Lloyd's Maritime and Commercial Law Quarterly
A quarter of a century of foreign currency judgments: the wealth-time continuum in perspective
John Knott *
“A rigid formula would be likely to produce injustices
”1
During the 1970s new guidelines were hammered into place for the treatment of claims with a foreign currency element, reflecting the lessening significance of sterling in world affairs. Lord Wilberforce’s powerful speech in
Miliangos v.
George Frank (Textiles) Ltd seemed to usher in an era of fairness and adaptability for losses affected by the performance of a foreign currency. The last quarter-century has seen the application of the new guidelines to a range of disputes. This paper examines a cross-section of cases involving foreign currency claims and reaches the disturbing conclusion that a lack of flexibility in the treatment of disputes is negating some of the benefit which the new guidelines were intended to bring.
1. The new regime of foreign currency
The three cases which freed our courts from the strait-jacket procedure of awarding all judgments in sterling, and which seemed to reinstate England as an effective forum for foreign litigants, were concluded between 1975 and 1978. As readers of this Quarterly
will recall, the change was brought about by Miliangos
2
(a claim for debt), The Despina R
3
(damages for tort) and The Folias
4
(damages for breach of contract). In Miliangos
, the House of Lords discovered that the long-established sterling-breach-date principle,5
which was derived from, or at least confirmed by, Manners
v. Pearson
6
—a dispute arising in connection with a contract related to the improvement of the drainage system of the City
* Consultant, Holman, Fenwick & Willan.
1. On the subject of the then newly introduced procedure for awarding judgments in a foreign currency: “To resolve it is part of the normal process of adjudication. To attempt to confine this within a rigid formula would be likely to produce injustices which the courts and arbitrators would have to put themselves to much trouble to avoid.” MV Eleftherotria (Owners)
v. MV Despina R (Owners) (The Despina R)
[1979] AC 685, 697; [1979] 1 Lloyd’s Rep 1, 6, per
Lord Wilberforce.
2. Miliangos
v. George Frank (Textiles) Ltd
[1976] AC 443; [1976] 1 Lloyd’s Rep 201.
3. [1979] AC 685; [1979] 1 Lloyd’s Rep 1.
4. Services Europe Atlantique Sud (SEAS) of Paris
v. Stockholm Rederiaktiebolag Svea of Stockholm (The Folias)
[1979] AC 685; [1979] 1 Lloyd’s Rep 1.
5. The expression “sterling-breach-date” principle, or rule, used in the text, is merely a short-hand way of identifying the pre-Miliangos
regime of conversion into sterling. However, the courts did not always apply the principle strictly. For example, the approach adopted by the House of Lords in SS Celia (Owners)
v. SS Volturno (Owners) (The Volturno)
[1921] 2 AC 544, a case arising from a collision between two ships, entailed conversion into sterling as at the dates of expenditure and loss—not
the date when the damage was caused—and allowing interest from that time.
6. [1898] 1 Ch 581.
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