Miliangos v George Frank Ltd [1976]
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Miliangos v George Frank Ltd [1976] AC 443 is a landmark decision by the House of Lords that redefined the enforcement of debts in English law, particularly in relation to foreign currencies. The judgment established what is now known as the Miliangos rule, which permits creditors under a contract to obtain a judgment in the foreign currency stipulated in the contract, rather than being restricted to pounds sterling. The Lords clarified that the relevant date for converting the foreign currency into sterling, if needed, would be the date of payment, not the date of the breach as was previously the rule.
The case also engaged in a significant examination of the doctrine of judicial precedent in English law, including the doctrines of ratio decidendi and per incuriam. Notably, the decision represents a rare instance where the House of Lords invoked the Practice Statement of 1966 to depart from its previous rulings. The former position was that all debts were payable in sterling, and the decision in Miliangos overruled this, effectively modernising the approach English courts could take concerning international transactions and debt recovery.
The background of the case involved Miliangos, a Swiss textile producer, who sold and delivered textiles to George Frank Ltd, an English textile trader. When George Frank Ltd refused to pay for the delivered textiles, Miliangos sued them in England, demanding payment in Swiss francs which was the currency specified in their contract. During the course of litigation, the exchange rate between the Swiss franc and the pound dropped considerably. According to the traditional rule, the debt had to be converted into pounds based on the exchange rate at the date of the breach. Given the significant devaluation of the pound against the Swiss franc, this would have resulted in a substantial loss for Miliangos.
The key issue before the House of Lords was whether English courts had the authority to order a judgment in a currency other than pounds sterling. The Lords ultimately ruled in favour of Miliangos, allowing the debt to be paid in Swiss francs. This decision overturned over two centuries of established legal practice. The judgment specified that for claimants seeking payment in a foreign currency, there must be a demonstrable loss suffered outside the domestic jurisdiction. Furthermore, the conversion date for the currency would now be the date of payment, thus aligning the legal judgment with economic reality and providing fairer outcomes in cases involving fluctuating exchange rates.
In his dissenting opinion, Lord Simon argued that the new rule disproportionately favoured claimants and contended that such a significant change should be made by Parliament rather than the judiciary. He also suggested that the House of Lords should have considered a prospective overruling approach, similar to the practices in other common law jurisdictions like the United States, where changes in the law do not apply retroactively to previously settled cases. Despite Lord Simon's objections, the decision in Miliangos marked a pivotal shift in English commercial law, reflecting the evolving nature of international commerce and the judiciary's role in adapting legal rules to suit such developments.
The case also engaged in a significant examination of the doctrine of judicial precedent in English law, including the doctrines of ratio decidendi and per incuriam. Notably, the decision represents a rare instance where the House of Lords invoked the Practice Statement of 1966 to depart from its previous rulings. The former position was that all debts were payable in sterling, and the decision in Miliangos overruled this, effectively modernising the approach English courts could take concerning international transactions and debt recovery.
The background of the case involved Miliangos, a Swiss textile producer, who sold and delivered textiles to George Frank Ltd, an English textile trader. When George Frank Ltd refused to pay for the delivered textiles, Miliangos sued them in England, demanding payment in Swiss francs which was the currency specified in their contract. During the course of litigation, the exchange rate between the Swiss franc and the pound dropped considerably. According to the traditional rule, the debt had to be converted into pounds based on the exchange rate at the date of the breach. Given the significant devaluation of the pound against the Swiss franc, this would have resulted in a substantial loss for Miliangos.
The key issue before the House of Lords was whether English courts had the authority to order a judgment in a currency other than pounds sterling. The Lords ultimately ruled in favour of Miliangos, allowing the debt to be paid in Swiss francs. This decision overturned over two centuries of established legal practice. The judgment specified that for claimants seeking payment in a foreign currency, there must be a demonstrable loss suffered outside the domestic jurisdiction. Furthermore, the conversion date for the currency would now be the date of payment, thus aligning the legal judgment with economic reality and providing fairer outcomes in cases involving fluctuating exchange rates.
In his dissenting opinion, Lord Simon argued that the new rule disproportionately favoured claimants and contended that such a significant change should be made by Parliament rather than the judiciary. He also suggested that the House of Lords should have considered a prospective overruling approach, similar to the practices in other common law jurisdictions like the United States, where changes in the law do not apply retroactively to previously settled cases. Despite Lord Simon's objections, the decision in Miliangos marked a pivotal shift in English commercial law, reflecting the evolving nature of international commerce and the judiciary's role in adapting legal rules to suit such developments.
