Jersey & Guernsey Law Review – October 2012
Arrested and charged
FG Hemisphere and the proprietary effect
of the arrêt entre mains
Richard Holden
Jersey’s
“arrêt entre mains” procedure arrests a debtor’s
property which is in the hands of a third party. FG Hemisphere Assoc LLC v DR
Congo
is the first modern case to shed clear light on the way in which the procedure
operates as a method of execution in Jersey. The Royal Court and Court of Appeal have held
that it has a proprietary effect, drawing on Pothier’s description of
Orléans’ saisie-arrêt, which they found sufficiently
analogous to the arrêt entre mains to provide guidance. In this article,
Pothier’s account of the saisie-arrêt (and related procedures) is
considered further, in particular in light of his Treatise on Obligations. It
considers that in substance, Pothier’s saisie-arrêt reflects his
account of assignment. As a result, the saisie-arrêt equated to
assignment or delivery of the thing arrested to the arresting creditor pending
satisfaction of the debt. It can therefore be explained as a charge. Jersey authority holds that a hypotec of movables
requires possession. Consequently, it is concluded that the courts were correct
and that the arrêt entre mains has proprietary effect, operating to
charge the thing arrested.
This article also considers that the Court of
Appeal’s view that the arrêt entre mains may apply to future debts
which have yet to fall due under existing contracts is amply supported by both
Pothier and customary law.
Introduction
1 The arrêt
entre mains is a remedy available to a plaintiff creditor in Jersey to satisfy a judgment in execution, or as an
interim measure pending judgment as an arrêt
entre mains provisoire. It is a court order giving that plaintiff rights in
respect of his debtor’s moveable property which is currently in the hands
of a third party. The aim is of course for that plaintiff to obtain
satisfaction of his debt by cutting out the active involvement of his unwilling
or incapable debtor. It can be effected against corporeal and incorporeal
property in the hands of the third party. In the case of
the latter (such as a debt) there are therefore three parties and two debts: the
arresting plaintiff (the “principal creditor”) who is owed money (the
“principal debt”) by his debtor (the “principal debtor”),
which principal debtor is in turn owed money (the “subsidiary debt”)
by a third party (the “subsidiary debtor”). Prior to the arrêt, the principal creditor is a
stranger to the subsidiary debt: the arrêt
entre mains gives him rights in respect of it so that he can obtain payment
of the principal debt from the subsidiary debtor.
2 As with many customary law remedies, the
existence of the arrêt entre mains was
clear but detail of its precise operation obscure. However, in FG Hemisphere Assoc LLC v DR Congo the Royal Court and
Court of Appeal have recently clarified its effect.
The courts’ decisions in FG Hemisphere
3 The case concerned attempts by FG
Hemisphere LLC (“Hemisphere”) to enforce arbitration awards made
against the Democratic Republic of Congo. There were two aspects to these
attempts. First, Hemisphere sought to enforce against a Congolese company,
Gécamines, which it contended was an organ of the Congolese state. Secondly,
Hemisphere sought an arrêt entre
mains against a Jersey corporation, “GTL”,
in respect of shares and payments which GTL owed to Gécamines. It is
this second aspect which is considered in this article.
4 The relevant payments which Hemisphere
sought to arrest arose under a contract between Gécamines and GTL. Under
this contract, GTL agreed to buy mineral rich slag at Gécamines’
site in the Congo,
for which GTL paid money to Gécamines (the “slag sales payments”).
The contract did not provide where these slag sales payments should be made,
and the contract was expressed to be subject to Belgian law.
5 The Royal Court and Court of Appeal
confirmed the arrêt entre mains in
respect of the slag sales payments. In so doing, the courts held that, in
respect of an arrêt entre mains—
(a) it operates in rem against the thing arrested, rather than simply in personam against the person in whose
hands the thing arrested happens to be;
(b) it can be
made in respect of debts or choses in
action payable in future, provided they are sufficiently capable of precise
identification at the time of the arrest;
(c) the situs of an incorporeal movable, such as a debt, is determined by
where it can be enforced, which means where the person in whose hands it is
currently resides; and
(d) the court will not order an arrêt entre mains in respect of an
incorporeal movable, such as a debt, where payment of the debt pursuant to the arrêt would not be recognised as
validly discharging the debt by its lex situs.
6 In so holding, the courts drew mainly on
two analogous procedures for guidance on the arrêt entre mains. The
first was the “saisie-arrêt”,
the equivalent customary procedure formerly available in Orléans, as
described by Pothier. The second was the English garnishee or third party debt
order, in particular as explained by the House of Lords in Société Eram Ltd v Cie International. As noted in Eram, this latter order is primarily
statutory in origin.
An arrêt entre mains operates in rem
7 In respect of the first point above, the Royal Court
and Court of Appeal were satisfied that the arrêt
entre mains operates in rem. The Royal Court
referred to the writings of Pothier in respect of
Orléans’ “saisie-arrêt”
which they accepted functioned similarly to the English garnishee/third party
debt order as described in the House of Lords’ decision in Eram. The Court of Appeal also referred
to Pothier,
noting also descriptions by Terrien and Routier of similar Norman
procedures.
8 The Royal Court and Court of Appeal particularly noted Pothier’s
observation that the saisie-arrêt
precluded the principal debtor from discharging the subsidiary debtor to the
prejudice of the arresting, principal creditor: from this, the Court of
Appeal concluded that the saisie-arrêt
was, and therefore the arrêt entre
mains is, an act affecting the debt itself. Otherwise,
the court noted, the subsidiary creditor would have separate personal
liabilities to the principal creditor and the principal debtor. The Court of Appeal
therefore considered “logic and justice . . . demand that the
arrestment have effect on the debt itself”, noting further that the
customary writers indicated that the thing arrested was subjected to the
control of the court.
9 In Eram,
the House of Lords made clear that the English third party debt order is not an
order in personam but in rem. Such an order is granted in two
related stages in a single application. The first, provisional order nisi acts
as a charge over the thing subjected so giving priority to the arresting
principal creditor as against the world. The final order absolute executes that
charge and so realises the property subject to the order, with the result that
payment to the principal creditor under the order pro tanto discharges the subsidiary debtor towards the principal debtor.
The Royal Court
accepted that the English and Jersey
procedures are sufficiently closely analogous for these principles to apply in
respect of the arrêt entre mains.
10 For the Lords in Eram, the English order’s proprietary effect as charge on the
subsidiary debt attached with a corresponding, pro tanto discharge of
the subsidiary debt when the subsidiary debtor pays the charging, principal
creditor was the very essence of the order. So essential was this to
the order’s operation that it survived a change in the English statutory
language from the court ordering the thing garnished’s being “attached”
pursuant to the Judgments Act 1838 (which first introduced the procedure into
English law) to making an “order to pay” under the Civil Procedure
Rules currently in force (and indeed the English RSC
Ord 49 in force prior to the CPR).
An arrêt entre mains is capable of arresting
future movables
11 In
FG Hemisphere, the Court of Appeal
rejected an argument that the arrêt
entre mains could not be effected or effective in respect of slag sales
payments which had not yet fallen due. In doing so, it drew on
Pothier in two respects. First, his statement that in Orléans the
sergeant declared arrested and put into the hand of justice “tout ce qu’il peut devoir et devra”: that is “all he
[the subsidiary debtor] can owe and will owe in the course of time”. Secondly, his observation
that a saisie-arrêt prevented
the principal debtor prejudicing the principal creditor by annulling a lease
for the future which would discharge the subsidiary creditor from his future
obligations.
The court further drew on Terrien and Routier noting that the procedure they
described required the debt arrested to be identified and declared. Overall,
therefore, the Court of Appeal was satisfied on these authorities that an arrêt entre mains can be effected
in respect of future debts provided that such debts are capable of identification
and declaration – ie precise
identification on oath.
“Foreign
debts” and situs
12 The Royal Court accepted English conflict
of law rules, as described in Dicey, Morris and Collins, also reflect Jersey
law to the effect that a debt is situate where it is enforceable; that, in turn,
is where the defendant principal debtor against whom it will be enforced is
resident.
So, as GTL was incorporated in Jersey, the Royal Court and Court of Appeal held
that it was resident in Jersey sufficiently to be served, and hence sued, in Jersey. Consequently, as the slag
sales payments were situate in Jersey, they
were therefore capable of being arrested by the Viscount.
13 Where a debt is situate abroad, the court
will not make an order unless the principal creditor clearly establishes that
the foreign court would regard the debt as automatically discharged by payment
pursuant to the order. The Royal
Court stressed that this was an inquiry into
where the debt is situated, not the risk of being compelled to pay twice. However, it also accepted
that the risk of a foreign court compelling a second
payment is a matter for it to consider in its discretion. Obviously, this risk
weighs against the making of the order, even where the foreign court is
exercising an exorbitant jurisdiction.
14 Again, in this the Jersey
courts followed the approach set out in Eram
in respect of English garnishee/third party debt orders. In Eram, it was the reciprocity of the
payment and discharge essential to the nature of the order that resulted in
this approach.
Where the situs of the debt was
abroad, in a place where the relevant courts would not recognise payment under
the order as discharging that debt, it necessarily followed that the order
would not work.
This is the case even where the foreign court is exercising a jurisdiction
considered exorbitant (even scandalously so): the lack of discharge
meant that an order could not be granted: could not, rather than should not, as
the question in this respect was one of principle and jurisdiction, rather than
discretion.
Pothier’s saisies,
exécutions and arrêts in Orléans
15 When deciding the above, the courts in FG Hemisphere were referred to and
relied on the writings of Pothier. In his Traité
de la Procédure Civile, Pothier describes three procedures available
to a creditor in Orléans in respect of movable property: the saisie-exécution, saisie-arrêt, and the simple arrêt. Of these, respectively—
(a) The saisie-exécution seized the principal debtor’s
corporeal moveables for sale in satisfaction of the principal creditor’s
debt.
(b) The saisie-arrêt seized and arrested the principal debtor’s
incorporeal movables and made them over to the principal creditor in satisfaction
of the principal debt: procedurally, it required service of process on both the
principal and subsidiary debtors as parties.
(c) The simple arrêt could arrest both the principal debtor’s
corporeal and incorporeal moveables in the hands of a third party such as a subsidiary debtor: it was effected only against that
third party/subsidiary debtor, and so process was only served on him.
16 Pothier also describes a fourth
procedure, saisie-gagerie, which is contained within the coutumier of Paris and comprised the arrest of movables by
the sergeant on behalf of the lessor of urban premises until he could obtain an
order for their sale from a judge.
17 The three procedures of Orléans
are considered in more detail below. In FG
Hemisphere, the courts found that Orléans’ saisie-arrêt most closely
corresponds to Jersey’s arrêt entre mains, at least in respect of arresting incorporeal moveables
owed by the third party, subsidiary debtor to the principal debtor. The purpose
of examining all three of Orléans’ procedures, therefore, is to
understand how they worked to test the closeness of the analogy and how, if
they are equivalent to Jersey procedures, they can assist in informing how
those Jersey procedures work.
Saisie-exécution
18 The saisie-exécution
was available to a creditor having executory title in respect of a certain,
liquidated sum of moneys or other fungibles such as wheat or wine. Its culmination was the
sale of the things seized: it is therefore equivalent to the Jersey
arrêt (simpliciter, arresting the principal debtor’s property in his
own hands, as opposed to entre mains arresting
his property in others’).
19 Pothier begins his description of saisie-exécution by observing
that it—
“. . .
diffère de la saisie et arrêt
de meubles, en ce que l’une tend à les vendre, l’autre
à empêcher les détournements.”
[. . . differs from saisie-arrêt, in
that the one [execution] tends to their sale, the other [arrest] to impede
misappropriations.]
20 Without more, this distinction could be
thought to mean that the saisie-arrêt
acted in personam to prevent
misappropriations by prohibiting the diversion of funds to the wrong party. As
examined below, however, there is much more substantive discussion of the saisie-arrêt which tends to defeat
this view. Further, to the extent that failure to pay the debt arrested to the
arresting, principal creditor constitutes a
misappropriation of that payment, it equally reflects the principal creditor’s
having a proprietary interest in it.
21 Pothier makes a further potentially
interesting observation regarding multiple saisie-exécutions,
indicating their extent over the goods of the principal debtor—
“Saisie sur saisie ne vaut.
Cette règle a lieu, soit à l’égard
du premier saisissant, soit à l’égard de différents
saisissants: 1 À l’égard du premier saisissant, celui qui a
saisi les effets de son débiteur ne peut faire une seconde saisie,
à moins que la première n’ait été auparavant
terminée, ou qu’il en ait donné main-levée. Coutûme
d’Orléans, art 453.
Mais si la première saisie ne comprend pas
tous les effets du débiteur, le créancier peut saisir incontinent
les autre effets qui n’y étoient pas compris, et cette saisie n’est
regardée que comme une continuation de la première, et non comme
une seconde saisie; elle n’est point par conséquent contraire
à la règle. Voyez mes notes sur l’art 453 qui vient d’être
cité. Il sembleroit, aux termes de cet article, qu’il seroit
nécessaire qu’il fut exprimé par le procés-verbal
que la saisie se fait en continueant la première; mais l’usage a
établi que ces termes dévoient se sous-entendre, quand même
ils ne seroient pas exprimés.”
[Saisie on saisie is invalid.
This rule applies, whether in respect of the first
seizing creditor alone, or whether in respect of different seizing creditors: first,
in respect of the first seizing creditor alone, he who has seized the effects
of his debtor cannot effect a second saisie,
unless the first has previously finished, or it has been withdrawn. Coutume d’Orléans, art 453.
But if the first saisie
does not include all the effects of the debtor, the creditor may unrestrainedly
seize the other effects which were not included in it, and this saisie is simply regarded as a
continuation of the first, and not as a second seizure, it is therefore not
contrary to the rule. See my notes on art 453 which have just been referred to.
It would seem necessary, according to this article, that the proceeding should
expressly order that the [second] seizure is carried out in continuation of the
first, but usage has established that these terms should be understood
implicitly, even should they not be expressed.]
22 This passage is
interesting for two points, which may have an important bearing elsewhere in
respect of the saisie-arrêt. First,
the distinction between “saisie”
and “exécution”;
second, the practice regarding the extent of a saisie-exécution over the debtor’s goods.
23 As to the first point, this passage
suggests that the distinction between “saisie” and “exécution”
is that the “saisie” is
the seizure or taking of possession; implying therefore that the execution is
the subsequent realisation of funds in satisfaction of the debt by the sale of
those goods seized. This particular interpretation is considered further below
(see paras 73–74), and follows from the second point arising from this
passage, that the extent of a single saisie-exécution
allows unrestrained, multiple seizures of goods. Pothier writes that once an
order was made, the practice of Orléans (the terms of its Coutûme notwithstanding) was to
allow multiple seizures of goods under that order, with no need for a
subsequent order to justify a second visit to take possession of further goods.
24 The points give rise to two questions;
first whether the different terms “saisie-arrêt”
and “saisie-exécution”
indicate that the “arrêt”
of incorporeal movables differs from the “exécution” of corporeal ones; and secondly, does the
multiple seizure of goods under a single order of saisie-exécution cast any light on the extent of an order
for a saisie-arrêt? On the one
hand this might suggest that future returns to take goods implies the taking of
future-acquired goods. On the other, however, there is no indication that this
is the case, and the goods subsequently taken may be those which were present
or owned at the time of the first attendance or when the saisie-exécution took effect.
Saisie-arrêt and the simple arrêt: a
comparison and distinction
25 Both the saisie-arrêt and the simple arrêt were methods of arresting the principal debtor’s
movables. As noted above, the saisie-arrêt
arrested only incorporeal movables, but the simple arrêt could arrest both his corporeal and incorporeal
movables. Both procedures were effective against third parties in whose hands
the relevant movables were found: but whereas the saisie-arrêt was
effected against both principal and subsidiary debtor, the simple arrêt needed only be effected
against the third party or subsidiary debtor alone.
26 Of the saisie-arrêt, Pothier wrote—
“On peut définir la saisie-arrêt,
un acte judicaire fait par le ministère d’un huissier, par lequel
un créancier met sous la main de justice les créances qui
appartiennent à son débiteur, avec assignation aux
débiteurs de son débiteur, pour déclarer ce qu’ils
doivent, et être condamnés à en faire délivrance
à l’ arrêtant, jusqu’à
concurrence de ce que lui est dû et assignation au débiteur de l’arrêtant
pour consentir l’arrêt.
Ces assignations données au débiteur
arrêté, et débiteur pour le fait duquel se fait l’arrêt,
et qui est le créancier du débiteur, distinguent la saisie-arrêt
du simple arrêt.”
[The saisie-arrêt
can be defined as a judicial act effected by the ministry of a bailiff, by
which a [principal] creditor puts under the hand of justice the credits which
belong to his [principal] debtor, by summons to the [subsidiary] debtors of his
debtor, to declare that which they owe,
and are ordered to deliver such debts to the arresting [principal creditor] up
to the amount corresponding to
that which is due to him, and a summons to the [principal] debtor of the
arresting [principal] creditor to consent to the arrest.
These summons served on the [subsidiary] debtor arrested, and the [principal] debtor by reason
of whom the arrest is performed and who is the subsidiary creditor of the
subsidiary debtor, distinguish the saisie-arrêt
from the simple arrêt.]
27 In contrast to the saisie-arrêt just
described, the simple arrêt
therefore did not require the principal debtor to be served, but only the
subsidiary debtor:
“C’est un simple arrêt, lorsque le
créancier se contente de signifier au débiteur de son
débiteur qu’il a arrêté tout ce qu’il doit
à son débiteur, sans assignation pour faire la déclaration
de ce qu’il doit, en faire délivrance entre les mains des
créanciers opposants.
Cet acte
tend à dépouiller entièrement celui pour le fait duquel se
font les arrêts.”
[It is a simple arrêt
when the [principal] creditor signifies to the [subsidiary] debtor of his
[principal] debtor that he has arrested all he owes to the [principal] debtor,
without a summons, and thereby removing its availability from rival creditors.
This act tends to deprive entirely him for whose act of
the arrests are made.]
28 This last phrase “Cet acte tend à dépouiller entièrement celui pour
le fait duquel se font les arrêts” could be understood in a
couple of ways. “Celui pour le fait duquel”
could mean “that for the fact by which”. That would indicate that
Pothier considered the simple arrêt
to be of limited use. Alternatively, it could mean “him by the fact of
whom”, or even be rendered “by the act of whom” by relating “fait” to faire.
29 The better translation seems to be this
latter one, so that Pothier was writing as translated above to mean that the
simple arrêt deprived the
subsidiary debtor of the subject matter arrested. Although he could have more
simply referred to “le
débiteur” or somesuch instead, Pothier elsewhere refers to the
principal debtor as “lui pour le
fait duquel” the arrest is made. Further, Pothier
subsequently describes the simple arrêt
in more substantive detail. Effectively, it operated as an order to the subsidiary
debtor not to pay or perform his obligation to the principal creditor; by
preventing the subsidiary creditor/third party from doing so, it therefore
deprived the principal debtor of the benefit of the subsidiary debt or thing
arrested—
“Le simple arrêt est un acte judiciaire
par lequel un créancier, pour sa sûrété, met sous la
main de justice les choses appartenentes à son débiteur, pour l’empêcher
en disposer. Il est bien différent de la saisie-exécution et de
la saisie-arrêt; car l’exécution de fiat a l’effet de
vendre les meubles exécutés, et la saisie-arrêt aux fins de
faire vider, au débiteur arrêté, les mains en celles de l’arrêtant,
au lieu que le simple arrêt se fait seulement pour conserver les choses arrêtées,
et empêcher que le débiteur n’en dispose.”
[The simple arrêt
is a judicial act by which a creditor, for his protection, puts under the hand
of justice the things belonging to his debtor, to prevent him disposing of
them. It is very different from the saisie-exécution
and the saisie-arrêt; for the execution de fiat has the effect of selling the moveable executed, and
the saisie-arrêt the aim of
emptying the hands of the debtor arrested in favour of the arresting party, and
the simple arrêt is effected
only to preserve the things arrested, and preventing the debtor from disposing
of them.]
30 This simple arrêt was nonetheless effected by
judicial act and the court’s officers—
“On arrêt, ou des meubles corporels, en
les faisant arrêter par un sergent qui y établit un gardien, ou
des créances en significant au débiteur, par un sergent, un acte
par lequel il lui déclare qu’on arrête ce qu’il doit
et pourra devoir á un tel, avec defenses de lui payer.
L’exploit d’arrêt doit etre
revêtue des mêmes formalités que les autres exploits.
Il y a cette différence entre les
exécutions et les simples arrêts, qu’on ne peut
procéder aux exécutions que pour des créances liquides et
exigibles, pour lesquelles le créancier a un titre
éxécutoire, au lieu qu’on peut en plusieurs cas
procéder par voie de simple arrêt, sans être fondé
sur un titre éxécutoire, ou en vertue de la loi, ou en vertu d’une
permission du juge.”
[One [simply] arrests either corporeal movables, by
causing them to be arrested by a sergeant who appoints a custodian of them, or
credits by serving the debtor, by a sergeant, with an act by which the sergeant
declares to the debtor that that which he owes and could owe to such debtor is
arrested, and forbids payment to him.
This method of arrest is subject to the same formalities
as the other methods.
There is this difference between exécutions and simple arrêts,
that one can only proceed to exécutions
for liquidated and demandable debts, for which the [principal] creditor has
executory title, whereas one can in several cases proceed by means of a simple arrêt without it being founded on
an executory title, or by virtue of the law, or with the permission of the
judge.]
31 From this, it seems that the simple arrêt was simply a conservatory
method, distinctly to the saisie-arrêt,
which was executory, and indeed, Pothier subsequently so describes it. He notes that while an
execution required a prior “commandement”
to the debtor requiring payment, this was not a necessary preliminary to a
simple arrêt which aimed only
to conserve, rather than deprive, as did an execution. Subsequently, however,
the simple arrêt could be
converted into an execution on obtaining judgment for payment. It did not give the
principal, arresting creditor any rights as such in the movables arrested. Rather,
it caused them to be removed from the reach of the principal debtor. In the
case of corporeal movables, this was done by sequestrating them into the keep
of a custodian. In the case of incorporeal immovables, this was done by the
sergeant arresting them and forbidding the subsidiary debtor from paying out to
the principal debtor. Effectively, it seems, the sergeant took walking
possession of them.
32 Pothier writes that simple arrêt tended to deprive the
principal debtor whose property was arrested. It appears that it did tend to
deprive him of the benefit of his property in the subsidiary debtor’s
hands, pro tem at least, as that
subsidiary debtor could not render that property to him while it was in custody
or under seizure by the sergeant. The saisie-arrêt
also deprived the principal debtor of the benefit of the property in the hands
of the subsidiary debtor. However, in the case of the saisie-arrêt this does appear more positively to be because
not only was the subsidiary debtor prevented from rendering the property to the
principal debtor, but that property was rendered instead to the principal
creditor. In that case, the deprivation is permanent.
33 Returning to the point made above
regarding the terms “saisie-exécution”
and “saisie-arrêt”,
this passage is also potentially interesting linguistically as Pothier
distinguishes the simple arrêt
from “exécutions”.
When using the term “exécutions”,
it does not appear that he is limiting the term to mean only saisie-exécutions of the
principal debtor’s corporeal movables. From the reference to executory
title, which was a necessary pre-requisite to both saisies-exécutions and saisies-arrêts, it appears that he meant “exécutions” to refer to
both these methods. Both are methods of execution, which distinguished them
from the simple arrêt, since
both culminated in the conversion of the initial seizure into the payment of
the principal creditor in satisfaction of the principal debt. On the other
hand, the simple arrêt had no
such culmination: it was simply the prevention of the debtor’s receiving
the thing arrested, presumably so that it was preserved for the time being so
that the principal creditor knew he had preserved some
means of ensuring his principal debt would be satisfied once he had obtained
judgment (and hence executory title).
34 This interpretation of “exécution” in this passage
is fortified by Pothier’s observations on the Parisian saisie-gagerie. This involved the seizure by the sergeant of movable
property in cases of non-payment of rent, which required a subsequent order of
the court before such movables could be sold. He therefore considered it to be “more
by way of arrest than execution” because it gave the
seizing party no rights of itself but required a second, further order. Similarly the simple arrêt was simply an arrest, rather
than execution, and did not therefore require special, executory title as a
pre-requisite. It is also noteworthy that despite its Parisian name of “saisie-gagerie”, in Orléans
Pothier emphasised not that it was more by way of seizure (saisie) than execution, but by way of arrest (arrêt) rather than execution.
35 By contrast to the non-executory simple arrêt, the saisie-arrêt was available to a principal creditor with
executory title—
“Le créancier de quelqu’un qui a
obtenu contre lui un jugement de condamnation d’une somme certaine et
liquide qui a passé en force de chose jugée, ou qui est de nature
á s’exécuter par provision, ou celui qui est
créancier en vertue de quelque autre acte exécutoire, peut contraindre
son débiteur au paiement de tous ses biens, de quelque espèce qu’ils
soient, et par conséquent il peut, non seulement prendre par
exécutions ses meubles, mais il peut aussi faire saisir et arrêter
les créances de son débiteur.”
[The [principal] creditor of someone who has obtained
against him a judgment ordering him to pay a certain and liquid sum which has
passed into force of chose jugée
or is otherwise provided to be executory, or he who is a creditor by virtue of
some other executory act, can constrain his [principal] debtor to payment of
all his goods, of whatever type they may be, and so he may not only take by way
of execution his movables, but he may also cause to be seized and arrested the
[subsidiary] credits of his [principal] debtor.]
36 Notably, Pothier here describes its
purpose as being to constrain his debtor to payment. Of itself, “constraint”
could refer to an in personam
compulsion requiring payment. It is clear, however, from the words following
that the reference constrains the debtor to make payment of his goods: he is
constrained to use those goods to effect the payment due. Pothier is here
making the point that such goods can be corporeal or incorporeal. The rendering
of such goods in discharge of the debt is the extent to which the procedure is
executory, following from the requirement for executory title.
37 Further, in this passage Pothier
maintains a distinction between the saisie-arrêt
of incorporeal property and the “exécution”
of “meubles” (the
execution of movables). In this passage, the “movables” referred to
are clearly tangible, corporeal goods. Although, as discussed above, the saisie-arrêt can be seen as
executory in that it resulted in payment whereas the simple arrêt did not, this suggests it
was less executory than the seizure of goods and their sale under a saisie-exécution.
Saisie-arrêt continued: procedure and effect
38 To obtain a saisie-arrêt, the principal creditor caused the sergeant to
arrest the movable in the hands of the subsidiary debtor, similar to the simple
arrêt. Signally different from
the simple arrêt, however, the saisie-arrêt was also served on
the principal debtor—
“Le sergent, à la requête du
créancier arrêtant, déclare au débiteur arrêté,
par un acte qui lui est signifié à sa personne ou à
domicile, qu’il saisit, arrête, et met sous la main de justice,
tout ce qu’il peut devoir et devra par la suite à celui pour le
fait duquel l’ arrêt se fait; pour sureté de cette somme due
à l’arrêtant, l’huissier lui fait défense de
payer à d’autres, l’assigne devant le juge du
débiteur, pour le fait duquel l’ arrêt est fait, pour faire
la déclaration de ce qu’il doit, et pour en faire le paiement
à l’ arrêtant, jusqu’à concurrence de ce que
lui est dû.
Le créancier arrêtant dénonce
ensuite, par le ministère du sergent, cette saisie arrêt à
son débiteur, et l’assigne pour consentir l’ arrêt, et
voir ordonner la délivrance des sommes arrêtées entre les
mains de l’arrêtant.
Cette assignation forme une instance qui se
poursuit comme les autres.”
[The sergeant, at the request of the arresting
[principal] creditor, declares to the arrested [subsidiary] debtor, by an order
which is notified to his person or at his address, that he
seizes, arrests, and puts in the hand of justice, all that he may owe and will
owe subsequently to he by whose act the arrest is effected; to secure that sum
due to the arresting [principal] creditor, the bailiff forbids him from paying
it to others, summons him before the judge of the [principal] debtor, to
declare what he owes, and to make payment of it to the [principal] arresting
creditor, corresponding up to the sum which is due to him.
The arresting [principal] creditor then announces, by the
ministry of the sergeant, this saisie-arrêt
to his [principal] debtor, and summons him to consent to the arrest and see
ordered the delivery of the sums arrested into the hands of the arresting
[principal] creditor.
This summons forms a proceeding pursued as any other.]
39 The requirement to serve on the principal
debtor is justified as required “to summon him to consent”. It may
be presumed that his actual consent was not a necessary pre-requisite to the saisie-arrêt, which was equally
presumably only necessary because of his recalcitrance to pay. The consent must
therefore have been a deemed consent: in effect, unless the principal debtor
could raise valid grounds against the ordering of the saisie-arrêt the court would order it, his consent therefore
being inferred by his failure to raise a valid ground of objection. Nonetheless, even this
forced and fictitious consent must have had some purpose, as it was not a
requirement of the non-executory simple arrêt.
It is therefore most likely that the consent was required because the saisie-arrêt effected a transfer
of rights, and so supports the view that the saisie-arrêt was executory and had proprietary effect.
40 As to the effect of the saisie-arrêt, Pothier wrote—
“L’effet de la saisie-arrêt est
que, dès qu’elle est faite, la créance arrêtée
étant mise sous la main de justice, celui à qui elle appartient,
et pour le fait duquel elle est arrêtée, n’en peut plus
disposer; il ne peut donc pas la transporter au préjudice du droit de l’arrêtant,
il ne peut la recevoir, et l’arrêté qui, au préjudice
de l’arrêt, paieroit à son créancier, seroit à
la vérité bien libéré envers son créancier,
mais il ne le seroit pas envers l’arrêtant, qui peut le faire
condamner à lui faire déliverance de la somme qu’il devoir
lors de l’arrêt, sans avoir égard au paiement qu’il a
fait depuis, sauf son recours en répétition, contre
son créancier, à qui il a mal-à-propos payé depuis
l’arrêt.
Par la même raison, le créancier,
pour le fait duquel l’arrêt est fait, ne peut pas, au
préjudice des arrêtants, décharge son débiteur arrêté
de son obligation; d’où il suit que, si un créancier a arrêté
les loyers échus et a écheoir, sur les locataires de son
débiteur, ce débiteur ne peut pas au préjudice de l’arrêtant,
annuler le bail pour l’avenir, par une convention entre lui et son
débiteur, car ce seroit décharger les locataires de leurs
obligations pour les années à écheoir, et ces
années étant arrêtées, il ne peut, au
préjudice de l’arrêtant en disposer.
[The effect of the saisie-arrêt
is that, from its being effected, the credit arrested being put under the hand
of justice, he to whom it belongs, and by the fact of whom it is arrested, can
no longer dispose of it; he therefore cannot transfer it to the prejudice to
the right of the arresting party, it may not receive it, and the arrested
party, who, to the prejudice of the arrest, would pay it to his creditor, would
be in truth well discharged as regards his creditor, but he would not be towards
the arresting party, who can have him ordered to deliver to him the sum he owes
pursuant to the arrest, without regard to the payment he has made since, except
his recourse, against his creditor, to whom he has wrongly paid since the
arrest.
For the same reasons, the creditor, for whose act the
arrest is made, cannot, to the prejudice of the arresting parties, discharge
his arrested debtor from his obligation; from which it follows that, if a
creditor has arrested rents fallen due and to fall due, against the tenants of
his debtor, this debtor may not to the prejudice of the arresting party, cancel
the lease for the future, by a contract between him and his debtor, because
this would discharge his tenants from their obligations for the years to fall due,
and these years being arrested, he cannot, to the prejudice of the arresting
principal creditor, dispose of them.]
41 Pothier also distinguished the effect of
the saisie-arrêt from a
novation. He wrote that to effect a novation substituting new obligations for
old, an expressly declared intention to this effect was required: for example,
an acceptance of payment by Jacques, in place of the original debtor Pierre,
which the creditor records himself as accepting as such. Having given this last
example to make the point generally in respect of novations, he repeated it
expressly in respect of a saisie-arrêt—
“Mais, a moins qu’il ne paroisse
évidemment que le créancier a eu intention de faire novation, la
novation se présume pas. C’est pourquoi si, dans la même
espèce, ayant fait une saisie et arrêt sur Jacques, pour le fait
de Pierre mon débiteur, Jacques s’est obligé envers moi
pûrement et simplement, par un acte, à me payer la somme de mille
livres qui m’est due par Pierre, et pour laquelle j’ai fait arrêt,
sans qu’il étoit ajouter, comme dans l’espèce
ci-dessus, que j’ai bien voulu, pour faire plaisir à Pierre, me
contenter de l’obligation de Jacques, ou quelque autre chose semblable,
qui feroit connoître évidemment que j’ai voulu
décharger Pierre je ne serai point censé avoir fait de novation,
et Jacques sera censé avoir accédé a l’obligation de
Pierre, qui demeure mon obligé.”
[But, at least if it does not seem obvious that the
creditor had the intention to effect a novation, the novation is not presumed. That
is why if, in the same example, having effected a saisie-arrêt against Jacques, by reason of the act of Pierre
my debtor, Jacques is obliged towards me purely and simply, by order, to pay to
me the sum of one thousand pounds which is due to me from Pierre, and for which
I have arrested, without my having added, as in the example above, that I
really wanted, to please Pierre, to content myself with Jacques’
obligation, or some other such thing, which would make clearly known that I
wanted to discharge Pierre I would not be taken to have novated, and Jacques
will be deemed to have acceded to Pierre’s obligation, who remains
obliged to me.]
42 So, in ordinary course, the saisie-arrêt was not of itself a
novation. As a result, the principal debtor remained bound to the principal
creditor, notwithstanding the saisie-arrêt.
The saisie-arrêt only caused
the discharge of the principal debtor by the subsidiary debtor’s paying
the principal creditor.
43 The final aspect of the saisie-arrêt as described by
Pothier which indicates how he considered it to work concerns the rules of
priority applicable where the principal debtor has assigned
the subsidiary debt. This is considered below
(at paras 61–62).
44 From the above, two observations can be
made so far regarding the executory effect of the saisie-exécution and the saisie-arrêt
in distinction to the simple arrêt.
First, the saisie-arrêt was
different from the simple arrêt
in that the former had executory effect, the latter was merely conservatory. Pothier
plainly described these differing effects when describing the simple arrêt. It is further reflected in
the saisie-arrêt’s
requiring executory title as a pre-requisite. The saisie-arrêt was executory because it bit against rights to
convert them into paying the subsidiary creditor what he was owed.
45 Secondly, there are nonetheless
linguistic grounds for qualifying the precise executory effect of the saisie-arrêt as being different from
that of the saisie-exécution. This
was potentially the case because of their different subject matter. The saisie-exécution was effected in
respect of corporeal moveables which could be removed and then sold. The
proceeds of sale were paid to the principal creditor. In that case, the
execution against those goods was direct, in the sense that it consisted of
taking the goods of another, the principal debtor, and liquidating them into
funds to pay to the principal creditor in discharge of the debt owed to him by
that principal debtor. Although this sale could be seen as a separate action,
it was nonetheless direct in that it was composite in the order which in terms
ordered the seizure and execution of the goods (and hence it was “execution de fiat” in the passage
noted at para 29 above). The saisie-arrêt
was executory in that it converted the rights of others into payment to the
principal creditor, but it was a step removed from the direct execution of the saisie-exécution. In the case of
the saisie-arrêt, the execution
bit against the right of the principal debtor and converted it into a right to
the creditor. However, that conversion of the right only resulted in payment to
the principal creditor when the subsidiary debtor paid the sums owed pursuant
to the subsidiary debt. Prior to that, the arresting, principal creditor became
entitled to that payment, but the saisie-arrêt
did not directly convert the subsidiary debtor’s funds into payment to
the principal creditor. This is self-evident, and appears also from Pothier’s
account of obligations which is considered further below (at para 49 et seq.).
46 Overall, from Pothier’s account,
the saisie-arrêt therefore had
the following characteristics—
(a) The
arrest was effected by the sergeant notifying the subsidiary debtor that he “seizes,
arrests, and puts under the hand of justice all that he can owe and may owe
afterwards” to the principal creditor.
(b) The effect of the arrest was that
the principal debtor could not transfer, affect or discharge the credit
arrested to the prejudice of the principal creditor following the arrest.
(c) The subsidiary debt remained extant
as between the subsidiary and principal debtor, but became additionally owed to
the principal creditor. The subsidiary debtor could only be discharged of the
subsidiary debt by paying the sum owed to the principal creditor.
(d) The principal debt also remained
extant as between principal debtor and principal creditor, notwithstanding the
effect of the arrest.
(e) The principal debtor was summoned
to consent to that arrest.
47 Of these characteristics, the following
observations can be made at this stage—
(a) Arguably, to the extent that the saisie-arrêt captured future
property it may be more likely to have operated in personam. This is because it seems unlikely that an obligation in rem could be created when there is
no res in existence for it to attach
to. Against that, the obligation in rem
could be created contingently, taking effect when the relevant res, the obligation, comes into being.
(b) The effect of the saisie-arrêt was prevention and
direction. It prevented the subsidiary debtor paying the principal debtor, and
directed him to pay the principal creditor instead. The sergeant so enjoined
the subsidiary debtor when he effected the arrest. Pothier repeats this as
being the effect of the arrest when the relevant obligation is put in the hands
of justice. On the one hand, the language of prevention and direction could be
said to support the order’s being in
personam. On the other hand, it can equally validly describe the consequences
of the transfer of a right in rem.
(c) So far, however, the continued
existence of the subsidiary debt as between the subsidiary and principal debtor
suggests that there was not a transfer of it, so suggesting further that the
arrest takes effect in personam.
(d) Equally, however, the particular
reason why the principal debtor had to be joined to consent to the arrest
remains unclear. Whether in personam or in rem, it
could be presumed that the court’s coercive power would be sufficient to
override the need for consent.
48 To develop these observations and find
answers to the questions they raise, it is necessary to read further into
Pothier’s works. In particular, since the arrest effects obligations, his
account of these is considered next below.
Pothier’s analysis of obligations
The effect of obligations to give or pay
something
49 Pothier divides obligations into
obligations to give (à donner)
and obligations to do (à faire).
Plainly, a debt was an obligation to give money in the sum indebted, and was
thus an obligation to give. An obligation to give required the debtor to give
the thing at a convenient time and place to the creditor (or to someone who has
the power or quality to receive it on the creditor’s behalf; correspondingly, it gave
the creditor the right to pursue the debtor with legal proceedings to obtain
the rendering of that which was contained in the obligation.
“Le droit que cette obligation donne au
créancier de poursuivre le paiement de la chose que le débiteur s’est
obligé de lui donner, n’est pas de droit qu’elle lui donne
dans cette chose, jus in re, ce n’est qu’un droit contre la
personne du débiteur pour le faire condamnera donner cette chose; jus ad
rem.”
[The right which this obligation gives to the creditor,
to pursue the rendering of the thing which the debtor is obliged to give him,
is not a right that he [the debtor] gives him in that thing, jus in re, it is only a right against
the person of the debtor by which he can be ordered to give that thing, jus ad rem.]
50 The thing the debtor was obliged to give
continued to belong to him, and the creditor could only become proprietor of it
by actual or implied delivery (absent which, he had to
sue for that delivery to be made).
51 It follows that the
debtor made payment by giving and transferring that which he was obliged
to give.
Equally, it follows that the effect of such payment was to extinguish the
obligation and so discharge the debtor. Pothier notes that
payment of an obligation could extinguish several obligations where the thing
given in discharge of one obligation was the same thing which was the object of
another obligation. Further, this rule was
effective even as between different creditors. Equally, payment of one obligation
could extinguish the obligations of other debtors which had the same object as
the obligation paid.
Person making payment: consent of proprietor of
thing transferred
52 To count as valid payment, the giving and
transfer of
the thing paid over had to be by the owner of that thing or with his consent,
as the consent of the owner was an essential pre-requisite to the transmission
of property in the thing paid. This may be thought to go
towards explaining why the presence of the principal debtor in court was
necessary for it to order a saisie-arrêt.
However, it was not necessary for the debtor or even his appointee to effect
the payment: valid payment such to discharge the obligation could be made by
anyone, even without the power or authorisation of the debtor, provided the
person making payment was capable of transferring property in the thing paid
and made the payment in the name of the debtor, even without that debtor’s
consent.
So, in the case of the saisie-arrêt,
the summoned principal debtor’s consent was not a pre-requisite for the
subsidiary debtor to make a payment to the principal creditor which had the
effect of discharging both the principal and subsidiary debts. It is the
subsidiary debtor’s consent to a transfer of the thing he pays which was
necessary for that: he can do so against the will of the principal debtor,
provided he does it in the principal debtor’s name. That only leaves the
principal debtor’s title to the subsidiary debt itself in respect of
which his consent might have been required.
To
whom payment made: creditor or his agents including the sergeant
53 For it validly to constitute payment in
discharge of an obligation, the payment had to be made to the creditor, or to
someone who had his power or the quality to receive (in which latter case the
payment was considered to be made to the creditor himself). Notably, Pothier expressly considers the executing sergeant (and hence
the sergeant carrying out a saisie-arrêt
as discussed above) to have had the
power of the creditor to receive—
“Le titre exécutoire dont est porteur
le sergent qui va de la part du créancier pour le mettre à
exécution, équipolle à un pouvoir de recevoir la dette
contenue en ce titre: et la quittance qu’il donne au débiteur est
aussi valable que si elle eut été donnée par le
créancier.”
[The executory title of which the sergeant is bearer
which comes from the part of the creditor to put it into execution, equates to
a power to receive the debt contained in that title; and the discharge he gives
to the debtor is as valid as if it were given by the creditor.]
54 In his account of obligations, Pothier
again specifically noted that payment by an arrested, subsidiary debtor to his
creditor, the principal debtor, was a valid payment of his subsidiary debt to
that principal debtor vis-à-vis that
principal debtor. However, it was invalid in respect of the arresting creditors
who could still enforce the subsidiary-debt subject to the saisie-arrêt and thereby receive payment of that debt.
“Le paiement que fait le débiteur à
son créancier au préjudice d’une saisie-arrêt faite
entre ses mains par les créanciers de son créancier, est bien
valable vis-à-vis de son créancier: mais il n’est pas
valable vis-à-vis des créanciers arrêtants, qui peuvent
obliger ce débiteur a payer une seconde fois, s’il est jugé
que les arrêts soient valables; sauf son recours contre son
créancier, a qui il a paye au préjudice de l’arrêt
. . .”
[The payment that a [subsidiary] debtor makes to his
creditor to the prejudice of a saisie-arrêt
effected in his hands by the [principal] creditors of his creditor is certainly
valid vis-à-vis his creditor,
but it is not valid vis-à-vis the
arresting [principal] creditors, who can oblige this [subsidiary] debtor to pay
a second time, if it is adjudged that the arrests are
valid, save for his recourse against his, whom he has paid to the prejudice of
the arrest . . .]
55 So far, therefore, Pothier’s
account of obligations and payment tells us four things about the saisie-arrêt—
(a) First, payment to the arresting sergeant
was good payment to the arresting, principal creditor.
(b) Second, that payment discharged
both the principal debtor’s debt and the subsidiary debtor’s debt
towards him, pro tanto.
(c) Third, the principal debtor’s
consent was not required for this dual, pro
tanto discharge to be effective.
(d) Fourth, payment by the subsidiary
debtor to the principal debtor following an arrest did not have this dual
effect and was only good payment as regards the principal debtor, the
subsidiary debtor remaining liable to the principal creditor to pay the sum
arrested.
56 The second and third of these points flow
from the general nature of obligations and the principle that payment of one
obligation can constitute payment of more than one debt. The first may well
seem self-evident from the purpose of the arrest, as may the fourth. However,
the fourth point means that the subsidiary debt remained an obligation in force
as between the subsidiary debtor and the principal debtor, notwithstanding the saisie-arrêt, with the result that
the principal debtor could give good discharge of it, as between themselves. The
saisie-arrêt, however, imposed
a superior and parallel obligation to pay the arresting principal creditor:
superior in that only he could give good discharge of the obligation in toto, as against both him and the
principal debtor.
57 This effect of the saisie-arrêt suggests there was some other reason why the
subsidiary debtor had to pay. Given that the principal debtor’s consent
was required (even fictitiously) to an apparently coercive process, it is
possible that some proprietary right in the subsidiary debt was transferred. Such
a transfer does not appear to be absolute, as the principal debtor was still
owed the debt. However, this factor is nonetheless consistent with the debt’s
having been assigned in some way according to Pothier’s account of
assignments, which is considered next below.
Pothier’s account of assignment: an agency to receive
58 According to Pothier, the subtlety of the
law meant that a credit, the right to receive an obligation, was not capable of
transfer or sale to another person because it was personal to the debtor. Because
the debtor was obliged to a certain person, the creditor, he could not be
obliged to another, third person. However, circumventing
itself with self-same subtlety, the law provided an alternative means by which
the creditor could transfer his obligation to a third party. The creditor could
appoint the third party his agent to enforce his rights against the debtor. In order to effect an
absolute transfer, the agency would be on terms that the assignee-agent enforce
the debt against the debtor at his own risk, such that if the debtor were
insolvent, the assignee-agent had no recourse against the assignor creditor. In
the case of an outright assignment, such an agency was a “transport-cession”, in reality a
transfer of the assignee-creditor’s rights absolutely, albeit disguised
as an agency.
Alternatively, there could also be a “transport
de simple délégation” where a debtor assigned the right
to collect his debt to his creditor. So, where I am the principal debtor and
owe money to my principal creditor, I can pay him by transferring my subsidiary
debt to him—
“. . . en lui donnant pouvoir d’exiger
de lui, en mon nom, ce qu’il me doit, pour être par lui reçu
en déduction de ce que je lui dois. Par cette délegation, je
demeure toujours propriéteur de a créance par moi
déléguée, jusqu’à qu’elle soit
éteinte par le paiement . . .”
[. . . by giving him power to demand of him, in
my name, that which he owes me, to be received by him in reduction of that
which I owe him. By this delegation, I always remain proprietor of the credit
delegated by me, until it is extinguished by payment . . .]
59 In order to effect a transfer of a
credit, notice had to be given to the subsidiary debtor—
“tant que le cessionnaire n’a point
fait signifier au débiteur le transport qui lui a été
fait, le cédant n’est point dessaisi de la créance
qu’il a transportée . . . Un simple transport ne saisit
point, et faut signifier le transport à la partie”.
[to the extent that the assignee has not caused to be
notified to the debtor the transfer which has been made to him, the assignor is
not disseised of the credit which he has transferred . . . A simple
transfer does not seise, and it is necessary to notify the transfer to the
party.]
60 When giving this above description in his
treatise on sale, Pothier goes on to compare the notification to delivery of a
corporeal movable. He also gives this
rationale behind it in his treatise on civil procedure when describing the saisie-arrêt. The notification takes
the place of physical delivery which is required to convey property in a
corporeal moveable.
61 Three things followed from the
requirement to notify in order to perfect an assignment—
(a) First, if it were not done, it
followed that payment by the debtor to the assignor prior to that notification
would constitute valid payment to the assignor who was his creditor;
correspondingly, the assignee would have no action against the debtor.
(b) Secondly, if there were more than
one assignee of the same thing, their rights to that thing ranked in priority
according to the timing of their notifications (as distinct from the underlying
assignment).
(c) Thirdly, and significantly, the
relevant thing remained liable to execution by the assignor’s creditors
until notification were given of its assignment—
“les créanciers peuvent saisir et arrêter
ce qui est dû par le débiteur dont la dette a été
cédé, et ils sont préférées au cessionnaire”.
[The
creditors can seize and arrest that which is due from the debtor of whom the
debt has been assigned, and they will be preferred to the assignee.]
62 In other words, in
terms of ranking priorities, a saisie-arrêt
was qualitatively equivalent to the notification of an assignment, priority
determined only by sequence. This would follow if the saisie-arrêt is taken to be a transfer of the principal
debtor’s rights to the relevant movable, in which case it is
qualitatively equivalent to an assignment. From this, it further follows that
the saisie-arrêt effected a
transfer in rem, being equivalent to
both the transfer to the assignee and its notification to the debtor. It would
therefore be equivalent to transfer and delivery of the moveable thing.
Assignor’s
entitlement despite assignment
63 Notwithstanding the view that
notification was equivalent to delivery of title to the movable, indeed in apparent
contradiction to it, even after the notification the assignor remained
proprietor of the obligation to him.
64 In this respect, the transfer was
distinct from a novation, which resulted in the substitution of the old debt
personal to the principal debtor and subsidiary creditor, by a new one from and
personal to the subsidiary debtor towards the principal creditor. This is because the debt
purportedly transferred by assignment remained the old debt due to the
assignor, rather than substituted with a new debt. As this was the case with
both the purportedly absolute transport-cession,
then a fortiori it must have been with
the more openly dual transport de simple
délégation.
Assignment of future rights
65 A final aspect of assignment observed by
Pothier was the position regarding attempts to assign future debts. This may obviously have
an important bearing on what is capable of being arrested at the time of the
arrest. If the arrest acts in personam,
it may be thought more likely that it is able to capture property not yet in
existence. This does not necessarily follow, however, since Pothier considers
that where an assignment of future property is otherwise perfect, it takes
effect when there is property in existence to feed the formalities previously
completed. However, the examples he gives of such future property are notable
in that they all refer to instalments falling due in the future as the result
of relationships apparently already in existence. For example, a lease, on foot
now and connoting an ongoing relationship which will
continue into the future and give rise to the payment of rent in the future. Conceptually,
such rent will fall due, by reason of
the continuing lease. In this passage, Pothier does not appear to comprehend
property which conceptually might
fall due, such as a rent due under a lease which the owner of the land may (but
may not) grant. Presumably, however, the same principle is capable of applying:
the assignee would only come into possession when there is property in
existence which is capable of being possessed.
66 Following from the above, the assignment
was not effective until the future date, and so the assignee competed with
arresting creditors. The nature of this competition was “au marc la livre”, a French
proverbial expression meaning “pro
rata”. Until future property became available, in Pothier’s
view, the rights of the assignee therefore equated to those of an arresting
creditor. As Pothier considered that there could be no possession of future
interests, this comparison implies that an arrest was something different from
a right of possession.
Conclusion:
l’effet de la saisie-arrêt Pothière
67 Tying
together Pothier’s accounts of the saisie-exécution,
saisie-arrêt and simple arrêt, obligations and assignment
gives a full picture of the saisie-arrêt’s
particular operation. Qualitatively, it operated equivalently to an assignment
of the debt in question. The starting point is that a subsidiary debtor could
pay to the principal creditor the sum owed by him under the subsidiary debt
without the compulsion of a saisie-arrêt
or other court order. Provided he did so in the name of the debtor, his payment
would be good to discharge both his subsidiary debt to the principal debtor,
and his debt to the principal creditor (pro
tanto). It begs the question, why was it necessary to effect a saisie-arrêt at all?
68 The obvious answers to that point are
that: first, the subsidiary debtor had to be made aware of the principal debt;
secondly, he may not have been inclined to pay directly to the principal
creditor. The court order thus compelled him to do so. However, as such payment
in dual discharge could be made without the principal debtor’s consent,
it could be made without the principal debtor’s being a party to court
proceedings (even if it were practical and sensible to inform him of them). So,
why was the principal debtor’s presence required in court to consent to
the saisie-arrêt?
69 The requirement for consent suggests a
transfer, as a proprietor’s consent is required to effect a transfer. It
cannot be a transfer of the money which the subsidiary debtor will pay over to
the principal creditor, for that is the subsidiary debtor’s, not the
principal debtor’s. This was so even taking into account the subsidiary
debt, which entitled the principal debtor only to payment
from the subsidiary creditor, ie an
entitlement to payment or delivery of the thing owed. It was not entitlement to
the thing owed: a right ad rem, not in rem.
70 The only transfer to which the consent
can be relevant is therefore a transfer of the principal debtor’s rights
in respect of the subsidiary debt. The effect and consequences of the saisie-arrêt as such mirror
exactly the effect and consequences of an assignment (and Pothier’s
description of assignments summarised above frequently assumes that the
assignor is debtor to the assignee). Their common characteristics are that—
(a) Both gave the assignee/arresting,
principal creditor the right to be paid by the subsidiary debtor.
(b) Both constituted the assignee/principal
creditor the assignor/principal debtor’s agent to receive payment from the
subsidiary debtor.
(c) Neither extinguished the subsidiary
debt as between the assignee/principal debtor and the subsidiary debtor. This
could therefore be extinguished as between the assignor/principal debtor and
subsidiary debtor alone by payment by the subsidiary debtor. However, such
payment was not effective as regards the principal creditor/assignee who
remained entitled to payment from the subsidiary debtor.
71 The principal substantive difference
between assignment and the saisie-arrêt
is that assignment required notification, the arrêt did not. However, the arrest was effected by the
sergeant attending and serving the subsidiary debtor. Since by that act the
subsidiary debtor was made aware of his duty to pay the principal creditor (via
the sergeant) instead of the principal debtor, he was thus notified of any
transfer of rights.
72 Further, it is here that the linguistic
difference between “saisie”,
“exécution”, “arrêt”, “saisie-exécution” and “saisie-arrêt” may apply. As
noted above, both the saisie-exécution
and the saisie-arrêt
constituted “exécution”,
in that both compelled the property of the principal debtor’s being used
to effect payment of the principal debt. The saisie-exécution was more direct in this respect: the
sergeant seized the goods, which were then sold and the proceeds were credited
to the principal creditor. Hence the name: there was a seizure and an
execution.
73 The saisie-arrêt
was less direct: the sergeant seized and arrested the subsidiary debt. However,
without more, there was no satisfaction to the principal creditor who had to
wait until payment by the subsidiary debtor. Nonetheless, it was more effective
than the non-executory, simple arrêt which seized goods, including incorporeal ones, only in
the sense of sequestrating them beyond reach. The non-executory simple arrêt comprised only a simple
arrest to take custody of the thing, to put it to one side. The executory saisie-arrêt was more emphatically
a seizure and an arrest. The difference between the “saisie’ and “arrêt”
within a saisie-arrêt may therefore
be that the “arrêt”
placed the movable beyond reach (as in the simple arrêt), but the “saisie”
went further to seise the arresting, principal creditor with the thing
arrested. Thus also the “saisie”
under a saisie-exécution would
similarly seise the arresting creditor with sufficient possession and title to
the goods to execute them by sale. “Saisir”
in this sense could be rendered in English by both “seize” (as it generally has been above) but also “seise”, in the sense of putting
into possession. For instance, Pothier uses “saisir” when describing notification of an assignment as akin
to delivery: the notification is necessary because “un simple transport ne saisit point” [a simple transfer does
not seise].
This is further borne out by the impossibility of being seised of future
property, thus an assignment of such future property being effective only as an
arrest of it: “il n’est pas
possible . . . d’etre saisi de ce qui n’existe pas encore”
thus notification or acceptance of assignment of a future debt “n’équipolle . . . qu’à
un arrêt” [It is not possible . . . to be seised of
that which does not exist yet thus notification or acceptance of a future debt
equates only to an arrest].
74 The saisie-arrêt
thus equated to notification not simply because it informed the subsidiary
creditor, but it was equivalent to a (forced) delivery by the principal debtor
to the principal creditor. The result is that the principal creditor became
seised of and possessed the principal debtor’s title to the debt. It was
an arrest in that the sergeant took control of the thing, putting it under the
hand of justice, as he did in the case of the simple arrêt, and payment was to be
made by the subsidiary debtor to the sergeant as the principal creditor’s
agent to receive. It was also an arrest, rather than an execution, in that the
taking of the thing in this way did not of itself provide a means of realising
money but further performance by the subsidiary debtor in making payment was
necessary. However, when that payment was made to the sergeant it was received
on behalf of the principal creditor, who was vested with rights to receive that
payment up to the point where the principal debt was satisfied. So, the saisie-arrêt was a “seising
arrest”: the sergeant arrested the thing and took custody of it on behalf of the principal creditor and in so doing seised
that principal creditor with title to receive the thing obliged of the
subsidiary debtor pursuant to the subsidiary debt.
75 However, the saisie-arrêt was not a novation, so the principal debtor
remained liable to the principal creditor. It would presumably not have been a
contempt of court for him to pay the principal creditor himself, to discharge
the debt directly. If so, it would follow that the subsidiary debtor would be
freed or entitled to be freed from the saisie-arrêt
and the obligation to pay the subsidiary debt to the principal creditor. Of
course, if the principal debtor did not do so, the principal creditor stood in
his shoes vis-à-vis the
subsidiary debtor to whose performance he was entitled (and could enforce
according to the tenor of the subsidiary debt).
76 The sergeant’s taking possession by
saisie-arrêt would therefore
equate to its possession on terms entitling the principal creditor to enjoy
entitlement to the payment obliged by the subsidiary debt until he was paid. Given
the above similarities with an assignment, saisie-arrêt
therefore appears to have taken effect as an assignment defeasible on payment of
a sum equal to the principal debt. On this sum being reached, entitlement to
any further payment of the subsidiary debt reverts to the principal debtor. As
this follows should the subsidiary debtor’ pay up to that level, there
seems no reason against its operating should the principal debtor himself have
made that payment (or indeed, for that matter should a further, fourth party
have paid in his name).
77 To this extent, the saisie-arrêt appears not only to have operated as an
assignment, but also as a security, such as a charge. It therefore appears to
have taken effect as a charge in the same way that delivery of a corporeal
movable into the possession of another would: it is to achieve such possession
that the rules of assignment, to which arrest equated, developed. It would also
explain the difference between the saisie-arrêt
and the simple arrêt, both
linguistically and in terms of the requirement for the principal debtor’s
consent.
78 Finally, the question remains whether and
to what extent the saisie-arrêt
was effective against future debts. Such debts can be considered of two types: debts
which are payable in future under currently extant obligations, and debts which
will only exist under obligations which themselves will only come into being in
future. Pothier does not analyse this question in directly or in detail. However,
the indications are that the first category of extant debts, not yet payable
were arrestable, and the second of truly future debts were not. This would
accord more with Pothier’s apparent views when he considered attempts to
assign future debts. Although, conceptually, the assignment or saisie-arrêt could remain fallow
until that future time when property came into being
against which they could bite, Pothier’s examples only consider future
instances of an extant obligation or relationship.
79 This may be reflected in the language
used at the time of the different arrests. When the sergeant attended the
subsidiary debtor to effect a saisie-arrêt,
he arrested “tout c qu’il
peut devoir et devra.” In the Royal Court hearing of the FG Hemisphere case this was translated
as “all that he can owe and will owe in the course of time”. The Court of Appeal
accepted “all that he may owe” as a reasonable translation of the
first part, and recognised that “peut”
does not naturally attach to “devra”
in the second part. This seems correct. Pothier’s
original French clearly uses the present indicative of pouvoir (to be able) in the first part of this excerpt and the
future indicative of devoir (to owe)
in the second part. As the English “may owe” could still arguably
include things only owed in the future, a better translation might therefore be
“all that he presently may owe and will owe”. This contrasts with
the sergeant’s words when he attended to effect a simple arrêt against the subsidiary
debtor to arrest “tout ce qu’il
doit et pourra devoir” [all that he owes and may in future owe]. Here,
the present indicative of devoir is
used in the first part and the future indicative of pouvoir in the second. Although Pothier supplies no express reasons
for this difference in language, the reason may follow from the executory and
conservatory roles of the saisie-arrêt
and simple arrêt.
80 The executory saisie-arrêt was aimed at quantifying and getting in debts in
satisfaction of the principal debt, but as the Court of Appeal noted, was
effected before the true value of the debt might be known, hence the subsidiary
debtor’s being required to declare it. Therefore, it seised the
arresting creditor of the credits, albeit their value (and hence how much was
owed) may presently have been unknown. Conversely, the conservatory simple arrêt was less concerned at the
quantification of any debt, which could take place later, but merely to prevent
any dealing with the debt (whatever its value) to the prejudice of the
arresting, primary creditor while respective entitlements were argued over. It
therefore appears more concerned to arrest whatever was owed currently, or
which may in future be owed; and Pothier expressly notes the simple arrêt did not require the
subsidiary debtor to be summoned to declare the value of the subsidiary debt. It would make
more sense for the simple arrêt’s
in terrorem conservatory custody to
extend to unknown and unascertainable truly future debts which it did nothing
further to vest, than the saisie-arrêt’s
granting of possession in execution. The saisie-arrêt’s
execution is concerned to achieve payment now, the simple arrêt’s conservation with
the preservation of such means as may be available between now and the future
when the right to payment out of those means may be established.
Norman and Jersey custom
81 As noted above, the relevance of
considering Pothier’s description of Orléans’ practice as a
guide arises from there being a paucity of detail regarding the arrêt entre mains in the coutumiers, related writings and
generally in Jersey law. Nonetheless, what
little there is supports the Orléans procedure as analysed above and
also the English procedure as explained in Eram
as being suitable analogues.
82 Chapter 6 of the Ancien Coutumier describes “Justicement” or distraint, being the means by which a person
can be constrained. The chapter is not exclusively concerned with disobedience
to judicial orders or obtaining satisfaction of a judgment. It gives a brief
description of the various circumstances in which differing distraints against
land, movables and the person were available in feudal Normandy, and does not describe their
respective operation in great detail. Nonetheless, Poingdestre considered this
chapter to be “the most excellent and universal there may be in all the coutumier”. His point was that to be
effective, a court must be able to back its decisions with coercive orders. From
this springs the jurisdiction to order execution including saisies, arrêts and
“putting in the hands of justice”. In essence, Poingdestre was
stating that the jurisdiction to make such orders sprang from the inherent
jurisdiction of the court, they being necessary in order to enforce the court’s
decisions.
83 Routier describes Saisies et Arrêts
in nominibus debitorum as—
“saisie & arrest que le créancier
fait sur les deniers dûs à son débiteur, mais comme tout
arrêt équipole à la saisie & exécution, il ne
peut être fait qu’en vertu d’un titre en bonne forme ou piece
exécutoire, ou du moins sans Mandement de Justice”.
[Saisie
and arrest which the [principal] creditor effects against monies due to his
[principal] debtor, but as all arrests equate to saisie-exécution, it can only be done by virtue of executory
title, or at least with an order of justice]
84 He then goes on to describe two types: the
“simple” effected by the
sergeant on the basis of executory documents without summons; and the “judiciaire” [judicial] in respect
of sums in the hands of a subsidiary debtor. This latter judicial saisie and arrest summoned the
subsidiary creditor to confirm the amount owed to the principal debtor. As noted by the Court of
Appeal, the saisie and arrest judiciaire lasted for 30 years, during
which time the subsidiary debtor was forbidden from making payment to anyone
other than the principal creditor.
85 Although Routier’s description of
the saisie and arrest judiciaire is brief, the similarity of
his language and the characteristics he describes to Pothier’s saisie-arrêt seem to justify the court’s
finding that they described the same or very closely equivalent procedures. Certainly, Pothier’s
and Routier’s procedures cannot be said to be obviously distinct from one
another.
Assignment, possession and security
86 That said, one apparent point for
potential difference is that while Routier observed (unsurprisingly) that
competing arresting principal creditors ranked in priority chronologically, in
Normandy the relevant chronology was their debts (and so apparently not their
arrests).
87 Despite this statement of Routier’s,
there is Jersey authority that arrêt entre mains does act as a
charge to give priority. According to Le Gros, an unsecured creditor who
obtains an arrêt confirmé thereby obtains priority
over other, unsecured creditors because the arrêt
confirmé hypotecs all the
goods arrested in favour of the creditor. To this can be added the
requirement that to be effective, a hypotec of movables requires possession. Although there is no
analysis beyond these bare statements, to this extent, an the arrêt entre mains can be seen to
operate consistently with the analysis of Pothier’s saisie-arrêt above, as the granting of a
charge by entering possession akin to an assignee’s entering possession
of a chose in action by giving notification of the assignment.
Le Geyt and extent of order: current and future
debts?
88 Le Geyt’s account of the arrêt entre mains is principally
concerned with dismissing as fallacious the view that it was more injurious to
the reputation than the ordinary arrêt
of corporeal movables. It is in this context that he makes an observation that
the arrêt entre mains gave the
least assurance to the principal creditor. In FG Hemisphere, that was used to support a submission that the arrêt entre mains must therefore
be conservatory only. Rightly, the court rejected this submission. The statement is
incidental in the context and flow of Le Geyt’s account. As the Court of
Appeal observed, Le Geyt merely described the obvious points that the value of
the debt may not be apparent, and may even be subject to defences which the
subsidiary debtor could have raised against the principal debtor. However, Le
Geyt’s account then flows into a subsequent observation regarding the
impossibility of the Viscount’s knowing about all debts existing in the Island, such that—
“De sorte qu’on va présentement
exécuter tout de grand, sauf à faire doit sur la saisie. On
cède au torrent jusqu’à ce qu’il y soit autrement
pourveu.”
[Therefore, nowadays one is going to execute at large,
except to debit a saisie. One yields
to the torrent up to that which may otherwise be provided.]
89 This passage is not altogether easy to
understand or translate, but having made the point immediately before it that
the Viscount cannot know all debts, it thus seems to say that the arrêt is effective against all of
them, except those which have already been arrested (or seized, at least) or
otherwise provided for against which there can be no debit by the current
arresting principal creditor. In
other words, arrêt sur arrêt
ne vaut.
90 In
this short passage, there is therefore potential to refer back to the rules of
priority of Pothier discussed above, in respect of arrêts at least. The first in time should prevail, which is
commonsensical, but moreover arguably it should prevail because it has an effect
against the property arrested, removing it from the pool of assets available
for arrest.
91 If so, there is
another consideration hidden within the passage. Although Le Geyt writes that
the arrest takes effect “at large”, it reaches its limit
when it comes up against an asset already arrested. However, presumably, that
previous arrest would itself have taken effect at large. It would therefore
have arrested all property not then subject to arrest, which begs the question
how there can be any property remaining for a second arrest to take effect
against. The only explanation is that such property has been acquired since the
arrest and was not caught by it, so by implication an arrêt can only take effect against property currently in
existence in the hands of the party against whom it is effected.
92 There is authority to suggest that this
is the case. In Falle v Pocock in response to an arrêt
entre mains the subsidiary debtor claimed not to have anything in his hands
at the time of the arrest; the court granted an injunction against him
forbidding him from divesting himself of any money which he may in future owe
to the principal debtor under certain contracts between them.
93 This (admittedly limited) authority
therefore suggests that the arrêt entre
mains can only arrest property currently in existence. It also suggests
that the arrêt does take effect in rem: where there is no property for
it to take effect against, the principal creditor should obtain an injunction
against the subsidiary creditor preventing him disposing of any property coming
into his hands in future.
94 In the case of payments due in future
under a contract in existence, it is arguable that the payments due are not
species of property which do not come into existence until that future date,
but rather they exist with the contract, albeit the extant obligation does not
require any current performance from the party obliged. So, where the principal
creditor arrests payments due under a contract (such as the slag sales payments
in FG Hemisphere) the obligations to
make those payments are extant, even if (for example) their precise
quantification depends on some future unknown.
95 This does put the principal creditor at
the mercy of the construction of the individual contract. For instance, the
construction of the contract may oblige the parties to place orders and pay for
them, even if the amount and value of such orders remains uncertain. In such a
case, there is a present obligation against which the arrêt can bite, but its value remains
unclear until subsequently determined. The arresting principal creditor could
still arrest such an obligation: he would simply have to take it according to
its tenor and await the order to trigger its valuation and subsequent payment
under the obligation. Alternatively, the construction of the contract may mean
that there is not a current obligation: for instance, if the subsidiary debtor
is not obliged but merely has an option to place orders. In such a case, his
doing so and the corresponding obligation to pay remains speculative, and not
in existence. In such circumstances, there would be nothing for the arrêt to bite against.
96 As an alternative to requiring an extant
obligation, an arrêt entre mains could
be granted against future obligations on the basis that it only bites in rem and therefore arrests those
obligations on their coming into existence. Pothier considered this happened in
respect of assignments of debts not currently due (as noted above that passage
concerned payments not yet fallen due under a lease or contract currently in
existence; it is conceptually inevitable that such payments will fall due). However,
there is nothing inherently illogical in extending that principle more widely
to all debts arising only in future. There are also policy arguments in favour
of all debts owed by the subsidiary debtor to the principal debtor being
arrested whenever arising, until the principal debt is paid.
97 The Court of Appeal appeared to prefer
the first view that an extant obligation, even if not yet due, was sufficient. First,
it held that the obligation sought to be arrested must be capable of some
definition. It noted that Orléans’ and Norman saisie-arrêts required the subsidiary debtor to declare what
he owed.
The debt in question must therefore have been capable of some definition
sufficient to be declared—“without knowledge of the transaction and
the debt arising, there could be no declaration”. Equally, that
requirement can be directed towards the applying principal creditor. He needs
to frame his application with sufficient particularity to specify the order he
seeks. An application to arrest property at large, without some statement as to
the nature of the subsidiary debtor’s obligation of which arrest is
sought, is unlikely to succeed and may be struck out as being embarrassing.
98 Knowledge of the transaction tends to
suggest that there has been one. The Court of Appeal noted the availability in Jersey of arrest of wages, and considered the arrest of
rent as it fell due. It concluded that an ongoing
contractual relationship was sufficient. The slag sales payments
fell due under a contract which obliged the subsidiary creditor to make them. It
was therefore a contract of the first type considered above: it contains
current obligations, even if they were not due.
99 The court’s decision is therefore
that an ongoing contractual relationship which extends into the future and
which contains obligations that will fall due as long as the contractual
relationship subsists is sufficient to found an arrêt entre mains. From
a practical perspective, this is unsurprising: the arrêt’s real value will often be in respect of such
contracts. Strictly, therefore, the court’s decision does not quite
extend to obligations which are conceptually possible, but not yet actually
extant. For example, a contract where options make the requirement to pay more
speculative, or possibly a contract which has not yet but is on the verge of
being signed. The court considered that provided such obligations are capable
of declaration, they are sufficient. However, if there is no obligation, it
could not be declared, beyond its possibility of coming to fruition. Theoretically
the court could arrest potential obligations which would take effect at the
time the obligations come into being. However, by reference to the ability to
declare the existence and extent of the obligation, the more restrictive
approach is the better view.
Conclusions
100 As concluded above, Orléans’
saisie-arrêt as described by
Pothier equated to an assignment by which the principal creditor (by the
sergeant) took possession of the debt arrested in the hands of the subsidiary
debtor. Such possession and assignment was defeasible by payment of the
subsidiary debt up to the level of the principal debt, in effect thereby
creating a charge of the debt arrested.
101 To this extent, despite their
(apparently) different customary and statutory law origins, it therefore
follows that the Orléans saisie-arrêt
and the English garnishee/third party debt order are analogous as to their
substance and underlying principles. Albeit the Norman
and Jersey descriptions of the arrêt entre mains are scanty, they
contain nothing to exclude such an analysis and indeed rather contain
indications that are consistent with it. It is therefore concluded that the Royal Court and
Court of Appeal were correct to consider the arrêt entre mains to operate as a charge of the thing
arrested, along similar principles to those described by
the House of Lords in Eram in respect
of the English procedure.
102 From this, further points follow in
respect of the Jersey courts’ decisions.
First, can the arrêt entre mains be
effected against future debts? Theoretically an arrest could be effected
totally at large in the sense of encompassing any property which may
subsequently come into existence, the arrest biting when it does so. Although
Pothier’s writings appear to recognise this latter point, they tend
against such an approach as that recognition discusses only future entitlements
under arrangements already on foot (such as future rental instalments under a
currently extant lease). Le Geyt also appears to discount such speculative
arrests, albeit by implication, and previously the Royal Court has granted injunctions against
dispersal of such potential future property pending an application for its
arrest. The Court of Appeal held that the arrest is limited to things which can
be identified and declared (whether by the arrested subsidiary debtor or the
principal creditor seeking the arrest). Given the foregoing, it is understood
that such things will be limited to legal relationships which are currently in
existence at the time of the arrest (even if there is no payment currently due
under such arrangements). To this extent, the decision again appears correct.
103 Finally, the question of “foreign
debts”. Following Eram, the
Court of Appeal held that foreign subsidiary debts could be arrested, provided
payment to the principal creditor by the subsidiary debtor is recognised as
discharging the subsidiary debtor from the subsidiary debt by the relevant
foreign lex situs. If not, the arrest will not be granted. Again, it is
considered that the courts in FG
Hemisphere and Eram were correct
that this is a matter of jurisdiction, rather than discretion. There are
several ways of analysing conflicts points and the rationale underlying them,
but in the case of an arrest as an assignment by way of security or charge, if
the lex situs (where conceptually the thing in question is located) does
not recognise the arrest as effectively doing so, the thing is not sufficiently
within the jurisdiction of the arresting court for it to take possession or
effect a charge over the thing in question. However, this is of course not to
say that the court does not also ultimately retain a subsequent and separate discretion
whether to grant an arrest, over and above the primary jurisdictional
considerations which must first be met.
Richard Holden is a Barrister (England and Wales),
Barrister and Solicitor (New Zealand),
a senior associate at Collas Crill, St Helier, and a Visiting Professor at the
Institute of Law, Jersey. He is currently
writing a supplementary volume to the White Book covering the Royal Courts of
Jersey and Guernsey and the High Court of the Isle of Man.