#5242 - Luther V. Sagor - Conflict of Laws BCL

Luther v. Sagor

Facts

The action was brought to establish the plaintiff company's right to a quantity of veneer or plywood which had been imported by the defendants from Russia. The plaintiffs' case was that they are a Russian company having a factory or mill at Staraja Russa in Russia for the manufacture of veneer or plywood, and that in the year 1919 the so-called Republican Government of Russia without any right or title to do so seized all the stock at their mill and subsequently purported to sell the quantity in dispute in this action to the defendants. The plaintiffs contended that the so-called Republican Government had no existence as a government, that it had never been recognized by His Majesty's Government, and that the seizure of their goods was pure robbery. As an alternative they contended that the decree of the so-called government nationalizing all factories, as a result of which their goods were seized, is not a decree which the Courts of this country would recognize.

Holding

Bankes LJ

It is necessary now to deal with the point made by the respondents, that the decree of confiscation of June, 1918, even if made by the Government which is now recognized by His Majesty's Government as the de facto Government of Russia, is in its nature so immoral, and so contrary to the principles of justice as recognized by this country, that the Courts of this country ought not to pay any attention to it. This is a bold proposition. The question before the Court is not one in which the assistance of the Court is asked to enforce the law of some foreign country to which legitimate objection might be taken, as in Hope v. Hope and Kaufman v. Gerson. The question before the Court is as to the title to goods lying in a foreign country which a subject of that country, being the owner of them by the law of that country, has sold under an f.o.b. contract for export to this country. The Court is asked to ignore the law of the foreign country under which the vendor acquired his title, and to lend its assistance to prevent the purchaser dealing with the goods. I do not think that any authority can be produced to support the contention. Authority appears to negative it. In Santos v. Illidge Blackburn J. says: “Assuming the taking to have been prohibited by a British act, still the taking having been of property locally situated in a foreign country, in a manner lawful according to the laws of that country, I apprehend that the property actually passed by the sale, and vested in the purchasers, though they committed a felony according to our law by taking it…. I apprehend that though the vendees were British subjects the validity of the transfer must on every principle of law depend upon the local law of Brazil, and not upon that of the country of the purchaser.”

Warrington LJ

Some reliance was placed by the respondents upon the principle enunciated in such cases as Kaufman v. Gerson, that the Courts of this country will not enforce a contract invalid by our law as being in contravention of some essential principle of justice or morality, notwithstanding that by the law of the country where it was made no such objection could be raised to it. In my opinion this principle has no application. The appellants are not seeking to enforce such a contract. They are resisting an endeavour on the part of the respondents to induce the Court to ignore and override legislative and executive acts of the Government of Russia and its agents affecting the title to property in that country; it is that which, in my opinion, we are not at liberty to do.

Scrutton LJ

If M. Krassin had brought these goods with him into England, and declared on behalf of his Government that they were the property of the Russian Government, in my view no English Court could investigate the truth of that statement. To do so would not be consistent with the comity of nations as between...