Surely there's a surfeit of words, neither or either foreign, veiled or not, sovereign or counterfeit, that are not heir to this weird rule... In my humble opinion...
It's incomplete as Clanad pointed out, it ought to say except after C when saying an 'E' sound. But even then I remember there are exceptions, which I can't recall but I did work out ages ago.
Jenstar's meta-rule of spelling: If a word is so tricky to spell that you have to think "what's the rule?", then the chances are that the word in question is an exception to the rule, so think of the rule and do the opposite of what it says..
One of my primary school teachers drummed into our heads: I before E except after C, with an exception of H and R. I was to learn, later in life, that this was total drivel but, unfortunately it is still there in my head, 55 years on! The best explanation I ever heard came from a Czech engineer studying English who finally said " in English, there are no rules, only a very large number of special cases"
Thanks for the answers everyone, but what I was really wondering was, what's wrong with decieve, reciept etc? Why not "i before e except after w". Why did they choose c as the special letter? Is there something particularly objectionable about "cie"?