Restructuring the U.S. Approach To Judgments On Foreign Currency Liabilities: Building On The English Experience

Abstract

Recent years have seen wide fluctuations in the value of currencies on the foreign exchange markets. As a result, those who participate in transnational business transactions now face greater risks when they become creditors on a foreign currency liability. This risk is exacerbated when the creditor must turn to U.S. courts to satisfy a foreign currency debt. Under the home currency judgment rule, United States courts have required all judgments to be granted in U.S. currency and have not recognized that an award in a foreign currency may better serve the interests of the injured party. English courts have recently thrown off three and a half centuries of similar precedent and are now granting judgments in foreign currencies. It is time for the United States to abandon its out-dated rules on foreign currency liabilities and adopt an approach consistent with modem commercial realities.