Page 1

Status:

Negative Judicial Treatment

Kuwait Oil Tanker Company S.A.K, Sitka Shipping Incorporated v Hassan Ali
Hassan Qabazard v UBS AG.
Case No: 2001 0814 A3
Court of Appeal (Civil Division)
25 January 2002

Neutral Citation Number: [2002] EWCA Civ 34

2002 WL 45131
Before: Lord Justice Peter Gibson Lord Justice Laws and Lord Justice Longmore
Friday 25th January, 2002
On Appeal from the High Court of Justice (Queen's Bench Division, Commercial Court
(Mr Justice Langley)

Representation
Mark Hoyle Esq (instructed by Shaw & Croft for the Appellants).
Laurence Rabinowitz Esq (instructed by Allen & Overy for the Respondent).
The Judgment Debtor did not appear and was not represented.

Judgment
Lord Justice Longmore:

Facts
1. In November 1998 after a six week trial in the Commercial Court Mr Justice Moore-Bick held that
Mr Al-Bader and Mr Qabazard had systematically defrauded Kuwait Oil Tanker Co SAK (KOTC) of
which they were respectively Managing Director and Head of Finance. Mr Qabazard had appeared in
person before the judge but did not give evidence. His defence, that what he had done was in the
best interests of the state of Kuwait, was comprehensively rejected and judgment for about $130
million was entered against him. Part of the evidence at the trial related to a sum of $34 million which
was paid into an account at the London branch of the Swiss bank UBS A.G. (UBS) and transferred
out of the London branch on 15th November 1990 to an account at the Geneva branch of UBS. UBS
has its Head Office in Zurich, and branches all over the world. Both the London and the Geneva
accounts appeared to be controlled by Mr Qabazard who had no explanation for the transaction
revealed by the movement of the sum from one account to the other. Shortly after the trial,
Moore-Bick J granted KOTC a world-wide freezing injunction.
2. Mr Qabazard has no plans to discharge the judgment given against him. Both he and Mr Al-Bader
appealed to this Court; Mr Al-Bader appeared by leading counsel. Mr Qabazard did not instruct
solicitors or counsel nor did he appear in person but, the appeal having been launched, this Court had
to consider his appeal along with that of Mr Al-Bader. After a hearing of many days, the Court
dismissed both appeals on 18th May 2000 with consequential orders as to costs. Mr Qabazard has
not been heard of since; KOTC has found a modest amount of property belonging to Mr Qabazard
which has realised about 140,000, but the judgment against him is, in substance, still unsatisfied.

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3. Not unnaturally the Claimants wondered what had happened to the $34 million sum and they
accordingly started garnishee proceedings in the English High Court. As any reader of this judgment
will know, garnishee proceedings are a form of execution whereby a judgment creditor can obtain an
order that any person (the garnishee) who owes money to a judgment debtor pay such money to the
judgment creditor, instead of to the judgment debtor, so far as may be necessary to satisfy the
judgment. The procedure was introduced in English law by the Common Law Procedure Act 1854
and, according to the law of England, payment by the garnishee will discharge the debt which the
garnishee owes the judgment debtor. There are two parts to the procedure. First the judgment
creditor obtains a garnishee order nisi against the garnishee; this has the effect of freezing any sum
due to the judgment debtor and requiring the garnishee not to pay him pending the garnishee's
attendance at court on a particular day to show cause why the order nisi to pay the judgment creditor
should not be made absolute or final. If the garnishee does not attend or makes no objection, the
order nisi will be made absolute and the garnishee is under an obligation to pay over any sum he
owes the judgment debtor to the judgment creditor.
4. The application for a garnishee order nisi is usually made on paper to a Master of the Supreme
Court. Since the trial had been in the Commercial Court it was sent as a paper application to the
Commercial Court and dealt with by Tomlinson J who (being a judge of that Court) decided to retain
the matter in the Commercial Court. He made the order as asked on 21st December 2000 but at the
same time wrote to the applicants to inform them that he was soon to deliver a judgment in which he
would be addressing the legal difficulties in the way of an applicant who sought to garnish a debt
owed by a foreign bank. That judgment was delivered on 23rd January 2001 in relation to a debt
owed to an account-holder by Hong Kong and Shanghai Banking Corporation (HSBC) in Hong
Kong. The matter was rightly before the court because HSBC had a branch in England and was
registered as an overseas company in England with the result that proceedings could be brought
against it in England. UBS is in an identical position in that it also has a branch in the City of London
and is registered as an overseas company. It is accordingly amenable to the jurisdiction of the English
court.
5. In his judgment Tomlinson J held that the debt owed by HSBC to the judgment debtor in the case
before him was a foreign debt whose lex situs was Hong Kong. That law would not recognise the
effect of an English garnishee order and payment by HSBC as garnishee would not, therefore,
automatically discharge HSBC; there was thus a substantial risk that HSBC might have to pay the
amount of the debt a second time in Hong Kong. He declined in his discretion to make the order
absolute, saying that garnishee relief should not usually be available in respect of a foreign debt
unless it brings about a virtually automatic discharge of liability as between garnishee and judgment
debtor. His decision was reversed by this court on 7th August 2001; this court held that there was no
presumption that, merely because a debt was a foreign debt, garnishee relief should be refused. The
fact that Hong Kong law would not recognise the effect of an English garnishee order was not
decisive of the question whether garnishee relief should be granted; the true question was whether
the garnishee would be at risk of paying twice over. In the absence of evidence to the contrary,
English law that any person compelled to discharge a third party's liability has a claim in restitution to
be reimbursed by that third party would be applied. The availability of this restitutionary remedy which
would pro tanto discharge any liability on the judgment debtor's bank account meant that the bank
would not be liable to pay twice and a garnishee order absolute was, therefore, made. The decision of
the Court of Appeal is now reported as Socit Eram Shipping Co Ltd v Compagnie Internationale de
Navigation [2001] All ER (Comm) 721. I will call it the Eram case.
6. Meanwhile KOTC's application to make absolute their garnishee order nisi had come before
Langley J on 23rd March 2001. He followed the decision of Tomlinson J, no submission having been
made that it was wrong. He considered that the bank's evidence of Swiss law, put before him, showed
that there was a real risk of exposure to Mr Qabazard if the bank were required to pay KOTC and also
a risk of exposure to sanctions from the Swiss state. He noted that the Bank's evidence was in conflict
with the evidence put before him by KOTC. He said that he was in no position to resolve that conflict
but that he was able to say that risks faced by the bank were real and not fanciful. He therefore
decided as a matter of his discretion to refuse to make the order absolute. KOTC now appeal to this
court.

The Arguments
7. UBS took a preliminary point on Article 16(5) of the Lugano Convention. Both Switzerland and the

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United Kingdom are parties to this Convention, which for present purposes could be said to be
equivalent to the Brussels Convention on Jurisdiction and the Enforcement of Judgments in Civil and
Commercial Matters. Normally a defendant must be sued in the courts of his domicile but Article 16
provides for exclusive jurisdiction in some cases, thus departing from that normal rule. Article 16
relevantly provides:
The following courts shall have exclusive jurisdiction regardless of domicile

5 In proceedings concerned with the enforcement of judgments, the courts of the

Contracting State in which the judgment has been or is to be enforced

UBS say that the judgment of Moore-Bick J and the Court of Appeal is to be enforced in Switzerland
and the courts of Switzerland have exclusive jurisdiction. Conversely KOTC say that the judgment
has been and is to be enforced in England whose courts, therefore, have exclusive jurisdiction.
Langley J decided against UBS on this point but it is logically the first matter to be decided.
8. Apart from their contentions on this point, KOTC submitted:
(1) that in exercising its discretion whether to make a garnishee order absolute, there is no
presumption that the court should refrain from making the order absolute in the case of a
foreign debt;
(2) the fact that the lex situs of any particular debt would not recognise the order of an English
court garnishing a debt due to the judgment debtor as discharging the garnishee's obligation
to the judgment debtor is not determinative of the question how the court should exercise its
discretion; the question for the court is whether there is a real risk of the garnishee having to
pay twice over (the risk of double jeopardy);
(3) if any considerations apart from the risk of having to pay twice are relevant, they have to
be assessed as real and pressing;
(4) there was no risk of double jeopardy or other action at the suit of the state because the
English court was the court with exclusive jurisdiction under Article 16(5) and the Swiss courts
and the Swiss state would recognise the order of the English court under Articles 2325 of the
Lugano Convention;
(5) if there was any relevant issue of Swiss law, it could not be decided merely by noting the
conflict of evidence but the conflict should be properly resolved.

9. Apart from the Article 16(5) argument, UBS submitted:

(1) that, while the UBS branch in London was entitled, under Swiss law, to confirm (and did
confirm) that Mr Qabazard now had no account at the London branch, Swiss law, supported by
state sanctions,
(a) prevented UBS from revealing the existence of any account held by Mr Qabazard with
UBS;
(b) prevented UBS from making any payment without Mr Qabazard's express authority;
(c) prevented UBS from honouring any order of the English court ordering payment to KOTC
by UBS of their debt to Mr Qabazard;

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(2) that Swiss law would not regard any debt to Mr Qabazard as discharged by virtue of
compliance with a garnishee order made absolute by the English court;
(3) that a Swiss court would not recognise the order of the English court because:
(a) the order did not fall within the category of judgments set out in Article 23;
(b) a Swiss court would regard the question arising before the English court as being within
the exclusive jurisdiction of the Swiss courts under Article 16(5);
(4) that there was thus a real risk both of double jeopardy and sanctions of the Swiss state if UBS
made payment pursuant to a garnishee order absolute;
(5) that Langley J was right to conclude that the fact that UBS had produced a reasoned and
professional statement as to Swiss law was sufficient to raise a real risk of double jeopardy and
exposure to sanctions and there was no need for any conflict of evidence to be resolved.
10. Before dealing with the detail of these submissions, it is necessary to say a little more about the
English law of garnishment.

Development of the garnishee jurisdiction

11. The current source of law is the old R.S.C. Order 49 which became part of Schedule 1 to the new
Civil Procedure Rules by virtue of C.P.R. 50.1. Order 49, relevantly for present purposes, provides, in
wording which still echoes the terms of the Common Law Procedure Act 1854:
1.
(1) Where a person (in this order referred to as the judgment creditor has obtained a judgment
or order for the payment by some other person (in this order referred to as the judgment debtor
of a sum of money amounting in value to at least 50, not being a judgment or order for the
payment of money into court, and any other person within the jurisdiction (in this order referred to
as the garnishee is indebted to the judgment debtor, the court may, subject to the provisions of
this order and of any enactment, order the garnishee to pay the judgment creditor the amount of
any debt due or accruing due to the judgment debtor from the garnishee, or so much thereof as
is sufficient to satisfy that judgment or order and the costs of the garnishee proceedings.
(2) An order under this rule shall in the first instance be an order to show cause, specifying the
time and place for further consideration of the matter, and in the meantime attaching such debt
as is mentioned in paragraph (1) or so much thereof as may be specified in the order, to answer
the judgment or order mentioned in that paragraph and the costs of the garnishee proceedings
8. Any payment made by a garnishee in compliance with an order absolute under this
order, and any execution levied against him in pursuance of such an order, shall be a
valid discharge of his liability to the judgment debtor to the extent of the amount paid or
levied notwithstanding that the garnishee proceedings are subsequently set aside or the
judgment or order from which they arose reversed.
The significant words of Order 49 r.1(1) are that the court may order the garnishee to pay the
judgment creditor the amount of any debt due or accruing due to the judgment debtor from the
garnishee.
12. The order nisi is a prescribed form (No 72) and the garnishee order nisi made by Tomlinson J
dated 21st December 2000 and sealed on 2nd January 2001 followed that prescribed form in the
following terms:
1 All debts due or accruing from the garnishee (UBS A.G.) to the judgment debtor,
Hassan Ali Hassan Qabazard, whether in his own name or in the name of Esculape
Foundation, be attached to answer Judgments recovered against the judgment debtor
by the judgment creditors in the High Court of Justice on 15 December 1998 for sums in
excess of US$ 130 million (together with the costs of the garnishee proceedings) on

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which judgments only approximately 140,000 has been repaid, the rest remaining due
and unpaid.
2 The garnishee do attend Master sitting in Room No , Royal Courts of Justice, Stand,
London WC2A 2LL on 2001 at o'clock on an application by the judgment creditors that
the garnishee do pay to the said judgment creditors the sums due from the garnishee to
the judgment debtor, or so much of them as may be sufficient to satisfy the said
Judgments together with the costs of the garnishee proceedings.
The only material difference between the Prescribed Form and the order as made is that in the
prescribed form there is an additional square bracketed paragraph, prefaced by an italicised rubric
[ Add where appropriate : The name and address of the branch of the garnishee
institution at which the debtor's account is believed to be held is The number of that
account is believed to be ]
13. Soon after the provisions of the Common Law Procedure Act were incorporated into the original
Rules of Court by the Supreme Court of Judicature Act 1875, the question arose: what should be the
court's approach to a garnishee who attended on the application to make absolute the order nisi but
refused to state the amount he owed to the judgment debtor or, indeed, whether he owed the
judgment debtor anything at all? It was first of all held in Lucy v Wood [1884] W.N. 58 that it was
proper to make a garnishee order on the application of the judgment creditor even if he did not or
could not specify the amount of the garnishee's debt which he wanted to attach.
14. This was followed by the case of Vinall v De Pass [1892] AC 90 in which De Pass had obtained
judgment against Capital and Industries Corporation for 148; he was able to swear that the
company's managing director had said to him that the company was owed at least 100 for calls due
on shares in the company. In reply Vinall swore he had paid the company all the sums which were
payable in respect of the shares. He declined to swear that he owed nothing to the company. The
Divisional Court set aside a garnishee order absolute made by Vaughan Williams J; the Court of
Appeal [1891] 1 QB 216 restored the judge's order but held that it was right for Vinall to have a further
opportunity to depose that he did not owe any debt to the company; when he declined to do so, the
court inferred that there was a debt outstanding and decided that an order absolute, requiring Vinall to
pay the amount of the judgment, should be made. Vinall appealed to the House of Lords submitting
that it was for the judgment creditor to allege what debt was due from the garnishee to the judgment
debtor and that it was sufficient for the garnishee to deny he owed that debt. There was then no
evidence of any other debt and the garnishee order should be set aside. His appeal was dismissed.
Lord Halsbury LC pointed out that the order attached all debts due and said (page 95):
It is clear that if there were other debts, out of which this execution could be satisfied
due from the same person, those debts ought to be made the subject of the execution.
He considered that Vinall, having been given every opportunity to deny that he was indebted to De
Pass and having refused, there was an inevitable inference that he was indebted and the order nisi
should be made absolute. Lord MacNaghten said (page 97):
[Vinall] says that he does not owe anything to the judgment debtor on one particular
account. More than that he will not say
and concluded that it was right to have made a garnishee order absolute. Lord Hannen considered
the wording of the rule and said (p 99) that the judgment creditor's affidavit
is to lay a foundation for calling the debtor, the garnishee, before the tribunal in order to
ascertain whether he can deny what is alleged against him, simply that he is indebted
[T]he statute here only requires that the affidavit shall state that he is indebted to such
debtor [I]t need not state in what respect he is indebted.
15. This remained the position until 31st March 1976. Order 49 r. 2 then provided:

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An Application for an order under Rule 1 must be made ex parte supported by an

affidavit
(a) identifying the judgment or order to be enforced and stating the amount remaining unpaid
under it at the time of the application, and
(b) stating that to the best of the information or belief of the deponent the garnishee (naming
him) is within the jurisdiction and is indebted to the judgment debtor and stating the source of
the deponent's information and the grounds of his belief.
This state of law may well have caused difficulty for banks since, if all the judgment creditor could say,
on information and belief, was that there was a debt, banks would, no doubt, have to do a certain
amount of research before they could definitively state whether they were indebted to a particular
customer and, if so, in what amount. That research would take time and cost money.
16. On 1st April 1976 Order 49 rule 2 was amended by adding a third requirement (see SI 1976 No
337, paras 9 and 22):
(c) stating, where the garnishee is a bank [now a deposit-taking institution] having more
than one place of business, the name and address of the branch at which the judgment
debtor's account is believed to be held [and the number of that account] or, if it be the case,
that [all or part of] this information is not known to the deponent.
The square bracketed words were added by later amendment to the Rules in 1981. The prescribed
form was also amended in 1976 and 1981 to include the substance of the paragraph in square
brackets identified in paragraph 12 above.
17. When KOTC's solicitor, Mr Aspinall, in the present case came to make his witness statement in
support of the application for a garnishee order nisi on 19th December 2000 he exhibited a payment
order of 15th November 1990 showing a transfer of $34.5 million from Mr Qabazard's Account No
210927 at UBS in London to Mr Qabazard's account No 362870 XL 60 at UBS in Geneva. On the
basis of a letter of 3rd May 2000 from UBS Geneva to Geneva's Debt Collection Office, stating that an
attachment existed on the sums then in Mr Qabazard's Geneva account totalling $1,333,174.78, he
then said he believed that Mr Qabazard had since transferred the original sum out of Geneva to other
branches of UBS. It was not suggested by UBS that Mr Aspinall's witness statement was not a
sufficient compliance with the requirements of Order 49 rule 2 in its current form. The evidence also
explains why the deponent did not think it appropriate to include the square bracketed part of the
Prescribed Form when he submitted a draft form of order to the Judge and, again no point was taken
as to that.
18. It may have been regarded as doubtful in 1976 whether Order 49 enabled a judgment creditor to
garnish a foreign debt viz a debt whose lex situs (or, perhaps, whose proper law) was a foreign law.
Any such doubts have now been laid to rest by SCF Finance Co v Masri (No 3) [1987] QB 1028,
104344, Interpool Ltd v Galani [1988] QB 738, Deutsche Schachtbau v. Shell International Trading
Co [1990] 1 AC 295and the Eram case [2001] All ER Comm, 721, paras 1424. But the fact that a
debt sought to be attached is a foreign debt will always be relevant when, in a contested case, the
court has to decide whether to make a garnishee order absolute. Before any such consideration
arises, however, the court must be made aware that a foreign debt is, indeed, sought to be attached.
In the present case, when it was argued before us, all that UBS said was that there was no debt due
from their London branch; they did not say that there is no debt due from any other branch. On Vinall
v De Passthat would not be enough for a proposed garnishee of an English debt to avoid the making
of a garnishee order absolute against him. The question arises whether it is enough in the case of a
proposed garnishee of a foreign debt.
19. A solution to this question has to be found in the context of a bank (such as UBS) which has
branches in many leading countries in the world. This is an important consideration since the situs of
a debt is where it is expressly or impliedly payable or, failing any such place, where it would be paid in
the ordinary course of business. For this reason, the debt constituted by a bank account and thus due
to a bank's customer is located in whatever country the account is kept, see Dicey & Morris Conflict of
Laws 13th ed., paras 22029 and 33296; Erampara 32. Even if, therefore, the Bank owes no English
debt to Mr Qabazard, it may owe a Swiss debt or any number of foreign debts, if any transfers have
been made out of his Geneva account to other accounts.

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Article 16(5) of the Lugano Convention

20. It is at this stage that it is convenient to consider the interpretation of Article 16(5), since UBS
submit that this Article precludes the English court from making a garnishee order and thus from
considering the question of the existence of or the amount of any foreign debt. Garnishment being a
form of attachment, must be a proceeding concerned with the enforcement of judgments. It,
therefore, follows that the court which has exclusive jurisdiction is to be the court of the Contracting
State in which the judgment [has been or] is to be enforced. I exclude from consideration the words
has been or since the judgment has not yet been substantially enforced. Where is the judgment to
be enforced?
21. The only feasible answer to that question on the evidence before the court is that the judgment is
to be enforced in England. It is the English court that is being asked to make the garnishee order into
an order absolute. There can, of course, be no question of enforcing that order in another Contracting
State without an order of a court of that state. In fact Moore-Bick J's world-wide freezing order of
November 1998 contains the usual Babanaftproviso (see [1990] Ch 13) providing that the terms of the
freezing order do not affect or concern anyone outside the jurisdiction of this court until it is declared
enforceable or is enforced by a Court in the relevant country. That makes explicit the fact that, before
a foreigner can be affected by an order of an English court, the order of the English court has to be
declared enforceable by the court of his country. Not until then will his assets in that country be at
risk. UBS's assets outside the English jurisdiction, wherever they may be, will thus not be available to
satisfy any order of the English court without the order of the relevant foreign court.
22. In the present case Mr Rabinowitz for UBS relied on the evidence of UBS's legal counsel at their
London branch, Mr Dealy, that there was no debt due to Mr Qabazard on any account with UBS in
London. He had no instructions (and originally there was no evidence) to say whether, apart from in
England, Mr Qabazard had any account with UBS in any country at all. The money might still be
owing in a Geneva account or elsewhere in Switzerland or in an account in another Contracting State
or, indeed, in a country which is not a party to the Lugano Conventionat all. In these circumstances it
is impossible to say that any state apart from England has exclusive jurisdiction. UBS's argument that,
while they could only say that no debt existed in London, exclusive jurisdiction was vested in the
courts of Switzerland where any debt was most likely to exist (although they could not say whether it
did or not), must be rejected since it is incumbent on a party who asserts that a particular court has
exclusive jurisdiction to assert and prove the grounds of such exclusive jurisdiction. If UBS wish to
say that enforcement of a judgment by way of a garnishee order can only take place (under the
Lugano Convention) in the place where it is recoverable, they have to state that a debt exists in the
place which is asserted to have exclusive jurisdiction viz Switzerland. That is, however, just the matter
which they submit Swiss law prohibits them from revealing. They cannot therefore prove the factual
foundation for their submission.
23. But even if it were clear that the debt sought to be garnished was a Swiss debt, that would not
mean, in my judgment, that the Swiss courts would have exclusive jurisdiction under the Convention.
The court which has exclusive jurisdiction is the court of the state in which the judgment has been or
is to be enforced. That does not mean, as UBS contend, the state which is the lex situs of the debt
and thus the state in which the debt is properly recoverable but rather the state in which it is proposed
to enforce the order for which application is being made. The mere fact that a debt exists within a
particular jurisdiction and is properly recoverable there does not mean that an order of the court made
as a result of the existence of that debt is only enforceable in that place, if the person against whom
the order is made has assets in another jurisdiction in which he is answerable to the order of the
court.
24. This makes sense once it is appreciated that the garnishee order absolute only operates in
England, unless it is sought to enforce it in some other Contracting State. If that happens, that other
state will then have exclusive jurisdiction in its own territory in relation to such enforcement. That, in
my judgment, is what Article 16(5) means. This is supported by a passage in Eramwhere Mance LJ
distinguished an English garnishee order from an order requiring a bank to produce, in an English
action, documents which were abroad; he said in relation to HSBC in Hong Kong:
The ultimate aim of garnishee relief is not, however, to require HSBC to do anything in
Hong Kong. It is to require HSBC in England to pay the judgment debt, or so much of it
as can be met, out of the moneys owed by HSBC to the judgment debtor in Hong

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Kong.
So here any order against UBS, if made, would only be an order to do something in England and, as
such, the English court has exclusive jurisdiction under the Lugano Convention.
25. The only decision of the European Court to which we were referred, Reichart v Dresdner Bank
[1992] ECR 12149 at 2182 lends slight support to this view, as Langley J indicated, by saying (1)
that Article 16 should not be given a wider interpretation than required by its objective and (2) that the
essential purpose of the provision is that it is only for the courts of the Member State in whose
territory enforcement is sought to apply the rules concerning the action on that territory of the
authorities responsible for enforcement.
26. For these reasons Article 16(1) of the Lugano Convention is no jurisdictional bar preventing the
invocation of English garnishee proceedings against UBS in respect of the English judgment debt due
from Mr Qabazard. The question remains whether an English court can properly make any order
where there is no evidence as to the existence or amount of any debt over and above the sum
currently attached in Mr Qabazard's Geneva account of $1,333,174.78. I return, therefore, to the
question whether absence of evidence from the proposed garnishee of a foreign debt as to the
existence or extent of his indebtedness means that the English court should make no order.

Consequence of absence of evidence about the extent to which UBS is indebted to Mr

Qabazard
27. Once it is accepted that the English court has jurisdiction to make a garnishee order in respect of
foreign debts, just as much as it has jurisdiction to make such an order in respect of domestic debts, it
is difficult to see that the principle laid down in De Pass v Vinall has any the less application. If a
debtor of a debt whose situs is in England has to state the extent of his indebtedness and not just
accept or deny the particular debt whose existence is asserted in the judgment creditor's witness
statement, there can be no principle that a debtor of a foreign debt (if it exists) need not similarly state
the extent of his indebtedness. Indeed, unless he does so, there can be no scope for a focused
debate on the vital question whether the garnishee will be exposed to double jeopardy or any
sanction of any relevant state where the debt is situated.
28. UBS seek to rely on evidence of Swiss law from a Swiss Attorney-at-law, Dr Jrg Alain Schwarz,
to the effect that Swiss banking secrecy rules do not allow any employee of a Swiss branch of UBS to
confirm or deny to any person (including any employee of a branch of UBS located outside
Switzerland) the existence of any assets deposited with UBS in Switzerland; Dr Schwarz says nothing
about confirming or denying the existence of assets deposited at UBS's branches outside
Switzerland. As I have said Mr Dealy of UBS was able to say that no debt was owed to Mr Qabazard
in London. Neither he nor Mr Rabinowitz for UBS could, at the time of oral argument, say anything
about the existence or non-existence of any debt anywhere else. Dr Schwarz supported his opinion
by referring to Article 47 of the Federal Act on Banks and Savings Banks of 8th November 1934 and
Article 43 of the Federal Act on Stock Exchanges and Securities Trading of 24th March 1995 which
both impose penalties on employees of banks or securities dealers who divulge confidential
information. For this reason he says (para 15):
a Swiss branch of UBS will eg not inform the London branch of UBS of the existence or
non-existence of any assets of the Judgment Debtor deposited with it.
He also says in para 17 that any information given by an employee of a Swiss branch of UBS to the
Judgment Creditor or to the High Court of Justice as to whether there are (or are not) any assets
deposited by the Judgment Debtor with any Swiss branch of UBS would constitute a violation of both
Acts and expose the employee to criminal prosecution and punishment. He states further (para 20)
that the Federal Banking Commission may withdraw the licence to do business of any bank which
manifestly fails to preserve its customers' secrets and can order the dismissal of employees who
violate banking secrecy.
29. The question that arises, therefore, is whether this evidence (which is substantially unchallenged)
can have any effect on the discretion of an English court to make absolute the garnishee order nisi in
this case. There can be no doubt that, if UBS were able to say that they did have an indebtedness to
Mr Qabazard and that such indebtedness was solely a Swiss debt, it would be relevant to have in

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mind the provisions of Swiss law preventing UBS from giving particulars of the indebtedness. Any
provisions of Swiss law in relation to the likelihood of the Bank having to pay the debt twice might well
also be relevant.
30. De Pass v Vinall had not, however, been cited to us and we considered that the parties ought to
have the opportunity to make written submissions to us on that case. KOTC submitted that De Pass v
Vinall was consistent with their argument but a change of approach occurred on the part of UBS who
sought to put in further evidence to show that UBS was not indebted to Mr Qabazard in any place
outside Switzerland; they then relied on Dr Schwarz's evidence to submit that they were unable to say
whether Mr Qabazard was indebted in Switzerland and that it was, therefore inappropriate for this
court to infer that any debt existed at all over and above the sum of $1.333 million revealed by their
letter of 3rd May 2000 to the Geneva Debt Collection Office. As to that sum, UBS could not say
whether it was still owing; even if it was right to infer that a debt in at least that sum existed no order
in respect of that sum should be made because (1) there was a risk that they might also have to pay it
to Mr Qabazard and (2) it was already the subject of a Swiss freezing order.
31. KOTC were content to leave it to the court to decide whether UBS's new evidence should be
admitted and what weight should be attached to it. For my own part, reserving all questions of costs, I
consider it should be admitted for the simple reason that cases should if possible be decided on the
basis of the full facts. It is not evidence that could, in any way, be challenged and, on the basis of that
evidence, I would conclude that there is no evidence of any debt due from UBS to Mr Qabazard
outside Switzerland. The fact remains, however, that the court still does not have the full picture and
still has to decide whether it is right to infer that UBS owes Mr Qabazard any sum in excess of that set
out in the 3rd May letter.
32. If the situation were that no procedure existed for ascertaining whether there was a debt and the
court considered that UBS were taking advantage of that situation to conceal the evidence of any
indebtedness of Mr Qabazard, it might well be proper for an English court to infer the existence of a
debt owed by UBS in a sum greater than $1.333 million to their customer. But if such a procedure
does exist and can be utilised by KOTC, it would be premature to reach any such conclusion. What
Dr Schwarz says about this is in paragraph 16 of his expert report:
The secrecy obligations of a banker are not, and never have been, absolute
These secrecy obligations are, in particular, not intended or operated as an obstacle to
the enforcement of any judgment given in civil or commercial matters. However, it has to
be emphasised that even in cases where banking secrecy can be set aside, foreign
courts cannot issue orders to a bank in Switzerland directly, but have to pass through
Swiss courts or Swiss authorities which will issue the necessary orders to witnesses or
persons who have to produce documents.
It seems to me, therefore, that this court's approach should be to make no order on this appeal at
present but leave KOTC to take such proceedings in Switzerland as they are advised, presumably by
way of registering their English judgment and then applying for production of Mr Qabazard's
statements of account with UBS which will show how much of the $34 million Mr Qabazard deposited
in 1990 remains and where any sums transferred out of the account have gone. I assume that the
Bank will not oppose such application and it is, in any event, clear in the light of Dr Schwarz's
evidence that the court will make such an order. In this way the English court and the Swiss court can
properly cooperate with one another. Once such order is made, it will then be clear whether a Swiss
debt, in excess of the sum already attached, exists or not and how much that debt is. An order of the
Swiss court will also dispose of the problem of Swiss state sanctions in relation to compliance with
any order made by the English court since there will no longer be any confidence to be broken and
the problems raised in paragraph 27 of UBS's supplemental submissions in relation thereto will
therefore disappear.
33. UBS accept that the letter of 3rd May 2000 may support the inference that there is a debt due
from UBS to Mr Qabazard in the sum of $1,333,174.78. I would so hold. This sum is subject to both a
civil attachment notified to UBS on 27th August 1999 (I assume this to be notification of the
post-judgment freezing order made by Moore-Bick J on 20th November 1998) and a criminal
attachment (which I assume has been obtained by the State of Kuwait as set out in paragraph 7 of Mr
Aspinall's witness statement). It may be established in due course that there are further sums due
which may or may not be subject to any such attachments. It is, therefore, sensible to consider briefly
what the decision of this court is likely to be once the extent of the debt is established, since the

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question of double jeopardy is still outstanding.

34. It is understandable that Langley J did not consider it necessary to resolve the conflicts revealed
by the evidence of Swiss law since neither party argued before him that Tomlinson J's decision in
Eram was wrong. It is only subsequent to Langley J's decision that Eram was overruled. It is now
clear that the conflict of evidence has to be resolved. It seems to me that the parties should have the
opportunity of revisiting that issue, in the light of the information revealed by any order of the Swiss
court. I do not envisage that any further evidence should be produced but either side should have the
opportunity, if they require it, of cross-examining its opponents' Swiss lawyers; the right order for this
court to make, once the extent of the debt is revealed in compliance with the order of the Swiss court,
will therefore be that the case be remitted to the Commercial Court for Langley J or any other judge of
that court to decide the question of double jeopardy in accordance with the principles set out in Eram
and in particular the restitutionary rights of the bank there identified.
35. The Commercial Judge should also consider the effect of any Swiss attachments there may be.
No argument was addressed to us about the effect of the attachments recorded in the 3rd May letter
or of any other attachments there might be. In the first place the attachments might be competing
attachments although that may not be particularly likely if they have been obtained by KOTC on the
one hand and the state of Kuwait on the other. That should be elucidated. Secondly UBS apparently
seek to argue that double jeopardy exists, even when the sums have been attached. This is at first
sight surprising since one would expect that the sole reason for any attachment is that the relevant
sums have been frozen either pending the decision of a relevant court as to Mr Qabazard's liability or
pending satisfaction of any judgment in relation to that liability. That must, however, depend on the
terms of the Swiss attachments as to which again there is currently no evidence.
36. For the reasons given, however, I would at this stage make no order pending an application by
the appellants to the Swiss court for relief save that if no such application is made within 28 days, the
appeal will be dismissed with costs; otherwise there will be liberty to both parties to apply.
Lord Justice Laws :
37. I agree.
Lord Justice Peter Gibson :
38. I also agree.
Order: No order on the appeal save that: 1. if the appellant's make no application to the Swiss courts
within 28 days, then the appeal should be dismissed with costs; 2. further proceedings this
jurisdiction, if any, to be remitted to a judge of the Commercial Court; and 3. there should be liberty to
apply to this court in the event of either side thinking that there are loose ends that need tying up by
(1) and (2). Permission to appeal to the House of Lords refused.
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