English Third Party Debt Orders: How they work and when English courts have jurisdiction

English Third Party Debt Orders: How they work and when English courts have jurisdiction

What is a third party debt order (“TPDO”)?

TPDO is a method of enforcing money judgments. Where a judgment creditor has a judgment against a judgment debtor, and the judgment debtor is owed money by a third party, the judgment creditor can ask the Court to order that the third party pay directly to the judgment creditor.

Thus, if party A has a judgment against party B, party B does not pay it, and party C owes money to party B, party A can go and seek to recover the judgment directly from party C.

This will then satisfy, simultaneously, the third party’s debt to the judgment debtor and the judgment debtor’s debt to the judgment creditor.

The judgment creditor may seek a TPDO in relation to a sum of money which is payable or will become payable in the future by reason of a present obligation (Webb v Stenton (1883) 11 Q.B.D. 518, at p.527).

Jurisdiction

English Courts have jurisdiction to make a TPDO if the third party is an English resident and when the assets owed to the judgment debtor are situated in England. Where assets are not situated in England, the English Court may still make a TPDO against an English resident provided that (i) an English TPDO would be recognised in the jurisdiction where the assets/debt owed by the third party is located; and (ii) where there is no risk that the third party would be ordered to pay the debt twice (i.e. once to the judgment creditor and thereafter also to the judgment debtor).

In a recent decision in a case run by Fortior Law, Adelon A.G. v Sib Coal A.G. (Defendant); WV Holdings Ltd, Natalia Kazakova-Kabli (Third Parties), the English Court had to consider whether a jurisdiction clause in the contract between the judgment debtor and the third parties which provided for the exclusive jurisdiction of Zurich Courts automatically deprived the English Court of jurisdiction to order the third parties to make payments to the judgment creditor. The English Court ruled (in an unreported judgment) that it did not. Thus, even debts between judgment debtors and third parties which are subject to the exclusive jurisdiction of foreign courts can still be enforced by means of an English third party debt order.

About Fortior

Fortior is an international law firm specialising in English litigation, arbitration, and dispute resolution in shipping, international trade and investment law. Fortior’s team consists of English solicitors and lawyers qualified in multiple jurisdictions (New York, Switzerland, Malta, Italy, Georgia, Ukraine, Kyrgyzstan). Fortior has offices in Geneva, Abu-Dhabi and Kyiv. For more information, please visit www.fortiorlaw.com, write to [email protected] or reach out to your usual contact at Fortior.

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