Private International Law: Foreign Money Liabilities Report
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The Law Commission (LAW COM. No. 124) PRIVATE INTERNATIONAL LAW FOREIGN MONEY LIABILITIES REPORT ON A REFERENCE UNDER SECTION 3(1)(e) OF THE LAW COMMISSIONS ACT 1965 Presented to Parliament by the Lord High Chancellor, by Command of Her Majesty October 1983 - -- LONDON HER MAJESTY’S STATIONERY OFFICE $6.40 net Cmnd. 9064 The Law Commission was set up by section 1 of the Law Commissions Act 1965 for the purpose of promoting the reform of the law. The Commissioners are- The Honourable Mr. Justice Ralph Gibson, Chairman, Mr. Stephen M. Crelney, Mr. Brian J. Davenport, Q.C., Mr. Stephen Edell, Dr. Peter North. The Secretary of the Law Commission is Mr. J. G. H. Casson and its -: offices are at Conquest House, 37-38 John Street, Theobald’s Road, London, WClN 2BQ. ii FOREIGN MONEY LIABILITIES CONTENTS Paragraphs Page PART I-INTRODUCTION . 1.1-1.6 1 PART 11-AN OUTLINE OF THE PRESENT LAW . 2.1-2.53 4 A DEBTSPAYABLE IN ENGLANDIN FOREIGNCURRENCY . 2.1-2.2 4 B JUDGMENTSIN FOREIGN CURREXCY . 2.3-2.21 4 (1) The former rule: judgment had to be in sterling converted as at the " breach-date " . 2.3 4 (2) The new approach: judgment in foreign currency 2.4 5 (3) The principle underlying MiZiangos . 2.5 6 (4) The judicial development of the MiZiangos principle . 2.6 6 (5) The principles whereby the currency of the loss is to be ascertained 2.7-2.21 (a) Debts and liquidated damages . 2.7 (b) Unliquidated damages . 2.8-2.10 (i) Damages for breach of contract . 2.8 (ii) Damages in tort . 2.9-2.10 (c) Restitutionary awards . 2.11 (d) Set-off . 2.12-2.14 (i) Set-off in general . 2.12 (ii) Limitation by a shipowner of liability by way of defence . ' 2.13-2.14 9 (e) An order for an account to be taken . 2.15-2.16 10 (f)An order for restitution against a defaulting trustee . 2.17-2.19 11 (g) The redemption of a mortgage securing a foreign-currency loan. 2.20 11 (h) Declaratory judgments . 2.21 12 C CLAIMSTO SHAREIN A FUND . 2.22-2.26 12 (1) Bankruptcy and liquidation . 2.22-2.23 12 (2) The limitation by a sh-ipowner of his liability . 2.24 13 (3) Pecuniary legacies . 2.25 13 (4) Other claims to share in a fund . , 2.26 I 14 ... 111 Paragraphs Page D INTERESTAND COMPENSATIONFOR LATEPAYMENT . 2.27-2.36 14 (1) Interest . 2.27-2.33 14 (a) The right to interest until the date of the judgment or the award . 2.29-2.30 15 (b) The rate of interest . 2.31-2.33 16 (2) Compensation for late payment . 2.34-2.36 17 E FOREIGNJUDGMENTS . 2.37-2.42 18 (1) Enforcement of foreign judgments by action at commonlaw. 2.38 19 (2) Enforcement of foreign judgments by statutory registration . 2.39-2.42 19 (a) Part I1 of the Administration of Justice Act 1920 . 2.39 19 (b) Foreign Judgments (Reciprocal Enforcement) Act 1933 . 2.40 20 (c) Civil Jurisdiction and Judgments Act 1982 . 2.41 20 (d)European Community Judgments . 2.42 21 F ARBITRALAWARDS . 2.43-2.47 22 (1) English awards . 2.43 22 (2) Foreign awards . 2.44-2.47 22 G MAINTENANCEAWARDS IN FOREIGNCURRENCY . 2.48-2.52 23 (1) Foreign maintenance orders . 2.48-2.51 23 (U) Maintenance Orders (Facilities for Enforce- ment) Act 1920 . 2.48 23 (b) Part I of the Maintenance Orders (Reciprocal Enforcement) Act 1972 . 2.49-2.50 24 (c) Civil Jurisdiction and Judgments Act 1982 . 2.51 25 (2) Maintenance orders made in foreign currency by an English court . 2.52 26 HTHE CONVERSIONOF FOREIGNCURRENCY UNDER CERTAININTERNATIONAL CONVENTIONS . 2.53 26 PART 111-A REAPPRAISAL OF THE PRESENT SUBSTANTIVE LAW . 3.1-3.62 27 A INTRODUCTION. 3.1-3.2 27 B MAJORISSUES OF POLICY . 3.3-3.19 27 (1) Are judgments in foreign currency desirable? . 3.3-3.8 27 (2) Should a plaintiff bt precluded by legislation from obtaining a judgment in sterling where his claim ought properly to be expressed in a foreign currency? . 3.9-3-11 29 iv Paragraphs Page (3) Should the date of conversion into sterling of the foreign currency in which a judgment is expressed be different from the date indicated in Miliangos? 3.12-3.15 30 (4) (U) Should it be possible to make an enforceable agreement to pay in this country in foreign currency alone? . 3.16-3.17 31 (b) Should the parties be free to agree the date and the rate of any conversion? . 3.18 32 C MATTERSOF DETAILREQUIRING CONSIDERATION . 3.20-3.62 32 (1) Set-off and related issues. 3.20-3.33 32 (U) General . 3.20-3.27 32 3 (b) Limitation of a shipowner’s liability under section 503 of the Merchant Shipping Act 1894 (as amended) . 3.28-3.31 35 (c) An order for an account to be taken . 3.32-3.3 3 36 (2) Claims to share in a fund . 3.34-3.44 37 (a) On the liquidation of a company and in bank- ruptcy . 3.34-3.37 37 (b) Section 504 of the Merchant Shipping Act 1894 (as amended) . 3.38-3.40 38 (c) Other claims to share in a fund . 3.41-3.44 39 (3) Foreign judgments . 3.45-3.46 40 (4) Maintenance orders in foreign currency . 3.47-3.49 40 (5) Interest and compensation for late payment . 3.50-3.62 41 (a) Interest . 3.50-3.57 41 (b) Compensation for late payment . 3.58-3.62 42 PART IV-INTEREST ON FOREIGN-CURRENCY JUDGMENT DEBTS AND ARBITRAL AWARDS . 4.1-4.15 45 A INTRODUCTION. 4.1-4.2 45 B THEPRESENT LAW . 4.3-4.7 45 (1) High Court judgments . 4.3 45 (2) County court judgments . 4.4-4.6 46 (3) Arbitral awards . 4.7 47 C THEREFORM WHICH WE RECOMMEND . 4.8-4.15 47 Our recommendations as to interest on judgment debts and arbitral awards in foreign currency . 4.15 I 49 V 3149961 B* Paragraphs Page PART V-PROCEDURE . 5.1-5.97 51 A INTRODUCTION. 5.1-5.4 51 B COMMENTSCONCERNING PROCEDURE IN GENERAL . 5.5-5.13 52 (1) The Bar . 5.5-5.10 52 (2) The Law Society . 5.11-5.13 53 c THEPROCEDURAL ISSUESIN DETAIL . 5.14-5.97 54 (1) Judgment for foreign currency in a form which does not allow the judgment debtor to pay in sterling . 5.14-5.17 54 (2) Fixed costs on default judgments . , 5.18-5.21 55 (3) Payment into court where the claim is for un- liquidated damages . 5.22-5.25 56 (4) Payment into court in a purely domestic sterling claim . 5.26-5.30 57 (5) The currency in which payment may be made into court in satisfaction of the claim . 5.31-5.35 58 (6) Payment into court with a plea of tender before action . 5.36-5.38 60 (7) The date of conversion of money paid into court . 5.39-5.48 61 (a) An outline of the general principles governing payments into court . 5.39-5.41 61 (b) The consideration in Working Paper No. 80 of the problem of conversion from one currency to another . 5.42-5.43 61 (c) The comments received on consultation . 5.44-5.48 63 (8) Payment-out of money in court after the trial . 5.49-5.54 65 (a) The general position . 5.49 65 (b) The procedure where more than one currency is involved . 5.50-5.54 65 (9) Enforcement proceedings in general . 5.55-5.58 67 (10) Enforcement proceedings : writs of fieri facias (fi. fa.) . 5.59-5.69 68 (a) Updating the conversion rate . 5.59-5.63 68 (b) Should the judgment debtor be entitled to satisfy the judgment debt in the foreign currency of the judgment after the issue of a writ of fi. fa.? ._. 5.64-5.69 69 (1 1) Enforcement proceedings: garnishee orders . 5.70-5.80 71 (a) The present position . 5.70-5.74 71 (b) The response on consultation . 5.75-5,77 72 vi Paragraphs Page (c) Our reconsideration in the light of consul- tation . 5.78 73 (d)Payment in the currency of the judgment after the issue of garnishee proceedings . 5.79 74 (e) Summary of our conclusions as to garnishee proceedings . 5.80 74 (12) Enforcement proceedings: charging orders . 5.81-5.84 74 (13) Enforcement proceedings : attachment of earn- ings . 5.85-5.88 75 (14) Enforcement proceedings: equitable execution . 5.89-5.91 76 (1 5) Enforcement proceedings : the position following a wholly or partially unsuccessful attempt to enforce a judgment . 5.92-5.94 77 (16) Enforcement proceedings : the position when a debtor applies for a stay of execution of a writ of fi. fa. 5.95-5.97 78 PART VI-SUMMARY OF CONCLUSIONS AND RECOMMENDATIONS . 6.1-6.4 80 APPENDIXA Draft clause relating to interest on foreign- currency judgments and arbitral awards with explanatory notes . 88 APPENDIXB Joint Working Party on Foreign Money Liabilities . 90 APPENDIXC List of persons and organisations who com- mented on Working Paper No. 80 . 91 APPENDIXD Practice Direction (Judgment : Foreign Currency) . 92 vii 3149961 THE LAW COMMISSION PRIVATE INTERNATIONAL LAW Item XXI of the Third Programme FOREIGN MONEY LIABILITIES To the Right Honourable The Lord Hailsham of St.