Lloyd's Maritime and Commercial Law Quarterly
POWER OF ENGLISH ARBITRATORS TO MAKE AWARDS IN FOREIGN CURRENCIES
London arbitrator.
1. For many years City of London arbitrators have been making awards in foreign currencies; they have been doing this whenever they thought that it produced a just result, bearing in mind the large fluctuations in currencies which have been taking place in recent years and the basic rule of English law that, for the purpose of a judgment or an award, the date for conversion of currency into sterling is the date of the breach. Legal arbitrators have tended to be more conservative about the matter, at least until the Court of Appeal decision in Jugoslovenska Oceanska Plovidba v. Castle Investment Co. Inc. (The Kozara) [1973] 2 Lloyd’s Rep. 1. This case is of some importance and, in view of its recent consideration by the House of Lords in Miliangos v. George Frank (Textiles) Ltd. [1975] 3 All E.R. 801; [1976] 1 Lloyd’s Rep. 201 it seems sensible to summarise what it decided before going on to consider the effect, if any, of the Miliangos decision.
2. In The Kozara two of the most experienced arbitrators in the City of London made an award expressed in United States dollars and the validity of this was tested in the Courts. In the High Court the Judge reluctantly decided that an award made in England and expressed in a foreign currency was not enforceable in the same manner as a judgment even when that currency was the money of account or even when it was the one with which the transaction had its closest connection, nor could such an award be enforced upon conversion of the amount awarded into sterling.
On appeal, it was decided by the Court of Appeal that the arbitrators did have jurisdiction to make their award in dollars. The Master of the Rolls, Lord Denning, said (inter alia):—
“… British arbitrators have authority, jurisdiction and power to make an award for payment of an amount in foreign currency. They can do this and … should do this whenever the money of account and the money of payment is in one single currency. They should make their award in that currency because it is the proper currency of the contract. By that I mean that it is the currency with which the payments have the closest and most real connection. Likewise, whenever the proper currency of a contract is a foreign currency, English arbitrators can and should make their award in that currency, unless the parties have expressly or impliedly agreed otherwise. The proper currency can usually be ascertained without difficulty. But if the transaction is closely connected with two currencies the arbitrators can and should make their award in whichever of the two currencies seems to them to produce the most appropriate and just result” (emphasis added by author).
3. The other two members of the Court of Appeal agreed that the arbitrators could make the particular award in dollars. However, on the general principle, Lord Justice Roskill appeared more restrictive than the Master of the Rolls when he stated:—
“I would only add on this part of the case that this decision does not amount to a general licence to arbitrators and umpires to make awards in any foreign currency they choose needless of the provisions of the contract with which they are concerned. The currency of account and the currency of payment will in most cases be easily ascertainable just as the proper law of a contract is in most cases easily ascertainable”.
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