Jugoslavenska Oceanska Plovidba v Castle Investment Company Inc.
| Jurisdiction | England & Wales |
| Judge | THE MASTER OF THE ROLLS,LORD JUSTICE CAIRNS,LORD JUSTICE ROSKILL |
| Judgment Date | 06 July 1973 |
| Judgment citation (vLex) | [1973] EWCA Civ J0706-1 |
| Date | 06 July 1973 |
| Court | Court of Appeal (Civil Division) |
[1973] EWCA Civ J0706-1
In The Supreme Court of Judicature
Court of Appeal
Appeal by plaintiffs from judgment and order of Mr. Justice Kerr on 29th January, 1973.
The Master of the Rolls (Lord Denning),
Lord Justice Cairns and
Lord Justice Roskill.
In the Matter of the Judicature (Consolidation) Act 1925
and
In the Matter of the Arbitration Act, 1950,
and
In the Matter of an Award dated the 14th day of May 1969
Mr. K. S. ROKISON (instructed by Messrs. Ince & Co.) appeared on behalf of the Appellant Plaintiffs.
There was no other appearance.
The thing to notice about this case is that it has nothing to do with England: save that any dispute was to be referred to commercial arbitrators in London. It concerns an oil tanker which was built in 1965 at Kure in Japan. It was owned by Jugoslav owners and was let to a Panama company for its first voyages. It was a time charter for one year from December 1965. It was on a Government form, approved by the New York Produce Exchange. The freight was payable in United States dollars. So were other expenses specified in the charterparty. Both the money of account and the money of payment (as to which see Woodhouse A. C. Israel Cocoa S. A. v. Nigerian Produce Marketing Co. (1971) 2 Q. B. at page 54: 1972 A. C. 741) were United States dollars.
The arbitration clause, in the printed original form, ran as follows:-
"Should any dispute arise between Owners and the Charterers, the matter in dispute shall be referred to three persons at New York, one to be appointed by each of the parties hereto, and the third by the two so chosen; their decision or that of any two of them shall be final and for the purpose of enforcing any award may be made a rule of the Court. The Arbitrators shall be commercial men."
But in the form as signed, the place — "New York" — was struck out and "London" substituted. This was the only connection of the contract with England.
At the end of the one year of the charterparty, a dispute arose. The owners contended that the vessel had been redelivered to them too early, that some of the hire remained unpaid, and that the hire which had been paid had beencalculated on the wrong dead weight. The owners claimed a total of U. S. 110,737.26. The charterers disputed the claim, The owners appointed Mr. John Chesterman and the charterers appointed Mr. Cedric Barclay to be the arbitrators. The arbitrators agreed on their decision. On 14th May, 1969, they made and published their Joint award in these terms:-
"We hold that the proper amount due to the Owners is U. S.$53,910.75.
We award and adjudge that the Charterers shall forthwith pay to the Owners the sum of U. S.$53,910.75 together with interest up to the date of the Award which we fix at U. S.$8,335.00, making a total award of $62,245.75."
They added an amount of interest from the date of the award, This further award was erroneous. It can be ignored. It does not affect the validity of the award.
The first question is whether English arbitrators have any authority, jurisdiction or power (whichever of those words is used) to make an award for payment of a sum in foreign currency, such as in this case in U. S. dollars. There has been some uncertainty in the City of London about this. Many commercial arbitrators have assumed that they have jurisdiction to make an award in a foreign currency, and have done so. That indeed was done by Mr. Chesterman and Mr. Barclay in the present case: and those two gentlemen have much experience of commercial arbitrations. But some arbitrators, especially legal arbitrators, have been hesitant. This hesitation was produced, or at any rate increased, by the observations of Mr. Justice Diplock in Margulies Bros, v. Dafnis Thomaides & Co. (1958) 1 W. L. R. at page 432:-
"It is an implied term of an arbitration agreement that an award for the payment of money shall be in a form which is capable of being enforced in the same manner as a judgment."
The hesitation became more pronounced by the words of Lord Justice Salmon in The Teh Hu (1970) P. at page 129:
"It is well settled that an English Court cannot give judgment for the payment of an amount in foreign currency. Nor, in my view, can an arbitrator make an award in foreign currency except, perhaps, by agreement between the parties."
Now the point comes up directly for decision. Mr. Justice Kerr left to himself would have held that the award was good. He made valuable researches and inquiries which he has set out in his judgment. But he thought that it should be considered by a higher Court as soon as possible. In order to facilitate this, he held that English arbitrators could not make an award in a foreign currency. But he did so saying that he hoped that his decision would be reversed at a higher level.
In my opinion British arbitrators have authority, jurisdiction and power to make an award for payment of an amount in foreign currency. They can do this — and I would add, should do this — whenever the money of account and the money of payment is in one single foreign currency. They should make their award in that currency because it is the proper currency of the contract. By that I mean that it is the currency with which the payments under the contract have the closest and most real connection. Likewise, whenever the proper currency of a contract is a foreign currency, English arbitrators can and should make their award in that currency, unless the parties have expressly or impliedly agreed Otherwise. The proper currency can usually be ascertainedwithout difficulty. But, if the transaction is closely connected with two currencies (as in The Teh Hu Japanese salvors of a Panamanian vessel) the arbitrators can and should make their award in whichever of the two currencies seems to them to produce the most appropriate and Just result. If this had been done in The Teh Hu, the injustice done in that case would have been avoided. The trouble in that case was that the salvage agreement was thought to contemplate an award in sterling (see what Lord Justice Salmon said at page 129), and so it was made in sterling. But, if it had been made in United States dollars or in Japanese yen (as perhaps it might have been), neither party would have suffered by the devaluation of sterling. This is pointed out by Dr. F. A. Mann in his book on The Legal Aspect of Money, 3rd edition (1971) at page 362.
The reason why some people have thought that an award by English arbitrators must be in sterling is because they have regarded it as equivalent to a judgment by an English Judge which must be in sterling. But there is this difference. When commercial men are in dispute and go to arbitration, they wish to have the dispute resolved. They want a decision one way or the other. Once given, they abide by it. The losing party pays up. There is rarely any need to call in the sheriff or his officer to enforce the award. So it is perfectly fair, as between them, for the arbitrator to make his award in the currency which is appropriate to their dealings. But, when a plaintiff goes to a Court of law, it is, as often as not, because the defendant cannot pay or will not pay. The plaintiff wants to get judgment against him, and, if need be, levy execution upon his effects. This is so much in the mind of the Courts, that they have rules that they will give judgment only in sterling.
That is the one currency which is known to the Court and to the sheriffs and their officers. I venture to suggest that this view of the Courts should be open for re-consideration. If the money payable under a contract is payable in a foreign currency, it ought to be possible for an English Court to order specific performance of it in that foreign currency: and then let the exchange be made into sterling when it comes to be enforced. I know that this is not yet the law. There is high authority against it, see United Railways of Hayana and Regla Warehouses (1961) A. C. at page 10243, 1052, 1069. But the House of Lords have since then held that specific performance can be ordered of a contract to make a money payment, see Beswlck v. Beswick (1968) A. C. 58. This may point the way to a relaxation of the old rule and enable the Courts, in proper circumstances, to order payment into a foreign currency, such as is suggested by Dr. Mann in his book at page 363.
At any rate, there is no reason why the rule about judgments of the Courts should be extended to awards by arbitrators. I think we should hold that arbitrators have jurisdiction to make an award in a foreign currency whenever that is the proper currency in which payments under the contract should be made.
The next question is the manner of enforcing such an award. It would, no doubt, be possible to bring an action on the award and seek a judgment from the Courts in sterling. In that case the rate of exchange would be taken at the date of the award. But another way is to seek the leave of the Court under section 26 of the Arbitration Act, 1950, which says:-
"An award on an arbitration agreement may, by leave of the High Court or a Judge thereof, be enforced in the samemanner as a judgment or order to the same effect, and, when leave is so given, judgment may be entered in terms of the award."
If the words "to the same effect" are read as meaning "in the same terms", there would be some difficulty in applying this section to an award in a foreign currency. But I do not think they mean "in the same terms". They only mean that the judgment or order must have "the same effect". If the sum awarded is converted into sterling at the rate of exchange at the date of the award, it does have the same effect. The proper course is for the applicant to file an affidavit showing the rate of...
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