Banque des Marchands de Moscou (Koupetschesky) v Kindersley
| Jurisdiction | England & Wales |
| Judgment Date | 28 February 1952 |
| Docket Number | Case No. 52 |
| Date | 28 February 1952 |
| Court | Chancery Division |
(Vaisey J.)
Jurisdiction — Confiscatory Decrees of Recognized Government — Extra-territorial Operation of — Whether Validity may be Questioned in Courts of Another Country — Winding-up of Dissolved Corporations' Assets Situated Abroad — Attempt to Prove Debts in Liquidation — Situs of Debt — Effect of Dissolution Decrees on Foreign Corporation — Whether it may be Notionally Revived by Subsequent Winding-up — Services Rendered after Dissolution.
The Facts.—The Banque des Marchands de Moscou, which formerly had its head office in Moscow, and a branch office in Petrograd, but no branch office in England, was dissolved, according to Russian law, on or about December 14,1917, by a Decree of that date of the Soviet Government by which the Bank, in common with other banks, was nationalized, its assets and liabilities being taken over by the State Bank. On May 30, 1932, a winding-up order was made in England in respect of the Bank.
The Royal Exchange Assurance Company sought to prove, in the liquidation of the Bank in England, in respect of the equivalent in sterling (at the rate of exchange current on December 14, 1917) of (a) a sum of roubles 1,332,992 which, in December 1917, stood to the credit of a current account with the Bank in the name of the Company; (b) a sum of roubles 4,500,000 which, in December 1917, stood to the credit of a deposit account in their name; (c) a sum in respect of interest on the latter account; and (d) the value of bonds, shares and other securities deposited with the Bank for safe custody by the Company (as a customer) in Petrograd. The liquidator rejected the proof and the Company appealed.
Between March 1930 and the date of the winding-up order in May 1932, Wilenkin, an expert in Russian law, assisted in various legal proceedings relating to the Bank, and, largely owing to his advice in regard to a claim by the Deutsche Bank, that claim was defeated. Wilenkin now claimed in the winding-up of the Bank for his expenses and remuneration.
Held: I. With regard to the claim of the Royal Assurance Company—
(i) The proper law of the contract between the Company and the Bank was Russian law, and thus the Company's claims, which were against the Bank in Russia, were regulated by Russian law; the effect of the Russian decree of nationalization had been to extinguish the rights of the Company against the Bank, so that at the date of the winding-up order in England, there was no subsisting debt or liability owed by the Bank to the Company.
(ii) The Soviet State having taken possession of the securities deposited by the Company with the Bank, the Bank would be entitled to claim that it had been evicted by title paramount, whereby the liability was discharged.
II. With regard to the claim by Wilenkin—Although for the purposes of winding-up the Bank it was necessary notionally to revivify it (notwithstanding its dissolution in Russian law), it could not be regarded as having been in existence at the time of Wilenkin's services, and therefore Wilenkin could not be regarded as having rendered services to the Bank for which he could claim in the winding-up.
Vaisey J., after stating the details of the Company's claim, continued:
“Counsel for the liquidator has submitted to me that there is a very short and simple answer to this claim, and that answer rests, putting it broadly, on a principle which was laid down by Maugham, J., in Re Russian Bank for Foreign TradeELRUNK ([1933] Ch. 745; 102 L.J.Ch. 309; 149 L.T. 65; Digest Supp.). The principle was laid down in clear terms, although it might be that in that case it was only said by way of dictum. Put shortly, the point which the liquidator takes on this proof is that these claims all relate to a debt or a liability which was owing or accrued in Russia, and the position of the Royal Exchange Assurance in this regard is no different in quality from the position of any other customer or debtor of the bank in Russia. It is not, and cannot be, I think, disputed that according to our law the debt is situate where the debtor is, and I do not think it can be disputed that these claims have to be regulated by Russian law and English law does not come into this matter at all. What is submitted on behalf of the liquidator is that here we have a debt or obligation that, undoubtedly, did exist prior to the legislation in Russia, which has been called confiscatory and which has, perhaps not unfairly, been so regarded, and that there were subsisting debts and obligations of the bank to its customers, including the present claimants. It is said that that is all very well, but although the Russian legislation, by reason of its confiscatory character, has no extraterritorial effect, it is completely binding so far as concerns things which belong to the debtor and are referable to Russian territory, and here we have a debt or a claim, the remedy for which at the material date—that is to say, at the date when the confiscatory legislation took effect—was a debt which was liable to be discharged in Russia and nowhere else. The Royal Exchange Assurance, it is said, stands in no different position from any Russian customer or creditor of the bank, and the claims of the Royal Exchange Assurance and every other claim in Russia having regard to matters that have taken place in Russian territory have been effectively dealt with by the legislation to which I have referred.
“In Re Russian Bank for Foreign Trade (ibid.) Maugham J. lays down that, among other things, the Soviet...
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