WHO BEARS THE BURDEN OF CURRENCY FLUCTUATION IN INTERNATIONAL DISPUTES?
Finding yourself in a dispute involving a currency other than your own will almost inevitably expose you to the added complication of the foreign exchange market. There will be two elements to the sums at stake: the losses you may be claiming as damages and the legal costs you will incur in pursuit of those losses. The currency market fluctuates daily and, even where you are the successful party at court, you need to factor in that if the sums you recover from your opponent are in another currency you may still end up out of pocket.
The recent, and rather considerable, fall in the value of sterling following the EU referendum result has been well-publicised. An effect of this currency change is that it has impacted on costs being recovered in ongoing court proceedings – costs that were incurred many months ago when sterling was more buoyant – buying £1000 in US dollars in June 2016 to contribute towards your legal costs would have cost you around $1446. If you successfully recover £1000 now, that will be the equivalent of only $1244, a difference of up to $200 in every £1000 recovered.
The currency of your claim for damages
The position of the English courts in relation to the currency of losses which are claimed in litigation is fairly settled: English Courts have the power to make orders for sums in foreign currencies, so you do not have to make your claim in sterling, although it is not quite as straightforward as that.
Jul-Sep 2017 issue
Stevens & Bolton LLP