Lloyd's Maritime and Commercial Law Quarterly
THE COURTS AND FOREIGN CURRENCY OBLIGATIONS
Steven Stern *
This article examines whether, and if so to what extent, courts in the United States and England can give judgments denominated in foreign currencies. A fair apportionment of benefits and risks inherent in converting rapidly fluctuating exchange rates may require using a foreign currency as the continuing measure of liability, and expressing awards in foreign currency or its equivalent on the date of payment. Although not satisfied that the English courts have gone far enough, the article contrasts the greater flexibility of English law in these respects with the comparative rigidity of United States courts, which might not be supported by the relevant authorities when properly analysed.
INTRODUCTION
There is a range of circumstances which indicates the desirability of courts using a foreign currency as the continuing measure of liability and making awards expressed in that currency or its equivalent on the date of payment. They include actions to recover debts denominated in foreign currencies, actions for an award of damages for tortious acts and breach of contract involving foreign currencies, and actions on foreign judgments, using a foreign currency as the continuing measure of liability. In these circumstances, making awards expressed in that currency or its equivalent on the date of payment can fairly apportion the benefits and risks inherent in the conversion of such claims into the local currency.1
Conversely, restrictions on the use of foreign currencies to denominate monetary obligations can prejudice the conduct of commerce in an increasingly international
* University Solicitor, Victoria University of Technology, Melbourne. The following abbreviations are used in this article.
Brand: Ronald A. Brand, “Restructuring the U.S. Approach to Judgments on Foreign Currency Liabilities: Building on the English Experience (1985) 11 Yale J. Int. L. 139.
Cashel: T.W. Cashel, “Foreign Currency Judgments: Changing the New York Rule (1991) 10 J.Int.Banking L. 385.
Freeman: Jennifer Freeman, “Judgments in Foreign Currency—A Little Known Change in New York Law” (1989) 23 Int. Lawyer 737.
Jones: Harry L. Jones, “The Spurious Judgment Day Rule for Converting Foreign Currency into Dollars When Suit is Brought Upon an Obligation Governed by Foreign Law: Deutsche Bank filiale Nurenberg v. Humphrey revisited” (1969) 3 Int. Lawyer 277.
Mann: F.A. Mann, The Legal Aspect of Money, 5th edn (1992).
Nussbaum: Arthur Nussbaum, Money in the Law National and International: A Comparative Study in the Borderline of Law and Economics, 2nd edn (1950).
1. New York Committee on Foreign and Comparative Law, “Report on Foreign Currency Judgments” (1985) 18 Int. Law & Pol. 791, 791–793.
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