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[1975] 1 All ER 152

Schorsch Meier GmbH v Hennin

COURT OF APPEAL, CIVIL DIVISION

LORD DENNING MR, LAWTON LJ AND FOSTER J


22, 26 NOVEMBER 1974



Judgment - Payment of sum of money - Foreign currency - Jurisdiction to order payment of sum expressed in foreign currency - Contract - Currency of contract foreign currency - European Economic Community - Creditor of member state entitled against debtor of another member state to payment in own currency - Circumstances in which judgment should be given for payment of a sum expressed in foreign currency - EEC Treaty, art 106.

The plaintiffs carried on business in West Germany as dealers in motor car parts and accessories. The defendant lives in England where he was engaged in the motor trade. In 1970 and 1971 the defendant ordered goods from the plaintiffs. The plaintiffs despatched the goods and invoiced the defendant for them in deutschmarks, the currency of the contract. The defendant paid part of the sum due but failed to pay the balance. On 3 February 1972 the plaintiffs rendered a statement of account for DM 3,756·4303 for goods sold and delivered to the defendant. At that time the sterling equivalent of that sum was £452. On 13 July 1973 the plaintiffs issued a summons in the county court against the defendant. In the county court the amount owing was proved in deutschmarks, ie DM 3,756·4303. Between the date of invoice and the date of the summons, however, sterling had been devalued with the consequence that at the date of judgment the value of £452 had fallen to DM 2,664. Relying on art 106^a of the EEC Treaty the plaintiffs asked for judgment in deutschmarks and declined to adduce evidence of the equivalent value in sterling. The judge held that art 106 had no bearing on the matter and that he could only give judgment for value in sterling. Accordingly he dismissed the action and the plaintiffs appealed.

^a     Article 106, so far as material, is set out at p 157 f, post

Held - The appeal would be allowed for the following reasons--

(i) (per Lord Denning MR and Foster J) Since the courts were no longer precluded from ordering a defendant to pay a sum of money or from granting a decree of specific performance for the payment of a sum of money, there was no longer any justification for the rule that judgment could only be given for a sum of money in sterling. Accordingly, where the currency of the contract was a foreign currency the English courts had power to give judgment in that currency (see p 156 d to h and p 161 h, post); Beswick v Beswick [1967] 2 All ER 1197 and Jugoslavenska Oceanska Plovidba v Castle Investment Co Inc [1973] 3 All ER 498 applied; dicta of Lindley MR in Manners v Pearson & Son [1898] 1 Ch at 587, of Lord Denning in Re United Railways of the Havana and Regla Warehouses Ltd [1960] 2 All ER at 365 and of Salmon LJ in The Teh Hu [1969] 3 All ER at 1206 not followed.

(ii) Furthermore, the effect of art 106 of the EEC Treaty was that a creditor in one member state of the European Economic Community was entitled to receive payment for goods supplied to a person in another member state in the currency of the creditor's own state if that was the currency of the contract under which the goods had been supplied. In conformity with art 106 the English court should give judgment in favour of a creditor of a member state in the currency of that state or its sterling equivalent at the time of payment (see p 157 g and h and p 161 c to h, post).

Per Lord Denning MR. Where judgment is given in a foreign currency the order should be in the form: 'It is adjudged this day that the defendant do pay to the plaintiff [the specified amount in foreign currency being the currency of the contract]

[1975] 1 All ER 152 at 153

or the sterling equivalent at the time of payment.' If the defendant fails to comply with the judgment the plaintiff should apply for leave to enforce it, filing an affidavit showing the rate of exchange at the date of the application and giving the amount of the debt converted into sterling at that date. Leave will then be given to enforce payment of that sum (see p 156 h to p 157 b and j to p 158 a, post).

Notes

For damages for breach of contract, the currency of which is a foreign currency, see 8 Halsbury's Laws (4th Edn) 424, 425, para 614.

Cases referred to in judgment

Application des Gaz SA v Falks Veritas Ltd [1974] 3 All ER 51, [1974] 3 WLR 235.

Beswick v Beswick [1967] 2 All ER 1197, [1968] AC 58, [1967] 3 WLR 932, affg [1966] 3 All ER 1, [1966] Ch 538, [1966] 3 WLR 396, CA, 12 Digest (Reissue) 49, 256.

Bulmer (H P) Ltd v J Bollinger SA [1974] 2 All ER 1226, [1974] 3 WLR 202.

Celia (Steamship) (Owners) v Owners of Steamship Volturno [1921] 2 AC 544, [1921] All ER Rep 110, 90 LJP 385, 126 LT 1, 15 Asp MLC 374, 27 Com Cas 46, HL; 17 Digest (Reissue) 204, 753.

Crampton v Vana Railway Co (1872) LR 7 Ch AC 562, 41 LJCh 817, 13 Digest (Repl) 316, 1255.

Cumming v Munro (1792) 5 TR 87.

Jugoslavenska Oceanska Plovidba v Castle Investment Co Inc [1973] 3 All ER 498, [1974] QB 292, [1973] 3 WLR 847, [1973] 2 Lloyd's Rep 1, CA.

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.

NV Algemene Transport-en Expeditie Onderneming Van Gend en Loos v Nederlandse Tariefcommissie [1963] CMLR 105, CJEC.

Rastell v Draper (1905) Yelv 80, Moore KB 775, 80 ER 55, sub nom Draper v Rastal, Cro Jac 88, 22 Digest (Reissue) 164, 1373.

Reading's Petition of Right, Re [1949] 2 All ER 68, sub nom Reading v The King [1949] 2 KB 232; affd sub nom Reading v Attorney General [1951] 1 All ER 617, [1951] AC 507, HL, 34 Digest (Repl) 149, 1028.

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) 891, 8366b.

United Railways of the Havana and Regla Warehouses Ltd, (Re) [1960] 2 All ER 332, [1961] AC 1007, [1960] 2 WLR 969, HL, Digest (Cont Vol A) 232, 862a.

Ward v Kidswin (1662) Latch 77, 82 ER 283.

Cases also cited

British Bank for Foreign Trade Ltd v Russian Commercial & Industrial Bank (1921) 38 TLR 65.

Kornatski v Oppenheimer [1937] 4 All ER 133.

Appeal

This was an appeal by the plaintiffs, Schorsch Meier GmbH, against the judgment of his Honour Judge Perks sitting at West London County Court, made on 11 February 1974, whereby it was ordered that, although the plaintiffs' claim of DM 3,756·4303 against the defendant, A R Hennin, had been established the action should be dismissed on the grounds (i) that no evidence had been adduced as to the equivalent value of that amount in sterling; (ii) that the court could only give judgment for value in sterling, and (iii) that the plaintiffs were unwilling to produce evidence of the equivalent value or to have their judgment debt expressed in pounds sterling. The ground of the appeal was that the judge had misdirected himself as to the effect of art 106 of the EEC Treaty which, by the European Communities Act 1972, s 2(1),

[1975] 1 All ER 152 at 154

had become directly applicable as part of the law of England. The facts are set out in the judgment of Lord Denning MR.

Louis Blom-Cooper QC and Derek Hene for the plaintiffs.

The defendant did not appear and was not represented.

Cur adv vult

26 November 1974. The following judgments were delivered.



LORD DENNING MR.

1. Introduction

Here we see the impact of the Common Market on our law. No one would have thought of it before. A German company comes to an English court and asks for judgment--not in English pounds sterling but, if you please, in German deutschmarks. The judge offered a sterling judgment. But the German company said, 'No. Sterling is no good to us. It has gone down much in value. If we accepted it, we would lose one-third of the debt. The debt was payable in deutschmarks. We want deutschmarks. We will accept no other.' The judge refused their request. He had no power, he said, in English law to give any judgment but in sterling. The German company appeal to this court.

These are the facts. Schorsch Meier GmbH are dealers in motor car parts and accessories. They have offices and workshops in Munich in the Federal Republic of Germany. Mr Hennin lives in England. He is engaged in the motor car trade. In 1970 and 1971 he ordered spare parts and accessories from the Germany company. Some of the orders he gave himself when he called at the German company's offices at Munich. Other orders he gave by telephone from England. The company invoiced the goods to him, giving the price in deutschmarks, and despatched them to him in England. He made some payments in cash when he was in Munich. He made these payments in deutschmark bank notes. He also gave two cheques in sterling; but they were dishonoured. On 3 February 1972 the German company rendered a statement of account to him. It was for DM 3,756·4303 for goods sold and delivered.

The currency of the contract was clearly German. The money of account and the money of payment was German deutschmarks. At the time when the sum became due the rate of exchange was £1=DM 8·4330. At that rate the sterling equivalent of DM 3,756·4303 was £452 sterling. Some time later sterling was devalued. As a result £1 sterling was only worth DM 5·4385.

On 13 July 1973 the German company issued a summons in the West London County Court for the sum of DM 3,756·4303. They claimed the sum in deutschmarks. They did not claim payment in sterling and for a very good reason. Sterling had gone down in value. If they had claimed in sterling, they would have had to convert the deutschmarks into sterling at the date the payment should have been made, ie 3 February 1972: see Re United Railways of Havana. They would have got judgment for only £452, which would at that time have only produced DM 2,664; whereas if they were able to claim in deutschmarks and get judgment in deutschmarks for DM 3,756·4303, the sterling equivalent would be £641. In other words, by getting judgment in sterling, they would lose one-third of the money due to them; whereas by getting judgment in deutschmarks they would recover the full amount.

When the case came before the county court judge, the German company proved the debt owing in deutschmarks, that is, DM 3,756·4303. They gave no evidence of rates of exchange. They asked for judgment in deutschmarks. They relied on the

[1975] 1 All ER 152 at 155

Treaty of Rome. They submitted that the rule of English law (by which an English court can give judgment only in sterling) is incompatible with art 106 of the treaty. They asked the court to refer the matter to the European Court under art 177(1)(a) of the treaty. The judge refused. He held that, applying English canons of construction, art 106 had no bearing on the rule of the commons law; and that this was so clear that no reference to the European court was required under art 177(1)(a). The case is reported in Current Law ([1974] 3 CL § 24).

2. English law apart from the treaty

So far as I can discover, no one has ever before asked an English court to give judgment in a foreign currency. It has always been assumed that it cannot be done. As long ago as 1605 a merchant sold some cloth to another for 60 Flemish pounds. He brought an action of debt in which he claimed the English equivalent, namely, £39 sterling. The defendant said he was not indebted in English pounds. The court overruled his objection, and said:

'... the debt ought to be demanded by a name known, and the Judges are not apprised of Flemish money; and also when the plaintiff has his judgment, he cannot have execution by such name; for the sheriff cannot know how to levy the money in Flemish.'

See Rastell v Draper ((1605) Yelv 80 at 80, 81). A few years later this was reaffirmed. In 1626 it was agreed by all the judges that 'in the case of foreign coin, such as Flemish, one must declare the value in English': see Ward v Kidswin which is reported in Norman-French but translated in the Havana case ([1960] 2 All ER at 340, [1961] AC at 1044).

From that time forward it has always been accepted that an English court can only give judgment in sterling. Judges and textwriters have treated it as a self-evident proposition. No advocate has ever submitted the contrary. The modern cases start with Manners v Pearson & Son ([1898] 1 Ch 581 at 587, [1895-9] All ER Rep 415 at 417) in which Lindley MR said: 'Speaking generally, the Courts of this county have no jurisdiction to order payment of money except in the currency of this county.' In 1961 I was myself quite confident about it. In the Havana case ([1960] 2 All ER at 356, [1961] AC at 1068, 1069) I said, '... if there is one thing clear in our law, it is that the claim must be made in sterling and the judgment given in sterling.' In 1969 Salmon LJ was equally confident, and he extended it to award by arbitrators. In The Teh Hu ([1969] 3 All ER 1200 at 1206, [1970] P 106 at 129) he said:

'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.'

In several other countries they have no such rule. Dr Mann in his book^b gives a list of many countries, including Germany, in which a plaintiff can claim payment of a sum of money in a foreign currency and get judgment for it.

^b     Legal Aspect of Money (3rd Edn, 1971)

Why have we in England insisted on a judgment in sterling and nothing else? It is, I think, because of our faith in sterling. It was a stable currency which had no equal. Things are different now. Sterling floats in the wind. It changes like a weathercock with every gust that blows. So do other currencies. This change compels us to think again about our rules. I ask myself: why do we say that an English court can only pronounce judgment in sterling? Lord Reid in the Havana case ([1960] 2 All ER at 345, [1961] AC at 1052) thought that it was

[1975] 1 All ER 152 at 156

'primarily procedural'. I think so too. It arises from the form in which we used to give judgment for money. From time immemorial the courts of common law used to give judgment in these words: 'It is adjudged that the plaintiff do recover against the defendant £X in sterling.' On getting such a judgment the plaintiff could at once issue out a writ of execution for £X. If it was not in sterling, the sheriff would not be able to execute it. It was therefore essential that the judgment should be for a sum of money in sterling; for otherwise it could not be enforced.

There was no other judgment available to a plaintiff who wanted payment. It was no good his going to a Chancery Court. He could not ask the Lord Chancellor or the Master of the Rolls for an order for specific performance. He could not ask for an order that the defendant do pay the sum due in the foreign currency. For the Chancery Court would never make an order for specific performance of a contract to pay money. They would not make it for a sterling debt: see Crampton v Vana Railway Co, and Halsbury's Laws of England^c. Nor would they make it for a foreign currency. In the Havana case ([1960] 2 All ER at 345, [1961] AC at 1052) Lord Reid said:

^c     3rd Edn (1961), vol 36, p 279

'A plaintiff cannot sue in England for payment of dollars and he cannot get specific performance of a contract to pay dollars--it would not be right that he should.'

Those reasons for the rule have now ceased to exist. In the first place, the form of judgment has been altered. In 1966 the common law words 'do recover' were dropped. They were replaced by a simple order that the defendant 'do' the specified act. A judgment for money now simply says that: 'It is this day adjudged that the defendant do pay the plaintiff' the sum specified: see the notes to RSC Ord 42, r 1, and the appendices. That form can be used quite appropriately for a sum in foreign currency as for a sum in foreign sterling. It is perfectly legitimate to order the defendant to pay the German debt in deutschmarks. He can satisfy the judgment by paying the deutschmarks; or, if he prefers, he can satisfy it by paying the equivalent sum in sterling, that is, the equivalent at the time of payment.

In the second place, it is now open to a court to order specific performance of a contract to pay money. In Beswick v Beswick the House of Lords held that specific performance could be ordered of a contract to pay money, not only to the other party, but also to a third party. Since that decision, I am of opinion that an English court has power, not only to order specific performance of a contract to pay in sterling, but also of a contract to pay in dollars or deutschmarks or any other currency.

Seeing that the reasons no longer exist, we are at liberty to discard the rule itself. Cessante ratione legis cessat ipsa lex. The rule has no support amongst the juridical writers. It has been criticised by many. Dicey^d says:

^d     Conflict of Laws (9th Edn, 1973), p 883

'Such an encroachment of the law of procedure upon substantive rights is difficult to justify from the point of view of justice, convenience or logic.'

Only last year we refused to apply the rule to arbitrations. We held that English arbitrators have jurisdiction to make their awards in a foreign currency, when that currency is the currency of the contract: see Jugoslavenska Oceanska Plovidba v Castle Investment Co Inc. The time has now come when we should say that when the currency of a contract is a foreign currency--that is to say, when the money of account and the money of payment is a foreign currency--the English courts have power to give judgment in that foreign currency; they can make an order in the form: 'It is adjudged

[1975] 1 All ER 152 at 157

this day that the defendant do pay to the plaintiff' so much in foreign currency (being the currency of the contract) 'or the sterling equivalent at the time of payment'. If the defendant does not honour the judgment, the plaintiff can apply for leave to enforce it. He should file an affidavit showing the rate of exchange at the date of the application and give the amount of the debt converted into sterling at that date. Then leave will be given to enforce payment of that sum.

It must be remembered that if the English courts refuse to give a judgment in deutschmarks, the German company could readily find a way round it. They could bring proceedings in the German courts to get judgment there in deutschmarks for DM 3,756·4303. Then they could bring that judgment over to England and register it in the High Court here. On registration here, the sum would have to be converted into sterling 'on the basis of the rate of exchange prevailing at the date of the judgment of the original court'; that is, at the rate in force at the date of the German judgment: see s 2(3) of the Foreign Judgments (Reciprocal Enforcement) Act 1933. By that means the company would get judgment for the full sum they now seek, ie £641 or thereabouts, and not £452.

3. The Treaty of Rome

I turn now to the Treaty of Rome. It is by statute part of the law of England. It creates rights and obligations, not only between member states themselves, but also between citizens and the member states, and between the ordinary citizens themselves; and the national courts can enforce those rights and obligations: see NV Algemene Transport-en Expeditie Onderneming Van Gend en Loss v Nederlandse Tarief-commissie ([1963] CMLR 105 at 129). Whenever the treaty is prayed in aid, the English courts can themselves interpret it, subject always to the European Court, if asked, having the last word: see the Champagne cases. Counsel for the appellant relies on art 106 of the treaty. It says:

'1. Each Member State undertakes to authorise, in the currency of the Member State in which the creditor or the beneficiary resides, any payments connected with the movements of goods, services or capital, and any transfers of capital and earnings, to the extent that the movement of goods, services, capital and persons between Member States has been liberalised pursuant to this Treaty ... '

In interpreting this article we need not examine the words in meticulous detail. We have to look at the purpose or intent: see the Champagne case ([1974] 2 All ER at 1237, [1974] 3 WLR at 216). There is no need to refer the interpretation to the European Court at Luxembourg. We can do it ourselves. It seems to me that the purpose of art 106--or one of its purposes--is to ensure that the creditor in one member state shall receive payment for his goods in his own currency--if it is the currency of the contract--without any impediment or restriction by reason of changes in the rate of exchange. The underlying principle is this: it is the duty of the debtor to pay his debt to the creditor in the currency of the contract according to its terms. If he delays and sterling depreciates, the creditor ought not to suffer loss as a result of the debtor's delay. The debtor ought to bear the burden of his own default. The English courts would be acting contrary to the spirit and intent of the treaty if they made a German creditor accept payment in depreciated sterling. In order to comply with the treaty, they should give judgment that the defendant do pay the stated sum in deutschmarks or its sterling equivalent at the time of payment. If the defendant fails to comply with that judgment, the plaintiff can apply for leave to enforce it, producing an affidavit showing the sterling equivalent

[1975] 1 All ER 152 at 158

at the date of his application to enforce it. Leave will then be given to enforce payment of that sterling sum.

4. Conclusion

This is the first case in which we have had actually to apply the Treaty of Rome in these courts. It shows its great effect. It has brought about a fundamental change. Hitherto our English courts have only been able to give judgment in sterling. In future when a debt is incurred by an English debtor to a creditor in one of the member states--payable in the currency of that state--the English courts can give judgment for the amount in that money. This change will have effect, too, beyond the Common Market. It has already made us think again about our own laws. As a result, it is my opinion, that, whatever the foreign currency, be it United States dollars or Japanese yen, or any other, the English courts can give judgment in that money where it is the currency of the contract.

I would allow the appeal and adjudge that the debtor do pay to the plaintiff DM 3,756·4303 or the sterling equivalent at the time of payment.



LAWTON LJ.

If A sells and delivers goods to B, both justice and the law say that A should be paid the price. If B does not pay, the courts should do all in their power to see that A does not lose by B's default--and it matters not that A is a trader outside the jurisdiction of this court or how the claim is based. Traders from overseas have been coming to this county for centuries. When the merchants from the Hanseatic towns and the Low Countries gathered together at Cambridge for the midsummer fair in the middle ages they would not have wanted to be paid with clipped coins which from time to time some kings put into circulation; and if the law merchant enforced in the pie poudre court at that fair had made them accept clipped coins, it is probable that they would never have come again. If the judgment under appeal in this case is right, a foreign trader who has agreed in his own country--in accordance with his own law--to sell and deliver goods here and who is entitled under his contract to be paid in his own currency, must accept the modern equivalent of clipped coins, now called devalued currency. If this be so, our courts and our law will have a poor reputation in the market places of the world as long as our currency is unstable.

Judges and lawyers have long thought that claims arising under foreign contracts must be for a sterling sum and that the judgment must be in sterling. A list of the judges who have said so includes the names of the most outstanding judges of the last 80 years: it starts with Lindley MR, and Vaughan Williams LJ in Manners v Pearson & Son ([1898] 1 Ch 581 at 587, 592, [1895-9] All ER Rep 415 at 417, 420). It includes Lord Summer in Owners of Steamship Celia v Owners of Steamship Volturno ([1921] 2 AC 544 at 555, 556, [1921] All ER Rep 110 at 115, 116); Viscount Simonds and Lords Reid and Denning in Re United Railways of the Havana and Regla Warehouses Ltd ([1960] 2 All ER 332 at 340, 345, 356, [1961] AC 1007 at 1043, 1052, 1069); and it ends with Lord Denning MR stating in Jugoslavenska Oceanska Plovidba v Castle Investment Co Inc ([1973] 3 All ER 498 at 501, [1974] QB 292 at 299), that the rule should be reconsidered, but he knows 'that this is not yet the law'. Before these names, if I may adopt the words of the late James Thurber, I am astonished at my own presumption in even querying what they have said. There has been no discussion in modern times about the rule. It has been assumed to be the law. It must have had a beginning. What was it? Why was such a rule necessary?

If disputes about foreign exchange did arise in the middle ages--and they must have done--the surviving reports do not, so it seems, disclose what they were. The upsurge of international trade at the beginning of the 17th century which in this country led to the grant of royal charters to trading companies such as the East

[1975] 1 All ER 152 at 159

India Company and the Levant Company, did result in disputes about foreign exchange. The problems were practical. How did a plaintiff sue for what was due to him in a foreign currency? How did the court apprise itself of the value in English currency of a foreign currency of which neither the judge nor the jury had had any experience? The approach to these problems was pragmatic, as is illustrated by Rastell v Draper. The plaintiff had sold to the defendant some cloth for 60 Flemish pounds to be paid on request. The plaintiff sued in the Court of Common Pleas for £39, which he alleged was the equivalent in English money. The defendant moved in arrest of judgment, submitting that the plaintiff should have claimed 60 Flemish pounds, not 39 English ones. The court (Yelv at 80, 81) would not accept this--

'for the debt ought to be demanded by a name known and the Judges are not apprised of Flemish money; and also when the plaintiff has his judgment, he cannot have execution by such name; for the sheriff cannot know how to levy the money in Flemish.'

This was robust common sense appropriate to trading conditions in which there were no telephones, no radio, no telex and news took seven days to get to London from Paris and a month from Rome. In the end the problem was put into the strait-jacket of the forms of action. It was decided that claims for foreign currency should be in detinue, not debt. The remedy for detinue was damages and they were always given in English currency: see Ward v Kidswin. The law has worn that strait-jacket ever since. It is time it was discarded, since most of the reasoning in both Rastell v Draper and Ward v Kidswin is inappropriate nowadays. Our judges, especially those presiding in the Commercial Court, are familiar with foreign currencies, and under the Foreign Judgments (Reciprocal Enforcement) Act 1933 an English judgment expressed in deutschmarks could be enforced in the Federal Republic of Germany and West Berlin. It is, of course, as true today as it was in 1605 that a sheriff acting under a writ of fieri facias cannot by execution raise foreign currency. All he can do by a forced sale is to provide a sum in sterling. Nowadays the conversion of foreign currency into sterling and vice versa is no longer a difficult task; and judges seldom, if ever, have to do the conversions themselves; they are done for them by someone in the case making a calculation from a copy of a newspaper for the day on which the sum became payable. The forms of action have been abolished. Time has swept away nearly all the reasons why our courts were reluctant to give judgment in a foreign currency.

After the early years of the 17th century the courts seem to have been untroubled by problems of foreign exchange until the end of the 18th century. The intervening period was one of rapidly expanding trade in which England was pre-eminent and sterling much sought after. Then came the American and French revolutionary wars. Trade was upset. The political and economic fortunes of nations ebbed and flowed and at the end of the 18th century the inevitable financial consequences of such changes became the concern of the courts. One such consequence was fluctuating exchange rates. As far as I can judge from the reported cases noted by Dr F A Mann in his treatise, The Legal Aspect of Money^e, the judges concerned themselves with making orders which met with the justice of the case, but not with defining areas of jurisdiction. Thus in Cumming v Munro an action was brought on a bond dated 13 July 1775 for a sum of £2,400 proclamation money of North Carolina. The defendant wanted to pay that sum into court. The application was opposed on the ground that such a sum in that currency was of no value. The submission was based

^e     3rd Edn (1971)

[1975] 1 All ER 152 at 160

on the broad justice of the case and the uncertainty as to the sterling equivalent which would have to be resolved by a jury. It was not suggested that an English court had no jurisdiction to make an order in any currency other than sterling. The judgments of the two judges, Buller and Grose JJ, dealt with the justice of the case, not jurisdiction.

There appears to be nothing more in the reports until Manners v Pearson & Son. The years since 1815 have been a period of great economic and financial stability and this may well have influenced English lawyers, as Lord Denning pointed out in Re United Railways of the Havana and Regla Warehouses Ltd ([1960] 2 All ER 332 at 356, [1961] AC 1007 at 1069), into thinking that sterling was a currency (I use his quotation) 'of whose true-fixed and resting quality there is no fellow in the firmament'^f.

^f     Julius Caesar, Act III, scene 1

In Manners v Pearson & Son ([1898] 1 Ch at 587, [1895-9] All ER Rep at 417) Lindley MR based the rule on jurisdiction and gave as his reason for it, not the uncertainty which has concerned the 17th and 18th centuries judges, but the fact that an order in a foreign currency could not be enforced by the ordinary writs of execution. The ordinary processes, if not writs of execution, nowadays include the legal processes of other countries which have reciprocal arrangements with the United Kingdom. Further, the judges of that period may have thought, as many judges have thought since (for an example see Re United Railways of Havana and Regla Warehouses Ltd ([1960] 2 All ER at 345, [1961] AC at 1052)) that a court could not make an order for specific performance of a contract to pay a specific sum in a foreign currency. In Beswick v Beswick the House of Lords adjudged that an order for the specific performance of an undertaking to pay by instalments specific sums in sterling could be made. If such an order can be made for the payment of sterling, I can see no reason why an order should not be made for the payment of specific sums in a foreign currency. Say another case, like Re Reading's Petition of Right occurred. Suppose an army officer serving in Germany, who was the holder of an imprest account, withdrew large sums of deutschmarks, deserted to the United Kingdom and put the stolen deutschmarks in a safe deposit. Suppose that by the time the military police found him sterling had been devalued against the deutschmark. It would be an affront to justice if our courts could only give judgment for the sterling equivalent at the date of conversion. Why should he not be made to deliver up the deutschmarks? All the reasons which have been given for a chauvinistic approach to foreign currency, with the exception of those based on the difficulty of execution by writs and garnishee orders have become meaningless; and the consequences of adhering to the practice of giving judgment in sterling has been to do injustice to foreign traders and to allow defaulting British traders to get a benefit which brings discredit on the administration of justice in this realm.

I am, however, a timorous member of this court. I stand in awe of the House of Lords. I have asked myself whether counsel for the plaintiffs' submission to the effect that there is no case binding on the court which requires us to dismiss the appeal was sound. He submitted that in all the cases in which reference has been made to giving judgment in sterling the question under discussion was a different one altogether. That may well be so as to the specificissues raised, but in both Owners of Steamship Celia v Owners of Steamship Volturno and Re United Railways of the Havana and Regla Warehouses Ltd, the approach of some of their Lordships to the specific issues was to find out what was the real nature of the cause of action which produced

[1975] 1 All ER 152 at 161

the claim. See Lord Sumner's speech in Owners of Steamship Celia v Owners of Steamship Volturno and the speeches of Viscount Simonds and Lord Denning in the Havana case ([1960] 2 All ER at 340, 356, [1961] AC at 1043, 1044, 1069). Both their Lordships in the latter case pointed out that a claim in respect of a foreign debt was a claim in damages, not in debt. Viscount Simonds referred to, and approved, the case which established this proposition, Ward v Kidswin. Jones J, one of the judges in that case, is reported^g as saying that--

^g     In the Havana case [1960] 2 All ER at 340, [1961] AC at 1044

'the action is properly brought in detinet alone for Hamburg money which is of no value and as if the action were brought for a piece of plate.'

It is disturbing to find that a rule which does injustice to a foreign trader is founded on archaic legalistic nonsense of this kind. It is, however, my duty to apply the law, not to reform it. I have reluctantly been driven to the conclusion that, subject to counsel for the plaintiffs' submission based on the European Communities Act 1972, this must be deemed to have been approved and followed by the House of Lords in Re United Railways of the Havana and Regla Warehouses Ltd. Has the European Communities Act 1972 altered the law? The relevant provision of the Treaty of Rome is art 106. This article occurs in a section of the treaty which is concerned, amongst other matters, with the maintenance of confidence in the currencies of the member states. There is to be an end to barriers being erected by member states to stop transfer of capital and earnings from one to the other. Payments connected with the movement of goods are to be authorised in the currency of the member states in which the creditor resides. Before the treaty became part of our law, a foreign creditor who had the misfortune to have a defaulting debtor in this country was at a serious disadvantage if he sought to get payment with the help of a judgment in our courts. Under the judgment he could not get payment in his own currency, only in sterling. This was a barrier and the law had raised it. Article 106 requires barriers of this kind to be taken down. As art 106 is now part of our law, this court must apply it and the old rule is superseded. The result is that English law in this respect falls into line with that of the Federal Republic of Germany and a number of other states forming part of the European Economic Community. The plaintiffs may have difficulties if they try to execute the judgment in England and they may have problems under the Exchange Control Act 1947. As the plaintiffs in this case have asked for a judgment in deutschmarks, I infer that there are good business reasons for their doing so. One reason may be that the defendant has interests abroad. The plaintiffs, however, must be left to extricate themselves from the intricacies of the law relating to execution and exchange control. It is for them to choose what to do. All I have adjudged is that this judgment can be in the form for which they have asked.

I would allow the appeal.



FOSTER J.

I agree with the judgment of Lord Denning MR and for the reasons which he gave.

Appeal allowed with costs in sterling in the Court of Appeal and below.

Solicitors: Buckeridge & Braune (for the plaintiffs).

M G Hammett Esq Barrister