#5241 - Lorentzen V. Lydden - Conflict of Laws BCL

Lorentzen v. Lydden

Facts

The plaintiff, who was the curator appointed by the Royal Norwegian Government, brought an action, for and on behalf of the owners of the steamship Tempo, a company known as A/s Benita, carrying on business in Oslo, against the defendants, Lydden & Co., Ld., a firm carrying on business in London, to recover damages for breach by the defendants of a contract, whereby the defendants agreed to charter the Tempo for the carriage of eight hundred tons of pulp from Oslo to Grangemouth or Leith. The defendants' obligations were to be performed in Oslo. It was alleged that the defendants in October, 1939, repudiated the contract. In the statement of claim the title of the curator to sue was based upon an Order in Council of the Royal Norwegian Government dated May 18, 1940, authorizing him to collect claims belonging to shipowners and enforce them by action.

The order of the Norwegian Government, which was relied on by the plaintiff as conferring upon him a right to sue, was made on May 18, 1940, at Trondjhem, in Norway1. Art. 1 provided that "All ships registered in Norway or belonging to a port there and situate outside the area in Norway which is occupied by an enemy power and which are owned by (a) persons domiciled in the occupied area or carrying on business from an office there, (b) part ownerships, corporations, joint stock companies or other companies registered in or having their board of directors in such area or carrying on business from an office there are considered as requisitioned by the Norwegian Government, who hereby takes over the right to use the ships." Art. 2 gave the Norwegian Minister of Shipping power to take over ships under construction outside occupied areas and contracts for the construction of ships belonging to such persons or companies. By art. 4, sub-s. 1, the Minister of Shipping, in exercising his powers under this order was called “curator.” By sub-s. 2 he was to exercise to the exclusion of the right of the owner the right of property in all assets outside the occupied areas belonging to owners as mentioned in arts. 1 and 2. By sub-s. 3 he was "entitled to collect claims belonging to owners as mentioned in arts. 1 and 2, to enforce by action or otherwise any claims that may already have, or which they may later acquire, to effect compromises or accept settlements and give valid discharges."

Art. 5 provided that: "Compensation for what has been taken over by the Government by virtue of the Provisional Order in Council of April 22, 1940, or which is taken over by virtue of the present Order in Council shall be fixed in accordance with Norwegian law."

Holding

It is said that by English law this Order in Council cannot operate to pass the ownership of any movable property or of any chose in action situate in England; that foreign legislation can have no extra-territorial effect. If that is right this order is of little avail, because it applies solely to property situate outside the territory of Norway.

Dicey’s Rule – Extra-territorial application on subjects

It is described by Dicey as follows:- “A State's authority, in the eyes of other States and the Courts that represent them, is, speaking very generally, coincident with, and limited by, its power. It is territorial. It may legislate for, and give judgments affecting, things and persons within its territory. It has no authority to legislate for, or adjudicate upon, things or persons (unless they are its subjects) not within its territory.” The rule which denies extra-territorial effect to the laws of a country requires a little elaboration for our present purposes," and the learned author goes on to say that the rule has received illustration from a number of decisions arising out of the Soviet Revolution. There are only two comments which I desire to make upon the quotation from Dicey. The first is to underline the words "speaking very generally," and secondly to underline the exception "unless they are its subjects." It is plain that the order in this case does not affect in any way the rights of anyone in this country. It regulates the rights of the owner of the debt in Oslo and that owner's government. It makes no difference to the defendants whether the action is brought by A/s Benita or by the curator on behalf of A/s Benita.

Comment on Russian Acquisition cases

Now, what does all that mean? It means this, not that whatever the intended meaning of the Russian decrees was they could not affect property outside Russian territory, but that, as a matter of fact, that is on the construction of the decrees themselves, and he construed them on the evidence given to him by Russian lawyers, they did not purport to affect the title to property outside Russian territory. It seems to me that so far from being an authority in support of Mr. Devlin's contention it is all the other way. It would have been so easy to say: "Well, why should I listen to evidence about the effect of these decrees because,...