1 See the discussion in Chapter 41 above. Certain aspects of foreign governmental action and the obligations of an English bank and its customer are also considered in Chapter 48 below.
2 For another discussion of this subject, see Paget, ch 31.
3 See, for example, Chapter 44 above.
4 This should be contrasted with the position discussed in Chapter 44 above. A freezing injunction is granted in anticipation of a judgment, whilst a third-party debt order is granted post-judgment and in aid of its execution.
5 It may be noted that the expression ‘third party debt order’ is derived from CPR, Pt 72. The order was formerly known as a ‘garnishee order’. It seems that Pt 72 was not intended to make any substantive changes to the procedure (although see nn 8 and 9 below). As a result, reference to the older case law still remains pertinent.
6 As is the case with many remedies by way of execution, the court has a discretion (and not an obligation) to grant a third-party debt order: CPR, r 72.8.3.
7 Formerly known as a ‘garnishee order nisi’. An interim order will be made without a hearing. It is designed to prevent dissipation of the deposit until a full hearing can take place.
8 A garnishee order operated by way of attachment and thus had proprietary consequences, whilst an interim third-party debt order operates as an injunction and, hence, in personam. The replacement of the former equitable charge with a personal remedy has not escaped criticism: see the judgment of Lord Millett in Société Eram Shipping Co Ltd v Compagnie Internationale de Navigation  3 All ER 465 (HL).
9 See Choice Investments Ltd v Jeromnimon  QB 149 and CPR, r 72.4. A bank which pays the customer under such circumstances runs the risk of having to pay the judgment creditor as well: Crantrave Ltd v Lloyds Bank plc  QB 917, where the bank mistakenly released funds to the judgment creditor against receipt of an interim third-party debt order, when it should merely have blocked the account and awaited the final order. However, given that a third-party debt order now operates as an injunction and does not create an equitable charge, it may be that this decision should be reconsidered in the light of the House of Lords decision in Customs & Excise Commissioners v Barclays Bank plc  4 All ER 256. That decision is considered at para 44.35 above.
10 CPR, r 72.6. This may be contrasted with the bank’s position in relation to a freezing injunction (see para 44.17 above), where the bank must search for accounts but, in the absence of any further order, its duty of confidentiality continues to apply in relation to the state of the account.
11 The order may not be made final if, for example, the judgment creditor would thereby obtain an unfair advantage over other creditors: Rainbow v Moorgate Properties Ltd  2 All ER 821; Pritchard v Westminster Bank  1 All ER 999. The bank will not, however, be concerned with such matters since it will not usually be a party to the proceedings. It will merely be concerned to comply with the terms of the order served upon it.
12 Note that a final third-party debt order creates a payment obligation which is enforceable against the bank itself. This was not always the case: see the discussion in Paget, para 31.4.
13 CPR, r 72.9. In deciding whether the debt is capable of attachment, conditions requiring a period of notice of withdrawal or a personal request by the account holder are to be disregarded: s 40 of the Senior Courts Act 1983.
14 This appears to be the effect of Hutt v Shaw (1887) 3 TLR 354, noted by Paget, para 31.11. Note, however, that (i) the right of set-off will not apply to customer liabilities incurred after the date on which the bank is served with the order (Tapp v Jones (1875) LR 10 QB 591) and (ii) any right of set-off which the bank proposes to assert must be notified to the court within seven days after the receipt of the order: CPR, r 72.6.2. See also Paget, para 31.19.
15 See Re General Horticultural Co ex p Whitehouse (1886) 32 Ch D 512.
16 See, for example, Webb v Stanton (1883) 11 QBD 518; Re Greenwood  1 Ch 887.
17 Holt v Heatherfield Trust Ltd  2 KB 1; Rekstin v Severo Sibirsko Gosudarstvennoe Akcionare Obschestro  1 KB 47; ED&F Man (Coffee) Ltd v Miyazaki SA  1 Lloyd’s Rep 154.
18 CPR, r 72.1 (emphasis added).
19 These general principles of private international law have already been considered in Chapter 41 above. In the light of these principles, the creditor may have to commence proceedings for the recognition or registration of his judgment in the foreign country in which the account is held.
20  2 KB 26 (CA). For other examples, see SCF Finance Co Ltd v Masri (No 3)  QB 1028; Interpool Ltd v Galani  QB 738; Deutsche Schachtbau- und Tiefbohr GmbH R’As al-Khaimah National Oil Co  1 AC 295.
21 This remains the position under the terms of Rome I: see Art 1(3).
22 This is a rather brief explanation which is perhaps sufficient for present purposes, but a full explanation of the history, nature, and effect of such orders is given in the judgment of Lord Bingham in the Société Eram case, n 8 above. It is, however, clear that a third-party debt order is intended to constitute a form of enforcement against the debt itself in the place in which it is situate (ie in rem), rather than against the third-party debtor personally in the country in which he may happen to be found (in personam), with the result that one is concerned with the situs of the third-party debt, rather than the law applicable to it: see the Kuwait Oil Tanker decision (below).
23 This point has already been noted above.
24 The decision was in part motivated by consistency and reciprocity, for the Court of Appeal noted that: ‘If we consider the converse case it is clear, to my mind, that we should take that view of a similar transaction occurring abroad…’ (per Vaughan Williams LJ at 29).
26 A third-party debt order can only apply to a debt and, clearly, this point will not usually be disputed in relation to a bank account. It has often been said that the debt must be recoverable by English proceedings, but it seems that this should not be regarded as an ‘infallible test’, see CPR, r 72.2.1.
27  3 All ER 465 (HL). On the point just made in the text, see paras 104–106 of the judgment.
28 As noted above, nearly all remedies by way of execution are at the discretion of the court.
29 Earlier cases suggested that the discretion did exist in relation to foreign debts, but that it would hardly ever be exercised; it would be inequitable to do so because of the obvious prejudice to the third-party debtor. It was, nevertheless, held to be incumbent on the bank to demonstrate that it was likely to be obliged to pay under the relevant foreign law and was thus exposed to ‘double jeopardy’: Swiss Bank Corporation v Boehmische Industrial Bank  1 KB 673. In the light of the decision in Société Eram (n 8 above), it is doubtful whether the bank should now be put to proof on such matters.
30 See, for example, the decisions of the Federal Court of Australia in Suzlan Energy Ltd v Bongad  FCA 1152 and Hua Wang Bank Bhd v Commissioner of Taxation  FCAFC 28.
31  3 All ER 501 (HL).
32 In addition, however, the House of Lords held that the Swiss courts had exclusive jurisdiction under Art 16(5) of the Lugano Convention.
33 12 NY 3d 533. The dissenting judgment in that case includes a useful discussion on jurisdictional and policy issues. For an analysis, see David D Siegel, ‘Koehler: Creating Mecca for Creditors or anti-Mecca for Garnishees?’ (2009) 242 NYLJ 4.
34 Morgenthau v Avion Resources Ltd 49 AD 3d 50, modified on other grounds, 11 NY 3d 382 (2008).
35 See also McCarthy v Wachovia Bank NA 759 F Supp 2d 265 (EDNY, 2011).
37 Shaheen Sports Inc v Asia Insurance Co Ltd 2012 WL 919664 (SDNY, 2012).
38 New York Appellate Division, First Department (11 March 2014), affirming 957 NYS 2d 574.
40 2nd Cir, March 2014. Tire Engineering concerns an attempt to garnishee a foreign bank account (as opposed to an information subpoena).
41 The ‘separate entity’ doctrine may have received some recent reinforcement as a result of the decisions of the Second Circuit Court of Appeals in the Tiffany and Gucci cases discussed at para 43.33 above.
42 12-CV-08087 (SDNY, 11 June 2013).
44 On the whole subject, see Fox, The Law of State Immunity (Oxford University Press, 2004) ch 9. For a case dealing with the immunity of foreign embassy accounts, see Alcom Ltd v Republic of Colombia  AC 580 (HL). In the absence of written agreement to the contrary, accounts held by central banks will be immune from execution proceedings irrespective of the intended use of the funds: AIC Ltd v Federal Republic of Nigeria  EWHC 1357; AIG Capital Partners Inc v Republic of Kazakhstan  1 All ER (Comm) 1; Thai-Lao Lignite (Thailand) Co Ltd v Government of Lao People’s Democratic Republic  2 All ER (Comm) 883;  EWHC 2466 (Comm), discussed at para 44.54 above.
45 See ss 13 and 14 of the State Immunity Act 1976.
46 It is for the defendant, rather than the bank, to raise questions of sovereign immunity.
47 An application to court on the part of the bank would usually be necessary in such a case.
48 Philipp Bros v Republic of Sierra Leone  1 Lloyd’s Rep 289 (CA).