Regazzoni v K. C. Sethia (1944) Ltd
| Jurisdiction | UK Non-devolved |
| Judge | Viscount Simonds,Lord Reid,Lord Cohen,Lord Keith of Avonholm,Lord Somervell of Harrow |
| Judgment Date | 21 October 1957 |
| Judgment citation (vLex) | [1957] UKHL J1021-1 |
| Date | 21 October 1957 |
| Court | House of Lords |
[1957] UKHL J1021-1
Viscount Simonds
Lord Reid
Lord Cohen
Lord Keith of Avonholm
Lord Somervell of Harrow
House of Lords
Upon Report from the Appellate Committee, to whom was referred the Cause Regazzoni against K. C. Sethia (1944) Limited, that the Committee had heard Counsel, as well on Monday the 8th, as on Tuesday the 9th, Wednesday the 10th, Thursday the 11th and Monday the 15th, days of July last, upon the Petition and Appeal of Polisseno Regazzoni, of Viaduktstrasse 14, Basle, Switzerland, praying, That the matter of the Order set forth in the Schedule thereto, namely an Order of Her Majesty's Court of Appeal of the 26th of April 1956, might be reviewed before Her Majesty the Queen, in Her Court of Parliament, and that the said Order might be reversed, varied or altered, or that the Petitioner might have such other relief in the premises as to Her Majesty the Queen, in Her Court of Parliament, might seem meet; as also upon the printed Case of K. C. Sethia (1944) Limited, lodged in answer to the said Appeal; and due consideration had this day of what was offered on either side in this Cause:
It is Ordered and Adjudged, by the Lords Spiritual and Temporal in the Court of Parliament of Her Majesty the Queen assembled, That the said Order of Her Majesty's Court of Appeal, of the 26th day of April 1956, complained of in the said Appeal, be, and the same is hereby, Affirmed, and that the said Petition and Appeal be, and the same is hereby, dismissed this House: And it is further Ordered, That the Appellant do pay, or cause to be paid, to the said Respondents the Costs incurred by them in respect of the said Appeal, the amount thereof to be certified by the Clerk of the Parliaments.
My Lords,
The Appellant, Polisseno Regazzoni, who resides in Switzerland, brought the action out of which this appeal arises against K. C. Sethia (1944) Ltd., an English company, claiming damages for breach of contract. He alleged that the Respondents had agreed to sell and deliver to him 500,000 jute bags of the quality and standard known in the trade as new B Twills and that they had wrongfully repudiated the agreement. The Respondents defended the action on numerous grounds, with only one of which your Lordships are now concerned, namely, that the contract, if any, was to the Appellant's knowledge an illegal contract and/or was void and unenforceable in that it had for its purpose an object which was illegal and/or contrary to public policy, namely, the taking and shipment of jute goods from India where the ultimate destination was the Union of South Africa in breach of a certain Act of the Indian Parliament and Regulations made thereunder.
The Act in question was the Sea Customs Act, 1878, which (as modified up to the 1st December, 1950) provided by section 19 that the Central Government might from time to time by notification in the Official Gazette prohibit or restrict the bringing or taking by sea or by land goods of any specified description into or out of the States across any customs frontier as defined by the Central Government, and by section 134 that the Central Government might from time to time by similar notification prohibit at any specified port or at all ports the trans-shipment of any specified class of goods generally or when destined for any specified ports. By section 138 of the Act provision was made for security for the due shipment, export and landing of goods and by section 167 for the punishment of offences. The prescribed penalties were severe. It was provided that if any goods, the importation or exportation of which was prohibited or restricted by or under the Act, should be imported into or exported from India contrary to such prohibition or restriction or if any attempt should be made so to import or export any such goods, the goods themselves should be liable to confiscation and any person concerned in any such offence should be liable to a penalty not exceeding three times the value of the goods or not exceeding 1,000 rupees.
In exercise of the powers conferred by this Act on the 17th July, 1946, the Central Government of India duly made an order prohibiting the taking "by sea or by land out of British India of goods from whatever place arriving which are destined for any port or place in the Union of South Africa or in respect of which the Chief Customs Officer is satisfied that the goods although destined for a port or place outside the Union of South Africa are intended to be taken to the Union of South Africa".
I do not think it necessary to state at length the facts of the case. They have been found by Mr. Justice Sellers and his findings were accepted by the Court of Appeal. No other conclusion was, in my opinion, possible than that (in the words of the learned Judge) "both parties … contemplated and intended that the contract goods would be shipped from India and be made available in Genoa so that the Plaintiff might make a resale or fulfil a bargain of resale to the South African buying agency". Nor is it to be doubted that both parties were well aware of the restrictions imposed by the Order of the 17th July, 1946. A strenuous attempt was made to persuade your Lordships that the contract did not infringe Indian law, and this was vouched by a Mr. Nissim whose qualification to give expert evidence was not challenged. But I must say with all respect to him that I find his testimony confused and unconvincing. It may well be that an Indian shipper would not be subject to any penalty if he could prove that he was unaware of the ultimate destination of the goods. But it is not possible for parties whose common intention it is to procure the shipment of goods from India directly or indirectly to the Union of South Africa to plead the innocence of the transaction on the ground that the Indian shipper may be deceived or even that the Chief Customs Officer may be satisfied (contrary to the fact) that the ultimate destination is not the Union of South Africa. On the contrary it must be assumed that the Chief Customs Officer would not be so satisfied: if so, the shipment inevitably falls within the prohibition and could only be carried out in violation of Indian law.
The question then arises—and it is, as I say, the only question for your Lordships' consideration—whether the Respondents were justified in repudiating the contract. They claim to be justified on the ground that I have already stated. Their broad proposition is that whether or not the proper law of the contract is English law, an English Court will not enforce a contract, or award damages for its breach, if its performance will involve the doing of an act in a foreign and friendly State which violates the law of that State. For this they cite the authority of the well known case of Foster v. Driscoll and Others [1929] 1 K.B. 470, and much of the debate in this House has been whether that case was rightly decided, and if so whether it is distinguishable from the present case. The Appellant contends that it was not rightly decided and further invokes a familiar principle which he states in these wide but questionable terms:
"An English Court will not have regard to a foreign law of a penal, revenue, or political character",
and claims that the Indian law here in question is of such a character.
My Lords, in the consideration of this matter I deem it of the utmost importance to bear in mind that we are not here concerned with a suit by a foreign State to enforce its laws. The recent case in this House of Government of India v. Taylor and Another [1955] A.C. 491, shows beyond all doubt that an English Court will not enforce the penal or revenue laws of another country at the suit of that country. That proposition was there exhaustively examined and nothing remains to be said about it except that there is still a question how far, if at all, the doctrine extends to laws which are described as having a "political" or "public" character. It is clear at least, as Lord Justice Denning said in this case, that "These Courts do not sit to collect taxes for another country or to inflict punishments for it". But, as I say, we are not concerned with such a case, but with a very different question, namely, whether in a suit between private persons the Court will enforce a contract which involves the doing in a foreign country of an act which is illegal by, and violates, the law of that country. When I say "foreign country" I mean a foreign and friendly country and will not repeat the phrase. In the statement of the question I call particular attention to the words "the doing in a foreign country", for it may well be that different considerations will arise and a different conclusion will be reached if the law of the contract is English and the contract can be wholly performed in England or at least in some other country than that whose law makes the act illegal (see Kleinwort, Sons and Company v. Ungarische Baumwolle Industrie Aktiengesellschaft and Another [1939] 2 K.B. 678). There are points at which the two questions appear to touch each other and sometimes the one proposition has been treated as an exception on the other. But there is, I think, a fundamental difference. It can hardly be regarded as a matter of comity that the Courts of this country will not entertain a suit by a foreign State to enforce its revenue laws. It is on the other hand nothing else than comity which has influenced our Courts to refuse as a matter of public policy to enforce, or to award damages for the breach of, a contract which involves the violation of foreign law on foreign soil, and it is the limits of this principle that we have to examine. If the principle is, as I think it clearly is, based on public policy, your Lordships will not hesitate, while disclaiming any intention to create any new head of public policy, to...
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