of indebtedness. Under Order 49, and applying Vinall v De Pass [1892] AC 90, a proposed garnishee must address the extent of its total indebtedness to the judgment debtor. It is insufficient to deny liability at one branch while providing no information about other branches. The court inferred that the sum identified in UBS’s letter was owed, but it was premature to infer any further debt because Swiss procedure could obtain the necessary evidence.
4. Double jeopardy and foreign law. The final decision whether to make the order absolute had to be made by reference to the real risk of double payment, relevant foreign-law sanctions, UBS’s restitutionary rights and the effect of any Swiss attachments. The evidential conflict concerning Swiss law required resolution. The Commercial Court was directed to reconsider that issue after the Swiss proceedings, in accordance with Société Eram Shipping Co Ltd v Compagnie Internationale de Navigation [2001] All ER (Comm) 721.

1. Court of Appeal. The court made no order on the appeal at that stage, remitted further proceedings to the Commercial Court and granted liberty to apply.
2. High Court, Commercial Court. Langley J refused to make the garnishee order absolute on 23 March 2001 because Swiss-law evidence indicated real risks of double payment and state sanctions.