## Facts

- A Swiss buyer contracted with an English seller for 500,000 standard jute bags to be sourced from India.
- The parties contemplated shipment from India with the goods ultimately reaching South Africa, routed through Italy.
- Indian export regulations prohibited exporting jute goods to South Africa “either directly or indirectly.”
- The courts found both parties knew and intended that performance would circumvent and violate the Indian prohibition.
- The seller repudiated before completion; the buyer sued in England for damages for breach of contract.

## Issues

1. Whether a contract otherwise lawful under English law is unenforceable when, from the outset, both parties intend performance to involve acts in a friendly foreign state that are illegal under that state’s law.
2. Whether refusing enforcement improperly enforces foreign “penal, revenue, or political” law, or instead applies English public policy while taking notice of foreign law.

## Decision

- The House of Lords dismissed the buyer’s appeal and affirmed the judgment for the seller.
- English courts will not enforce the contract or award damages for its breach where the intended performance entails committing an illegal act in a friendly foreign country.
- The contract was tainted at inception by the parties’ common design to breach Indian export restrictions; the buyer’s claim failed.

## Legal Principles

- An English court will not enforce a contract, or award damages for its breach, if the contemplated performance involves doing an act in a foreign and friendly state that violates that state’s law.
- The bar applies where illegality is part of the parties’ common intention from the beginning, not merely a later supervening obstacle.
- Refusal to enforce is grounded in domestic public policy and comity; it is not the enforcement of foreign penal, revenue, or similar public laws, though foreign law may be recognized as a relevant fact.
- The characterization of the foreign rule as “political law” is unnecessary where the contract is intended to contravene foreign law in the place of performance.

## Conclusion

The House of Lords held the contract unenforceable because both parties intended performance to evade and violate Indian export prohibitions, and English courts will not provide remedies for agreements formed on a common plan to break the law of a friendly foreign state.


Regazzoni v. K.C. Sethia (1944) Ltd., [1958] A.C. 301 (H.L. 1957)