[1973] 3 All ER 498

Jugoslavenska Oceanska Plovidba v Castle Investment Co Inc

COURT OF APPEAL, CIVIL DIVISION

LORD DENNING MR, CAIRNS AND ROSKILL LJJ


14, 15 JUNE, 6 JULY 1973



Arbitration - Award - Payment of sum of money - Foreign currency - Jurisdiction of arbitrators to make award for payment of sum expressed in foreign currency - Circumstances in which award should be expressed in foreign currency.

Arbitration - Award - Enforcement - Leave - Enforcement in same manner as judgment or order to same effect - Award for payment of sum expressed in foreign currency - Judgment for sum in foreign currency not enforceable - Award expressed in foreign currency enforceable - Sterling equivalent - Need to file affidavit showing rate of exchange at date of award and amount converted into sterling - Arbitration Act 1950, s 26.

By a time charterparty on the New York Produce Exchange form the plaintiffs, a Yugoslav company, chartered their vessel to the defendants, a Panamanian company. The freight was payable in United States dollars as were other expenses specified in the charterparty. Both the money of account and the money of payment were expressed in United States dollars. The only connection which the contract had with England was that the standard arbitration clause had been altered to provide for arbitration in London instead of New York. On redelivery of the vessel a dispute arose which was resolved in the plaintiffs' favour by two arbitrators in London. The plaintiffs were awarded a sum expressed in United States dollars. The defendants failed to honour the award and the plaintiffs sought leave to enforce it under s 26^a of the Arbitration Act 1950. In support of the application the plaintiffs filed an affidavit showing the rate of exchange at the date of the award and the amount of the award in pounds sterling. The question arose whether the award, being expressed in a currency other than sterling, was valid and lawful and, if so, whether it was enforceable under s 26.

^a     Section 26 is set out at p 502c, post

Held - The arbitrators' award was valid and leave should be given to enforce it for the following reasons--

(i) In a proper case English arbitrators had jurisdiction to make an award for payment in a foreign currency. Since the money of account and money of payment under the charterparty were expressed in United States dollars the arbitrators were entitled to make their award in the same currency (see p 501 b, p 502 a, p 503 g to j and p 506 c and d, post); dictum of Salmon LJ in The Teh Hu [1969] 3 All ER at 1206 disapproved.

(ii) An award lawfully made in a foreign currency could be enforced under s 26 of the 1950 Act 'in the same manner as a judgment or order to the same effect'. Although a judgment of an English court had to be in sterling it did not follow that an arbitration award could only be enforced under s 26 if it were in sterling; the words 'to the same effect' did not mean 'in the same terms'; if the sum awarded were converted into sterling at the rate of exchange prevailing at the date of the award it would have the same effect as a judgment in sterling. Accordingly leave should be given to enforce an award expressed in foreign currency provided that the applicant had filed an affidavit showing the rate of exchange at the date of the award and giving the amount of the award converted into sterling (see p 502 d and f, p 503 g to j and p 507 e and f, post).

[1973] 3 All ER 498 at 499

Notes

For enforcement of an award, see 2 Halsbury's Laws (4th Edn) 339, para 629, and for cases on the subject, see 2 Digest (Repl) 700, 701, 2129-2136.

For the Arbitration Act 1950, s 26, see 2 Halsbury's Statutes (3rd Edn) 456.

Cases referred to in judgments

Bankruptcy Notice, A, Re [1907] 1 KB 478, 76 LJKB 171, 14 Mans 1, sub nom Re A Debtor 96 LT 131, CA, 4 Digest (Repl) 96, 862.

Beswick v Beswick [1967] 2 All ER 1197, [1968] AC 58, [1967] 3 WLR 932, HL, Digest (Cont Vol C) 903, 181a.

London and Overseas Freighters Ltd v Timber Shipping Co SA [1971] 2 All ER 599, [1972] AC 1, [1971] 2 WLR 1360, [1971] 1 Lloyd's Rep 523, HL.

Manners v Pearson & Son [1898] 1 Ch 581, [1895-9] All ER Rep 415, 67 LJCh 304, 78 LT 432, CA, 35 Digest (Repl) 201, 90.

Margulies Brothers Ltd v Dafnis Thomaides & Co (UK) Ltd [1958] 1 All ER 777, [1958] 1 WLR 398, 56 LGR 398, [1958] 1 Lloyd's Rep 250, Digest (Cont Vol A) 39, 1236a.

Teh Hu, The, Turbo-Electric Bulk Carrier Teh Hu (Owners) v Nippon Salvage Co Ltd of Tokyo [1969] 3 All ER 1200, [1970] P 106, [1969] 3 WLR 1135, [1969] 2 Lloyd's Rep 365, CA, Digest (Cont Vol C) 708, 64a.

United Railways of Havana and Regla Warehouses Ltd, Re [1960] 2 All ER 332, [1961] AC 1007, [1960] 2 WLR 969, HL, Digest (Cont Vol A) 231, 862a.

Woodhouse AC Israel Cocoa SA v Nigerian Produce Marketing Co [1971] 1 All ER 665, [1971] 2 QB 23, [1971] 2 WLR 272, [1971] 1 Lloyd's Rep 25, CA; affd [1972] 2 All ER 271, [1972] AC 741, [1972] 2 WLR 1090, 13 KIR 45, [1972] 1 Lloyd's Rep 439, HL.

Appeal

By a time charterparty on the New York Produce Exchange form made and concluded at Freeport, Grand Bahamas, on 2 August 1965 the plaintiffs, Jugoslavenska Oceanska Plovidba, whose principal office and place of business was in Yugoslavia, chartered the vessel Kozara to the defendants, Castle Investment Co Inc, a company incorporated in Panama whose business included the chartering of ships in the international freight market, for a period of one year 30 days more or less. A dispute having arisen as to the hire payable to the plaintiffs on redelivery of the vessel the matter was referred to arbitrators (John Chesterman and Cedric Barclay) in London who held that 'the proper amount due to the [plaintiffs] is US $53,910·4375' and awarded and adjudged that the defendants pay that sum to the plaintiffs with interest amounting to US $8,335. The defendants having failed to comply with the award, the plaintiffs applied by summons for leave to enforce the award 'in the same manner as a judgment or order to the same effect pursuant to section 26 of the Arbitration Act 1950'. In support of the application an affidavit had been filed on behalf of the plaintiffs which stated:

'The rate of exchange prevailing at the date of the ... award was U.S. $2·4340 to the pound sterling. The amount due under the ... award in respect of the principal debt amounts to U.S. $62,245·4357 which at the rate of exchange aforesaid is equivalent to the sum of £25,935·4373 sterling.'

The defendants did not appear to the summons. On 16 June 1972 Master Elton dismissed the application and, on appeal, his decision was affirmed by Kerr J on 29 January 1973. The plaintiffs appealed to the Court of Appeal.

K S Rokison for the plaintiffs.

The defendants were not represented.

Cur adv vult

6 July 1973. The following judgments were delivered.



LORD DENNING MR.

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

[1973] 3 All ER 498 at 500

in London. It concerns an oil tanker which was built in 1965 at Kure in Japan. It was owned by Yugoslav 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 AC Israel Cocoa SA v Nigerian Produce Marketing Co ([1971] 1 All ER 665 at 667, [1971] 2 QB 23 at 54; affd HL [1972] 2 All ER 271, [1972] AC 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, this agreement 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 been calculated on the wrong dead weight. The owners claimed a total of US $110,737·4326. 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 14 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. $53,910·4375 ... 'WE AWARD AND ADJUDGE:--That the Charterers shall forthwith pay to the Owners the sum of U.S. $53,910·4375, together with interest up to the date of this Award, which we fix at US $8,335·4300, making a total amount of U.S. $62,245·4375 ... '

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 United States 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 Diplock J in Margulies Brothers Ltd v Dafnis Thomaides & Co (UK) Ltd ([1958] 1 All ER 777 at 780, 781, [1958] 1 WLR 398 at 402):

'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 Salmon LJ in The Teh Hu ([1969] 3 All ER 1200 at 1206, [1970[ P 106 at 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.'

[1973] 3 All ER 498 at 501

Now the point comes up directly for decision. Kerr J left to himself would have held that the award was good. He made valuable researches and enquiries 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 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 ascertained without 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 Salmon LJ said ([1969] 3 All ER at 1206, [1970] P at 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, The Legal Aspect of Money^b.

^b     3rd Edn (1971), p 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 on his effects. This is so much in the mind of the courts that they have ruled 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 reconsideration. 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 Re United Railways of Havana and Regla Warehouses Ltd. But the House of Lords have since then held that specific performance can be ordered of a contract to make a money payment: see Beswick v Beswick. 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^c.

^c     Op cit, p 363

[1973] 3 All ER 498 at 502

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 s 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 same manner as a judgment or order to the same effect, and where 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 exchange at the date of the award and giving also the amount of the award converted into sterling. Then leave will be given to enforce payment of that sum.

This view is supported by reference to s 36(1) of the 1950 Act which provides:

'A foreign award shall ... be enforceable in England either by action or in the same manner as the award of an arbitrator is enforceable by virtue of section twenty-six of this Act.'

Now a foreign award (which is defined in s 35) will, almost invariably, be an award for payment of a sum in a foreign currency. Parliament expressly says that it is to be enforceable in the same manner as under s 26. That shows that s 26 can and should be applied to an award in a foreign currency. In order to be so applied it must be converted into sterling as at the date of the award.

Then s 26 goes on to say that: '... where leave is so given, judgment may be entered in terms of the award.' In most cases it will be unnecessary to enter judgment. Once leave is given, the award can be enforced by the ordinary means of execution. But it may be necessary to enter judgment in order to issue a bankruptcy notice: see Re A Bankruptcy Notice. The latter words of s 26 enable this to be done.

In my opinion leave should be given to enforce this award in the same manner as a judgment to the same effect. For this purpose it should be converted into sterling at the rate of exchange ruling at the date of award. Then it can be executed for the sterling sum. I gather that in this case it is not desired to levy execution, but simply to have an authoritative impress of the courts on the award. The very granting of leave is sufficient. So we should give leave. I would allow the appeal, accordingly.



CAIRNS LJ.

If an award made in a foreign currency is not enforceable under s 26 of the Arbitration Act 1950, then it might be held to follow that the making of such an award amounts to misconduct of the arbitrator or arbitrators. We were informed that awards in a foreign currency are frequently made in the City of London. Where under a contract a foreign currency is the currency of account and also of payment it seems both just and convenient that the award should be made in that currency. I am reluctant to brand the making of such an award as misconduct or to discourage

[1973] 3 All ER 498 at 503

foreign parties to contracts from agreeing to arbitration in London by compelling them to accept a form of award which they may not want or to run the risk of finding that their award is unenforceable here.

I recognise that there are valid arguments, of fairness and convenience, in favour of requiring awards to be made in sterling. A judgment must be in sterling and it may be said that the measure of monetary relief afforded to a claimant should not depend on the form of the proceedings. Further, so long as the decision of this court, by a majority, in The Teh Hu stands an arbitrator who makes an award in sterling must award what is an appropriate sum in that currency without regard to whether the equivalent in some foreign currency would be appropriate and there is much to be said for the view that an arbitrator should not be able to adjust the actual value of his award by making it in one currency rather than another. Moreover if all awards are required to be in sterling, this will avoid the discussions which might take place, and might lead to protracted arguments and reference to the court, as to which currency was appropriate.

It is further necessary to consider whether The Teh Hu binds this court to hold that, except by consent, an award must be in sterling. Salmon LJ said ([1969] 3 All ER at 1206, [1970] P at 129):

'It is well settled that an English court cannot give judgment for the payment of an amount in foreign currency: Manners v. Pearson & Son. Nor, in my view, can an arbitrator make an award in foreign currency except perhaps by agreement between the parties.'

I do not regard this passage as entirely obiter. It was part of the reasoning which led Salmon LJ to his conclusion. Lord Denning MR was of the contrary opinion; but Karminski LJ said ([1969] 3 All ER at 1212, [1970] P at 135): 'Since writing this judgment, I have had the advantage of reading the judgment of SALMON, L.J., and desire to express my agreement with it.' However, it was conceded in that case that the award must be in sterling because of the terms of the submission. The passage in Salmon LJ's judgment to which I have referred was not an essential part of his reasoning. Karminski LJ reached his conclusion without adverting to this matter and it is perhaps wrong to attribute to him concurrence in everything said by Salmon LJ. On the whole I think we are free to reach our decision without being compelled to accept the view expressed by Salmon LJ.

Now a foreign award can be enforced under s 26 of the Arbitration Act 1950 'in the same manner as a judgment to the same effect'. A foreign award will usually be made in a foreign currency. It would be unreasonable that an award made in this country in a foreign currency should not be enforceable here when an award made abroad in a foreign currency is so enforceable.

In the result I am persuaded that there are circumstances in which an award can be made by English arbitrators in a foreign currency and can be enforced here and, without expressing any opinion as to how wide may be the power to make such award and enforce it, I am quite satisfied that if it can ever be done, this was an appropriate case for doing it, and I would allow the appeal and give leave to enforce the award.

The award would clearly have to be converted into sterling before it could actually be enforced here by any process of execution.

I have felt some doubt whether it must be converted into sterling before leave to enforce it is given, but both Lord Denning MR and Roskill LJ consider that it should be and I do not dissent from that view.

[1973] 3 All ER 498 at 504

ROSKILL LJ.

On 14 May 1969 two very experienced members of the London Maritime Arbitrators Association made an agreed award in favour of the claimant shipowners, a Yugoslav company who had chartered their motor vessel 'Kozara' to a Panamanian company as charterers under a time charter in the New York Produce Exchange form dated 2 August 1965. That time charter had nothing whatever to do with London or with the United Kingdom save that the standard arbitration clause (cl 17) had been altered to provide for arbitration in London instead of in New York. Under cl 5 hire was payable in United States dollars in New York in cash. All other payments were similarly to be made in United States dollars. See for example cll 7 and 23.

Disputes arose regarding the hire allegedly unpaid as a result of which the owners claimed over $100,000 from the charterers. The disputes were ultimately resolved in the owners' favour. The two arbitrators sitting in London made an agreed award in the owners' favour. Not surprisingly, in view of the nature and terms and origin of the time charterparty, they made the award in United States dollars. They also awarded interest in United States dollars on the amount awarded until payment at the rate of 6 per cent per annum. The award was made before the final decision in London and Overseas Freighters Ltd v Timber Shipping Co. The arbitrators when making their award could not have anticipated that it would be ultimately held (after a considerable difference of judicial opinion) that an arbitrator could not award a rate of interest and that an award could only carry interest (if ordered by the arbitrator to do so) at the rate applicable to the judgment debt. That part of the present award which dealt with interest is therefore bad. But it is clear from what was said by Lord Morris of Borth-y-Gest ([1971] 2 All ER at 608, 609, [1972] AC at 22) that that fact does not affect the validity of the rest of the award if the substantive part is otherwise good. The inclusion of the provision for interest is therefore irrelevant in the present case.

The charterers have not honoured the award and the owners now seek to enforce it under s 26 of the Arbitration Act 1950. Master Elton has refused leave. Kerr J has upheld the learned master's refusal, though with extreme reluctance, and had he thought he was free to do so, he would have given leave. Rarely can a learned judge at first instance have so enthusiastically invited reversal of his decision by this court.

We can only accept his invitation if two questions are both answered in the affirmative. The first is whether an arbitrator or umpire sitting in England or Wales can lawfully make an award in a currency other than sterling. The second is whether if such an award can be so lawfully made, it is enforceable under s 26.

The first question has long been debated but never (as I think) yet authoritatively decided. It is common knowledge that for many years arbitrators and umpires in the City both on the Baltic and in the commodity trades have made awards in what is sometimes called the currency of the contract. Legal arbitrators have, however, in the absence of express agreement empowering them to do so, been more timorous on this issue. This City practice has proved, so far as I am aware, entirely satisfactory and such awards have long been honoured all over the world without anyone seeking to contend that the award was bad because it was not expressed in sterling. Moreover if such an award is to be held to be bad solely because of the currency in which it is expressed, grave inconvenience will be caused to those who bring their disputes to this country for decision. They want an award which will enable them to recover the same amount as that which they ought in the first instance to have received. They do not want that recovery to be exposed, if it can be avoided, to exchange fluctuations between the currency in which they ought to have received the amount initially and the pound sterling, especially since the latter was allowed to float.

There is, as I think, no binding authority that such an award cannot lawfully be made

[1973] 3 All ER 498 at 505

in a currency other than sterling. Equally there is no binding authority that it can only be lawfully made in sterling. To hold that the former is the law would cause grave inconvenience because if that is the law every arbitrator or umpire making such an award would be acting outside his jurisdiction and would as I think arguably be guilty of misconduct. In some cases the award might even be set aside for an error of law on its face. Convenience, expediency and, as I think, principle, should permit such an award to be expressed in a currency other than sterling, always provided that the currency is the appropriate currency in which to express the award. Does the law then permit it?

The current (18th) edition of Russell on Arbitration states that in the absence of agreement an arbitrator has no power to make an award for the payment of money in a currency other than sterling. The authority for this statement, which does not appear in any previous edition of that work, is the recent decision of this court in The Teh Hu. The actual decision in that case, from which Lord Denning MR dissented, was that a salvage arbitrator sitting under Lloyd's salvage award form cannot increase the amount of a sterling salvage award following on devaluation so as to avert the loss which would otherwise be caused to salvors by reason of the devaluation. That devaluation would, in the absence of the amount of the award being increased, cause them to receive a smaller sum in the currency into which the sterling amount of the award would in the ordinary course of events be converted. This conclusion was said to follow from the rule, now established beyond judicial challenge, that the amount for which a judgment is entered cannot be affected by any change in the value of sterling between the date when the cause of action accrued and the date of the judgment. It is to be observed that the Lloyd's salvage form in that case only empowered the making of an award in sterling: see the extract from this form quoted by Salmon LJ ([1969] 3 All ER at 1206, [1970] P at 129). The point there at issue was how much that sterling award should be and not whether the award could have been made in a currency other than sterling. Plainly it could not.

In the course of his dissenting judgment Lord Denning MR ([1969] 3 All ER at 1202, [1970] P at 126) said that there was no reason why an English arbitrator should not make his award in a foreign currency, adding that such an award does not need to be enforced under s 26. As Lord Denning MR observed during the argument of the present appeal, that latter point was not at issue in that case. Salmon LJ ([1969] 3 All ER at 1206, [1970] P at 129) said precisely the opposite: 'Nor in my view, can an arbitrator make an award in a foreign currency except perhaps by agreement between the parties'. Karminski LJ in the third judgment did not mention this point expressly but stated at the conclusion of his judgment that he agreed with the judgment of Salmon LJ.

Whilst paying the utmost respect to these views, I cannot regard Salmon LJ's statement (even assuming that Karminski LJ is to be taken as agreeing with it) to be binding authority on the present point. That point was not argued. Indeed it could not have arisen, since as already pointed out, Lloyd's form expressly empowered and only empowered a sterling award. No reference was made to s 36 of the Arbitration Act 1950 to which I shall refer later. Nor does it seem that the attention of the court was drawn to what has long been the City practice in this matter. Salmon LJ's observation is strongly criticised by Dr F A Mann in his book, The Legal Aspect of Money^d, a criticism which, with all respect to the learned Lord Justice, I venture to think is well founded.

^d     3rd Edn (1971), p 362

It has been suggested that one reason why English law does not allow awards to be made in foreign currency is because of the supposed difficulty of enforcement under

[1973] 3 All ER 498 at 506

s 26 and because of what Diplock J said in Margulies Brothers Ltd v Dafnis Thomaides & Co (UK) Ltd ([1958] 1 All ER at 780, 781, [1958] 1 WLR at 402). The learned judge there gave as an alternative reason for remitting the award there in question to the arbitrator that it was an implied term of an arbitration agreement that an award for the payment of money should be in the form which was capable of being enforced in the same manner as a judgment. Diplock J was not there dealing with an award in a foreign currency. His observations were not directed to such a case but to a case where this court had already previously held that the award was not in a form which was susceptible of summary enforcement under s 26. I cannot help thinking that the learned judge would be surprised if he knew that this sentence was being used as the foundation for an argument that no award in a foreign currency could lawfully be made in this country. To some extent this point is more concerned with the second question in the present case than the first. It suffices to say that I can find nothing which obliges this court to hold that all awards made in this country must be made in sterling. Even if a foreign currency award cannot be enforced under s 26, I can see no reason why an action cannot be brought in England on any such award.

I therefore hold that the arbitrators in the present case were entitled to make their award in United States dollars and that their award is a perfectly lawful and valid award.

I would only add on this part of the case that this decision does not amount to a general licence to arbitrators and umpires to make awards in any currency they choose heedless of the provisions of the contract with which they are concerned. The currency of account and the currency of payment will in most cases be easily ascertainable just as the proper law of a contract is in most cases easily ascertainable. In a few cases the problem will be difficult as in a few cases the question of proper law is difficult. But even in a difficult case the problem must ultimately be capable of solution and the arbitrators (if they wish) can--as I would think--always decide as a matter of discretion to make an award in sterling unless either the terms of the contract in question or of the arbitration agreement under which their jurisdiction arises or some other reason prevents them from so doing.

I now turn to the second point. Section 26 of the Arbitration Act 1950 provides:

'An award on an arbitration agreement may, by leave of the High Court or a judge thereof, be enforced in the same manner as a judgment or order to the same effect, and where leave is so given, judgment may be entered in the terms of the award.'

The final words from 'and where leave is so given' were added in the Arbitration Act 1934 which amended the original Act, the Arbitration Act 1889, in this respect. The High Court has therefore power in its discretion to give leave for an award to be enforced in the same manner as a judgment or order to the same effect. What do the words 'to the same effect' mean? It is suggested that because an English court cannot give a judgment for an amount other than a sum in sterling, an award in a foreign currency can never be enforced in the same manner as a judgment to that effect because there never could be a judgment to that effect, that is to say, a judgment in a currency other than sterling.

But s 26 cannot, as I think, be construed without regard to s 36(1), which provides that in the case of 'foreign awards' (as to which see s 35(1)) these--

'shall ... be enforceable in England either by action or in the same manner as the award of an arbitrator that is enforceable by virtue of section twenty-six of this Act.'

Section 36(1) is mandatory, whereas s 26 is discretionary. A foreign award will usually (but not always) be in a currency other than sterling. I cannot think that

[1973] 3 All ER 498 at 507

Parliament intended, or indeed that the convention on which s 36 is based intended, foreign awards in a foreign currency only to be enforceable in this country by action. If not, then s 36(1) read with s 26 not merely permits but enjoins the High Court to give leave to enforce a foreign award in the same way as an ordinary arbitration award is enforceable under s 26. Yet if a foreign currency award cannot in any event be enforced under s 26, this provision is self-defeating.

The learned judge made enquiries of the Central Office of the High Court as to the practice in dealing with applications under s 36(1). He was told that the practice on applications under that section is that the sum awarded in the foreign currency in question is converted into sterling at the rate prevailing at the date of the award and that, in the absence of any other objection, an order is then made giving leave to enforce the foreign award in the same manner as a judgment for that resulting sterling sum. This practice, if I may say so, seems clearly right. It is in line with the practice under the Foreign Judgments (Reciprocal Enforcement Act) 1933, as to which see Chitty and Jacob's Queen's Bench Forms^e. I can see no other way in which effect can be given to s 36(1) and s 26 when these two sections are considered together.

^e     20th Edn (1969), form 1475

As the learned judge rightly pointed out, s 36(1), unlike s 26, does not also empower or enjoin the court to enter judgment in the terms of the award. But under s 26 there are two different steps which may be taken. First, leave may be obtained to enforce the award in the same manner as a judgment, and secondly and independently where leave is so given, judgment may be entered in the terms of the award. The first limb is common both to ss 26 and 36(1). If a foreign award is enforceable under these two sections read together in the way I have described, I can see no reason why what I may for convenience call a 'non-foreign award' in a foreign currency should not similarly be enforced. It does no violence to the words 'as a judgment or order to the same effect' to read these as meaning 'as a judgment or order for the sterling equivalent'.

But execution on an award can issue once leave is given under s 26--it can also issue without an order under s 26--see the Supreme Court Practice 1973^f, and the note to form 1467 in Chitty and Jacob. For my part, I have difficulty in seeing how execution can issue for a sum other than a sterling amount. I therefore think that the necessary conversion should be effected and deposed to in an affidavit before the application for leave to enforce is made. Leave can then issue under s 26 to enforce the award in the same manner as a judgment for that sterling equivalent.

^f     Vol 2, pp 1087, 1088

For these reasons I would accede to the learned judge's urgent request that we should reverse his judgment. I would allow the appeal and give leave in the terms of the summons.

Appeal allowed. Leave given in the terms of the summons.

Solicitors: Ince & Co (for the plaintiffs).

L J Kovats Esq Barrister