Foreign Currency: Claims, Judgments and Damages

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Claims against limited or common funds


10.1 The principal problem with which we have been concerned so far is the identification of the correct currency in which to assess the value of a claim or in which to give judgment or make an award. There are certain cases where that is not so much the end of the problem as the beginning. Those are situations where there is a limited fund for distribution among a number of claimants when there are or may be insufficient assets in the fund to meet all the liabilities to which it is subject. Here is also the practical consideration that the objective of avoiding a conversion if at all possible is unlikely to be capable of achievement. As Mann points out,1 there is an essential difference between this class of case and individual claims, because of the need not only to deal with the currency problem but to preserve equity between competing claimants by treating them equally and uniformly. In order to achieve this result, it is necessary that there is (i) a common currency from which all debts can be satisfied and (ii) (probably) a single date on which the conversion is to take place. 10.2 The practical difficulties which might be supposed to arise in this situation have not given rise to a large body of litigation. This is partly due to the substantial impact of statute and regulation on this part of the law. Even before the topic was closely regulated, however, there were only a few authorities which dealt with the question. 10.3 The commonest example of this type of case is where a company goes into liquidation, but there are others, such as personal bankruptcy, the creation of the fund which falls to be distributed after a shipowner has limited his liability pursuant to the Merchant Shipping Act 1995, or the situation that arises when there are claims to priority over funds in court, whether on the sale of a ship or on the enforcement of a mortgage. The administration of trusts and of estates lie outwith the scope of this book, although they present cognate problems, to which the same answers may be appropriate.2 10.4 The general rule is that conversion into sterling is to be effected at the date

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of the order for a distribution. This is the outcome of the rule embodied in the decisions which came after Miliangos v George Frank Textiles Ltd 3 in the context of company liquidations. As with personal bankruptcy, the rule has been given binding force in rules made under the statute. Both Mann 4 and Black 5 regard it as the most satisfactory rule. It is worth examining how it came to be accepted. 10.5 The general question was considered by Lord Wilberforce in Miliangos v George Frank Textiles Ltd.6 He said:

As regards the conversion date to be inserted in the claim or in the judgment of the court, the choice, as pointed out in the Havana Railways case,7 is between (i) the date of action brought, (ii) the date of judgment, (iii) the date of payment. Each has its advantages, and it is to be noticed that the Court of Appeal in Schorsch Meier 8 and in the present case chose the date of payment meaning, as I understand it, the date when the court authorises enforcement of the judgment in terms of sterling … So I would favour the payment date, in the sense I have mentioned. In the case of a company in liquidation, the corresponding date for conversion would be the date when the creditor’s claim in terms of sterling is admitted by the liquidator.

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