On appeal from: [2015] EWCA Civ 835

This case considered the identity of the beneficiary under letters of credit, the situs of debts under letter of credit, and whether there is a free-standing principle of honest dealing beyond the rule that a judgment creditor cannot execute against property that does not belong to the judgment debtor. It also considered the correct basis on which a court should exercise its discretion to make receivership orders, and the circumstances in which the State Immunity Act 1978, ss 13(2)(b), 14(2) and 14(4) allow immunity from execution.

The Supreme Court allowed the appeal by a majority of three to two, reversing the High Court and Court of Appeal decisions which had set aside arbitral orders in the appellant’s favour. The Court held that the appellant was entitled to the third party debt order as the respondent was the sole beneficiary of the letters of credit, and identified as such in them, and as it was the sole creditor of the London branch of Crédit Agricole S.A. The Supreme Court considered that the debts were located in England, because that was where they were recoverable, and that there is no independent rule that a third party debt order can be made only in respect of property with which the judgment debtor can “honestly deal”. The Court concluded that a receivership order was appropriate as it was predictable that the respondent would be sued in England and domestic and international policy favours the efficient recognition and enforcement of arbitration awards.

For judgment, please download: [2017] UKSC 64
For Court’s press summary, please download: Court’s Press Summary
For a non-PDF version of the judgment, please visit: BAILII

To watch the hearing, please visit: Supreme Court Website (21 Mar 2017 morning session) (21 Mar 2017 afternoon session) (22 Mar 2017 morning session) (22 Mar 2017 afternoon session)