Guernsey: Jersey Jurisdiction: Arresting Cross-Border Debts

Last Updated: 18 February 2016
Article by Marcus Pallot and Richard Holden

A creditor owed money by a debtor who is owed money in turn by a Jersey company can get a court order for payment from the Jersey company direct to the creditor. However, the court order will not be made unless the creditor proves the Jersey company will not have to pay a second time overseas.

In Tepe Insat Sanayii AS v Boru Hatlari Ile Petrol Tasima AS (Botas) [2016] JRC 012A Jersey's Royal Court held that Jersey companies' debts to their Turkish parent were situate in Turkey, so Jersey had no jurisdiction to arrest those debts to pay the parent's creditors.


The issue arose in an application to enforce ICC awards in Jersey by Tepe, a Turkish construction company. Botas was a Turkish oil company. Botas had employed Tepe to construct facilities on the Baku-Tbilisi-Ceyhan oil pipeline, but Botas refused to pay. So Tepe took it to arbitration, and won.

Botas' assets included wholly owned subsidiary companies registered in Jersey, TPIC and BIL. Tepe, therefore, applied to register the awards as New York Convention awards under Jersey's relevant arbitration legislation and for arrêts entre mains.

Arresting debts: the arret

An arrêt is a traditional Jersey customary law remedy to arrest a debtor's property to satisfy the debt (Guernsey has a similar procedure). An arrêt entre mains arrests the debtor's property when it is in the hands of a third party. It extends to debts owed by a third party to a debtor, and is similar, but not identical, to other jurisdictions' third party debt/garnishee orders.

Like many customary law remedies, its existence is well known but its full scope is not. However, previous recent case law in both the Royal Court and Court of Appeal has held that an arrêt entre mains:

  • Has proprietary effect.
  • Is not merely an order telling the debtor's debtor to pay the creditor. 
  • Arrests or attaches the debt owed to the debtor, charging it or diverting it to the creditor. By doing so, its effect is not only to direct the third party debtor to pay the judgment creditor, but also his doing so discharges that debt to the extent of that payment.

Location of the debt

As the arrêt entre mains is proprietary in effect, the Court will not make an order against property that is not within its jurisdiction. Where the property arrested is a debt, its location is ultimately where the debtor under it is resident, being the place where he can be sued should he not discharge the debt when due.

Where the debt is owed by a company, it may be located in more than one jurisdiction. This is because the company may be resident in more than one place. A company is resident where it is incorporated and has its registered office. It can also be resident where it carries on business, and a company may carry on business in a number of jurisdictions.

Hence, a company's debts may be situated in more than one place. If so, there is a risk that company may be sued in any of those places. As a result, the Court will not arrest a debt which can be characterised as foreign if the relevant foreign court or law would not recognise payment under the arrêt as discharging the debt to be arrested.

Jersey companies' foreign debts

In Tepe, both TPIC and BIL were registered and incorporated in Jersey. The debts were therefore subject to the Jersey Court. However, it found they also carried on business in Turkey and were resident there.

TPIC's liabilities to Botas arose solely from Botas' transporting oil from wellhead to refinery by pipeline, all within Turkey. There was no formal written contract, and Botas invoiced TPIC in Turkey according to unit prices set by the Turkish Energy Market Regulatory Board under Turkish law. TPIC paid these from its Turkish bank accounts to Botas' Turkish bank accounts. Accordingly, the Court found the place of performance of the obligation to be Turkey. By  implication, the proper law of the contract would be Turkish, and place of performance by  payment of the transport fees would be Turkey.

BIL's sole activity was as operator of the Turkish section of the BTC pipeline. Again, it had a Turkish branch office and all its directors were Turkish. Its liabilities to Botas arose under a written contract drafted in Turkish and expressed to be subject to Turkish law with an exclusive jurisdiction clause in favour of courts in Ankara. Under it, Botas supplied natural gas to BIL to fuel pumping stations on BIL's Turkish section of the BTC pipeline, for which Botas invoiced BIL's Ankara office. BIL then settled them by payment from its Turkish bank accounts to Botas' Turkish bank account. Botas had also lent BIL money to settle invoices for natural gas and acquire items for BIL's Ankara office.

Decision: arret refused

The Court therefore found the location of the debts to be Turkey. It did not accept that TPIC and BIL's incorporation in Jersey made any difference to this, because whether or not subject to Jersey law and jurisdiction, the debts were subject to Turkish law and jurisdiction. That being so the question had to be answered, whether an arrêt would be recognised as discharging the debts under Turkish law.

This required evidence of Turkish law. The evidence before the Court was that payment pursuant to the order would discharge TPIC and BIL's debts to Botas, because Turkish law would recognise that payment. The means by which it would do so were that by paying Tepe, TPIC and BIL would relieve Botas of a corresponding debt to Tepe. Botas therefore could not claim to be out of pocket from not having received money directly from TPIC or BIL.

On that basis, payment under an arrêt would appear sufficient discharge of the debt under Turkish law, so that it was safe for the Jersey Court to make an order. However, the Court disagreed. It interpreted this evidence as meaning that Botas would be unjustly enriched and so liable to a restitutionary claim to pay back any double recovery to TPIC or BIL. Referring to English case law, it held that was not enough. It therefore refused to arrest the debts owed by TPIC and BIL to Botas.

Conclusion: extinguish the foreign debt

Previous overseas case law considered that the right of the third party debtor to claim back any double payment from the debtor was not enough to extinguish the foreign debt. To force the third party to pay twice and then claim payment back unfairly put the litigation risk on that third party.

In Tepe, the Jersey Court took this one step further. It did not consider whether BIL and TPIC could claim back payment in Jersey, but whether that would be the case in Turkey.

On one view, this is simply the Court's interpretation of the evidence available to it on the day, which could be different in another case (even involving Turkish law as the relevant location of the foreign debt). On another, the Court may have settled a new rule that the debt must be extinguished, and even a set-off under the foreign law may not be enough.

On either view, the lesson emerging is that the applicant for arrest of a debt with a foreign element should take care to prove that the foreign debt is clearly extinguished abroad as well as in Jersey.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Events from this Firm
28 Nov 2017, Conference, London, UK

BVCA's tax, legal and regulatory conference takes place on 28 November 2017 at Savoy Place, London.

24 Jan 2018, Conference, St Peter Port, Guernsey

In association with the Guernsey Training Agency, we are pleased to offer a unique, interactive event that will explore the role of integrity in the modern employment relationship, with a particular focus on the financial services sector.

15 Mar 2018, Seminar, St Peter Port, Guernsey

We are once again sponsoring C5 Fraud, Asset Tracing & Recovery which is due to take place on 15-16 March 2018 (tbc) in Geneva.

In association with
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

*** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.