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(1934) JELR 87078 (KB)

King's Bench  •  9 Mar 1934  •  United Kingdom

Lawrence J


Lawrence J. read the following judgment:

In this interpleader issue the plaintiffs, the Banco de Vizcaya, a Spanish bank, affirm, and the defendant, H.M. Don Alfonso de Borbon y Austria, ex-King of Spain, denies, that the plaintiffs are entitled as against the defendant to certain securities and the possession thereof, and to delivery thereof by the Westminster Bank, Ld., in London. The securities in question were purchased by the defendant with his own moneys and by his instructions deposited with the Westminster Bank in London to the order of its Madrid branch as the defendant’s agent. On September 7, 1923, the Madrid branch of the Westminster bank being about to be closed, the defendant gave instructions to that branch and to the plaintiffs that the securities should be held by the Westminster Bank in London to the order of the plaintiffs as the defendant’s agents. These instructions were carried out by the Westminster Bank’s head office in London sending the securities to its Foreign Office branch in London to be placed “under the dossier of the plaintiffs’ rubric Don Alfonso de Borbon y Austria.”

On May 13, 1931, a decree was enacted by the President of the Provisional Government of the Spanish Republic, proving by art. 1 for the seizure of all properties situate or placed in Spain which might belong to the private fortune of the defendant, and by art. 3 that bankers established in Spain, who had in deposit such properties as were referred to in art. I, Should make delivery thereof to the Spanish Treasury. On June 3, 1931, an order of the Spanish Ministry of Finance was made for the due execution of the decree of May 13, 1931 and on November 25, 1931, a decree was enacted by the Constituent Cortes of Spain declaring the defendant to be guilty of high treason and an outlaw, and that all the properties, rights and grounds of action belonging to him which were situated within the national territory would be seized for its own benefit by the Spanish State.

In these circumstances, on April 25, 1932, the defendant brought an action against the Westminster Bank for the delivery of the securities to him. The Westminster Bank interpleaded, and the plaintiffs now claim to be entitled to the securities in question on the ground that transaction which took place on September 7, 1923, was a contract under solely a right of action against the plaintiffs as depositaries that the right of action was situated in Spain; that the effect of the above-mentioned decrees was to transfer the defendant’s right of action to the Spanish Republic; and that the rights of the plaintiffs against the Westminster Bank remained unimpaired. It is not suggested that the plaintiffs have or ever had any lien on the securities, or claim of any kind against the defendant. It is contended on behalf of the defendant that these decrees are penal laws of a foreign state and ought not to be recognized in an English court.

In such circumstances the judgment of the Judicial Committee of the Privy Council in Huntington v. Attril (r) lays down that I have to construe and apply an international rule and to determine, first, the substance of the right sought to be enforced, and in the second place whether its enforcement will directly or indirectly involve the execution of a penal law of another state.

In my judgment, the substance of the right sought to be enforced by the plaintiffs is the delivery to them of the securities in question and the enforcement of this right will directly or indirectly involve the execution of what are undoubtedly and admittedly penal laws of the Spanish Republic. The plaintiffs’ whole case is that they are bound by virtue of the decrees to hand over the securities to the Spanish Government in defiance of the mandate of the defendant, and, that being so, it seems to be unarguable that indirectly involve the execution of the decrees,

It was contended on behalf of the plaintiffs that, though the decrees may be penal, the plaintiffs’ claim is not a penal action, because they are not asserting the right of the Spanish Government, but their own contractual right to the securities as against the Westminster Bank. I am unable to accept this contention. The plaintiffs are not asserting their contractual rights as they originally existed, but as altered by the decrees of the Spanish Republic. Nor are they in substance asserting their own rights at al, but the rights of the Spanish Republic. It is true, as is pointed out in Huntington v. Attrill (I), that some actions for penalties are not penal actions within the meaning of the above mentioned international rule – where, for instance, the penalties are not exigible by the State in the interest of the community, but by private persons in their own interest. But in the present case the penalty imposed is seizure by the State for its own benefit of all the defendant’s properties, rights, and grounds of action, and this penalty is imposed in terms for high treason, and the only way in which the plaintiffs are able to assert their claim that they are entitled as against the defendant is by virtue of these decrees, and they are compelled to admit that they have no personal right or title to the property in the securities. In the words of Lord Loughborough in Folliott v. Ogden (2): “The penal laws of foreign countries are strictly local, and affect nothing more than they can reach and can be seized by virtue of their authority; a fugitive who passes hither, comes with all his transitory rights; he may recover money held for his use, stocks, obligations and the like; and cannot be affected in this country, by proceedings against him in that which he has left, beyond the limits of which such proceedings do not extend.” These words have frequently been cited with approval, and in my judgment they are directly applicable to the present case. I therefore hold that H.M. Don Alfonso and not the plaintiffs is entitled to the securities in question.

That disposes of the issue, but it is perhaps desirable that I should notice two other contentions on behalf of the defendant: (1.) that the present proceedings are proceedings in rem and that even if the Spanish Republic’s right to affect the right of action of the defendant against the plaintiffs in Spain must be recognized, the decrees do not purport to affect the defendant’s right to the securities themselves, which are and have been at all material times in this country; (2.) that the plaintiffs have not established their right to claim the securities. Evidence as to the effect of the decrees in Spanish law was called on behalf of the plaintiffs and was not contradicted, and, as I understand that evidence, the defendant under Spanish law had no right to the securities themselves or against the Westminster Bank, but only a right of action as depositor against the plaintiffs as depositaries. I am not satisfied that Spanish law was the law of the contract made between the defendant and the plaintiffs with reference to these particular securities, which were then deposited in an English bank in England, but as this question was not fully argued, 1 do not decide the case on this ground.

As to the plaintiffs’ right to claim in these proceedings, I think that I must assume that the Court of Appeal by their judgment, April 10, 1933 [on an interlocutory appeal in this case (1)] decided that if the plaintiffs could establish their right to the possession of these securities they were entitled to succeed on this issue, even though in so doing they relied on a right to the property in the securities in the Spanish Republic; but in my judgment the plaintiffs have not discharged the onus which rests on them of proving any right to possession. The Spanish lawyer who was called did not give any evidence as to the effect of the decree of November 25, 1931, upon the decree of May 13, 1931, and I am therefore compelled to decide its effect without the help of any evidence on the subject. In my opinion, the true interpretation of the decree of November 25, 1931, is that the Spanish State, and the Spanish State alone, can seize the properties of the defendant and as there is in this decree no provision analogous to art. 3 of the decree of May 13, 1931, I hold that the plaintiffs have not established any right to possession of the securities.

For this reason, therefore, as well as for the reason that the enforcement of the plaintiffs’ claim involves the execution of the penal law of a foreign state, I decide this issue in favour of H.M. Don Alfonso de Borbon y Austria, with costs.

Judgment for defendant.

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