With the pound impacted by Brexit fears and suffering from a 'flash crash' a question occurs to me: is an award for, say, £100,000 million worth the same this week as last week?
The fluctuation of currency is far from uncommon so what is the impact on any damages awarded in arbitration and the enforcement of those damages in such situations
What currency is the award made in?
Under English law, the tribunal may order the payment of a sum of money in any currency (Arbitration Act 1996 (AA 1996), s 48). (By way of interest, similarly in an arbitration under the Arbitration Rules of the London Court of International Arbitration (LCIA) an award may be expressed in any currency unless the parties have agreed otherwise (Article 26)).
In Lesotho v Impreglio1 the court considered the application of AA 1996, s 48. In the case a tribunal had awarded the Italian contractor damages in various European currencies (including sterling) in respect of claims expressed in Maloti (Lesotho's currency). The award followed a substantial depreciation of Lesotho the currency between the time of the loss being suffered and the commencement of the arbitration. The award was challenged to the High Court, then the Court of Appeal then to the House of Lords.
The House of Lords found that the tribunal's approach was the correct one and that the tribunal's power under AA 1996, s 48 was unconstrained. The position is therefore, essentially, that unless the contract expressly or impliedly excludes the tribunal from awarding damages in a currency other than the currency of the contract, it may do so.
For a tribunal addressing issues of currency under English law, guidance is available in Virani v Manuel Revert2 that:
the choice of currency must depend on general principles of the law of contract and on rules of conflict of laws i.e. the currency with which the contract had the closest and most real connection there may be cases in which although the obligations in the contract are to be met in a specified currency, there is no intention that damages should be given in that currency the damage should be calculated in the currency in which the plaintiff suffered the loss or 'which most truly...