Decisions of the English House of Lords are not binding on the courts of other jurisdictions in the Commonwealth but are often considered to have persuasive influence, unless, of course, local statutory law precludes such treatment.

Decisions of the English House of Lords are not binding on the courts of other jurisdictions in the Commonwealth but are often considered to have persuasive influence, unless, of course, local statutory law precludes such treatment.


The question whether Australian courts could follow English cases leading up to the Miliangos decision might have been faced by a New South Wales court in a case decided as early as 1975, but the question was avoided.1 The Australian tax service obtained a judgment for arrears of tax in Papua New Guinea while the territory was subject to Australian authority and before it achieved independence. The judgment was expressed in the currency of the territory. The currency was freely interchangeable with the Australian dollar. The defendant sought to prohibit registration of the judgment in the Supreme Court of New South Wales on the ground that a judgment expressed in a foreign currency was not registrable. The court held that the currency was not foreign, because it was authorized by Australian law. In subsequent enforcement proceedings,2 the court held it could issue a writ of execution on the judgment under the inherent power of the court to convert the judgment debt into Australian currency. An Australian expert has concluded there is no procedural, and apparently no substantive, objection to the application of the Miliangos doctrine by the courts of New South Wales.3

According to the judgment of a Queensland court,4 a judge in a New South Wales court had expressed the obiter view that it would be wrong for a judge at first instance to follow the Miliangos doctrine in the light of prevailing authority. Subsequently, however, there had been a number of single judge decisions in New South Wales in which judgments had been expressed in a foreign currency on the principle that a judgment ought to be expressed in the currency that best represents the judgment creditor’s loss.5

In the Queensland case, the appellant objected to an order giving the respondent leave to defend an action commenced by a writ in which the appellant claimed an amount expressed in Swiss francs, for which summary judgment was sought. One of the grounds for giving leave to defend was that there was at least the triable issue of whether or not the court could give judgment for an amount expressed in a foreign currency. The defendant had opposed the request for summary judgment on the ground that the claim for a debt expressed in a foreign currency was not a claim for a debt or liquidated demand in money within the meaning of the order on summary judgment.

The court found no binding authority on the question in Australian case law, although there were many obiter dicta that Australian courts could give judgments only in Australian currency. The court held that the central issue—whether the court could give judgment for an amount expressed in a foreign currency, and whether such a claim was within the order—required careful consideration of the Miliangos decision.

The court cited the view of Lord Wilberforce in the Miliangos case that the modern English doctrine that judgments could be expressed only in sterling had originated in a case decided in 1898 and that the doctrine had become clearly binding only as late as 1961. According to Lord Wilberforce, the pre-Miliangos doctrine was based on practical objections relating to the enforcement of judgments expressed in a foreign currency. The Queensland court was obviously emphasizing the weak historical roots of the pre-Miliangos doctrine, but the court did more:

[B]oth in England and in Australia the commercial world has undergone a significant change in recent years. Even limited experience in the commercial jurisdiction of this Court clearly indicates a marked increase in recent years in traders obtaining loans in foreign currency: the obvious inference to be drawn is that in the modern economy it is necessary for traders to obtain loan funds from overseas and/or to do business in a foreign currency. Fluctuating exchange rates (the Australian dollar is now floated) have not brought about that policy change, but they have made more pertinent the considerations behind the appellant’s attempt here to recover its loan in Swiss Francs. As Lord Wilberforce said in Miliangos (supra) at 465: “I do not for myself think it doubtful that, in a case such as the present, justice demands that the creditor should not suffer from fluctuations in the value of sterling. His contract has nothing to do with sterling: he had bargained for his own currency and only his own currency. The substance of the debtor’s obligations depends on the proper law of the contract (here Swiss law): and though English law (lex fori) prevails as regards procedural matters, it must surely be wrong in principle to allow procedure to affect, detrimentally, the substance of the creditor’s rights.”6

The Queensland court concluded that the former English rule was no more than a principle of convenience adopted by the courts in the exercise of their discretion to deal with procedural problems. The analysis of the court was designed to emphasize that the pre-Miliangos rule was not rooted in the common law. This analysis has helped the courts of other common law countries and the drafters of the Third Restatement to resile from the former rule.

The court was disposed to apply the Miliangos doctrine if it was clearly established that the appellant was entitled to judgment in Swiss francs:

The Rules of the Court should, in my view, be given their ordinary and current meaning, and they must be treated as flexible enough to meet changing commercial situations. When O.6 r.7(a) speaks of “money” it should be construed widely enough to encompass all forms of currency which traders within the jurisdiction regard as “money” for purposes of meeting their trading and contractual obligations. If men of commerce within the jurisdiction are prepared to borrow money in foreign currency (whether because that is the only money available to them or not) the courts must recognise the reality of the situation and ensure that the procedural rules (which are clearly within the discretionary powers of the judges) are such as to recognise and give force and effect to the contractual obligations so entered into.7

Nevertheless, the court held that there was a triable issue and decided in favor of the respondents because it was unclear on the facts of the case whether under the contracts between the parties the respondents’ obligation of repayment at the material time was in Swiss francs or in U.S. dollars. At the exchange rates in effect at the date of the judgment, there was a substantial difference in terms of Australian dollars between repayment in U.S. dollars and repayment in Swiss francs.

Two years later the Queensland decision was followed by the Supreme Court of South Australia as authority for applying the Miliangos doctrine.8 The defendant, a bank, had made a loan of Swiss francs to the plaintiffs that was repayable in the same currency. The court gave judgment in Swiss francs on the defendant’s counterclaim for the amount of the loan. The court awarded damages to the plaintiffs in Australian currency on their claim for breach of duty by the defendant in not arranging hedges for the plaintiffs against the loss they might sustain as the result of the depreciation of the Australian currency against the Swiss franc. The court did not deal with the problem of set-off because the quantum of damages had not been ascertained and was referred to inquiry.


In Canada, the expression of judgments in a foreign currency is widely thought to be impeded by statutory law in the form of section 11 of the Currency and Exchange Act:9

All public accounts throughout Canada shall be kept in the currency of Canada; and any statement as to money or money value in any indictment or legal proceeding shall be stated in the currency of Canada.

One explanation of the provision as it applies to judgments is that they must be susceptible of execution. The sheriff’s officers would have difficulty in attempting to execute a judgment expressed in a foreign currency. However, an Ontario court has said that but for the statutory provision, problems would not arise if a judgment of the court could be expressed in terms of a specified sum of foreign currency together with provision for the payment of an equivalent amount of Canadian dollars.10 Subsequent developments in Ontario law on the subject of judgments are discussed later in this chapter.

The Ontario court held that the Miliangos doctrine could not be applied for the expression of judgments because of the statute, but the Miliangos case influenced the court on another problem in the same case. The plaintiff sought enforcement in Ontario of a judgment expressed in U.S. dollars that had been obtained in Pennsylvania. The problem was the choice to be made of the rate of exchange for translating the U.S. dollars of the Pennsylvania judgment into Canadian dollars.

The Ontario court concluded that the law on the choice of the rate of exchange was judge-made, and that Canadian courts had followed English case law on this matter. Earlier English cases had applied the rate of exchange prevailing at the date of the original judgment (which would be the Pennsylvania judgment in the Ontario case), but the court thought that it should take account of more recent developments in England. The English rule for over three centuries had been that in an action for damages the rate of exchange in effect at the date of a breach of contract or the commission of a tort was the rate to be chosen. The Miliangos case, however, had preferred a more realistic approach to modern economic conditions and had changed the law, because fluctuations in exchange rates were normal now and not the exception. In present conditions, fluctuations occurred between the date of breach and the date of judgment as well as at other times.

Canadian courts had applied the breach date rule, but that rule had been based on English cases now overruled by the Miliangos case. No Canadian case had been cited that applied the breach date rule to actions to enforce foreign judgments. In the absence of such a decision, the court considered itself free to follow the new trend in English law. English courts, the Ontario court assumed, would probably apply the Miliangos doctrine, insofar as it dealt with the choice of exchange rates, to actions to enforce foreign judgments.

The Ontario court considered itself unable to apply the rate of exchange prevailing at the date of actual payment, because that rate cannot be known when judgment is given, and there was no machinery for enforcing the rate. The court would clearly have preferred to apply the Miliangos doctrine, but on the assumption that the Currency and Exchange Act prevented this solution, the court decided that the next best solution was to hold that the appropriate rate of exchange for translating U.S. dollars into Canadian dollars was not the rate prevailing at the date of the Pennsylvania judgment but the rate ruling at the date of the Ontario court’s decision to enforce that judgment.

The English Law Commission’s Report has dealt with this problem and has confirmed that the Commission shared the assumption of the Ontario court that English courts would probably apply the Miliangos doctrine.11 After the Miliangos case, the Report declares, there should be no impediment, in an action on a foreign judgment that met the criteria for enforcement of the judgment under common law, to application of the later exchange rate. Another procedure that is possible is the registration of foreign judgments under statutory law. The Foreign Judgments (Reciprocal Enforcement) Act 1933 provided originally for translation of the foreign currency of the foreign judgment into sterling at the exchange rate prevailing at the date of the foreign judgment. After the Miliangos case, that provision was repealed by the Administration of Justice Act 1977 and registration is now made in the foreign currency. The effect is that the registered judgment is treated as an English judgment for the purpose of discharge in sterling, and the English Law Commission sees no difficulties in applying the Miliangos solution of the exchange rate in effect at the date of actual payment (or at the date of the court’s order to enforce payment if such an order becomes necessary).

In 1978, the United Kingdom acceded to the EC’s Convention on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters of 1968. The EC Convention provides for the registration and enforcement in a member state of the Community of judgments by courts of other members of the Community. The United Kingdom’s Civil Jurisdiction and Judgments Act 1982, which implements the EC Convention, contains no provision on the translation of foreign currency, from which the English Law Commission infers that the way will be open to application of the Miliangos solution by courts of the United Kingdom.

Finally, the European Communities (Enforcement of Community Judgments) Order 197212 provides that a “Community judgment” to which the Secretary of State of the United Kingdom has appended an order for enforcement shall be registered in the High Court on an application made by the party entitled to enforce it. The English Law Commission explains that the term “Community judgment” does not mean the judgment of a national court of a member of the Community, which is covered by the 1982 Act, but a judgment by certain specified bodies of the Community, such as the European Court of Justice. The most likely judgments to require registration and enforcement in the United Kingdom are decisions of the Commission imposing fines or penalties. The application for registration would normally be made by the Commission.

The 1972 Order referred to above provided that a Community judgment for a sum of money had to be translated into sterling at the rate of exchange prevailing on the date when the judgment was given. After the Miliangos case, the provision on translation was repealed by the Administration of Justice Act 1977, and no substitute provision was adopted. Again, therefore, the English Law Commission sees no hindrance to the application of the Miliangos doctrine to Community judgments.13

After this excursus on the English law relating to foreign judgments, the discussion of Canadian law is resumed. In a case decided by the Supreme Court of British Columbia14 after the decision in the Ontario case, damages were claimed for breach of a contract that provided for payment in U.S. dollars. An issue in the case was the date as of which to choose the prevailing rate of exchange for translating the U.S. dollar amount into Canadian currency. The Canadian dollar had depreciated substantially against the U.S. dollar between the date when the debt became payable and the date when the case began to be heard.

The court spoke of English law as now conforming to “commercial realities” and referred to the Ontario case as “a step in the same healthy direction.”15 The British Columbia court, however, distinguished the Ontario decision as one that dealt with the enforcement of a foreign judgment, and held that decisions of the Canadian Supreme Court required application of the breach date rule in the British Columbia case, because it dealt with an original cause of action.

In a later British Columbia case,16 the defendant admitted that as of December 26, 1984 it became indebted to the Austrian plaintiff in a specified amount of Austrian schillings. On the motion for summary judgment, the issue was whether the judgment should be expressed in Canadian currency by applying the exchange rate prevailing on December 26, 1984 or on the date of judgment. As a result of the depreciation of the Canadian dollar against the Austrian schilling, the amount of Canadian dollars according to the earlier exchange rate would be half the amount calculated on the basis of the later exchange rate.

The court reviewed English law, culminating in the Miliangos decision, and Canadian law on the subject. Two decisions of the Supreme Court of Canada were often quoted as authorities for the breach date rule, but the court held that the two cases involved special circumstances that made the decisions inapplicable to the case before the court. The examination of other decisions of Canadian courts led the court to conclude that there were considerable differences among them on the date of the appropriate exchange rate.

The court cited the recommendation in the Report of the British Columbia Law Reform Commission, discussed later in this chapter, that legislation should be adopted permitting a British Columbia court in appropriate cases to express judgments in a foreign currency or its Canadian equivalent at the time of actual payment. The court added that perhaps the law had evolved to the point where it was possible to dispense with such a statute.17 Nevertheless, the court held that section 11 of Canada’s Currency and Exchange Act required the expression of a judgment in Canadian currency and prevented expression in a foreign currency.

Perhaps, one reason for the inconsistencies in the authorities arises from different economic times. When domestic currencies in Canada and England were appreciating against other foreign moneys, picking the date of the breach as the correct date to calculate the rate of exchange usually caused no harm to the foreign judgment creditor. For example, if at the date of the breach the foreign currency on a debt payable in Canadian dollars was say $10,000 but the Canadian dollar had appreciated in value from then until the time of the judgment, so that the same $10,000 debt could be discharged by the conversion of $8,000 Canadian then, the creditor did not suffer. The fact that the Canadian debtor could pay the foreign creditor with less Canadian money at the time of the judgment was neither here nor there. It was just a lucky windfall to the debtor. What was important was that the foreign creditor be paid in full.

On the other hand, when Canadian currency is falling as against foreign money, great unfairness can occur to a foreign creditor if the date of the breach is selected as the proper date. In such an instance, the foreign creditor may receive far less in his domestic currency than the debtor originally promised to pay. That is what happened here. If the breach date of December 26, 1984, is selected, the plaintiff will only recover about one-half of its claim, or about 252,000 Austrian schillings, instead of the approximately 504,000 schillings rightfully owed. Further prejudice to the foreign creditor can arise if the plaintiff is kept out of its money while the matter proceeds to appeal.18

Faced with the conflicting case law, the court declared that the correct approach was to try to do justice in the circumstances of the case. It would be inequitable to enable the plaintiff to recover only half the just debt owed to it because of changes in exchange rates over which it had no control. Furthermore, the defendant could have paid at any time after December 26, 1984 and cut its losses instead of waiting until judgment was entered against it. The equities were heavily in favor of the plaintiff. As there was no compelling authority to the contrary, the court gave judgment for the plaintiff in the Canadian dollar equivalent of the nominal amount of the schilling debt at the exchange rate prevailing at the date of judgment.

In a case decided by the Quebec Superior Court (in Bankruptcy)19 before the decision was delivered in the Ontario case, a creditor, resident in Germany, claimed, in the bankruptcy proceedings of the Canadian debtor, amounts under contracts with the debtor that were expressed in deutsche mark. The creditor based its claim on the rate of exchange in effect at the date of submission of its proof of claim in the proceedings and reserved the right to adjust the rate when at later dates dividends were paid by the trustee in bankruptcy.

The court held that under the Canadian Bankruptcy Act20 the claims of creditors must be determined at the time the trustee files with the official receiver the proposal by the insolvent debtor for a compromise with creditors, if indeed the proposal is accepted by the creditors and ratified by the court. The date was relevant for other purposes under the statute and should be chosen for translating deutsche mark into Canadian currency, unless there was a compelling reason to depart from the date. The court considered the solution equitable because the proposal, if made effective, was a new contract and a novation of the contracts under which the claims by creditors arose. Under the new contract, dividends were payable at fixed dates, and a creditor could enter into a forward contract for sale, at the rate of exchange at the date of entry into the contract, of the Canadian dollars the creditor would receive as dividends from the trustee. The court therefore denied the creditor the right to adjust the rate of exchange.

The court was pleased that it was relieved by the Bankruptcy Act from the necessity to involve itself with English decisions, and that it could avoid the “instability”21 that resulted from the decision in the Miliangos case.

Thus a reason, persuasive to me, for applying to its fullest extent—albeit in a somewhat arbitrary and artificial manner—the clear and unambiguous rule set forth in the terms of the above-quoted ss. 42(1) and 95(4) of the Canadian Bankruptcy Act, is the sheer hopelessness of attempting to follow and to apply, on a continuing and current basis, the leading decisions in the law of foreign currency obligations of the highest courts of England (where the bulk of our bankruptcy law comes from, but not thank goodness, ss. 42(1) and 95(4), which are of pure Canadian inspiration).22

The British Columbia Commission Report, published in 1983, was inspired by what the Report describes as the remarkable piece of judicial lawmaking in the Miliangos case. The Report notes that there are four possibilities for selecting the rate of exchange when translation of a foreign currency claim into the currency of the forum is necessary. The rate can be the one prevailing when the claim arises, proceedings are instituted to enforce the claim, judgment is delivered, or the judgment is satisfied. Canadian courts have usually chosen the first of these dates. The last of these dates, now chosen in England, requires legal authority to express judgments in a foreign currency. A secondary issue, if two or more foreign currencies are involved, is determination of the appropriate foreign currency in the circumstances of the case in which the issue arises. The report concluded, after a thorough survey of Canadian case law, that the judiciary had shown considerable dissatisfaction with the choice of the date of breach and had been willing to depart from it in some cases by preferring the date of the institution of proceedings or the date of judgment. The result was a confusing and contradictory body of jurisprudence.

The breach date rule was criticized because it was based on the view that a monetary obligation in a foreign currency is analogous to an obligation to deliver a commodity. If the defendant fails to deliver the commodity on the due date, the plaintiff can go into the market at once and purchase the commodity from another supplier for the same amount of currency that he had undertaken to pay to the defendant, and in this way the plaintiff can mitigate the detrimental effect of the breach. The subsequent rise in price of the commodity either is too remote to alter the size of the plaintiff’s claim or is simply irrelevant.

If, however, the plaintiff’s claim is for an amount of foreign currency payable to him on a specified date for goods supplied to the defendant, and the currency of the forum has depreciated, on the analogy of the commodity approach the plaintiff would be expected to go into the market to purchase the amount of the foreign currency he should have received. The plaintiff could not protect himself in this way, however, because he would have to use his own currency, the currency of the forum, at the depreciated rate to purchase the foreign currency he should have received. Even so, it has been argued that the plaintiff could protect himself against loss in such circumstances, but the question is whether, as the innocent party, he should have to bear the burden of taking steps to guard against an adverse movement in the currency of the forum. It seemed more appropriate that the defendant as the party in breach should bear the burden.

The Report notes that rigid application of the pre-Miliangos law can lead to unfair results. The English cases leading up to Miliangos and those that developed it further were cases in which it has been said that a judgment in the currency of the forum translated at the exchange rate in effect on the date of breach would have been unfair to the innocent plaintiff.

It is necessary to define what is meant by “fairness” in this context. The standard against which the fairness of a result may generally be tested is summed up in the Latin phrase restitutio in integrum: the plaintiff should, as far as possible, be put in the same position he would have been in had the breach not occurred. The clearest case is where the currency of the forum has undergone a relative decline. A rule which requires that a properly founded claim for payment in a foreign currency may be discharged by payment of depreciated currency may fall significantly short of the standard described above.23

If, however, the plaintiff’s currency is a foreign currency that has depreciated against the currency of the forum, the plaintiff, in some cases, may be placed in a better position by applying the breach date rule, which may seem to be unfair to the defendant. In other cases, however, the defendant’s delay or failure to pay may have prevented the plaintiff from mitigating the consequences of the decline in his (foreign) currency, and the breach date rule may come closer to restoring his position than any other solution.

The Report summarizes this part of the inquiry by concluding that it cannot be asserted that the breach date rule consistently or invariably produces an unfair result. It is safe only to observe that in a wide variety of situations, perhaps in a majority of them, application of the breach date rule does not achieve restitutio in integrum. The breach date rule had been defended, however, by two authors of a paper submitted to the British Columbia Law Revision Commission who argued that not only did the former English rule achieve fairer results, but it also gave certainty, which the Miliangos doctrine did not.24 They argued that unfairness to a plaintiff could be moderated by the award of prejudgment interest at the proper rate, and moderated even more effectively if compound interest could be awarded. They pointed out that the English cases did not provide certainty about the circumstances in which a foreign currency will be awarded rather than sterling or about the selection of the foreign currency when two or more such currencies are involved.

The Miliangos decision was delivered at a time when sterling, the currency of the forum, was depreciating, so that it seemed clear the decision was more likely to achieve restitutio in integrum for the plaintiff. This effect appeared to justify abandonment of the old case law. For this reason, the British Columbia Report gave special attention to the case in which the foreign currency of the plaintiff’s claim depreciates in relation to the currency of the forum after the date of breach. If the exchange rate prevailing on the date of actual payment were applied, the plaintiff would receive less than he would have received if the defendant had paid on the due date, and therefore the breach date rule and judgment in the currency of the forum would seem to be more advantageous for him. The Commission did not think that this consideration gave a conclusive answer to the question whether the new law was prejudicial to the plaintiff in such a case. It was true that he obtained less in his own currency than he would have received under the old law, but much depended on what had happened to the real purchasing power of the plaintiff’s currency between the dates of breach and judgment. The Commission concluded that the question of prejudice to the plaintiff could not be answered in the abstract once purchasing power was taken into account, so that it could not be postulated that either the breach date or the date of actual payment rule produced the more equitable results in all cases.

Suggestions had been made that were designed to obtain just results in all cases under a rule that recognized the date of actual payment. Some of the suggestions were that the plaintiff should have the option of choosing between the exchange rate in effect on the date of breach and on the date of actual payment; that the court should have a discretion to choose the date; and that the plaintiff should be able to assert an independent claim for damages caused by the defendant’s delay.

The solution preferred by the Commission is prejudgment interest at the rate considered most appropriate by the court, even though this solution might still fail to yield perfect results in the absence of compounding. British Columbia statutory law grants the courts the discretion to award prejudgment interest at the rate deemed appropriate, provided that the rate must be not less than the rate prescribed by law for postjudgment interest. The Commission concluded that the basic rule should be that British Columbia courts award the rate of interest in effect in the country of the foreign currency if the courts receive authority to express judgments in foreign currency.

The Commission noted that the rule on interest it preferred was followed in the second Miliangos case,25 in which the plaintiff’s claim was to be finally disposed of in the light of the decision of the House of Lords in the first case. In the second Miliangos case, the court chose the simple rate of interest on the Swiss franc in Switzerland:

In my judgment the approach in English law should be: if you opt for a judgment in foreign currency, for better or for worse you commit yourself to whatever rate of interest obtains in the context of that currency.26

(The court refused to award the compound interest rate available in Switzerland, holding that such a rate was appropriate when a party was accountable for money wrongfully used for his own purpose, but the defendant had not behaved in this way.) In a British Columbia case discussed earlier in this chapter,27 the Supreme Court directed that the British Columbia prejudgment rate of interest applied to the plaintiff’s recovery of the Canadian dollar equivalent of a debt expressed in Austrian schillings under a judgment in which the schillings were translated into Canadian dollars at the exchange rate prevailing on the date of the judgment. The court held that it could not give judgment in schillings. The subject of interest is considered in more detail after the further discussion of Canadian law.

The British Columbia Commission did not think there was any great need for recognition of a special cause of action for damages for delayed payment as a means of achieving justice not ensured in some circumstances by the rule relating to application of the exchange rate prevailing at the date of actual payment. Prejudgment interest would go a long way toward compensating the plaintiff whose currency had depreciated, because normally the rate of interest on a currency increases as the currency depreciates. (The Report did not mention that this correlation has not always occurred.) The Commission considered the possibility of recommending that courts should have a discretion to choose the rate of exchange prevailing at any date between the date of breach and the date of actual payment. The idea was that the court would be empowered to exercise the discretion only in exceptional circumstances to do justice between the parties. The Report noted that there had been some dubiety among members of the Commission, but finally the Commission agreed not to recommend that the courts should have any such discretion. One reason for reaching this agreement was that the discretion would introduce a degree of uncertainty into operation of the law.

The British Columbia Commission considered the question whether under the Canadian Constitution the topic of the treatment of foreign currency claims was reserved exclusively to the Federal Government or to the Provinces. The Commission concluded that there was no fundamental impediment to provincial legislation on this topic.

The British Columbia Commission examined also the effect of section 11 of the Currency and Exchange Act and concluded that the provision was ambiguous, did not necessarily apply to judgments, and was not intended to prevent the expression of judgments in a foreign currency. The purpose of the provision was to establish that only one currency was legal tender in Canada and to eliminate the pre-Confederation practice of recognizing that numerous currencies had the character of legal tender. Canadian courts should hold that the provision did not prevent adoption of the Miliangos doctrine when causes of action based on claims to foreign currency are litigated in Canadian courts.

Even if section 11 meant that judgments had to be expressed in Canadian currency, which was the prevailing view, it might still be no infraction of the provision to follow English practice and formulate judgments that would be consistent with the Miliangos doctrine. That is to say, a judgment would order the defendant to pay a specified sum in the appropriate foreign currency or the equivalent, at the time of actual payment, in Canadian currency.

The Commission made four recommendations, of which the first three were formulated as follows:

  1. Legislation be enacted which reflects the following principles:

    • (a) In circumstances where a currency other than the currency of Canada will most truly express a person’s loss or claim and will most fully and exactly compensate him then a court shall order that judgment be entered in a form which states the defendant’s liability in the other currency or the equivalent, at the time of payment, in Canadian currency.

    • (b) Paragraph (a) should apply mutatis mutandis to arbitration proceedings.

  2. (a) Ancillary rules of practice concerning the assertion and enforcement of foreign money claims should be promulgated under the Court Rules Act.

    (b) The form of judgment provided by the rules should be comparable to the following:

    • THIS COURT ORDERS that the defendant(s)__________ pay to the plaintiff(s)

    • (i) (state the sum in foreign currency in which judgment has been ordered to be entered), and

    • (ii) (interest as claimed or, interest pursuant to the Court Order Interest Act) or the equivalent, at the time of payment, in Canadian currency, and costs to be taxed.

  3. The Court Order Interest Act should be amended by adding a provision to the effect that the court, in the exercise of its discretion as to the rate of interest, should, when awarding interest on a judgment stated in a foreign currency, have regard to the foreign interest rates which prevail with respect to that currency.28

After the British Columbia Commission issued its Report, the Province of Ontario adopted new provisions for the translation of foreign money claims. The provisions are included in Section 131 of Ontario’s Courts of Justice Act and became effective on January 1, 1985. The rules are similar in some respects to the conclusions and recommendations of the British Columbia Commission’s Report, but differ in other respects. An important difference is that the Ontario legislature concluded that section 11 of Canada’s Currency and Exchange Act prevented the expression of judgments in a foreign currency. The new provisions of Ontario law are these:

131(1) Subject to subsections (3) and (4), where a person obtains an order to enforce an obligation in a foreign currency, the order shall require payment of an amount in Canadian currency sufficient to purchase the amount of the obligation in the foreign currency at a chartered bank in Ontario at the close of business on the first day on which the bank quotes a Canadian dollar rate for purchase of the foreign currency before the day payment of the obligation is received by the creditor.

(2) Where more than one payment is made under an order referred to in subsection (1), the rate of conversion shall be the rate determined as provided in subsection (1) for each payment.

(3) Subject to subsection (4), where, in a proceeding to enforce an obligation in a foreign currency, the court is satisfied that conversion of the amount of the obligation to Canadian currency as provided in subsection (1) would be inequitable to any party, the order may require payment of an amount in Canadian currency sufficient to purchase the amount of the obligation in the foreign currency at a chartered bank in Ontario on such other day as the court considers equitable in the circumstances.

(4) Where an obligation enforceable in Ontario provides for a manner of conversion to Canadian currency of an amount in a foreign currency, the court shall give effect to the manner of conversion in the obligation.

(5) Where a writ of seizure and sale or notice of garnishment is issued under an order to enforce an obligation in a foreign currency, the day the sheriff, bailiff or clerk of the court receives money under the writ or notice shall be deemed, for the purposes of this section and any obligation referred to in subsection (4), to be the day payment is received by the creditor.29

The Ontario statute is consistent with the conclusion of the English Law Commission that the parties to an obligation should be free to agree on the rate of exchange at which a foreign currency obligation shall be translated into the currency of the forum, or on the date of the prevailing rate that is to be applied for this purpose. The statute differs from the views of both the English and the British Columbia Commissions in empowering a court to choose a rate of exchange prevailing at a date other than the date of actual payment if equitable considerations justify this departure. Under the Ontario rule, a contractual prescription of exchange rate will exclude both the statutory date under subsection (1) and the court’s discretion to choose a date that would prevent inequity.

Subsection (1) of the Ontario statute achieves a result in Canadian currency close to the Miliangos body of law and the recommendation in the British Columbia Commission’s Report by rejecting the breach date rule. Indeed, by choosing the rate of exchange in effect on the day before receipt of payment by the plaintiff, Ontario has chosen an exchange rate that may be even later than under English practice, according to which, if it is necessary for the court to authorize enforcement of a judgment, the appropriate rate of exchange is the rate prevailing on the day when enforcement is ordered. There can be delay between adoption of the order and execution of it.

An Excursus on Prejudgment and Postjudgment Interest

The dictum quoted above from the second Miliangos case must be seen within the broader context of English law on the award of prejudgment interest for late payment. The subject of interest merits this excursus because of the economic deduction that prima facie there is an inverse relationship between exchange rates and interest rates. It will be seen that the Miliangos doctrine has had considerable influence on the subject of interest also.

The English Law Commission’s Report explains that the recovery of interest is determined to a large extent by the lex causae.30 The right to recover interest on a contractual debt by virtue of an express or implied term in the contract is governed by the proper law of the contract. If the proper law is foreign, the court will have to determine whether or not under the foreign law a creditor is entitled as of right to interest on an overdue debt. If the proper law of the contract is English law, interest is not recoverable as of right in the absence of a term in the contract to that effect. The court, however, has a discretion to include interest in any sum for which a judgment is given or to award interest on any sum paid after commencement of the proceedings but before judgment. A claim for interest not as an express or implied term of the contract but as damages for breach of contract is governed by the proper law of the contract. According to the Report, there was no direct authority on the law with respect to the right to recover interest in the case of a claim in tort.

Once it is determined that the lex causae enables the plaintiff to claim interest, the second question to be settled is the law that governs such issues as the rate of interest or the award of compound interest or simple interest. The choice to be made is between (a) the lex causae as the law governing the right to interest, on the theory that the further issues are substantive in character and (b) the lex fori as the law that governs matters of procedure, on the theory that the further issues are procedural in character.

If the claim to interest is by virtue of a term of the contract, the issues are resolved according to the proper law of the contract. The law was unclear on the rate of interest when interest is claimed by way of damages. There was no authority in tort, and the authorities were in conflict in relation to contractual claims for interest as damages. Some opinion favored English law as the lex fori and other opinion preferred the proper law of the contract. If English law applies, either as the lex fori or because English law is the proper law of the contract, the court has a discretion to grant simple interest. According to the approach in the second Miliangos case, the court should exercise its discretion, if the payment is expressed in a foreign currency, by award of the prevailing rate of interest on that currency in the country of the currency. In a later case, however, the Court of Appeal has stated that this principle is prima facie guidance only.31

The English Law Commission concluded that, on the whole, the settled law as summarized above was satisfactory, but the Commission set forth its preferences where the law was uncertain.32 The conclusions were, first, that the lex causae should govern the questions (a) whether there is a right to claim interest on the basis of a contractual term and (b) whether there is a claim to interest as damages. Second, if interest is claimed by virtue of a contractual term, both the validity of the term and the rate at which interest is to be paid33 should be governed by the proper law of the contract. Third, English law as the lex fori should govern the rate of interest for damages. Fourth, when the court exercises its discretion to award interest, it should do so, prima facie but not as an absolute rule, at the rate prevailing in the country of the currency in which the judgment is expressed.

In a case34 decided after the Commission’s Report, one of the questions before an English court was whether it had a discretion to award interest on a judgment of a Saudi Arabian court expressed in the currency of that country. The English proceedings were brought to enforce the judgment. Interest on the Saudi Arabian judgment is not payable under the law of that country. It was argued that, for this reason, an English court could not award interest, because the question of interest in legal proceedings is a substantive and not a procedural issue. This argument, for which the second Miliangos case was cited, was rejected. The court held that the statutory provision granting courts a discretion to award interest had to be classified as procedural and not substantive. Therefore, English law, the lex fori, applied, and not the proper law of the obligation. The decision would not affect contractual rights to interest, but it appears that interest on claims to damages for breach of contract or for tort, where there is no express or implied contractual right, is now governed by English law as a matter of procedure.

The English Law Commission dealt also with postjudgment interest—that is to say, interest on judgment debts—and concluded that the Miliangos doctrine made a legislative change in the law desirable in relation to judgments and arbitral awards expressed in a foreign currency.35 Existing legislation provides that every judgment debt shall carry the rate of interest fixed by order and in force at the date of the judgment.36 The reform proposed by the Commission results from the anomaly that while prejudgment interest may be awarded in some cases at the rate prevailing on a foreign currency in the country of the currency, according to the principles summarized above postjudgment interest, whether on judgments expressed in sterling or in a foreign currency, is always fixed in the light of the interest rates prevailing in the United Kingdom at the date of judgment. This rate applies automatically.

The Commission was of the opinion that the Miliangos principle that foreign currency claims are not to be treated as sterling claims applied after judgment as forcefully as before judgment. The Commission recommended, therefore, that the High Court and arbitrators should be empowered to direct that a sum expressed in a foreign currency in a judgment or in an arbitral award should carry interest at such fixed or variable rate as the court thinks fit instead of the statutory rate that would otherwise apply.

The Third Restatement contains the following Comment by the American Law Institute on prejudgment and postjudgment interest:

The date for commencement of interest on an obligation or a judgment is determined by the law of the forum, including its rules on choice of law. When a statutory rate of interest is applicable in the forum, that rate must be applied, even if the judgment is given in a foreign currency. If no statutory rate of interest is applicable, the court may, in appropriate cases, order interest to be based on the interest rate applicable at the principal financial center of the state issuing the currency in which the judgment is payable.37

This Comment is condensed and not altogether clear, although it appears to lean more toward the domestic rules of the lex fori than the lex causae, which may be foreign law. The clause “including its rules on choice of law” in the first sentence, however, might mean that the right to interest is determined by the lex causae if that solution is permitted by the private international law of the forum. The second sentence, however, makes the statutory rate of the forum applicable for both prejudgment and postjudgment interest whatever may be the currency in which a judgment is expressed. Only if the lex fori contains no statutory rate of interest will the court have discretionary authority to apply the rate of interest prevailing on the foreign currency in which the judgment is payable.

Section 9(a) of the proposed Uniform Foreign-Money Claims Act endorses a thorough dedication to the lex causae on prejudgment interest, in some aspects of which it goes beyond the English Law Commission and the Third Restatement. If a foreign money claim is involved, the recovery of prejudgment or pre-award interest and the rate of interest in an action or distribution proceeding are considered matters of substantive law governing the right to recovery under the conflict of laws rules of the forum. Both the right to the recovery and the rate of interest are subject to the private international law of the forum State. A comment describes this rule as the majority rule in the United States. A comment in the January 1989 draft recognized that considerable authority exists in favor of regarding interest rates as matters of procedure and therefore governed by the lex fori without reference to conflicts rules of the forum. The commentary in the January 1989 draft explained that the treatment of interest rates as substantive rather than procedural was related to the choice of the payment date rule for the translation of foreign currencies, and that the effect would be that in most cases the foreign rate of interest would be applicable. This assertion was not explained.38 The earlier comment has been omitted from the commentary on the final version of the Act.

The final commentary recognizes that the provision on prejudgment interest differs from English law on the subject. The commentary states the English law to be that the court will apply either the rate of interest the plaintiff pays on borrowing or the rate of interest applied on the foreign currency of the judgment in the country of that currency.

The commentary in the January 1989 draft noted that domestic law on interest in the United States varied greatly. Some jurisdictions awarded fixed interest rates, others variable rates. Three jurisdictions (one of which was the United States) permitted compounding. This last practice—one would have thought the difference between fixed and variable rates also—permitted forum shopping by parties seeking foreign money judgments. The conflict of laws approach, it is said, would ensure that forum shopping was of no avail.

Another comment in the January 1989 draft was that, according to economists, current interest rates reflect expectations about future inflation (which will affect exchange rates), but prejudgment interest relates to the past and therefore should be based on compensation for the actual lower purchasing power of money. The commentary drew no normative conclusion from this contrast, but the argument could be made on the basis of it that prejudgment interest should be awarded at rates prevailing from time to time since the cause of action arose.

A comment in the final version includes the caveat that although prejudgment interest is one form of damages, provision for prejudgment interest must not be understood to preclude other damages that can be awarded under the substantive law applicable to the determination of damages in accordance with the private international law of the forum.39 For this proposition, the comment draws attention to the New Zealand Naylor case discussed in Chapter 11 and later in this chapter.

Section 9(b) of the Uniform Foreign-Money Claims Act provides that the prejudgment or pre-award interest that would otherwise be payable in a judgment or award in foreign currency may be increased or decreased in certain circumstances to the extent that this qualification is imposed by the law of the enacting State. The circumstances are defined as those in which there is “a failure to make or accept an offer of settlement or offer of judgment, or conduct by a party or its attorney causing undue delay or expense.” Some American States reduce or increase interest rates in order to encourage realistic pretrial offers of settlement and the acceptance of them. The realistic character of an offer is assessed by measuring the offer against the ultimate judgment or award. The increase or decrease in the rate of interest can be considered a sanction against one party or the other. The enacting State may provide, for example, that in the circumstances it specifies the rate of prejudgment interest will be the rate of the lex fori on U.S. dollar claims instead of the rate on the foreign money claim under the lex causae. A comment explains that the State laws under which there is authority to modify the rate of prejudgment or pre-award interest can be considered as either procedural or an expression of public policy, for either of which reasons the lex fori should be applicable.

Finally, Section 9(c) of the final version of the recommended Uniform Act establishes a distinction that was not made by the January 1989 draft. Under that draft, no distinction was made between prejudgment and postjudgment interest, and the provisions as explained above for prejudgment interest applied to postjudgment interest also. Section 9(c) of the final version of the Uniform Act provides, however, that postjudgment interest on a foreign money claim is imposed at the same rate as applies to other judgments of the enacting State, namely the rate that applies to judgments on dollar claims.

The commentary explains that the drafters faced a problem that led them to prefer the solution of Section 9(c). The explanation is that great discrepancies exist among the States in their rates for postjudgment interest. Most countries, including the United States, have fixed statutory rates, which therefore do not respond to changes in the rate of inflation. The implication of this remark appears to be that the economic relationship between exchange rates and statutory interest rates is not allowed to function in the normal way. Without this impediment, the relationship would normally bring about changes in the postjudgment interest rate awarded by courts. To allow the lex causae to determine the interest rate in these circumstances could produce the undesirable consequence of undercompensation or overcompensation. Application of U.S. interest rates to the foreign money judgments of courts in the United States might have similar consequences. The choice between the two sets of undesirable consequences might as well be determined by traditional private international law under which interest on judgments is classified as a problem of procedure and governed by the lex fori.


In an Admiralty action in Cyprus,40 the plaintiff, ships agents in Spain, entered into a contract with the defendant, a Cypriot firm carrying on business of various kinds related to shipping. Under the terms of the contract, the plaintiff, in return for a commission, agreed to find cargo for three of the defendant’s vessels that were to call at Spanish ports on various dates. The third vessel failed to call at the agreed date or at any later date. The plaintiff claimed the loss of commission and the expenses incurred in procuring cargo as damages in consequence of this failure. The parties reached agreement on the plaintiff’s damages at a sum in Spanish pesetas, and the court gave judgment expressed in pesetas for this sum.

The court referred to the Miliangos line of cases:

The decision in Miliangos is a species of judge-made law in response to the problems of our times, such as inflation and great fluctuations in the rate of exchange between various currencies. The internationalization of trade and the use of more than one currencies [sic], as a basis for exchange, were, on surmise, the basic reasons behind the recent evolution of the law.41

The development of English law along its present lines was dictated not by any problems peculiar to English society but by the need to facilitate international trade and keep the avenues of commerce open, considerations relevant to the policy of the law in every country. The solution is a just one and in the absence of any legislative restrictions, it should be followed in Cyprus with equal benefit.42

The legislation of Cyprus regulating the authority of courts to issue judgments placed no restrictions on the power of the court to give judgment in any particular currency. On the contrary, the courts are expressly authorized to issue judgments on “such terms and conditions as the court thinks just.” The power was broad enough, the court held, “to do justice, in this area, in the light of the merits of each case.”43

New Zealand

Isaac Naylor & Sons Ltd. v. New Zealand Co-operative Wool Marketing Association Ltd.,44 decided by the New Zealand Court of Appeal, is an example of the effect the Miliangos case can have even in jurisdictions in which the courts hold that they are unable to express judgments in a foreign currency. The case is discussed in Chapter 11 of this volume, so that it is necessary to recall only a few salient facts here. Naylor, an English company, purchased wool from the Cooperative, a body of New Zealand wool farmers. The practice of the Co-operative was to have sterling receipts converted at once into New Zealand currency and remitted to New Zealand. Naylor was aware of this practice. Shipments were delayed at the request of Naylor, subject to reservation by the Co-operative of its rights resulting from the delay. Payments were made by Naylor at the contract price, but the Co-operative claimed that the delay had caused them various losses, including loss occasioned by the depreciation of sterling against the currency of New Zealand, for all of which the Co-operative claimed damages.

Naylor argued that the recovery of damages for exchange losses was ruled out by the principle of nominalism. A debt expressed and payable in a particular currency may be discharged by payment of the same number of units of the currency as is called for by the contract even if payment is delayed and the currency of payment has depreciated during the period of delay. The court rejected the argument of nominalism.

It should be noted that if the court had held the principle of nominalism to be relevant, the Miliangos decision would have seemed more obviously compatible with that principle than the practice that the decision replaced. The Miliangos case held that a claim to Swiss francs in an English proceeding remained a claim to Swiss francs. Under the pre-Miliangos practice, a claim to Swiss francs would have been transformed into an obligation to pay sterling.

The court stated that notwithstanding the attractiveness of the more realistic solutions made possible by the Miliangos doctrine, New Zealand courts could give judgment only in New Zealand currency. Nevertheless, the Miliangos line of cases gave

some encouragement for the approach that in contracts made in international trade and resulting in the exchange of currency by one party, there is no special rule against the recovery of exchange losses. On this approach such losses will be recoverable if the criteria ordinarily applied in damages cases in contract are satisfied. As is well known the most important of these is usually foreseeability.45

The court held that the loss sustained by the Co-operative because of the depreciation of sterling against the New Zealand dollar during the period of delay was foreseeable and therefore not too remote to justify damages. The court awarded damages for the loss.

The court regarded the case as one of first impression on this point of law. The rationale of the decision on the remoteness of damage can be interpreted to mean that in modern conditions contracting parties, at least if they are experienced traders, must be taken to foresee that exchange rates may fluctuate and that, in the circumstances of the case, loss attributable to fluctuation may be the consequence of failure to perform contractual obligations on time. The allowance of damages for this kind of loss may put a creditor in a financial position similar to the one that would result from applying the Miliangos doctrine, even though the court can express judgments in its domestic currency only.

The New Zealand case resembles the English Ozalid case46 in the emphasis placed on the reasonable foreseeability of an exchange loss as a specific loss suffered because of delay in the payment of a currency, foreign to the forum, in which the contract called for payment. In both cases, the defendant had foreseen, or should reasonably have foreseen, that the plaintiff immediately on receiving the currency of payment would have exchanged it for the currency of the forum. The foreseeability of this special fact had to be shown to sustain the claim for damages and not the foreseeability of changes in the exchange rate, about which there should be no controversy. The requirement of proof of the special fact is the reason why the clause “in the circumstances of the case” appears in the preceding paragraph. Foreseeability was emphasized in the Naylor case because of the role it plays in both English and New Zealand law on damages for breach of contract. The specific character of the loss was stressed because both those legal systems are opposed to a straightforward proposition that damages can be recovered for delay in the payment of a debt.

It has been seen that the true understanding of the Ozalid case is subject to some doubt. It is clear, however, that, in emphasizing the need for the foreseeability of special loss to justify a claim for damages, the courts in the Ozalid and Naylor cases were rejecting the principle that a plaintiff has a prima facie entitlement to damages for loss sustained as the result of the fluctuation of exchange rates that occurs after the contractual date for payment. But it has been argued earlier in this study, with the apparent support of the Naylor case in its treatment of remoteness of damage, that contracting parties engaged routinely in international activities will be aware that exchange rates may fluctuate and cause loss. There must be few parties, whatever their transborder activities may be, who are not aware of these conditions.

If judicial notice were taken of this evident fact, something like a prima facie entitlement to compensation for late payment would be recognized. The dividing line between general loss and special loss might be difficult to discern, and might disappear for practical purposes. The effect of such a development would be nullified to a large extent, however, if foreseeability were understood to require foreseeability not of the obvious fact that exchange rates are fluctuating but of the exchange rates that actually emerge. In these days of volatile and sometimes erratic changes in exchange rates, it is extraordinarily difficult to foresee the course that the exchange rates for many currencies will take over the short, medium, or long term.

Legislators and courts might oppose a prima facie entitlement to damages for loss because of fluctuating exchange rates and late payment because such a principle would seem to favor plaintiffs with foreign currency claims and to discriminate against plaintiffs with domestic currency claims. Evidence exists of such an attitude. Article 4 of the Annex to the Council of Europe Convention on Foreign Money Liabilities (1967) provides that if a monetary obligation, including a debt, is paid late and the creditor suffers a loss as the result of adverse exchange rate fluctuations, the creditor is automatically entitled to an additional sum equivalent to the difference between the rate of exchange prevailing at the date of maturity and at the date of actual payment. If exchange rates behaved in the same way between the date of judgment and the date of actual payment, the creditor would have a similar right to compensation under Article 7. The English Law Commission criticized these provisions because they gave an automatic right to damages irrespective of the currency in which the judgment should properly be expressed under the Miliangos doctrine. The Commission preferred the Miliangos approach as a means of doing justice in a world of fluctuating exchange rates rather than a right to damages for the late payment of a debt (except when there was a specific and foreseeable loss). Furthermore, there should be no special exception for foreign money obligations.

We believe that the introduction of a specific right of compensation applicable to foreign-currency creditors but not to those whose claim is in sterling would create an anomaly.47

The Commission advised that the United Kingdom should not become a party to the Convention, and this advice has been followed. The Commission might not object to a rule on the award of compensation for the late payment of a debt if English law should develop a general right of this kind.


In a case of first impression in Scotland,48 L. owed C. Bank a debt in deutsche mark as the result of a loan. L. failed to repay, and C. Bank sought judgment for the deutsche mark amount of the loan or the sterling equivalent. The Lord Ordinary reviewed the Scottish cases, the general tenor of which can be summarized by citing a sentence from an earlier judgment:

I think the inconvenience involved in attempting to enforce a decree expressed in foreign currency is too great to justify me in granting the warrant craved.49

The Lord Ordinary then reviewed the Miliangos line of cases, and recommended that they should be followed. If they were not followed,

it seems that we would be falling behind England and, I think, other European countries in allowing procedural rules to produce relative injustice in times of sudden and substantial variations in exchange rates.50

The option to repay in sterling was necessary, because a debtor willing to repay in the appropriate foreign currency might be prevented from doing so by exchange control in force at the time of repayment. But in view of the novelty and importance of the issue, the Lord Ordinary reported the cause to the Inner House (a superior court).

The Inner House held that in conditions of rapidly fluctuating exchange rates it was not bound by former decisions on the expression of judgments, and it was free, therefore, to consider the problem in the light of the true objectives of the law of Scotland. For this purpose, the court quoted the following remarkable passage on the law as it stood at the end of the sixteenth century:

[22] . . . In the case, firstly, of a transaction between the subjects of different sovereigns, the creditor is not bound to accept payment in the money of his debtor’s country if any prejudice would be caused to him thereby (D. 46.3.99). . . . The sound rule, however, in these matters is that strict regard should be paid to the terms of the bargain between the parties. Thus, if the agreement is that payment should be made in the usual coin of the realm current for the time being—which is a common form of agreement—then it should receive effect, and the nominal value of the public coin will become the measure of the private debt. But sometimes it is specially provided that the loan shall be made in gold, in ‘écus’ as is sometimes provided, or in angels, or testers; and in that case repayment must be made in the stipulated coin, or in the like quantity and quality of the precious metal. A creditor thus avoids the risk of being the loser by accommodating his debtor which he may have done without stipulating for interest. . . . [23] If the parties have made no special agreement on the subject, and the value of the currency has become depreciated since the debt was incurred, it becomes important to ascertain whether (on the one hand) the debtor has been late in making payment, or whether (on the other hand) the creditor has been at fault in not accepting it. In the former case, the loss arising from a fall in the value of the currency, occurring subsequent to the date fixed for payment, falls on the debtor. In the latter case, the loss arising from a similar cause falls on the creditor, provided he has refused to accept payment when tendered to him.51

The court concluded that the objectives in this statement were the same as those declared by the House of Lords in the Miliangos case, including the now famous statement by Lord Wilberforce that a creditor contracting for Swiss francs does not bargain for sterling and that rules of procedure, unless imperative, should not be allowed to alter the bargain. The court applied a solution similar in all respects to the Miliangos doctrine.

South Africa

The discussion of relevant South African jurisprudence can begin with a decision of the Witwatersrand Local Division of the Supreme Court in 1984.52 The plaintiff entered into contracts to purchase a specified quantity of a commodity from the defendant against payment in South African currency. The defendant wrongfully repudiated the contracts. The plaintiff suffered loss as a result of purchasing the commodity from another supplier for U.S. dollars at a higher price. The court held that not only was the defendant entitled to pay in rand, but also that the court was obliged to give judgment in that currency, although the court confessed that it could not find the origin of the latter rule. The issue was the choice of the appropriate exchange rate for translating U.S. dollars into rand.

That exchange rate according to the plaintiff was the one prevailing at the date of judgment, and according to the defendant the rate prevailing at the date when the breach occurred. The defendant’s contention would produce an amount in South African currency equivalent to about 55 percent of the amount claimed by the plaintiff.

On the strength of Roman-Dutch authority, South African cases, and South African authors, the court decided to adopt the defendant’s contention. Fluctuations in exchange rates subsequent to the date of breach had to be ignored. It was possible that the loss suffered by the plaintiff as a result of the depreciation of the U.S. dollar since the date of breach could be recovered as an additional head of damage, but this point had not been argued. The court held that to apply the exchange rate prevailing at the date of judgment would alter the quantum of the debt according to the fortuitous date when judgment was given after the plaintiff chose to bring his claim.

Otherwise, why should the depreciation in the value of money caused by inflation, or, maybe one day its appreciation, between breach and actual payment, not similarly be taken into account? It was not suggested that this can be done, or is, done.53

The court discussed the Miliangos case and subsequent English cases and referred to “the attractive and persuasive reasoning”54 in them. The cases rested, however, on the ability of English courts to express judgments in foreign currency and therefore to apply the exchange rate prevailing at the date of judgment or later. The plaintiff could not rely on the doctrine of the English cases, because South African courts had no power to give judgment in a foreign currency, and the plaintiff had not argued that there was such a power. The court applied the exchange rate in effect at the date of breach.

The next case in the development of South African jurisprudence was decided in June 1986 by the Appellate Division, the highest court.55 In a consolidated action in rem in Admiralty under an English Admiralty statute of 1890 that applied in South Africa, a number of seamen claimed wages due and payable to them by the owner of a vessel. The claims were expressed in U.S. dollars. The court first held in February 1986 that this fact raised the questions (a) whether the court’s order in such a case was to be expressed in dollars or in rand, (b) the date of the exchange rate for translating dollar claims into rand, and (c) who should make the calculation in view of the fact that the appropriate rate of exchange prevailing on the relevant date or dates would have to be ascertained. As these questions had not been canvassed, the parties were permitted to file their written agreement on the questions.56

The order did not imply that the decision of these matters was being delegated to the parties, because the court declared that it would formulate its final order after having received details of the parties’ agreement. The parties did not reach agreement, so that the court had to answer the questions without any benefit that it might have derived from an agreement. The seamen argued that the Miliangos doctrine should be regarded as declaratory of the English common law as of 1890, which was applicable in admiralty, and should be followed by the South African court. The owner argued that an English admiralty court sitting in 1890 would not have applied the Miliangos doctrine. The House of Lords in the Miliangos case was departing from the earlier law and was not expounding the common law with retrospective effect.

The Appellate Division in its second decision recalled that the dissenting Law Lord in the Miliangos case (Lord Simon) had said that the majority opinion

involves that the law must be deemed always to have been as my noble and learned friends now declare it.57

Nevertheless, in the opinion of the Appellate Division, it would be wholly unrealistic to regard the Miliangos decision, which relates essentially to matters of a procedural character, as representing the law and practice current in the English Admiralty Court of 1890. The decision was a radical (perhaps “revolutionary”) departure from the established rules of practice, dictated by changed conditions in exchange rates and currency stability. The court decided, therefore, that judgment in the case had to be expressed in rand, and that the breach date rule should apply.

This conclusion posed a novel difficulty in the choice of exchange rates. The seamen’s claims included a variety of items: payments for wages, overtime, Saturday and Sunday work, holidays, leave, subsistence. The seamen were paid monthly. The court noted that while determination of the monthly shortfall might be possible in respect of some items, other items would raise difficulties. Furthermore, it would be complicated and cumbersome to ascertain and apply a separate exchange rate for each monthly amount. In the circumstances of the case, it was not possible to apply the breach date rule, and so an alternative ad hoc procedure would be necessary. The court decided to adopt the global amount for each seaman as calculated by the trial court, and that March 15, 1980 would be chosen as the date that would determine the applicable (middle) exchange rate. That day was the last one of the period that formed the basis of the seamen’s claims. The calculation in rand would be made by the Registrar of the trial court. The Appellate Division emphasized that its decision related solely to the circumstances of the case and that the decision would not necessarily be a precedent for actions under the Admiralty statute of 1983. If the court was able and willing to be practical and flexible about calculating the seamen’s claims as a matter of procedure, why should the court not have been equally practical and flexible about a Miliangos solution as it too was considered essentially procedural?

A third case to be examined as part of this jurisprudence was decided by the Cape Provincial Division in August 1986.58 The Japanese plaintiff issued a summons against the South African defendant for an amount in rand. The alleged cause of action was based on a contract dated August 19, 1982 under which the plaintiff would manufacture certain machinery for the defendant and would deliver the machinery f.o.b. at a Japanese port, in return for payment of a specified amount of yen, to be effected by an irrevocable letter of credit due at sight. The defendant failed to provide the letter of credit, although the plaintiff had tendered the machinery against payment. The plaintiff claimed an amount of rand calculated at the yen-rand exchange rate in effect on August 19, 1982.

The plaintiff, after instituting these proceedings, gave notice of a proposed amendment to its pleadings. The defendant’s objection to the proposal gave rise to the issue in the case. Among the changes the plaintiff wished to make was a request for an order requiring the defendant to pay the amount in yen specified in the contract and alternatively the rand equivalent at the exchange rate obtaining on the date on which payment would be effected. The defendant’s objections were, first, that a South African court can express its judgments in rand only (save in the exercise of admiralty jurisdiction); and, second, that the English rule permitting judgment to be given in a foreign currency and translated at an exchange rate prevailing at a date related to enforcement, instead of the contractual due date, was contrary to Roman-Dutch law.

The court dismissed both of the defendant’s objections. The Witwatersrand case was distinguished on the ground that it involved a claim by a foreign creditor seeking damages against a South African debtor in a South African court. In such a case, the court thought, damages would probably be awarded in rand, calculated at the exchange rate prevailing at the date of breach. The instant case was different: it involved a foreign creditor seeking to enforce in a South African court, as the forum of the debtor’s domicile, a contractual debt payable in a foreign currency at the creditor’s domicile. In such a case, unless there was a rule of law to the contrary, logic and morality dictated that the plaintiff should receive what he had bargained for. The terms of the contract should not be changed by substituting another currency for the foreign currency of payment.

A tardy debtor suffering disadvantage as a result of adverse developments in exchange rates would have no one to blame but himself for his loss. A creditor detrimentally affected by his debtor’s delay in making payment is not in law prevented from claiming damages occasioned by the delay while at the same time holding the debtor to the agreement. For his part, the creditor is obliged to mitigate damages. It will be observed that the court held that a creditor can claim damages for delayed payment of a foreign currency debt, as was held by the New Zealand court in the Naylor case and perhaps by the English court in the Ozalid case.

The court could find no rule of law that barred the expression of a judgment in a foreign currency. Any so-called rule probably had its roots in practical convenience. An unsatisfied judgment leads to process in execution. South African bidders are not likely to offer yen for the debtor’s assets put up for sale to satisfy the judgment.

The court held that logically the translation of a foreign currency into South African currency had to be made when payment takes place and not when it falls due. To hold otherwise would pave the way for a defaulting debtor to profit by his default. Cases in which the due date had been applied were distinguishable or wrong.

In a case59 decided on May 15, 1987 the full bench of the Natal Provincial Division was thus faced with the conflicting conclusions of the single judge of the Witwatersrand Local Division and the single judge of the Cape Provincial Division. The plaintiff, a Danish company, carried on business in Copenhagen as shipowners; the defendant, a South African company, carried on business as a ship repairer in Durban. The lower court had held that the plaintiff had suffered loss, either in the sense of expenditures or moneys not received, in amounts of U.S. dollars, Danish kroner, and rand. The lower court followed the Witwatersrand decision and held that judgment for these amounts could be expressed only in South African currency.

The Natal court preferred the approach of the Cape decision and held that the so-called rule that judgments had to be expressed in the domestic currency was rooted in supposed reasons of convenience related to execution. A court might want to take these considerations into account in exercising a discretion on the currency in which judgment should be expressed, but there was no absolute prohibition of the expression of judgments in a foreign currency. The modern English approach was said to be in accordance with this view. For determining the appropriate currency, the court cited with approval the criteria applied in the English cases of The Despina R and The Folias.

The court held that it had a discretion to decide what was the appropriate currency in the circumstances of the case. The fact that the amount of damages might have to be assessed in a foreign currency at the date of breach did not mean that those damages had to be quantified in South African currency as at that date. In the instant case, according to the criteria of the English cases, the plaintiff felt his loss in the three foreign currencies.

When judgment is given in a foreign currency it is necessarily implicit that it may be satisfied in South Africa by payment in the foreign currency or by the payment of its equivalent in rand when paid.60

The Cape decision had held that a judgment could be expressed in a foreign currency when a contractual debt was payable in that currency. The Natal court went further and held that damages for breach can be awarded in a foreign currency in appropriate circumstances.

The Durban and Coast Local Division,61 on August 12, 1987, gave further evidence of the new tendency, but added an interesting nuance on causation in dealing with the consequences of this development. The plaintiff conducted a maritime service between Europe and South Africa. The defendants were liable under Section 5(4) of South Africa’s Admiralty Jurisdiction Regulation Act 105 of 1983 for the improper arrest of the plaintiff’s vessel. The issue was the quantum of the plaintiff’s loss and damage caused by the arrest. On this issue, admiralty law was the same as English and South African common law.

The parties agreed on the amounts of U.S. dollars that should be awarded for loss of hire and the consumption of fuel. The parties agreed on the amount in rand for port, agency, and marine charges, but disagreed on whether judgment for this collective item should be expressed in that currency or in U.S. dollars. The charges had been incurred and settled in rand. The plaintiff’s argument was that freight moneys payable in South Africa were due in dollars but collected in rand at the exchange rate between the two currencies prevailing at the date of arrival of a vessel. From time to time, the plaintiff’s agents remitted the dollar equivalent of these collections to the plaintiff’s headquarters in Geneva. The plaintiff contended that if the charges had not been incurred because of the wrongful detention of the vessel, the agents would have remitted the dollar equivalent of a larger amount of rand. In addition, a more favorable rate of exchange would have applied than the current one, because the rand had depreciated against the dollar. The defendants’ argument for expressing this item in rand was that the charges had been incurred and paid in that currency, and that if the rand had not depreciated there would have been no issue. The proximate cause of the loss, therefore, was the exchange rate and not the attachment of the vessel.

The court accepted the defendants’ argument, and, applying the criterion of the currency in which the loss is felt as stated in The Despina R, held that this currency was the rand. In reaching its conclusion, the court emphasized that “the money did not have to be sent here from overseas to pay the claims but was already here in rands to pay. . . . It is somewhat difficult to imagine, had the rate of exchange gone the other way, that the plaintiff would not have insisted on an award of R4 302,69!”62

It is submitted that the location of funds should not necessarily settle the question of the currency in which an enterprise suffers a loss if the single main base of its activities, to which receipts are remitted, is in another country. As for the court’s comment on appreciation, it does not follow that the choice of the appropriate currency should be left to the discretion of the claimant and not determined by the court in accordance with established rules.

A more surprising aspect of the opinion is the court’s reaction to the alleged issue of causation. In fact, there was no issue once the court decided that the appropriate currency for the item in question was the rand. The depreciation of the rand was then irrelevant. But suppose that the appropriate currency was the dollar. It should not be held on that hypothesis that the depreciation of the rand against the dollar was too remote to be taken into account. A cause of action does not arise because of a depreciation. A cause of action is always something else—such as the improper arrest of a vessel as in this case—but the loss arising from such wrongful behavior can then be increased by the depreciation of a currency against the appropriate currency.

Various legal fees and charges incurred in the United Kingdom, the Netherlands, and Durban were to be treated and recovered as allowable costs of the legal proceedings in which they were incurred and not as damages, so that the issues of the appropriate currency and exchange rates did not arise in relation to this collective item. A party has to finance his own litigation and, if successful, to recover such costs as he may be entitled to through the applicable process. If actual costs exceed recoverable costs, the balance cannot be claimed as damages. Certain legal costs incurred in the United Kingdom were distinguished, however, as not having been related to litigation and could be treated as damages. The items of damages awarded to the plaintiff were expressed respectively as amounts of U.S. dollars, rand, and sterling, or, in other words, the currency of the U.K. forum and two currencies foreign to that forum.


In August 1987, the High Court of Zimbabwe considered the question whether judgments had to be expressed in the currency of that country.63 The plaintiff claimed damages in U.S. dollars for misrepresentation as the result of which it alleged it had made an overpayment to the defendant of a substantial amount of U.S. dollars. The court reviewed the English precedents and the first three South African cases discussed above. The defendant applied to have the reference to U.S. dollars struck from the plaintiff’s claim on the ground that a court in Zimbabwe could express judgments only in the currency of the forum. The defendant argued that the law to be administered, according to section 89 of the Constitution of Zimbabwe, was the law in force in the Colony of the Cape of Good Hope on June 10, 1891, and that the law on the matter in issue at that time was the law of England. The court thought, however, that English legal rules in force at that time were persuasive but not binding in the Cape of Good Hope.

The defendant also argued that even if the court could give judgment in U.S. dollars, the alleged loss was suffered in Zimbabwean currency and not in the foreign currency. The court gave judgment in U.S. dollars but did not explain why it failed to accept the defendant’s argument that the loss had not been suffered in that currency. The Supreme Court, the decision of which is discussed below, thought that the lower court had implicitly held that a plaintiff is entitled to judgment in the currency in which the loss was immediately sustained even if the loss was effectively felt or borne in another currency.

The defendant relied on an earlier decision of a Zimbabwean court,64 in which a novel argument was endorsed. In the earlier case, the court thought that English courts had no inhibition about giving judgments in foreign currency because the United Kingdom did not have exchange control legislation. In Zimbabwe, however, judgments could not be expressed in a foreign currency because Zimbabwe did have exchange control legislation. The court in the instant case did not accept this distinction, although it regarded the earlier decision as highly persuasive, because the defendant had not cited any provision of Zimbabwe’s exchange control legislation that prohibits the expression of judgments in a foreign currency. The court pointed to section 11 of Canada’s Currency and Exchange Act 1970 as an example of a statutory provision, for which, however, no corresponding provision of Zimbabwean statutory law had been mentioned. Instead, the court cited with approval the decision of the Cape Provincial Division discussed above.

A strange feature of the case is that, according to the law as seen by the court, the plaintiff, if successful, would be entitled to judgment for the amount of U.S. dollars he claimed or the equivalent in Zimbabwe dollars at the rate of exchange prevailing at the date of payment. The plaintiff, however, claimed, as the alternative to U.S. dollars, Zimbabwe dollars at the exchange rate in effect on April 6, 1984, the due date for payment. The defendant stated that it did not dispute this date. Perhaps the exchange rate in effect on that date was more favorable to the defendant than the exchange rate likely to prevail on the prospective date of payment. The English Law Commission has concluded that parties should be free to agree on the date for the choice of exchange rate,65 and perhaps the defendant’s acquiescence in the date advanced by the plaintiff in its claim constituted such an agreement.

On appeal, the Supreme Court66 agreed with the lower court that there was no legal principle that judgments had to be expressed in the domestic currency. On the contrary, justice between the parties demanded that, if necessary, judgments should be expressed in the appropriate foreign currency. This principle would bring the law of Zimbabwe into line with many foreign legal systems.

Fluctuations in world currencies justify acceptance of the rule not only that a court order may be expressed in units of foreign currency, but also that the amount of the foreign currency is to be converted into local currency at the date when leave is given to enforce the judgment. Justice requires that a plaintiff should not suffer by reason of a devaluation in the value of currency between the due date on which the defendant should have met his obligation and the date of actual payment or the date of enforcement of the judgment. Since execution cannot be levied in foreign currency, there must be a conversion into the local currency for this limited purpose and the rate to be applied is that obtaining at the date of enforcement.67

That the majority of the Law Lords [in the Miliangos case]…opted for a more realistic approach to modern economic conditions is strongly illustrative of the concept, never to be overlooked, that the law is a living system that adapts to the necessities of present times and is to be given new direction where on principle and in reason it appears right to do so.68

The Supreme Court agreed with the lower court that the presence or absence of exchange control legislation was irrelevant.

The reference to the exchange rate obtaining at the date of enforcement of the judgment must be understood to mean that enforcement is necessary in the circumstances of the case. If payment is made without an order for enforcement of the judgment, the exchange rate for translating the amount of the judgment into the domestic currency should be the exchange rate prevailing on the date of actual payment. If enforcement is necessary, the rate of exchange prevailing at the date when enforcement is ordered might be different from the rate when the plaintiff receives satisfaction from the proceeds of sale of the defendant’s assets in execution of the judgment. Application of the earlier rate of exchange, however, may be unavoidable if the rules of the court require that the enforcement order must prescribe the amount to which the plaintiff is entitled in the domestic currency.

The Supreme Court held, notwithstanding the principle it endorsed on the currency of judgments, that the lower court had erred in deciding that the appropriate currency in which the judgment should be expressed in this case was the U.S. dollar.69 The foreign currency was the one in which the loss had been immediately sustained, but that test was not correct for determining the currency of judgment. The correct test was the currency in which the plaintiff avers and proves that the loss had been effectively felt or borne. The plaintiff (respondent on appeal) had suffered its true loss in Zimbabwe dollars. The plaintiff was a Zimbabwean company that conducted its business in Zimbabwe. It had not been alleged that the business was normally conducted in U.S. dollars or that the plaintiff owned holdings of that or any other foreign currency. The plaintiff had been required to obtain permission of the Reserve Bank of Zimbabwe to purchase U.S. dollars with the domestic currency in order to discharge its contractual obligations. This fact was not sufficient to establish that the plaintiff’s loss was truly felt or borne in U.S. dollars rather than Zimbabwe dollars. The plaintiff had the closest, if not the only, connection with the latter currency.

The plaintiff advanced two further arguments, both of which failed. First, the judgment should be expressed in U.S. dollars because Zimbabwe’s reserves of foreign exchange had suffered a loss in that currency, and therefore public policy justified the plaintiff’s claim to U.S. dollars. The court agreed that the nation’s foreign exchange reserves had suffered a loss, but the test is the currency in which the plaintiff, and only the plaintiff, has effectively felt or borne a loss.

Second, the plaintiff’s claim to dollars was supported by the existence of a clause in the agreement between the parties under which if a dispute went to arbitration, the arbitrators were authorized to make an award for payment in a foreign currency. The court held that the arbitrators would award a foreign currency only if it was the currency in which the plaintiff effectively felt or bore his loss. The clause would not justify a court to apply a different test.


Chief Collector of Taxes Papua-New Guinea v. T.A. Field Pty. Limited [1975] 49 A.L.J.R. 351.


T.A. Field Pty. Ltd. v. Chief Collector of Taxes of Papua-New Guinea [1975] 2 N.S.W.L.R. 101.


David Flint, Foreign Investment Law in Australia (Sydney: Law Book Company, 1985), pp. 364–65.


Australian and New Zealand Banking Group Limited v. Cawood [1987] 1 Qd.R. 131.


Ibid., p. 134.


Ibid., p. 133.


Ibid., p. 134.


Giuseppe Foti and Ors. v. Banque Nationale de Paris (unreported, No. 60 of 1987, March 17, 1989).


R.S.C. 1970, c. C-39.


Batavia Times Publishing Co. v. Davis [1978] 88 D.L.R. (3d) 144.


On the enforcement of foreign judgments in English law, see paragraphs 2.37–2.42, 3.45–46, 6.2(11) of the English Law Commission’s Report.


S.I. 1972, No. 1590.


Paragraph 2.42 of the Report.


Am-Pac Forest Products Inc. v. Phoenix Doors Ltd. et al [1979] 14 B.C.L.R. 63.


Ibid., p. 66.


Salzburger Sparkasse v. Total Plastics Service Inc. [1988] 50 D.L.R. (4th) 639.


Ibid., p. 646.


Ibid. See also National Westminster Bank Ltd. v. Burston [1980] 28 O.R. (2d) 701, at p. 703, 16 C.P.C. 27; Airtemp Corp. v. Chrysler Airtemp Canada Ltd. [1981] 121 D.L.R. (3d) 236, at p. 239, 31 O.R. (2d) 481, at p. 484; Oshawa Croup Ltd. v. Great American Ins. Co. [1982] 132 D.L.R. (3d) 453, at p. 467, 36 O.R. (2d) 424, at p. 437, [1982] I.L.R. ¶1-1492; Royal Bank of Canada v. Paletta [1983] 44 O.R. (2d) 29, at pp. 31–32, 40 C.P.C. 55; N.V. Bocimar S.A. v. Century Ins. Co. of Canada [1984] 7 C.C.L.I. 165, at p. 179, 53 N.R. 383, at pp. 392–93; Prasad v. Frandsen [1985] 60 B.C.L.R. 343, at p, 358.


Re Canadian Vinyl Industries Inc.; Textilwerke Gebrüder Hoon v. Corber [1978] 29 C.B.R. 12.


R.S.C. 1970, c. B-3.


Re Canadian Vinyl Industries Inc.; Textilwerke Gebrüder Hoon v. Corber [1978] 29 C.B.R., at p. 23.


Ibid. The court did not cite Re Dynamics Corporation of America [1976] 2 All E.R. 669, the English case that establishes a simple and uniform criterion for the translation of claims in foreign currency in bankruptcy proceedings.


P. 26 of the British Columbia Report.


Roger A. Bowles and Christopher J. Whelan,.review of “Foreign Money Liabilities, Working Paper No. 33,” Canadian Bar Review, Vol. 60, No. 4 (December 1982), pp. 805–16.


Miliangos v. George Frank (Textiles) Ltd. (No. 2) [1976] 3 W.L.R. 477; [1976] 3 All E.R. 599; [1977] 1 Q.B. 489.


[1977] 1 Q.B. 489, at p. 495. The second Miliangos case raised the question whether the rate of interest should be the rate the plaintiff was actually paying during the period in which he was kept out of his money. The plaintiff was able to borrow at extremely favorable rates because his financial standing in Switzerland was high. The court held, however, that it could not examine all the variables that might enter into the circumstances of a case. The court preferred to fix a principle that would be applicable to all plaintiffs. This solution, it should be noted, though convenient, might not give expression to restitutio in integrum in all cases. In B.P. Exploration Co. (Libya) Ltd. v. Hunt (No. 2) [1979] 1 W.L.R. 783, the court did take into account some of the possible variables and, as a result, adopted a rough and ready solution.


Salzburger Sparkasse v. Total Plastics Service Inc. [1988] 50 D.L.R. (4th) 639.


P. 60 of the British Columbia Report (footnote omitted).


J. Michael Robinson, “Canada Adopts a Currency Conversion Code,” International Financial Law Review (London), Vol. 3, No. 11 (November 1984), pp. 27–29, at p. 28.


Paragraphs 2.29–2.33.


Shell Tankers (U.K.) Ltd. v. Astro Comino Armadora S.A. (The “Pacific Colocotronis”) [1981] 2 Lloyd’s Rep. 40, at pp. 45–47. The solution, whether or not prima facie, was not followed in Helmsing Schiffahrts G.m.b.H. & Co. K.G. v. Malta Drydocks Corporation and Others [1977] 2 Lloyd’s Rep. 444. The court expressed its award in Maltese pounds but chose the interest rates prevailing in Germany, where the plaintiff carried on its business and had to borrow because of the delay in payment. The court did not award interest, therefore, at the rate prevailing in either Malta or England (the country of the forum). The decision was referred to without disapproval in The “Pacific Colocotronis.”


Paragraphs 3.50–3.57, 6.2(13).


The English Court of Appeal has decided that in English law there is no right to compound interest save by express or implied agreement between the parties or by custom binding on them. An agreement to pay compound interest may be implied by virtue of acquiescence, but such an agreement is not normally implied except in the case of “mercantile accounts current for mutual transactions.” (National Bank of Greece SA v. Pinios Shipping Co. No. 1 and Another, The Maira [1989] 1 All E.R. 213; [1989] 3 W.L.R. 185; The Times (London), December 1, 1989, p. 42.) In Minories Finance Ltd. v. Daryanani (The Times (London), April 14, 1989, p. 36) the Court of Appeal held that it was unclear whether bankers were entitled to charge compound interest on loan accounts in the absence of any express provision to that effect in the loan agreement, but the court did not reject the possibility that evidence might be offered to establish an implied term in modern banking practice. See Timothy Portwood, “Wherefore Compound Interest?” Journal of International Banking Law (Oxford), Vol. 4, No. 5 (1989), pp. 243–45, See F.A. Mann, “Compound Interest as an Item of Damage in International Law,” in Further Studies in International Law (Oxford: Clarendon Press, 1990), pp. 37785, who concludes at p. 385 that “it is submitted…, on the basis of compelling evidence, compound interest may be and, in the absence of special circumstances, should be awarded to the claimant as damages by international tribunals.”


Midland International Trade Services Ltd. & Others v. Sudairy & Others, Financial Times (London), May 2, 1990, p. 14.


Paragraphs 4.1–4.15, 6.4, Appendix A.


Other provisions apply to county courts and certain judgments by other courts. See the Report, paragraphs 4.4–4.6. For arbitral awards, see ibid., paragraph 4.7.


Section 823, Comment (e), pp. 333–34.

In H.A.W.M. Ackerstaff V. M.A. van Berge Henegouwen, Nederlandse Jurisprudentie (1973), No. 377, the Supreme Court of the Netherlands decided that the statutory rate of interest under the Civil Code payable on an overdue debt applied not only to debts payable in Netherlands currency but also to debts expressed and payable in a foreign currency. In the latter case, however, interest was not intended to be compensation for the depreciation of the foreign currency against the guilder after the due date, and damages were recoverable for that loss. The Court of Appeal had taken a different view on the statutory rate of interest on the ground that a debt payable in a foreign currency was not a sum certain within the meaning of the Civil Code. The Supreme Court held that the legislature may not have thought of debts payable in a foreign currency, but the creditor’s loss because of the debtor’s nonperformance was the same whatever the currency of payment might be, save for the loss resulting from depreciation of the foreign money.


The reasoning may be that the payment date rule is the natural consequence of expressing a judgment on a foreign currency claim in that currency, and the further consequence that the interest rate on that same currency should be awarded for economic (substantive?) reasons.


Note, for example, the Netherlands case mentioned in footnote 37 above. It is possible, however, that on the facts of that case an American court would hold that the substantive law governing the contract under the court’s private international law was French law and not Netherlands law.


J.Y.A. Lamaignere v. Selene Shipping Agencies Limited, 1 C.L.R. 227.


Ibid., p. 234.


Ibid., p. 235.




[1981] 1 NZLR 361. See also Johanna Vroegop, “Exchange Losses on an International Sale of Goods,” New Zealand Law Journal (Wellington), January 1982, pp. 3–5.


[1981] 1 NZLR, at p. 365.


Ozalid Group (Export) Ltd. v. African Continental Bank Ltd. [1979] 2 Lloyd’s Rep. 231.


English Law Commission Report, paragraph 3.60, last sentence. See also paragraph 2.36.


Commerzbank Aktiengesellschaft v. Large, Scots Law Times Reports, November 25, 1977, p. 219.


Ibbetson—Petitioner, 1957 S.L.T. (Notes) 15, quoted at p. 221 of the report on the Commerzbank case cited in footnote 48 above.


P. 222 of the report on the Commerzbank case cited in footnote 48 above.


Sir Thomas Craig’s Jus Feudale (1655), Vol. I, translated by James Avon Clyde (Edinburgh and London: William Hodge & Company, 1934), Title 16, pp. 318–19. The object of the book was to illustrate feudal law as applied in Scotland.


Voesl Alpine Intertrading Gesellschaft MBH v. Burwill and Co. SA (Pty) Ltd., 1985(2) SA 149(W).


Ibid., p. 151.


Ibid., p. 152.


Malilang and Others v. MV Houda Pearl, 1986(3) SA 960(A).


1986(2) SA 714(A).


[1976] A.C., at p. 490.


Murata Machinery Ltd. v. Capelon Yarns (Pty) Ltd., 1986(4) SA 671(C).


Elgin Brown and Hamer (Pty) Ltd. v. Dampskibsselskabet Torm Ltd., 1988(4) SA 671(N).


Ibid., p. 674.


Mediterranean Shipping Co. Ltd. v. Speedwell Shipping Co. Ltd. and Another, 1989(1) SA 164(D).


Ibid., pp. 167–68.


Makwindi Oil Procurement (Pvt) Ltd. v. National Oil Co. of Zimbabwe (Pvt) Ltd., 1988(2) SA 690 (ZHC).


National Food Distributors v. Paul Weltman, HO-H-408-85.


Paragraph 6.2(4) of the English Law Commission’s Report. See A.J. Kerr, “Date for Determining Loss Through Breach of Contract; Fluctuating Exchange Rates,” South African Law Journal, Vol. 103 (August 1986), pp. 339–43.


1989(3) SA 191(ZSC).


Ibid., pp. 197–98.


Ibid., p. 197.


The court explained that notwithstanding this conclusion it had dealt with the question whether judgments can be expressed in a foreign currency because of the undesirability of leaving the law on this point unclear in the face of conflicting decisions.