England and Wales Court of Appeal (Civil Division) Decisions

IN THE SUPREME COURT OF JUDICATURE
IN THE COURT OF APPEAL (CIVIL DIVISION)
ON APPEAL FROM THE HIGH COURT OF JUSTICE, QUEEN'S BENCH DIVISION
(MR. JUSTICE MORISON)

		Royal Courts of Justice Strand London WC2 Friday 17 January 1997

LORD JUSTICE SIMON BROWN: This is an appeal by a judgment creditor from the order of Morison J on 24th May 1996 refusing to make absolute a garnishee order nisi made the previous month. The garnishee, Zambia Consolidated Copper Mines Ltd (ZCCM) is far and away Zambia's largest foreign currency earner. Under Zambian law it is required to pay 45% of such earnings to the Bank of Zambia (BOZ), being credited in return with Zambian currency, kwacha. The central question raised in these proceedings is whether that foreign exchange can and should be garnished in the hands of ZCCM to satisfy a judgment debt outstanding against BOZ. Very large sums are at stake. The judgment debt with interest was some US$120 million in May 1996. Although the sum attached by the garnishee order nisi was only about £1,600,000 (and even that appears impermissibly to have included some foreign exchange beyond the 45% payable to BOZ), this order is intended to lay the foundations of altogether more extensive recovery proceedings hereafter, if necessary by way of receivership and sequestration, proceedings which will build too on a related Mareva order.

The judgment creditor is Camdex International Limited (Camdex), a Bahamian company, which took an assignment from the Central Bank of Kuwait of that Bank's rights against BOZ arising under two deposit agreements. The principal sum involved was equivalent to approximately £40 million, a claim which Camdex purchased in the distressed debt market for 11% of its value.

Camdex issued proceedings against BOZ on 26th May 1995 and obtained summary judgment on 18th September 1995. BOZ's appeal was dismissed by the Court of Appeal on 3rd April 1996. Mareva proceedings followed; these I need not describe. The garnishee order nisi was made by Master Trench on 12th April 1996. Camdex's application to make it absolute was linked to an application for injunctive relief against ZCCM and for convenience, therefore, came before Morison J. As stated, he refused it. Camdex now appeal.

With that brief introduction let me indicate something more of ZCCM's situation and the circumstances in which they are required to pay over a proportion of their foreign earnings to BOZ.

ZCCM is a Zambian company which owns and operates all the main copper mines there. The Zambian Government hold 60.3% of its shares. It is the largest commercial organisation in Zambia, employing 40,000 people. Almost all the copper (and other mineral) produced is exported. ZCCM earns the equivalent of US$80-100 million per month in foreign exchange (approximately US$1.5 billion for the financial year ending March 1995). The metals are traded on the London Metal Exchange so that traditionally the proceeds of sale have been paid into bank accounts here. ZCCM earns only a negligible amount of Zambian currency. To fund its operation in Zambia, in particular to pay its many employees and all the other substantial local costs for the large mining operation, it therefore needs to exchange a substantial part of its foreign currency for kwacha. BOZ for its part has no less need of foreign exchange.

BOZ is the central bank of Zambia, wholly owned by the State. Its functions are specified in section 4 of the Bank of Zambia Act 1985 as follows:-

"4(1) The functions of the Bank shall be to do all such things as are necessary for the maintenance of the internal and external values of the kwacha, a stable and efficient system of payments, the liquidity, solvency and proper functioning of a soundly based monetary, credit and financial system in Zambia and the fostering of monetary, credit and financial conditions conducive to the orderly, balanced and sustained economic development of Zambia.

(2) Without derogating from the generality of subsection (1), the Bank may, subject to the provisions of this Act -

(a) issue notes and coins to be legal tender in Zambia and exercise control over all matters relating to the currency of the Republic;

(b) exercise control over dealings in ........ foreign currencies......

(c) regulate the value of the kwacha; ........ "

Section 4A(1) provides that:

"The Minister may, after consultation with the Governor, give directions to the Bank, and the Bank shall comply with such directions."

By section 56(1) it is provided that:

"The Bank shall be the agent responsible for administering exchange control in accordance with the provisions of the Exchange Control Act, regulations made thereunder and any instructions and directives that the Minister may from time to time issue."

The Exchange Control Act has since been repealed and exchange control is now therefore administered in accordance with instructions and directives issued by the Minister.

Section 59 provides that:

"In addition to the other duties imposed and powers conferred by this Act, the Bank may ........

(j) buy and sell external currencies ....."

Section 64 provides that regulations may be made by the Minister for the better carrying out of the purposes of the Act.

Pursuant to section 64 there were made The Bank of Zambia (Foreign Currency) Regulations 1994 (SI No. 44 of 1994) (the Regulations). Part II of the Regulations is headed "Offences Relating to Foreign Currency" and by regulation 3 provides:

"(1) Income obtained by ZCCM or any of its subsidiaries in the form of foreign currency shall be disposed of in accordance with directions given in writing by the Bank.

(2) If this regulation is contravened, ZCCM shall be guilty of an offence."

Regulations 18 and 19 provide:

"18. If ZCCM or any other body corporate is convicted of an offence under these Regulations, every person who is a director of, or who is concerned in the management of, the body corporate shall be deemed to have committed the same offence if the person knowingly authorised or permitted the act or omission constituting the offence.

19. A person who commits an offence under these Regulations shall be liable on conviction -

(a) in the case of a body corporate, to a fine not exceeding ten thousand kwacha; and

(b) in the case of an individual to a fine not exceeding 10,000 kwacha or to imprisonment for a term not exceeding 12 months, or to both."

(A fine of 10,000 kwacha is the equivalent of £5.70)

Pursuant to regulation 3(1) BOZ has given ZCCM written directions as to the disposition of their foreign currency income. Essentially these directions indicate the proportion of foreign earnings which ZCCM are permitted to retain.

The first such direction in the papers before us was by letter dated 12th April 1995 and this stated that ZCCM's retention rate would be reduced "from its present level of 70% to 55%." The letter explained:

"It has been necessary to institute this measure in order to minimise exchange rate instability caused by the dominant role that your company plays in the Zambian foreign exchange market. When ZCCM's retention rate was increased to 70 percent on February 1, 1995, that change was made under a clear understanding that it was to be done contingent upon ZCCM's devising ways of participating in the foreign exchange market rate in such a manner as would positively contribute towards ensuring exchange rate stability. We are concerned that actual developments have, however, been to the contrary."

The letter concluded:

"We intend to keep the situation under review and to effect further changes should developments deem them necessary."

The next change was by letter dated 26th September 1995. This was the direction ruling at the date of the garnishee order nisi although, as will appear, it was itself shortly thereafter superseded by a further direction.

The 26th September 1995 letter was headed "Re: Handling of ZCCM Metal Proceeds" and stated:

" After the meeting held in my office this afternoon, kindly note that the Bank of Zambia has, with immediate effect, granted authority to ZCCM to receive metal proceeds in their account at Zambia National Commercial Bank London.

ZCCM will in turn issue standing order instructions to ZNCB London to pay Bank of Zambia 45% of the metal proceeds soon as the amounts are received. On receipt of 45%, Bank of Zambia will credit ZCCM kwacha designated accounts as instructed.

The Bank of Zambia portion of the metal proceeds should be paid to Bank of Zambia account with Bank for International Settlements Basle as follows: [and there were then specified the BOZ accounts into which the various foreign currencies had to be transferred]."

It was clearly no coincidence that this further direction was given just 8 days after Camdex had obtained their summary judgment against BOZ: plainly it was designed to hinder execution of the judgment debt, not least by authorising ZCCM to receive the proceeds of metal sales initially into their own bank account rather than, as previously, into BOZ accounts.

As stated, the garnishee order nisi was made on 12th April 1996. On 16th April 1996 BOZ wrote to ZCCM as follows:

"In exercise of the powers contained in Regulation 3 of SI No.44 of 1994, ZCCM is with immediate effect authorised to retain 100% of its future foreign exchange receipts until further notice. Receipts prior to the date of this letter are to be dealt with in accordance with our letter dated 26th September 1995. The Bank of Zambia will, however, purchase foreign exchange from ZCCM as the need arises from time to time upon advice in writing."

Camdex contend that this purported variation in the directions given to ZCCM breached the Mareva injunction. That allegation, however, is the subject of separate proceedings and I need say no more about it. This appeal is concerned solely with the situation arising under the 26th September 1995 direction.

Garnishee proceedings are governed by the provisions of RSC Order 49. Rule 1(1) under the heading "Attachment of Debt due to Judgment Debtor" provides:

"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."

Given, as the Judge below found and as is now accepted (although it was disputed below), that ZCCM is within the jurisdiction, the basic questions arising under order 49 are first, whether ZCCM are "indebted to" BOZ and second, if so, whether the court in its discretion should attach the debt.

As to whether or not ZCCM are indebted to BOZ by virtue of the latter's direction to pay over 45% of ZCCM's foreign exchange receipts, two main issues arose below:

(i) whether ZCCM's obligation to pay over that foreign exchange was one enforceable by civil action,

(ii) assuming that it was, whether the liability to which it gave rise was in debt or, as BOZ and ZCCM contended, in damages.

The Judge below decided the case against Camdex on the second point: he held that ZCCM's obligation was to exchange one commodity (foreign currency) for another (kwacha), rather than to pay over money as a medium of exchange. He decided accordingly that any breach of that obligation gave rise to a claim in damages rather than in debt, assuming that it gave rise to any civil remedy at all. In those circumstances he found it unnecessary to decide the first point, indicating only that he would in any event have thought it undesirable to do so without hearing evidence upon the effect of Zambian law.

The Judge did, however, state that either way he would in the exercise of his discretion have refused to make the order absolute. He concluded that there was a real risk of "double jeopardy", namely (a) of ZCCM and their directors being exposed to criminal sanctions if they paid the due proportion of foreign exchange earnings over to Camdex rather than BOZ, and (b) of ZCCM not being credited by BOZ with kwacha of equivalent value to the sum garnished.

Before us all those issues and others too have been in play. In logical sequence they can, I think, be formulated thus:

1. Has BOZ under Zambian law a civil cause of action against ZCCM to recover foreign exchange due under the direction of 26th September 1995?
2. If so, would the English court entertain proceedings to enforce that cause of action?
3. If so, is it a cause of action in debt?
4. If so, would the English court entertain proceedings at the suit of Camdex to attach that debt?
5. If so, should the English court in its discretion attach the debt?
6. Is there a Civil Cause of Action at all?

It is as well at the outset to clarify the factual situation upon which Camdex rely as giving rise to a claim in the first place. Under the direction of 26th September 1995 (hereafter for convenience "the direction"), ZCCM were required to pay over to BOZ 45% of the metal proceeds (hereafter for convenience "the foreign exchange due") immediately upon its receipt. Because of these proceedings it seems that ZCCM varied or countermanded their standing order instructions to their own bank (ZNCB). Thus it was that when the garnishee order nisi was made, ZNCB held some of the foreign exchange due. That, at least, is how I understand the position. Were it otherwise I fail to see how on any view there would be any attachable funds - any monies (I deliberately eschew the word "debt") "due or accruing due" to BOZ from ZCCM.

At one time I had thought Camdex were contending for a right to garnish prospective future liabilities of ZCCM under the direction and certainly we were referred to a number of authorities emphasising the width of order 49 - most notably Lloyd v Burrup (1868) LR Thaw Ex 63, Rawley v Rawley (1876) 1QBD 460, Webb v Stenton (1883) 11QBD 516, Booth v Trail (1883) 12QBD 8, and O'Driscoll v Manchester Insurance Committee [1915] 3KB 499. Even, however, were the direction still in force, none of these authorities would to my mind make good the suggestion that Camdex could attach any proceeds of metal sales before their receipt by ZCCM, and, of course, with the direction observed, the foreign exchange due would then instantly be paid out again and so cease to be available for garnishee proceedings.

Lloyd v Burrup decided no more than that church wardens were under an absolute duty to pay over to the minister pew rents as soon as they were received, and were liable to him in law for money had and received in the event of their not performing that duty. Here, of course, I am postulating by contrast that ZCCM, in accordance with the direction, do immediately pay over the foreign exchange due. The trilogy of cases - Rawley v Rawley, Webb v Stenton, and Booth v Trail - clearly give a wide meaning to the words "debt owing or accruing" under order 49. A debt, said Lindley LJ in Webb v Stenton at page 527 "....... is a sum of money which is now payable or will become payable in the future by reason of a present obligation, debitum in presenti solvendum in futuro. An accruing debt, therefore, is a debt not yet actually payable, but a debt which is represented by an existing obligation." At page 528 he added: "...... you may attach all debts, whether equitable or legal." Those cases, however, make plain too that for attachment to be ordered there must be funds already in the garnishee's hands when the order is applied for. That, indeed, was why the judgment creditor failed in Webb v Stenton: no money had yet come into the trust preparatory to meeting the next half-yearly payment due.

As for O'Driscoll v Manchester Insurance Committee, that decided only that there was an attachable debt owing or accruing from the insurance committee to the panel doctor even though the exact sum payable to him could not at that stage be calculated: ".... the mere fact that the amount is not ascertained does not show that there is no debt." (per Bankes LJ at p 517). Clearly, however, it was a precondition of the decision there that the insurance committee itself had received the funds from the National Insurance Commissioners.

It has seemed to me desirable to make this position clear both for the accurate analysis of the issues now arising and also for its likely importance when considering the course of future proceedings.

The question, therefore, arising is whether, when ZCCM breached the direction by failing immediately upon receipt of the metal proceeds to pay over the foreign exchange due, BOZ had a civil cause of action available against them. (I shall assume for present purposes that BOZ had not authorised this non-payment. To have done so would, it is said, have put them in breach of the Mareva injunction; certainly it would make a nonsense of the present appeal.) All agree that this question falls to be determined according to Zambian law. Since, however, all agree too that the English common law and doctrines of equity are expressly part of the laws of Zambia, and no one suggests that the Zambian courts would apply any different approach to the interpretation of the legislation or the dealings between the parties from that applied by this court, it seems to me unnecessary to dwell long on the views expressed by the four experts (three of them practising lawyers in Zambia, the fourth, Professor Read of London University) who have addressed this question. Suffice it to note that three of the four experts (including Professor Read) think that ZCCM are under no civil liability to pay the foreign exchange; the fourth thinks otherwise. The majority are influenced mostly by the existence of express provisions imposing criminal liability for breach, and the absence of words making the sum recoverable "as if it were a civil debt."

Camdex argue that neither of these considerations is relevant, or at any rate that neither is fatal to their contention that BOZ must have been intended to have a civil remedy to enforce the obligations created by the direction. The direction, Mr Howard QC at one point submitted, gave rise to a contract; true, a contract which ZCCM were obliged to accept, but one nevertheless then enforceable against them. That argument I would unhesitatingly reject: whatever else may be said about ZCCM's obligation pursuant to the direction, it certainly was not a contractual one. Mr Howard's main argument, however, is altogether different: it is that BOZ enjoy a right of action pursuant to what is essentially a statutory direction, for money had and received by ZCCM to their use. The position is, he submits, just as it was in Lloyd v Burrup, where the Court of Exchequer said this:

"In the present case, under the provisions of the Church Building Acts ..... and the order of the church commissioners assigning the pew rents to the district, and expressly directing them to be received by the churchwardens ..... the rents are, in the first instance, expressly made applicable to the payment of the stipend .... The plaintiff, upon these provisions of the act, contends that whenever the churchwardens have received pew rents applicable to the payment of his stipend, and the stipend has become due, a special action upon the statute, or an action for money had and received, is maintainable by him against the churchwardens to recover the amount, and to this extent we are of opinion that the plaintiff's claim is sustainable."

Mr. Howard relies too upon the earlier case of Shepherd v Hills (1855) 11 Ex 56 in which the deputy master of the Trinity House sued for the recovery of tolls payable under various statutes for the improvement of Ramsgate Harbour. Section 15 of the principal Act gave a specific power to distrain ships for non-payment of the duties. Section 16 provided that if the ship's master or owner eluded or avoided payment of the duties he was to "stand charged with and be liable to payment of the same, and the same shall be levied and recovered from such master or owner by the same method by which fines and penalties imposed by this Act are hereinafter directed to be levied and recovered".

That took one to section 72 which provided that all penalties "the manner of recovering and levying whereof is not hereby otherwise particularly directed, shall be levied and recovered in any action of debt in any court of record in the name of the deputy master of the Trinity House ......". It was held that an action would lie on the statute for the recovery of the duties. Parke, B said this:

"There is no doubt that wherever an Act of Parliament creates a duty or obligation to pay money, an action will lie for its recovery, unless the Act contains some provision to the contrary. It is true that this statute gives a power of distress, but that is clearly a cumulative remedy."

I confess to some difficulty with this passage, not because of the result which seems to me unexceptionable, but rather because Parke, B appears to have been more concerned about section 15 than about section 67 (the only section apparently referred to in counsel's arguments on this part of the case) which provided that penalties and forfeitures were to be recovered by distress and which, therefore, must surely have precluded the plaintiff from relying upon section 72 to found an express right of action in debt.

Mr Howard argues that the principle stated by Parke, B is one of general application and that by the same token that a right of action was held to flow automatically from the words of section 16 creating the obligation to pay there, so too here an action must lie for the recovery of the money due under the direction.

In my judgment Lloyd v Burrup and Shepherd v Hills provide but the slenderest foundation for Mr Howard's argument and I decline to find within our law the broad general principle for which he contends. Rather, I think that each case must be considered on its own facts, and to my mind there are a number of factors present here which, taken in combination, make it impossible to conclude that a civil action was intended to lie or does lie for the recovery of the foreign exchange due under the direction.

First and foremost amongst these factors is that regulation 3 of the 1994 Regulations - that which makes provision for directions to be given by BOZ - is introduced under the heading "Offences Relating to Foreign Currency"; the entire mechanism for controlling the disposition of foreign currency is explicitly criminal. It is, therefore, wholly unsurprising to find in the Regulations many references to offences, convictions, penalties and the like, but not a word suggesting the availability of any civil process of recovery, whether to BOZ or anyone else. And there are other important considerations too. The following paragraph appears in Mr Howard's written argument as to why English public policy ought not to shut out proceedings by BOZ to enforce any cause of action in this country (the second issue, to which I have yet to come):

"It may be noted that if public policy precludes its enforcement in England the Zambian cause of action will effectively be rendered nugatory. ZCCM's foreign currency is earned through trading on the London market and is paid into bank accounts in London. Execution against those funds is therefore possible only by process of the English court."

One sees the force of that. But the corollary is surely this: that Camdex's case on the first issue must necessarily be that not only did the 1994 Regulations and BOZ's direction silently create a civil remedy to run alongside the express criminal regime, but that this was so despite the realisation that that cause of action would only effectively be enforceable in England. It seems to me altogether more logical to suppose that rather than create a cause of action enforceable, at best problematically, in England, no cause of action was in the event provided. And why indeed would a right of civil recovery be thought necessary given the government's power of control over ZCCM's dealings through their majority shareholding?

I would accordingly decide this critical first issue against Camdex and on that fundamental ground dismiss their appeal. Since, however, we heard extensive argument too upon the other issues I have identified, I propose to turn now to these, although altogether more briefly given not least the element of artificiality inevitably introduced into their discussion following my conclusion on the first issue.

7. Could BOZ sue here had they a Cause of Action?

ZCCM's contention that the court here would refuse jurisdiction first appeared in a supplementary skeleton argument submitted by Mr Salter QC the day before the appeal hearing. It is founded squarely upon rule 3(1) of Dicey and Morris on The Conflict of Laws (12th edition volume 1 at page 97):

"Rule 3 - English courts have no jurisdiction to entertain an action:

(1) for the enforcement, either directly or indirectly, of a penal, revenue or other public law of a foreign state ..... "

Assuming that BOZ has a cause of action against ZCCM, it would, submits Mr Salter, clearly be for the enforcement of the public law of Zambia and perhaps also for the enforcement of their revenue law and would thus fall foul of the rule.

It cannot, I think, be doubted that enforcement of the direction would indeed constitute the enforcement of Zambian public law. In giving the direction BOZ was exercising its authority under section 56(1) of the Bank of Zambia Act as the agent responsible for administering exchange control. That legislation together with the 1994 Regulations are part of the public law of Zambia enforceable by right of the authority of the Zambian State rather than by way of a private law right in BOZ.

As I understand Mr Howard's response to the rule 3(1) argument it is that there are no sound public policy reasons for preventing the enforcement of legitimate Zambian exchange control laws in this country. No one has suggested that the 1994 Regulations and the directions given thereunder are anything other than genuine provisions for the control of foreign exchange. Given, indeed, that both this country and Zambia are signatories to the Bretton Woods agreement, there are strong policy reasons why this country should enforce these provisions. In this regard Mr Howard invites our attention to certain passages in Dicey and Morris which discuss aspects of rule 210, passages which point out (at p 1595) that the Bretton Woods agreement is part of English law and under it "each country will respect the currency laws of the other" (see Sharif v Azad [1967] 1 QB 605 at 613); and (at p 1599):

"It is doubtful whether the exchange control regulations of a member of the IMF, maintained and imposed consistently with the Fund Agreement, could ever in themselves be regarded as contrary to public policy in England ......"

Mr Salter's argument, Mr Howard notes, requires a distinction to be drawn between the mere recognition of a foreign exchange control law (to which clearly no objection can arise) and its enforcement (which, the respondents suggest, is open to objection); no such distinction, he submits, exists: it is neither established by authority nor justified in principle.

There are, as it seems to me, insuperable difficulties in the path of this argument. Rule 210, that under which the effect of the Bretton Woods agreement is discussed, states so far as relevant:

"A contractual obligation may be invalidated or discharged by exchange control legislation if -

(a) such legislation is part of the law applicable to the contract .....

provided that foreign exchange control legislation will not be applied if it is used not with the object of protecting the economy of the foreign State, but as an instrument of oppression or discrimination."

It is, as Mr Salter points out, a rule which is put forward by the same authors as also put forward rule 3(1), and entirely consistent with it: rule 210 simply makes certain contractual obligations, which are contrary to foreign exchange control legislation, unenforceable here. The rule is couched in what I may call defensive terms, not concerned with, still less purporting to provide, any right to sue. It is thus in marked contrast to rule 3(1).

As the commentary under rule 3(1) explains, there is a fundamental reason why English courts do not entertain actions for the enforcement of foreign public laws. This is, as was stated by Lord Keith in Government of India v Taylor [1955] AC 491, that enforcement of such claims involves "an assertion of sovereign authority by one state within the territory of another ....... contrary to all concepts of independent sovereignties."

As the editors of Dicey and Morris point out at p 99:

"Rule 3(1) relates only to enforcement, but it does not prevent recognition of a foreign law of the type in question, and it is sometimes difficult to draw the line between an issue involving merely recognition of a foreign law and indirect enforcement of it."

The short answer to Mr Howard's submission that there is no reason why effect should only be given to foreign regulations when they operate in favour of defendants, is that it is one thing to acknowledge a difficulty on occasion in distinguishing mere recognition of a foreign law from its indirect enforcement; quite another to hold that there is no distinction at all between recognition and enforcement and thus no limit upon the extent to which a foreign state may seek to enforce its public law here.

On my reading of Dicey and Morris' commentary on rule 3(1) it would, I think, be arguable (a) that exchange control regulations are not revenue law, and (b) that it is only foreign revenue law and penal law that the courts here will not enforce, there being no bar upon actions seeking to enforce any other type of foreign public law. I do not, however, understand Mr Howard to be advancing this argument and, indeed, to my mind for good reason. He would need to make good both limbs of it and, whereas the first is certainly arguable - see in particular Kahler v Midland Bank [1950] AC 24 - I would not be disposed to accept the second: the same objections which arise with regard to the enforcement of foreign revenue and penal laws to my mind apply equally to many other public laws, including particularly exchange control, the enforcement of which is of no less political character.

In In Re Lord Cable Deceased (1977) 1WLR 7, the Indian Government sought to be joined in proceedings for the execution of a will trust so as to argue that the will trustees should remit funds to India in accordance with Indian Exchange Control legislation. Slade J said this:

"Despite the Kahler decision, I am not satisfied that the English court would ever entertain proceedings by the Union of India, or any other foreign government, of which the sole acknowledged purpose was directly to enforce its currency control regulations. No case has been cited to me which suggests that the English court would entertain such proceedings, even against a citizen of the country concerned, and the absence of such authority strongly suggests a contrary conclusion. Though I have heard no full argument on this point, I would expect the English court to regard the courts of the country concerned as being the only proper forum for the enforcement of its exchange control legislation. If I were to refuse this present application and the Union of India were to bring proceedings in England designed directly to enforce its currency control regulations, even against an Indian citizen, such as Union Trust, I am inclined to think that such proceedings could at once be struck out as disclosing no cause of action."

True, as Mr Howard emphasises, Slade J there was assuming that the Indian Government had no cause of action whereas the argument here is predicated upon the basis that BOZ does have a right of action against ZCCM for monies had and received. True, too, Slade J "heard no full argument on this point." True, finally, that no one in In Re Lord Cable appears to have considered the effect of Bretton Woods. But, as I have earlier stated, there is an undoubted distinction between the invalidation of a contractual obligation (even assuming, contrary to the fact, that one exists here) by reference to Bretton Woods, and its enforcement at the suit of a foreign government. Even if sometimes that distinction is unclear on the facts, it is certainly not so here. Slade J's dictum in In Re Lord Cable is regarded as correct by the editors of Dicey and Morris. I too regard it as correct. It follows that even had I concluded that BOZ have a cause of action against ZCCM, I would hold such a claim unenforceable in the courts of this country.

8. Debt or Damages?

It was the resolution of this issue in favour of the respondents that was decisive of the application below.

Morison J held:

"ZCCM are not indebted to the Bank. The September letter required ZCCM to enter into a foreign exchange transaction with the Bank under which one commodity, namely forex, is to be swapped with Kwacha. That type of transaction gives rise to a remedy in damages, assuming it gives rise to any obligation enforceable at law. The word 'money' is apt to include money in a foreign currency as well as in sterling. But sometimes money is treated not as 'money' as such but as a commodity. Thus, one can have a contract for sale and purchase of 'money' where the money is not just a medium of exchange but is an object of commercial intercourse. The distinction is neatly expressed by the late Dr Mann in his book, The Legal Aspect of Money (fifth edition) at pages 196-199. It seems to me that the case of In Re British American Continental Bank Limited Lisser & Rosenkranz's claim [1923] 276 supports the proposition that breach of a contract for currency exchange gives rise to a claim for damages. There, the Bank had defaulted on a currency exchange contract. As Lord Sterndale put it, at page 290:

"The claim [of the other party] really was in respect of damages for breach of contract to deliver what the bank had agreed to deliver."

It follows, in my judgment, that ZCCM does not presently owe money to the Bank; not because the amount of money is uncertain, but because ZCCM is required to sell to the Bank in exchange for Kwacha a certain quantity of forex. Accordingly there is no debt, in the sense of a present obligation to pay money [in the sense of a medium of exchange], owed by ZCCM to the Bank, assuming that the statutory scheme gives rise to civil remedies."

Mr Brindle QC for BOZ sought before us to support that view and indeed to reinforce its correctness by reference to the marginal note alongside regulation 3: "Sale of Foreign Currency by ZCCM."

As for Mr Howard's reliance upon Miliangos v George Frank (Textiles) Limited (1976) AC 443, Mr Brindle argued that Dr Mann's critical distinction between foreign currency as a medium of exchange and foreign currency as a commodity remained unaffected by that decision. The House of Lords there, he argued, merely removed the procedural rule whereby claims for debts designated in foreign currency could not be advanced in the English courts without conversion into sterling before judgment. But the rule, he submitted, had always assumed that the subject matter of the action was indeed a debt, so that its abolition begged rather than answered the question whether an obligation is indeed one of debt or whether rather it is an obligation to deliver a commodity, breach of which will sound in damages.

The entire argument rests, of course, upon the correctness of Dr Mann's central thesis. This I confess to having found at first blush persuasive if somewhat elusive. The closer it was examined, however, the more elusive I came to find it to the point where I now regard it as wholly illusory. When indeed one asks for what purpose it is sought to categorise foreign exchange transactions variously as commodity or as money transactions one is lost for an answer. What in other words is the point of the distinction: it can hardly be to decide the odd Order 49 case. Of course if one is concerned with rare coins or the manufacture of bank notes or something of that kind, money may indeed be a commodity rather than a medium of exchange. But where, as is the usual case, the obligation in question is simply the payment of a stipulated sum in a stipulated currency, then, whether that obligation arises from a loan, a sale, or any other contract or set of circumstances, it is an obligation properly described as one of debt.

Mr Brindle submitted here that the relationship between ZCCM and BOZ, assuming non-compliance by ZCCM with the direction, could not properly be categorised as one of indebtedness because, on the discharge of ZCCM's obligation, there would instantly arise a corresponding obligation upon BOZ to pay over an equivalent sum in kwacha. The right of set off would, therefore, preclude the obligation being regarded as one of simple indebtedness. Rather there could only be a claim for specific performance or damages. Plausible although that submission may sound, it surely founders upon the realisation that the direction under which ZCCM's monetary obligation here arises necessarily excludes any right of set off. Breach of the direction produces a state of (successive) mutual indebtedness, each debt dischargeable only in the stipulated currency.

In short, I have reached the view that there exists no distinction in principle between the present case and a case where, for example, X is purchasing goods for dollars, payment being due in advance on a specified day. Once that day passes and X fails to pay, a debt arises which is available for attachment by a judgment debtor under garnishee proceedings.

9. Should Garnishee Proceedings be entertained here?

Mr Salter advanced a number of arguments to the effect that even if, contrary to his primary submission and contrary to my own already expressed conclusions, BOZ would be entitled to enforce payment in this country by ZCCM of foreign exchange due under the direction, nevertheless the court ought not to entertain Camdex's application to attach that debt. The argument took various forms but at its core I understood to be the proposition that it would be one thing to allow a State to enforce its exchange control laws abroad, another and altogether more objectionable thing to allow someone else, here Camdex, to do so purely for their own private commercial purposes. Even assuming, the argument runs, that sound public policy reasons exist for allowing the State to sue, those reasons disappear as soon as one realises that so far from these proceedings being calculated to safeguard Zambia's foreign currency situation, their success would significantly worsen it.

There is, of course, an air of unreality about the point given my conclusions upon the earlier issues. That said, I for my part would not be disposed to accept Mr Salter's submissions: if there were indeed a recoverable debt available here to BOZ from ZCCM, I see no sufficient reason why a private litigant like Camdex should be disentitled on policy grounds from attaching it - see by way of broad analogy Philipp Brothers v Republic of Sierra Leone [1995] 1 Lloyds Law Reports 289, and in particular Hoffmann LJ's comments at page 296.

I am similarly unimpressed by the invocation of considerations of comity. Of course Zambia is a foreign friendly State and of course one recognises that State's acute need for hard currency. The rule of law, however, dictates that judgment debtors should pay their debts and that if they fail to do so all the usual methods of execution should be open to their creditors.

10. How should Discretion be exercised?

As stated, the Judge below indicated that he would in any event have refused to make the order absolute on the ground that there would be a real risk here of double jeopardy. I recognise, of course, that that conclusion involved the exercise of a discretion with which this court will not readily interfere. It is nevertheless necessary to examine whether there existed any sufficient factual foundation for the Judge's decision that a real risk arises here. That clearly on the authorities is the correct test - whether there exists a real or substantial risk - see Deutsche Schachtbau GMBH v Shell International Petroleum Co. Ltd [1991] AC 295.

Although we were treated to elaborate argument on all aspects of this issue I content myself with the following few brief comments. The risk here, were the garnishee order made absolute and complied with, seems to me entirely fanciful. Order 49 rule 8 provides that:

"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 ......"

BOZ as well as ZCCM having been party to the present proceedings, it seems to me inconceivable that any Zambian court hereafter seised of the matter would decline to recognise the propriety of ZCCM's compliance with the order. In the unlikely event that BOZ refused to pay over the equivalent sum in kwacha I entertain no doubt whatever that the Zambian court would enforce such payment. Whether or not technically BOZ would be bound to pay under the doctrine of issue estoppel - see Carl Zeiss Stiftung v Rayner and Keeler Ltd (No 2) [1967] AC 853 - it seems to me quite unnecessary to decide. It is quite simply unrealistic to suppose that ZCCM would be left unable to fund its Zambian operations. As Mr Howard points out, in the last resort the Minister can direct BOZ to make payment pursuant to his power under section 4A(1) of the 1985 Act. Even more unlikely is it that the Zambian authorities would contemplate bringing criminal proceedings against ZCCM or its directors for all the world as if they had wilfully contravened regulation 3 of the 1994 Regulations.

Again, therefore, had I decided the first two issues in the appellant's favour I would not have found any of these considerations sufficient to justify denying them their prima facie rights under Order 49. As it is, however, these conclusions cannot avail them.

Footnote

By way of footnote I would just add this. Several of the many issues raised on this appeal were by no means entirely straightforward - indeed quite the contrary. Certainly I would have preferred substantially longer than the one day estimated for the hearing (and in the event made available to the court) for their fuller exploration in argument. It has been helpful, if a little unorthodox, to have a post-hearing exchange of supplementary written arguments on certain issues. This, however, cannot compensate for the difficulties presented by an unduly hurried hearing.

LORD JUSTICE OTTON: I have read the judgments of

Simon Brown LJ and Phillips LJ and agree that the Appeal should be dismissed.

LORD JUSTICE PHILLIPS: The issue raised on this appeal is whether a direction issued by the Bank of Zambia ("the Bank") to Zambia Consolidated Copper Mines Ltd.("ZCCM") in relation to the disposal of the proceeds of sales of metal has had the result of creating a debt owed by ZCCM to the Bank which can be attached by Camdex International Limited ("Camdex") by garnishee proceedings in the English court.

Background

The Bank is the central bank of Zambia. ZCCM is a company the majority of whose shares are held by the State of Zambia. It mines copper in Zambia and sells it abroad, thereby earning substantial amounts of foreign currency. These earnings are paid into bank accounts which ZCCM maintains in London. The circumstances in which the Bank has come to be indebted to Camdex are described in the judgment of Hobhouse L.J. in Camdex International Ltd v Bank of Zambia [1996] CLC 1477 at 1480. In short the Bank found itself unable to meet obligations owed to a number of foreign banks. Some of these entered into schemes of arrangement with the Bank under which the Bank is making payments over a period. One creditor which did not enter into any such scheme was the Central Bank of Kuwait. This Bank assigned its rights against the Bank under two deposit agreements to Camdex for approximately one tenth of their nominal value. Camdex has obtained judgment against the Bank in England in respect of this assignment. At the time of the hearing before Morison J. there was owing under that judgment US$120 million, inclusive of interest.

It will be necessary in due course to consider the nature and effect of the Direction that has been given to ZCCM by the Bank which Camdex alleges has created a debt that can be attached, but I propose at the outset to consider the nature of garnishee proceedings.

Garnishee Proceedings

The relevant portions of O.49,r.1 provide:

Where a person ("the judgment creditor") has obtained a judgment or order for the payment by some other person ("the judgment debtor") of a sum of money...and any other person within the jurisdiction ("the garnishee") is indebted to the judgment debtor, 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, or so much thereof as is sufficient to satisfy that judgment or order and the costs of the garnishee proceedings.

O.49,r.8 provides that payment by the garnishee:

shall be a valid discharge of his liability to the judgment debtor to the extent of the amount paid.

Garnishee proceedings are one of a number of methods of levying execution on the property of the judgment debtor.

"It should always be borne in mind that the object and intention of the process is to render "debts" as a form of property available in execution. This marks both the nature of the process and its limitations" - O.49/1/3

Supreme Court Practice.

Other notes to O.49,r.1 give examples of different types of "debt" within the Order. These demonstrate that, subject to important qualifications, any obligation to make a payment of a specific sum of money to the judgment debtor that can be made the subject of a civil suit is susceptible to attachment.

Thus in Booth v. Trail(1883) 12 QBD 8 at p. 10 Lord Coleridge C.J. said:

A sum in the hands of the garnishees, which they in some way or other can presently be compelled to pay to the judgment debtor, seems to me to be a debt within the rule, and therefore attachable. It appears to me to be none the less a debt because no particular mode of enforcing the payment is given by the statute. When there is a statutory obligation to pay money, and no other remedy is expressly given, there would be a remedy by action.

For present purposes, the most important qualification is that the judgment debtor must be beneficially interested in the debt. In Deutsche Schachtbau v. Shell I.T.C. [1990] A.C. 295 at p. 351 Lord Goff held that the Court would have jurisdiction to attach a debt owed to the debtor as trustee, though it would not normally make such an order. In fact, early authority makes it plain that it is not a proper exercise of the jurisdiction to make a garnishee order in respect of trust funds - Roberts v. Death (1881) 8 Q.B.D. 519. "The judgment creditor...can only obtain what the judgment debtor could honestly give him" so a debt that is the subject of an equitable assignment cannot be garnisheed- Ex parte Whitehouse (1886) 32 Ch.D. at p.516.

The requirement that the debtor should be within the jurisdiction usually carries with it the consequence that the 'situs' of the debt is within the jurisdiction, but this is not a condition of the exercise of the jurisdiction to make an order under O.49- see S.C.F.Finance Co v. Masri(No.3) 1987 Q.B.1028 at p.1043. In Interpool Ltd. v. Galani [1988] 1 Q.B.738 at p.741 it was suggested that there is no reported case where a garnishee order has been made in respect of a debt payable only outside the jurisdiction. Certainly an order should not be made if there is a danger that the garnishee may be forced to pay the debt a second time in some other jurisdiction - Deutsche Schachtbau v. Shell I.T.C.

The Nature of the Bank's Instructions

The status of the Bank and the authority under which it gave instructions to ZCCM have been helpfully and uncontroversially summarised by ZCCM's expert on Zambian law, Professor Read and I shall draw on his summary.

The Act and Regulations

The relevant law is contained in the Bank of Zambia Act, Act No.24 of 1985 ("the Act"), and the Bank of Zambia (Foreign Currency) Regulations 1994, Statutory Instrument No.44 of 1994 ("the Regulations").

The Bank of Zambia was established, originally under the previous Bank of Zambia Act 1964 (the year in which Zambia became an independent State), to perform the usual functions of a central bank, including the regulation of exchange control. Until 1994, the Bank's exchange control functions were carried out under the Exchange Control Act 1965 and regulations made thereunder.

The Bank of Zambia Act 1964 has been replaced by the Bank of Zambia Act 1985. Relevant provisions of the Bank of Zambia Act 1985 are to be found in section 4:

4. (1) The functions of the Bank shall be to do all such things as are necessary for the maintenance of the internal and external values of the kwacha, a stable and efficient system of payments, the liquidity, solvency and proper functioning of a soundly based monetary, credit and financial system in Zambia and the fostering of monetary, credit and financial conditions conducive to the orderly, balanced and sustained economic development of Zambia.

(2) Without derogating from the generality of subsection (1), the Bank may, subject to the provisions of this Act -

(a) issue notes and coins to be legal tender in Zambia and exercise control over all matters relating to the currency of the Republic;

(b) exercise control over dealings in gold coins, bullion, precious metals, foreign currencies and securities issued or guaranteed by foreign governments or international financial organisations.

Section 56 of the Act makes specific provision for the exercise of the Bank's functions in relation to exchange control:

56. (1) The Bank shall be the agent responsible for administering exchange control, in accordance with the provisions of the Exchange Control Act, regulations made thereunder and any instructions and directives that the Minister may from time to time issue.

(2) In carrying out its functions under sub-section (1) the Bank may issue to financial institutions such instructions or directives as it is empowered to do, and such instructions and directives shall be valid and binding as if issued under this Act.

Section 59 of the Act confers on the Bank, inter alia, a related power:

59. In addition to the other duties imposed and powers conferred by this Act, the Bank may -

(j) buy and sell external currencies....

The Minister also has:

a) a general power under section 4A of the Bank of Zambia Act to give written directions to the Bank;

b) a power under section 64(1) to make regulations by statutory instrument "for the better carrying out of the purposes of this Act"; and

c) a further power under section 64(2) to make rules and regulations (the form of which is not specified), on the recommendation of the Board of the Bank, "prescribing any matter which the Bank is authorised by this Act to formulate, regulate or prescribe".

Section 64(3) provides that rules or regulations made under the Act may provide in respect of contraventions thereof that the offender shall be subject to a fine and/or imprisonment.

Regulations made by the Minister pursuant to the power conferred by Section 64 of the Act include the following:

3. (1) Income obtained by ZCCM or any of its subsidiaries in the form of foreign currency shall be disposed of in accordance with directions given in writing by the Bank.

(2) If this regulation is contravened, ZCCM shall be guilty of an offence.

18. If ZCCM or any other body corporate is convicted of an offence under these Regulations, every person who is a director of, or who is concerned in the management of, the body corporate shall be deemed to have committed the same offence if the person knowingly authorised or permitted the act or omission constituting the offence.

19. A person who commits an offence under these regulations shall be liable on conviction -

(a) in the case of a body corporate, to a fine not exceeding ten thousand kwacha; and

(b) in the case of an individual to a fine not exceeding ten thousand kwacha or to imprisonment for a term not exceeding twelve months, or to both.

The current sterling value of 10,000 Kwacha is no more than a few pounds. I suspect that they had a more significant value at the time that the regulations were made.

The Direction

It is common ground that the direction which is relied upon by Camdex in this case was given by the Bank pursuant to the authority conferred by Regulation 3(1).

Prior to 1994 ZCCM was required to remit all foreign exchange earnings to the Bank. Thereafter ZCCM was entitled to retain 70% of these and to remit 30%. The evidence does not disclose into which account or accounts these remissions of foreign currency fell to be made, or where the Bank held such accounts. On the 12th April 1995 a letter containing the following direction was received from the Bank:

We wish to inform you that we have decided, under the powers granted to Bank of Zambia by Statutory Instrument Number 44 of 1994, to reduce the foreign exchange retention rate of the Zambia Consolidated Copper Mines Limited (ZCCM) from its metal export receipts from its present level of 70 per cent to 55 per cent. This measure comes into effect on the 24th of April 1995. All commercial banks operating copper receiving accounts on our behalf must be immediately apprised of this modification.

This letter in its turn was superseded by a letter of 26th September 1995, which gave the following direction:

.....kindly note that the Bank of Zambia has, with immediate effect, granted authority to ZCCM to receive metal proceeds in their account at Zambia National Commercial Bank London.

ZCCM will in turn issue standing order instructions to ZNCB London to pay Bank of Zambia 45% of the metal proceeds as soon as the amounts are received. On receipt of 45%, the Bank of Zambia will credit ZCCM kwacha designated accounts as instructed.

The Bank of Zambia portion of the metal proceeds should be paid to Bank of Zambia account with Bank for International Settlements Basle as follows:

(i) USD Payments - BIS a/c No. 'F' with Federal Reserve Bank NY favour of BOZ USD 2 day notice a/c.

(ii) GBP Payments - BIS a/c 40360008 with Bank of England favour of BOZ GBP 2 day notice a/c.

(iii) FRF Payments - BIS a/c 5532-3 with Bank de France Paris favour of BOZ FRF 2 day notice a/c.

This direction ("the Direction") is the foundation of Camdex' claim.

The manner in which the Bank would normally have complied with the Direction would have involved, no doubt, international inter-bank transfers under which credits which the Zambian National Commercial Bank ("the Commercial Bank") itself enjoys with other banks would have been transferred to

the designated accounts.

The garnishee proceedings have prevented compliance with the Direction and Camdex's application for attachment is directed to the 45% of the foreign currency currently held by the Commercial Bank in London to the credit of ZCCM.

The Basis of the Judgment Below

The Judge accepted the following submission advanced by Mr. Brindle: A debt is an obligation to pay money as a medium of exchange. ZCCM is not under such an obligation to the Bank. ZCCM's obligation is to hand over foreign currency as a commodity to be exchanged for Kwacha. It follows that ZCCM is not indebted to the Bank and that there is no debt which can be garnisheed.

In accepting this argument the Judge observed that the distinction between money as a commodity and money as a medium of exchange "is neatly expressed by the late Dr. Mann in his book, The Legal Aspect of Money, 5th edition, at pages 196 to 199". I have read the chapter of Dr. Mann's work in which these pages occur. I have found the distinction that he seeks to draw between money as a means of exchange and money as a commodity an elusive one. Dr. Mann appears to espouse the view that:

"foreign money is a commodity where it is, or is referred to as, an object of commercial intercourse, and that it is money when it serves monetary functions" (p.191).

He goes on at p.196 to identify a foreign exchange transaction as a typical example of a situation where money is treated as a commodity rather than a medium of exchange. He comments in a footnote to p.197:

"An example of a case where foreign money was the object of commercial intercourse and therefore a commodity was In re British American Continental Bank Ltd., Goldzieher & Penso's claim [1922] 2 Ch.575; Lisser & Rosenkranz's claim [1923] I Ch. 276."

Morison J. found that the latter case supported his conclusion that ZCCM's obligation in the present case was to hand over a commodity to the Bank rather than to make a payment of money.

I can appreciate that an agreement that provides for the transfer of specific coins or notes may treat the specie as chattels valued as a consequence of their physical properties rather than as a medium of exchange and that, in such circumstances, it may not be appropriate to describe the obligation to transfer the specie as a debt. Beyond this, however, I do not think it helpful, or even possible, to differentiate between money as a commodity and money as a means of exchange, by reference to the nature of the transaction under which it falls to be transferred. Dr. Mann states at p.197:

"the legal nature of the transaction is always to be tested by the question: does the currency function as money, that is to say as a medium of exchange, or is it the object of commercial intercourse?"

Yet earlier at page 190 Dr Mann advances this proposition:

"if an Englishman exchanged francs against pound sterling in Calais, English courts would not classify the transaction as a sale of English, but as a purchase of French money, the purchase price being expressed in English currency, although at Calais the transaction was certainly regarded as a sale of English money.

On this analysis, from the viewpoint of the Frenchman, francs would be the medium of exchange, and the obligation to pay them a debt, whereas sterling would be the commodity to be delivered, but from the viewpoint of the Englishman sterling would be the medium of exchange and francs the commodity. This makes no sense at all. Nor does Dr. Mann, at p.197, suggest that a loan of money does other than give rise to a debt, although that is not a transaction that involves using money as a medium of exchange.

It seems to me that whether money is lent or borrowed, whether it is used to buy goods or services, or whether it is exchanged against a different currency, it retains its character as a medium of exchange. In each case the transaction will involve a particular specified currency or currencies. This reflects the fact that there exist different media of exchange, that their relative values fluctuate over time and that for this reason parties to a transaction may be concerned to stipulate for a particular currency. The fact that the identity of the currency may be a material feature of the transaction does not translate the currency into a commodity, whatever the nature of the transaction.

It is time to turn to the authorities referred to by Dr. Mann to see whether they support his thesis that exchange transactions involve an exchange of commodities, so that breach gives rise to a claim to damages but not a claim in debt. Both cases arose out of the insolvency in England of the British American Continental Bank ("the English Bank") and involved similar facts. Lisser and Rosencranz's Claim was brought by a German Bank. The English Bank had entered into an exchange contract with the German Bank under which the English Bank contracted to pay specific sums of US dollars and English pounds against payment by the German Bank of Swiss francs and German marks. The German Bank performed but the English Bank did not. The German Bank then bought in the currencies that the English Bank should have paid, using German marks to do this. The liquidator of the English Bank argued that he could discharge the Bank's liability to the German Bank by tendering the sum of German marks that the German Bank had expended - an attractive option for the liquidator due to the rapid depreciation of the mark. The Court of Appeal rejected this approach, holding that the German Bank's claim was for damages for breach of contract, to be assessed as at the date when the English Bank should have made payment under the exchange contract, and not a claim for a debt in marks. Had the German Bank not bought in the currencies in question damages would have been assessed by converting those currencies into sterling as at the date of breach. In the event the Court held that the marks should be converted into sterling at that date. Warrington L.J. put the matter thus at p.292:

"all that the claimants did was to ascertain the amount of their damages by actually buying the dollars and sterling in Germany. They need not have done that; they might have made a claim for the loss that they had sustained by not having their dollars and sterling."

In their 9th edition, the authors of 'The Conflict of Laws', Dicey and Morris, questioned whether the two cases under consideration could be reconciled with their Rule 172, which stated:

"(semble) where English law is the proper law of a contract, damages for its breach must be calculated in the currency in which the loss was incurred, unless a contrary intention emerges from the contract itself."

In Services Europe Atlantique Sud (SEAS) v. Stockholms Rederiaktiebolag [1979] 1 Q.B. 4911 at p. 502 Goff L.J. commented:

For my part, I do not understand these cases to be inconsistent with the general rule stated in rule 172. Both cases were concerned with contracts for the supply of foreign currency, and in such a case, where the defendant fails to supply the foreign currency which he has contracted to supply, the claimant can only obtain an equivalent amount of foreign currency by expending some other currency which is likely to be the currency of the place in which he carries on business. Generally speaking, therefore, in cases such as these that is the currency in which the loss is incurred.

For my part I believe that these two decisions require reconsideration, in the light of the revolution to the approach of the English Court to foreign currency obligations brought about by the decision of the House of Lords in Miliangos v. George Frank (Textiles) Ltd [1976] A.C. 443. It is informative to compare them with Credit General Liegeois' Claim against the same Bank [1922] 2 Ch. 589. That was a claim in debt by a Belgian Bank against the English Bank. The Belgian Bank had lent the English Bank Belgian francs on overdraft on its account in Brussels. One issue that fell to be resolved was whether the Belgian Bank's claim fell to be converted into sterling on the date when it called in its loan, or on the later date of the winding up order. Lawrence J. held that the former was the correct date for conversion, on the basis that it was on that date that the English Bank broke its contract. In so holding, he followed this proposition in the dissenting judgment of Vaughan Williams L.J. in Manners v.Pearson [1898] 1 Ch 581 at p. 592:

It seems plain that this mode of computing the value of foreign currency in English sterling, and thus converting the one currency into the other, is based upon damages for the breach of contract to deliver the commodity bargained for at the appointed time and place, and, if this is so, it follows that the date as of which that value must be ascertained is the date of the breach, and not the date of the judgment.

This minority view was subsequently accepted as the correct approach in authorities that carried greater weight than the judgment of Lawrence J. - see Lord Cross in Miliangos at p.495, but that view, and the decision in Credit General Liegeois' claim, have not survived Miliangos. I do not believe that the decisions in respect of the other two claims against the English Bank have survived either.

In my judgment, where a contract expressly provides for the payment of a sum in a foreign currency, the obligation is a money obligation and breach of it gives rise primarily to a claim in debt, whether the obligation is by way of repayment of money loaned, payment for goods or services or payment for other currencies.

So far as the last type of contract is concerned, I recognise that an exchange transaction is sui generis, but its true nature is the incurring of mutual money obligations, not the barter of commodities. If one party performs and the other does not, the latter will be and remain indebted to the former in the sum of currency that he has failed to provide, unless, of course, the former accepts the failure to perform as a repudiation, and claims restitution of his own payment. In either case the primary relief will be a claim in or in the nature of debt, although an additional claim for damages may lie - see President of India v. Lips Corporation [1988] A.C.395. Where one party to a foreign exchange transaction performs his obligation and the other does not, I see no reason why the obligation of the latter should not be subject to attachment as a debt under O.49.

It is for these reasons that I differ from the Judge's conclusion that the solution to this case lies in the commodity theory of money.

A Cause of Action?

The Judge found it possible to resolve this application without determining the issue of whether or not the Bank's Direction has created a cause of action which the Bank is entitled to enforce in private law. It is common ground that this is a question that falls to be determined according to Zambian law, and the Judge had before him conflicting opinions on this question by experts in Zambian law. No-one suggested, however, that Zambian law on this question differs in any respect from English law, which is the foundation of Zambian law. I have not found it possible to divorce the question of whether the direction has created a cause of action from the other issues that have been canvassed before us and I propose to resolve that question.

Public or Private Law Obligation?

Professor Read, in a passage in his opinion which was not challenged, said that in giving the Direction the Bank:

"was merely exercising its authority ...as the agent responsible for administering exchange control. It was exercising an organisational function in the interests of the Zambian economy"

In my judgment this is an accurate summary of the position. It has led Mr. Salter, Q.C., with the leave of the Court, to advance an argument which he did not deploy below. He submits that the provisions of Zambian law under which the Bank has given the Direction are part of the public law of Zambia. The Bank's right to give the Direction is a public law power. Even if the Direction has given rise to a cause of action under Zambian law, it is one that the English court will not enforce. This is because of the principle that:

"English courts have no jurisdiction to entertain an action.... for the enforcement, either directly or indirectly, of a penal, revenue or other public law of a foreign state" - Dicey & Morris, The Conflict of Laws, 12th Ed. Vol 1 p. 97.

A number of judicial dicta support the full width of this proposition. Thus, in Government of India v. Taylor [1955] A.C.491 at p.511 Lord Keith, referring to the rule that the English court will not enforce foreign revenue laws said:

One explanation of the rule thus illustrated may be thought to be that enforcement of a claim for taxes is but an extension of the sovereign power which imposed the taxes, and that an assertion of sovereign authority by one State within the territory of another, as distinct from a patrimonial claim by a foreign sovereign, is (treaty or convention apart) contrary to all concepts of independent sovereignties.

In A-G of New Zealand v. Ortiz [1984] 1 A.C.1 at p.20 Lord Denning M.R. said:

No one has ever doubted that our courts will not entertain a suit brought by a foreign sovereign, directly or indirectly, to enforce the penal or revenue laws of that foreign state. We do not sit to collect taxes for another country or to inflict punishments for it. Now the question arises whether this rule extends to "other public laws.".... But what are "other public laws"? I think they are laws which are eiusdem generis with "penal" or "revenue" laws......

Applied to our present problem the class of laws which will be enforced are those laws which are an exercise by the sovereign government of its sovereign authority over property within its territory or over its subjects wherever they may be. But other laws will not be enforced. By international law every sovereign state has no sovereignty beyond its own frontiers. The courts of other countries will not allow it to go beyond the bounds. They will not enforce any of its laws which purport to exercise sovereignty beyond the limits of its authority.

We have been referred to only two decisions where this principle was considered in the context of foreign exchange regulations. Perhaps the nearest to the present case, and it is not very near, is King of the Hellenes v. Brostrom [1923] Ll.L.R.190. In that case goods had been shipped from Greece in breach of Greek exchange control regulations which required the bills to be made out to the order of certain banks whose duty it was to account to the Greek Government for the sterling paid for the goods, whereupon the Greek Government would pay the sellers in local currency. It was asserted that the relevant provisions of Greek law gave the Greek Government a proprietary interest in the goods. As to that, Rowlatt J. said at p.193:

It is said that they give what is called a sui generis pledge; I take it that means it is an anomalous right of property in the nature of a pledge that does not exist in any other case. What I have said about the effect of the decrees shows that I do not accept that: but, supposing it did, what would be the result? It simply means that the government are given a lien over a certain levy on this property, and the question again arises whether then in the Courts of this country a foreign government can come and say: "We ask that a lien given by the laws of our own country shall be enforced against goods which we now find are in this country." It is perfectly elementary that a foreign government cannot come here - nor will the Courts of other countries allow our Government to go there - and sue a person found in that jurisdiction for taxes levied and which he is declared to be liable to by the country to which he belongs; and if you cannot do it against a person I can see no reason at all why such process should be allowed against goods. It seems to me to be a simple case of enforcing in the directest possible way the revenue provisions of a foreign State.

More recently the point arose for consideration in In re Lord Cable, deceased [1977] 1 W.L.R.7. The Union of India sought to intervene in a dispute about trust funds in England on the ground that Indian exchange control regulations required them to be repatriated to India. Slade J. held:

I of course accept that there may be some distinctions between foreign fiscal laws relating to currency control on the one hand, and the collection of taxes such as estate duty, on the other hand. I also accept that the outcome of the present proceedings must be a matter of close concern to the Union of India, having regard to its general desire to enforce its exchange control legislation, quite apart from its claims for estate duty in the particular instance.

However,.... I am satisfied that this is not an appropriate case to order the joinder of the Union of India as a party to these proceedings. My reasons are briefly as follows. (1) Despite the Kahler decision, I am not satisfied that the English court would ever entertain proceedings by the Union of India, or any other foreign government, of which the sole acknowledged purpose was directly to enforce its currency control regulations. No case has been cited to me which suggests that the English court would entertain such proceedings, even against a citizen of the country concerned, and the absence of such authority strongly suggests a contrary conclusion. Though I have heard no full argument on this point, I would expect the English court to regard the courts of the country concerned as being the only proper forum for the enforcement of its exchange control legislation. If I were to refuse this present application and the Union of India were to bring proceedings in England designed directly to enforce its currency control regulations, even against n Indian citizen, such as Union Trust, I am inclined to think that such proceedings could at once be struck out as disclosing no cause of action.

Mr. Howard, Q.C., has submitted that none of these authorities determines the issue. He contends that English public policy supports not merely the recognition but also the enforcement of foreign exchange control regulations of friendly states, particularly when they are, as fellow members of the International Monetary Fund, party to the Bretton Woods Agreement. So far as recognition is concerned, he relies upon Kahler v. Midland Bank Ltd [1950] A.C.24 and this statement by Upjohn J. in Re Claim by Helbert Wagg & Co Ltd [1956] Ch.323 at p.351:

In my judgment these courts must recognise the right of every foreign State to protect its economy by measures of foreign exchange control and by altering the value of its currency. Effect must be given to those measures where the law of the foreign State is the proper law of the contract or where the moveable is situate within the territorial jurisdiction of the State. That, however, is subject to the qualifications that this court is entitled to be satisfied that the foreign exchange law, that is, a law passed with the genuine intention of protecting its economy in times of national stress and for that purpose regulating (inter alia) the rights of foreign creditors, and is not a law passed ostensibly with that object, but in reality with some object not in accordance with the usage of nations.

Mr. Howard submits that there is no justification for drawing a distinction between recognising and enforcing foreign exchange regulations.

The question that we have to consider in this context is the reaction of the English Court were the Bank to sue ZCCM in England in respect of a money claim, recoverable as a debt, but recoverable under laws designed to protect Zambia's foreign exchange. For reasons which will appear, I consider this a wholly hypothetical situation, and not one which it is easy to envisage. Were such a situation to arise, I consider that the current state of the authorities militates against the English court entertaining the claim, but I do not conclude with confidence that it would not do so. Its attitude might turn on the particular facts. However, in the circumstances of the present case the fact that ZCCM's obligation arises in consequence of an obligation imposed under public law is one of the reasons why I consider that attachment in garnishee proceedings does not lie.

Is There a Civil Law Claim in Debt?

Three of the Zambian law experts have expressed the opinion that ZCCM's obligation to comply with the Direction does not constitute or create a debt which can be enforced by civil suit in Zambia. They draw attention to the fact that an express criminal sanction for failure to comply with the Direction exists and that there is no provision, as in some Zambian statutes there has been, that the Bank is entitled to recover payment of any sum directed to be paid to it "as if it were a civil debt". Mr. Mwanakatwe, who is Camdex's expert, has expressed the following view:

In my opinion a debt is, in Zambian law as in the common law generally, a legal obligation to pay a liquidated sum of money. A debt, as opposed to liability for unliquidated damages or other forms of obligation, is characterised not by the source of the obligation to pay, which may for example be a contract, a statute or a judgment, but by the fact that the obligation is to pay a liquidated sum.

I consider that this Court can properly reach a conclusion on this conflict of evidence by the application of common law principles, and the point has been argued before us on the basis of such principles.

Mr Howard relied upon Shepherd v Hills (1855) 11 Ex. 56. In this case the Deputy Master of the Trinity House, Deptford Stroud, sued for the recovery of tolls or dues payable under the Statute 32 Geo 3 c.74 and other Acts for the improvement of Ramsgate Harbour. Section 15 of the principal Act gave a specific power to distrain ships, tackle, etc., in order to obtain payment. By Section 16, if the ship's master or owner eluded or avoided payment, he was to stand charged with and be liable to payment of the dues. The issue arose whether the words of Section 16 by which the master or owner was to stand charged with and liable to payment of the dues created a right of action in debt in addition to the right of distress under Section 15: cf the argument at p.63. At p.67 Parke B held that they did on the ground that:

There is no doubt that wherever an Act of Parliament creates a duty or obligation to pay money, an action will lie for its recovery, unless the Act contains some provision to the contrary. It is true that this statute gives a power of distress, but that is clearly a cumulative remedy.

Mr. Howard submitted that this principle is of general application. He also placed reliance on Lloyd v. Burrup (1864) LR 4 Ex 63 where the statutory duty of churchwardens to pay the minister's stipend out of pew rents was held to give the minister a special right of action on the statute or for money had and received.

An action for a debt in this jurisdiction has certain features which are of significance in the present context. Although the debt may be claimed in foreign currency, the Defendant is entitled to make a payment into court in sterling and to satisfy a judgment in sterling. He can also set off against his liability a cross claim in debt. I assume, in the absence of evidence to the contrary, that these are also features of Zambian law and procedure. Indeed it may well be the case that in Zambia a pre- Miliangos regime prevails so that judgment for a foreign currency debt can only be recovered in Kwacha. Having regard to these features, it is apparent that if the Bank were to bring against ZCCM a claim in debt in the Zambian court in respect of ZCCM's obligation to comply with the Bank's Direction, it would not necessarily achieve the object of that Direction - the receipt by or to the credit of the Bank of foreign exchange. These considerations underline the conclusion that I have reached that payment obligations imposed on ZCCM by Directions given by the Bank do not create civil law debts, but obligations imposed under public law which have to be complied with precisely. If ZCCM is required to pay a particular currency into a particular account in a particular country, it is obliged to do so. Payment of an equivalent sum into a different account of the Bank will not discharge the obligation. The sanctions for non-compliance with the obligation are, exclusively, those provided for by Regulations 3(ii), 18 and 19.

The conclusion that no action lies at the suit of the Bank in private law for payment by ZCCM in accordance with the Bank's Direction is fatal to Camdex's application under O. 49.

Other Objections to Camdex's Application

If I were wrong in my conclusion that the Bank has no civil cause of action in respect of ZCCM's obligation, so that the Bank has a good claim in debt, it does not follow that ZCCM's debt would be open to attachment in garnishee proceedings. In my judgment it would not, for the following reasons:

(i) The Bank would not be beneficially entitled to the foreign currency received. Mr. Howard argued that the Bank would be able perfectly properly to use the money to discharge its debt to Camdex; in effect that the 'debt' constitutes funds that the Bank "could honestly give" to Camdex. I cannot accept this without evidence. The Bank clearly has to use its foreign exchange in accordance with its duties as Central Bank and I would expect that it would be inconsistent with those duties to use receipts of foreign exchange to prefer Camdex to other creditors, who have agreed to schemes of arrangement. If one accepts Mr. Howard's analogy with Shepherd v. Hill, the dues and tolls payable to the Deputy Master of Trinity House, which had to be disbursed for the improvement of Ramsgate Harbour, would not have been subject to attachment by a creditor of the Deputy Master. In the present case, the Bank's duty to use receipts of foreign exchange for public purposes would defeat any claim to attach such funds.

(ii) I do not consider that Camdex would have been entitled to attach the 'debt' owed by ZCCM, without permitting ZCCM to set off, in extinction of the 'debt', the equivalent value of Kwacha to which ZCCM would be entitled on making the payment - see O.49/3/12 Supreme Court Practice.

Discretion

Mr. Salter, in written submissions after the hearing has stated that it is common ground that the 'situs' of the debt, if debt it is, is in England. It does not seem to me that that is necessarily correct. I can see that the 'situs' of the debts which are owed by the Commercial Bank to ZCCM is probably England, but that does not seem to me to be the 'situs' of ZCCM's obligation to transfer 45% of those debts to the Bank's accounts with the Bank for International Settlements in Basle. The relevance of this is that it seems to me that the appropriate forum in which Camdex should have pursued garnishee proceedings is Zambia, where both the Bank and ZCCM are incorporated and have their principal places of business and where the law to be applied would be the law of the forum. For this reason I would not have been prepared to exercise my discretion by making an order of attachment.

Appeal dismissed. Leave to appeal to the House of Lords refused.