Miliangos v George Frank Ltd
Encyclopedia
Miliangos v George Frank Ltd, [1976] AC 443 is a leading decision of the House of Lords
enforcement of debts. The case created the Miliangos rule that allows creditor
s under a contract to obtain judgment under a foreign currency
. The Lords stated that the date of payment would be the date of conversion to the foreign currency.
The case also represents a rare occasion where the Lords overturned previous precedent which has held that all debts were to be paid in sterling.
. Miliangos refused to pay for the textiles. George Frank sued Miliangos in England for the amount of the debt in the currency of the contract which was Swiss franc
s.
Over the time of the litigation the exchange rate
between the Swiss franc and the pound had dropped dramatically. The traditional rule required that the debt in Swiss francs be converted to pounds on the date of breach. George Frank would lose a significant amount of the value of the money owed if paid in pounds due to the exchange rate.
The issue before the House of Lords was whether the English courts
were able to order a judgment in any currency besides pounds sterling
.
The Lords ruled that the debt could be paid in Swiss francs, breaking a line of authority over 200 years old. The claimant applying for the payment of foreign currency must show reasons for it based on losses suffered outside the domestic jurisdiction. The conversion date to be used is the date of payment.
In dissent, Simon LJ stated that the new rule gave too much advantage to the claimants and said that this task should normally be established by the Parliament. He also tried to influence the other Lords to accept the prospective overruling; which already exists in other common law
countries like the USA.
House of Lords
The House of Lords is the upper house of the Parliament of the United Kingdom. Like the House of Commons, it meets in the Palace of Westminster....
enforcement of debts. The case created the Miliangos rule that allows creditor
Creditor
A creditor is a party that has a claim to the services of a second party. It is a person or institution to whom money is owed. The first party, in general, has provided some property or service to the second party under the assumption that the second party will return an equivalent property or...
s under a contract to obtain judgment under a foreign currency
Currency
In economics, currency refers to a generally accepted medium of exchange. These are usually the coins and banknotes of a particular government, which comprise the physical aspects of a nation's money supply...
. The Lords stated that the date of payment would be the date of conversion to the foreign currency.
The case also represents a rare occasion where the Lords overturned previous precedent which has held that all debts were to be paid in sterling.
Background
George Frank Ltd was a Swiss textile producer who sold and delivered textiles to Miliangos, textile trade located in EnglandEngland
England is a country that is part of the United Kingdom. It shares land borders with Scotland to the north and Wales to the west; the Irish Sea is to the north west, the Celtic Sea to the south west, with the North Sea to the east and the English Channel to the south separating it from continental...
. Miliangos refused to pay for the textiles. George Frank sued Miliangos in England for the amount of the debt in the currency of the contract which was Swiss franc
Swiss franc
The franc is the currency and legal tender of Switzerland and Liechtenstein; it is also legal tender in the Italian exclave Campione d'Italia. Although not formally legal tender in the German exclave Büsingen , it is in wide daily use there...
s.
Over the time of the litigation the exchange rate
Exchange rate
In finance, an exchange rate between two currencies is the rate at which one currency will be exchanged for another. It is also regarded as the value of one country’s currency in terms of another currency...
between the Swiss franc and the pound had dropped dramatically. The traditional rule required that the debt in Swiss francs be converted to pounds on the date of breach. George Frank would lose a significant amount of the value of the money owed if paid in pounds due to the exchange rate.
The issue before the House of Lords was whether the English courts
Courts of England and Wales
Her Majesty's Courts of Justice of England and Wales are the civil and criminal courts responsible for the administration of justice in England and Wales; they apply the law of England and Wales and are established under Acts of the Parliament of the United Kingdom.The United Kingdom does not have...
were able to order a judgment in any currency besides pounds sterling
Pound sterling
The pound sterling , commonly called the pound, is the official currency of the United Kingdom, its Crown Dependencies and the British Overseas Territories of South Georgia and the South Sandwich Islands, British Antarctic Territory and Tristan da Cunha. It is subdivided into 100 pence...
.
The Lords ruled that the debt could be paid in Swiss francs, breaking a line of authority over 200 years old. The claimant applying for the payment of foreign currency must show reasons for it based on losses suffered outside the domestic jurisdiction. The conversion date to be used is the date of payment.
In dissent, Simon LJ stated that the new rule gave too much advantage to the claimants and said that this task should normally be established by the Parliament. He also tried to influence the other Lords to accept the prospective overruling; which already exists in other common law
Common law
Common law is law developed by judges through decisions of courts and similar tribunals rather than through legislative statutes or executive branch action...
countries like the USA.