FOREIGN CURRENCY JUDGMENTS IN TORT: AN ILLUSTRATION OF THE WEALTH‐TIME CONTINUUM

DOIhttp://doi.org/10.1111/j.1468-2230.1980.tb01580.x
AuthorJ. A. Knott
Publication Date01 Jan 1980
FOREIGN CURRENCY JUDGMENTS IN TORT:
CONTINUUM
AN ILLUSTRATION
OF
THE WEALTH-TIME
A
pound in England is a pound whatever its international
purchasing value Scrutton
L.J.
in
The Baarn
(No.
1)
It
does not mean,
of
course, that the pound in Britain, in
your pocket or purse, or in your bank, has been devalued.
Harold Wilson
P.C.,
M.P.a
IN
recent years, while the British housewife found that
a
Prime
Minister's assurance
as
to the purchasing power of the money
in
her
purse did not stabilise her grocery bill, foreign claimants found that
English law often could not secure for them effective financial com-
pensation for legal wrongs. The immediate causes of the failings-
inflation, devaluation, and erosion of exchange rates-were symptoms
of ills that are still with us and which have reduced our once sought-
after currency to
a
pathetic caricature which has been judicially
observed being blown about by
every
gust of wind on the foreign
exchange markets.s It was not surprising, when foreign claimants
became reluctant to litigate here, that first arbitrators and then the
courts found ways of departing from the long-established practice of
making awards in sterling only. The history of the inaugural flights is
well known and
has
been set out el~ewhere.~ Subsequently, in 1975.
the House of Lords,6 in
Miliangos
v.
Frank (Textiles)
approved
the escape from sterling for claims for debts but expressly left open
for further discussion whether that new rule should apply also to
claims for damages in tort or for breach
of
contract. The House
completed the trilogy on October 19 1978 with judgments in
Owners
of
the Motor Vessel Eleftherotria
V.
Owners
of
the Motor Vessel
Despina
R
(The Despina
R)
'
on
a
claim for damages in tort, and in
Services Europe Atlantique
Sud
(SEAS)
of
Paris
v.
Stockholms
Rederiaktiebolag Svea
of
Stockholm (The
Folias)n
on a claim for
damages for breach of contract.
1
C19331
P.
251,265.
a
In a post-devaluation broadcast:
The Times,
November
20,
1967,
p.
2.
3
See,
for example, Lord
Denning
M.R.,
in
Schorsch Meier
GmbH
v.
Hennin
119751
Q.B.
416, 424:
''
It was a stable currency which had
no
equal.
Things arc
dserent now. :terling floats
in
the wind.
It
changes like a weathercock with every
gust that blows.
4
See, for example, J.
A.
Knott,
''
Judgments
in
Foreign Currencies,"
The
Posr
Magazine
and
Insurance
Moniror,
June 22, 1978, at
p.
1626; and
"
Marine Collisions
and Foreign Currency
"
(1978) 122 S.J.
443.
5
Consisting of Lord Wilberforca, Lord Simon of Glaisdale (dissenting),
Lord
Cross
of Chelsea, Lord Edmund-=vier and Lord
Fraser
of Tullybelton.
8
I:
19761
A.C.
443;
hereafter referred to as
Miliangos.
7
[I9791
1
Lloyd's Rep. 1; hereafter referred to as
The Despina
R.
8
Ibid;
hereafter referred
to
as
The
Folias.
18
Jan. 19801
FOREIGN
CURRENCY
JUDGMENTS
IN
TORT
19
One most satisfactory feature of these appeals was that, following
Lord Denning’s suggestion in
The
Folia~,~
they were heard consecu-
tively
by
the same judicial comrnittee.’O Another satisfactory feature
was that both decisions of the House were unanimous. There was in
each case
a
leading speech (by Lord Wi1berforce)-with the reason-
ings and the conclusions in which three other members (Lord Diplock,
Lord Salmon, and Lorth Keith) expressed agreement-while
an
assentient speech (by Lord Russell) supported the dismissal of the
appeals for the same or similar reasons. Thus the difficulty of deter-
mining a
ratio decidendi,
that can easily arise from a plurality
of
speeches (as,
e.g.
in
Suisse Atlantique Societe d’ Armement Maritime
S.A.
v.
N.V.
Rotterdamsche Kolen Centrale
”),
has been avoided.
Nevertheless, some substantial problems do arise from the judgments.
’’
In
The Despina R
Lord Wilberforce said, referring to both tort and
contract.
“I
do not think that there can now
be
any doubt that, given
the ability of an English court (and of arbitrators sitting in this
country) to give judgment or to make an award
in
a foreign
currency, to give judgment in the currency in which the
loss
was
sustained produces a juster result than one which fixes the plain-
tiff with a sum in sterling taken at a date
of
the breach or of the
loss.’s
For the determination of “the currency in which the loss was
sustained
Lord Wilberforce applied somewhat different tests for tort
and contract.’“ In this article an attempt is made to examine the test
for claims in tort in the light of the passage
of
The Despina
R
through
the courts and in the full context
of
the developing law. The relevance
of that test for shipping disputes-in which area the two cases arose-
is then considered, by way of illustrating the likely effects
of
the
decision.
C19781
2
W.L.R.
887.
Lord Denning, in an unreported comment, after giving
leave to appeal stressed the importance
of
the case
for
the commercial community
and expressed the hope that any Appeal would be heard at the same time as that
in
The
Despina
R:
Transcript of Shorthand Notes
of
Association of Official Short-
handwriters Ltd., p.
25.
10
Consisting
of
Lord
Wilberforce,
Lord Diplock, Lord Salmon, Lord Russell
of
Killowen and Lord Keith
of
Kinkel.
11
C19661
1
Lloyd’s Rep.
529.
12
These are discussed at pp.
28
et
seq.
13
11W91
1
Lloyd’s Rep.
1,
5.
14
The best in contract cases depended on
general principles of the law of con-
tract and on rules
of
conflict
of
laws. The former require application, as nearly
as
possible,
of
the principle of
resrituto
in integrum,
regard being had to what was in
the reasonable contemplation of the
parties.
The latter involve ascertainment of the
proper law of the contract, and application
of
that law.
If
the proper law is English,
the
first
step must be to
see
whether, expressly
or
by implication, the contract provides
an answer to the currency question. “his may lead to selection of the ‘currency
of
the contract
.
.
.
But
there may be cases
in
which, although obligations under the
contract are to be met in a specified currency,
or
currencies, the right conclusion may
be that there is no intention shown that damages for breach of contract should be
given in that currency
or
currencies.
.
.
.
If then the contract fails to provide a
decisive interpretation, the damage should
be
calculated in the currency in which the
10~3
was felt by the plaintiff
or
‘which most truly expressed his
loss.’
This is not
limited to that in which it first and immediately arose.”
119793
I
Lloyd’s Rep.
1,
7,
8.
_______
___

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