Part II Preliminary Topics, 6 Substance and Procedure
Uglješa Grušić, Christian Heinze, Louise Merrett, Alex Mills, Carmen Otero García-Castrillón, Zheng Sophia Tang, Katarina Trimmings, Lara WalkerEdited By: Paul Torremans, James J. Fawcett
- Choice of law clauses — Substance and procedure — Limitations on jurisdiction — Substance and Procedure
(a) Procedure governed by the law of the forum
One of the eternal truths of every system of private international law is that a distinction must be made between substance and procedure1, between right and remedy.2 The substantive rights of the parties to an action may be governed by a foreign law, but all matters appertaining to procedure are governed exclusively by the law of the forum.3
At first sight the principle seems almost self-evident. A person who resorts to an English court for the purpose of enforcing a foreign claim cannot expect to occupy a different procedural position from that of a domestic litigant. The field of procedure constitutes perhaps the most technical part of any legal system, and it comprises many rules that would be unintelligible to a foreign judge and certainly unworkable by a machinery designed on different lines. A party to litigation in England must take the law of procedure as he finds it. He cannot by virtue of some rule in his own country enjoy greater advantages than other parties here; neither must he be deprived of any advantages that English law may confer upon a litigant in the particular form of action.4 To take an old example, an English creditor who sued his debtor in Scotland could not insist on trial by jury, nor, in the converse case, could a Scottish creditor suing in References(p. 74) England refuse the intervention of a jury, on the ground that in Scotland, where the debt arose, the case would have been tried by a judge alone.5
(b) Importance of distinction between substance and procedure6
Although the principle is certain and universal, its application can give rise to considerable difficulty, especially when trying to establish a test by which a procedural rule can be distinguished from a substantive one. Unless the distinction is made with a clear regard to the underlying purpose of private international law, the inevitable result will be to defeat that purpose. So intimate is the connection between substance and procedure that to treat an English rule as procedural may defeat the policy which demands the application of a foreign substantive law. A glaring example of this is afforded by section 4 of the Statute of Frauds, which formerly provided that no action should be brought on certain contracts unless they were evidenced by a note or memorandum signed by the party to be charged or by his lawfully authorised agent. In Leroux v Brown:7
An oral agreement was made in France by which the defendant, resident in England, agreed to employ the plaintiff, resident in France, for a period that was longer than a year. The contract was valid and enforceable by French law, which was the law by which it was to be governed, but had it been an English domestic contract it would, though valid, nevertheless have been unenforceable under the Statute of Frauds. An action brought in England for its breach failed on the ground that the statute imposed a rule of procedure which was binding on all litigants suing in England.
Although this decision might, possibly, be based on an intelligible principle of domestic law, it is repugnant to the principles on which English private international law is founded. That law exists to fulfil foreign rights, not to destroy them. The law governing the contract in Leroux v Brown undoubtedly entitled the plaintiff to recover damages for the breach of the undertaking and, had he obtained judgment in France in an action to which the defendant voluntarily appeared, nothing would have prevented him from succeeding in an action brought on the judgment in England. Moreover, he would have succeeded had he done something in furtherance of the contract that constituted an act of part performance in the eyes of English law.8 To refuse him a right of action in England on the contract was tantamount to denying that the contract, admittedly governed as to substance by French law, conferred a right on him. It is a stultification of private international law to refuse recognition to a foreign right substantively valid under its governing law, unless its recognition will conflict with some rule of public policy so insistent as to override all other considerations. Willes J attacked the decision in two later cases, and evidently thought that in the circumstances the statutory rule should not have been treated as procedural.9
The plaintiff, a Maltese company, owned a ship which was managed by a Norwegian company with Norwegian officers and a Spanish crew. The defendants were an international federation of trade unions with whom the plaintiff had purported to enter into a collective agreement in 1980. However, the defendants “blacked” the ship when it started a regular run between Swedish ports, because the Swedish seamen’s union objected to the use of a Spanish and not a Swedish crew. The plaintiff claimed damages for breach of the 1980 collective agreement, and the issue was raised of whether the law governing the agreement was English or Spanish. The Court of Appeal held that it was Spanish; but the court also had to consider whether to give effect to section 18 of the Trade Union and Labour Relations Act 1974, which declared that a collective agreement “shall be conclusively presumed not to have been intended by the parties to be a legally enforceable contract unless the agreement . . . states that the parties intend that the agreement shall be a legally enforceable contract”. It was argued by the defendants that this section was procedural in effect so that an English court should apply the section irrespective of the law governing the contract.
The Court of Appeal held that section 18 was to be classed as substantive and not procedural. In so doing dissatisfaction was expressed11 with the reasoning in Leroux v Brown12 and, in holding section 18 of the 1974 Act to be substantive, Lord Denning MR had this to say:
It seems to me that the true distinction is between the existence of a contract (which is substantive law) and the remedies for breach of it (which is the procedural law). The right course is to analyse the statute and see whether it negatives the existence of a contract or not. If there is no contract, but the statute says it cannot be enforced (except in writing or within a stated period) that is procedural law. It is governed by the lex fori. In this present case, as I construe s 18 of the 1974 Act, it negatives the existence of any contract at all.13
(c) How is the distinction to be made?
It remains to consider further how the line between substance and procedure is to be drawn for the purposes of private international law.14 Only the most general definitions of “the law of procedure” have been given by the English judges. Perhaps the best known is that of Lush LJ: “The mode of proceeding by which a legal right is enforced, as distinguished from the law which gives or defines the right, and which by means of the proceeding the court is to administer the machinery as distinguished from its product.”15 This substitution of “mode of proceeding” for “procedure” does not carry us far. Nor does the definition ensure a just and convenient solution. It implies that, since the owner has chosen to fashion his foreign-acquired right into a new form through the instrumentality of English machinery, he must rest content with the design and movement of that machine. This sounds sensible but if, as in Leroux v Brown, the machinery refuses to move, one part of private international law is nullified by another. Nor shall we arrive at a solution if we change the metaphor and concentrate References(p. 76) on the contrast between right and remedy. They do not always admit of contrast in law. Historically they are inseparably connected. As Goulding J has said:
Within the municipal confines of a single legal system, right and remedy are indissolubly connected and correlated, each contributing in historical dialogue to the development of the other, and save in very special circumstances, it is as idle to ask whether the court vindicates the suitor’s substantive right or gives the suitor a procedural remedy as to ask whether thought is a mental or cerebral process. In fact the court does both things by one and the same act.16
The truth is that substance and procedure cannot be relegated to clear-cut categories. There is no preordained dividing line between them which can be discovered by logic alone. Determining the nature of a rule as procedural or substantive cannot be done in the abstract. Although the two must be distinguished, the line between them should be drawn by having regard to the relativity of legal terms and the exact purpose for which the distinction is being made.
This problem was clearly faced by Scarman J in Re Fuld’s Estate (No 3)17 when he asked: “When is a question one of substantive law? When is a question merely one of evidence or procedure? I attempt no general answer to these questions; for answer can only be made after an analysis of the specific questions calling for decision, its legal background and factual context.” This shows that the line should not be drawn in the same place for all purposes.18 It should be drawn in the light of the relevant circumstances, one of which is that the purposes of private international law as distinct from municipal law require fulfilment. Thus it is at least arguable that whether section 4 of the Statute of Frauds is of a procedural or substantive nature should be decided differently according to whether a foreign or purely English transaction is involved. The crux of the matter is: Why is the distinction between substance and procedure made in private international law? The answer presumably is: For the convenience of the court. The court, when faced with a conflict of laws problem, though bound to apply the law selected by the choice of law rules, cannot be expected to import all the relevant rules of the foreign law. To apply, for instance, the foreign rules concerned with such matters as service of process, evidence and methods of enforcing judgments would be not only inconvenient but impracticable. Nevertheless, the overriding policy is to apply the foreign substantive law, and if this will be defeated by a slavish adherence to the domestic distinction between substance and procedure, the court should consider whether in the circumstances such adherence is necessary. For: “It is not everything that appears in a treatise on the law of evidence that is to be classified internationally as adjective law, but only provisions of a technical or procedural character—for example rules as to the admissibility of hearsay evidence or what matters may be noticed judicially.”19
“If we admit”, says Cook, “that the ‘substantive’ shades off by imperceptible degrees into the ‘procedural’, and that the ‘line’ between them does not ‘exist’, to be discovered merely by logic and analysis, but is rather to be drawn so as best to carry out our purpose, we see that our problem resolves itself substantially into this: How far can the court of the forum go in applying the rules taken from the foreign system of law without unduly hindering or inconveniencing itself?”20 One critic has replied, “Not much farther than we have already gone”;21(p. 77) but at least it would be possible to go far enough to avoid such decisions as Leroux v Brown,22 and a Canadian court has suggested that legislation should be categorised as procedural only if the question is beyond doubt.23
It should be borne in mind that the issue whether a rule is one of substance or procedure may arise in more than one context. The most common context, as illustrated by Leroux v Brown, is the determination of the nature of a rule of English law in circumstances where the governing law is foreign. If the English rule is procedural, it is applied notwithstanding the foreign governing law. If the English rule is substantive, it is ignored and the foreign law applied. The problem can, however, arise in circumstances where, although the applicable law is foreign, there is some doubt as to whether the rules of that country’s law are procedural (and to be ignored in England) or substantive (and to be applied in England).24 In Chase Manhattan Bank NA v Israel-British Bank (London) Ltd:25
The plaintiff, a New York bank, sought to trace and recover in equity £2 million paid by mistake to the account of the defendant bank. The issue was whether the plaintiff bank was entitled to trace the proceeds. Although the court held that there was no significant difference between the two relevant laws, English and New York law, on the right to trace, Goulding J asked the question “whether the equitable right of a person who pays money by mistake to trace and claim such money under the law of New York is conferred by substantive law or is of a merely procedural character”.26 He concluded27 that the view of an English court would be that the plaintiff New York bank had, under New York law, an equitable interest as a cestui que trust which was substantive in nature.
Why did the judge ask the question as to the nature of the equitable right to trace? Presumably, because if he had found the New York rule to be procedural, he would have been unwilling to apply it in England.
Authority is scarcely needed for the proposition that all routine matters arising in the successive stages of litigation must be governed exclusively by English law as being the law of the forum. Such routine matters are generally said to include: service of process; the form that the action must take and whether any special procedure is permissible; the title of the action, eg by what persons and against what persons it should be brought; the competency of witnesses and questions as to the admissibility of evidence; the respective functions of judge and jury; the right of appeal, and, according to some writers, the burden of proof.28
It is necessary to consider separately certain issues whose classification as substantive or procedural raises difficulties.
References(p. 78) (a) The time within which an action must be brought
Until 1984, English law was committed to the view that statutes of limitation, if they merely specified a certain time after which rights could not be enforced by action, affected procedure and not substance.29 This meant that limitation was governed by English law, as the law of the forum, and any limitation provision of the applicable law was ignored.30 Where, however, it could be shown that the effect of a statute of limitation of the foreign applicable law was not just to bar the plaintiff’s remedy, but also to extinguish his cause of action,31 then the English courts would be prepared to regard the foreign rule as substantive and to be applied in England.32
The common law rule, which has been criticised in a number of common law jurisdictions,33 tends to have no counterpart in civil law countries which usually treat statutes of limitation as substantive.34 Furthermore, the Contracts (Applicable Law) Act 1990, implementing the European Community Convention on the Law Applicable to Contractual Obligations (1980),35 provides that the law which governs the essential validity of a contract is to govern “the various ways of extinguishing obligations, and prescription and limitation of actions”.36 In 1982 the Law Commission concluded that “there is a clear case for the reform of the present English rule”37 and their recommendations formed the basis of the Foreign Limitation Periods Act 1984.38
The general principle of the 1984 Act abandons the common law approach which favoured the application of the domestic law of limitation.39 Instead, the English court is to apply the law which governs the substantive issue according to English choice of law rules, and this new approach is applied to both actions40 and arbitrations41 in England. In the case of those few tort claims, such as defamation, to which the common law choice of law rules still apply,42 English law, as the law of the forum, will remain relevant43 because of the choice of law rule which requires actionability both by the law of the forum and by the law of the place of the tort.44 The corollary of the main rule is that English law is no longer automatically to References(p. 79) be applied. There is, of course, a significant difference between a rule under which a claim is to be held to be statute barred in England if statute barred under the governing law, a reform which seems widely to be welcomed, and a further rule that, if the claim is not statute barred abroad, it must be allowed to proceed in England. This is more controversial and the question whether any, and if so what, restriction should be placed on the application of the foreign rule was examined at length by the Law Commission.45 At the end of the day, they decided not to adopt, for example, any “long-stop” provision such as that an action could not proceed after, say, fifty years;46 but concluded that the courts had adequate power under the doctrine of public policy to disapply either an extremely long or a very short foreign limitation period. Such a public policy exception to the general rule is to be found in section 2(1) of the 1984 Act; but it is worth noting that it is reinforced by a provision,47 not found in the Law Commission’s draft Bill, to the effect that the causing of undue hardship to a party by the application of the foreign period would be contrary to public policy.48 Such hardship has been held to arise where the defendants had agreed to an extension of time which proved to be ineffective under the governing law, the basis of the hardship being the parties’ unawareness that that law would apply.49
There are some practical limits to the application of a foreign limitation rule. For example, it is for English law to determine the time at which the limitation period stops running against the claimant, eg when he commences litigation50—to do otherwise might involve the English court in detailed matters of foreign procedure. For similar reasons, the English court will ignore foreign rules as to the interruption of the running of the period because of the absence of a party from the jurisdiction.51 On the other hand, if there is a discretion under the foreign law, eg to suspend the running of the period, the English court must attempt to exercise it in the same way as it would be exercised in the foreign courts.52 The rule that equitable relief may be refused apart from a statute of limitation, if for example the claimant has been guilty of delay, has been preserved. Yet still, where there is a foreign applicable law, the English court must exercise its discretion by having regard to the relevant rules of any foreign applicable law.53
In 2006, the Legal Affairs Committee of the European Parliament54 requested that the European Commission should submit a legislative proposal on limitation periods in relation to cross-border personal injury and fatal accident claims. The view of the Committee is that, given current divergences among Member States as regards limitation periods, there may be sufficient justification for the setting of common minimum requirements throughout Europe, by means of legislation, at least in respect of cross-border litigation cases.55 A consultation followed in 2012.
References(p. 80) (b) Evidence56
(i) Evidence a matter for the law of the forum
Every system of law has its own principles for deciding the way in which the truth of facts, acts and documents shall be ascertained, and it is obvious that those principles must usually apply whether the question at issue is domestic or foreign in origin. If another system of evidence were admissible it would be equally reasonable to permit another mode of trial.57 “Whether a witness is competent or not”, said Lord Brougham “whether a certain matter requires to be proved by writing or not, whether certain evidence proves a certain fact or not, that is to be determined by the law of the country where the question arises.”58
Leroux v Brown59 is an outstanding example of the rule that the law of the forum determines whether written evidence is required. There is, however, in the case of contracts an important statutory exception to the rule that proof of facts is for the law of the forum. Under the Contracts (Applicable Law) Act 1990,60 a contract or an act intended to have legal effect may be proved in any way allowed by the law of the forum or by reference to any law governing the formal validity of the contract or act,61 provided that the mode of proof under such law can be administered in the courts of the forum. This provision is echoed, in respect of non-contractual obligations, in Article 22(2) of the Rome II Regulation,62 which provides that acts intended to have legal effect may be proved by any mode of proof recognised by the law of the forum or by any of the laws governing the formal validity of the act,63 provided that such mode of proof can be administered by the forum.
(ii) Distinction between interpretation and proof of document
With regard to the evidence necessary to prove a certain fact, an important distinction exists where a document is in issue, in that the interpretation of the document must be distinguished from its proof. The foreign document must be interpreted according to the system of law by which it is governed, but it must be proved in accordance with the requirements of the law of the forum.64 The English court that is hearing the matter must investigate the governing law as a fact and must take such expert evidence as shows what the construction would be in the foreign country, but at that point the reference to the foreign law must stop. What evidence that law admits or rejects is irrelevant.65 For example, the meaning of technical expressions used in a charter-party must be ascertained by reference to the governing law, but the existence of the charter-party itself must be proved in the manner required by English law. Thus, in Brown v Thornton:66
An action was brought in England to cover freight due under a charter-party that had been made in Batavia, by means of the instrument being written in the book of a notary, and signed by the parties. Each party received a copy, signed and sealed by the notary, and counter-signed by the principal governmental officer of Java. A charter-party was sufficiently proved in a Javanese court by production of the notary’s book, but, since such books were not allowed to be removed from Java, courts in other parts of the Dutch dominions admitted the copies as evidence.
The plaintiff was nonsuited owing to his failure to prove the charter-party in the manner required by English law. The original contract contained in the notary’s book was not produced. Secondary evidence would have been admissible had it been given in the form either of a copy made by the public officer of a court, or of a copy made by some person authorised by each party to give a binding copy, but neither of these ways was available.
The Crown, however, has power under the Evidence (Foreign Dominion and Colonial Documents) Act 193367 to issue Orders in Council providing that entries contained in the public registries of other countries, whether part of the Commonwealth or not, shall be admissible evidence in English proceedings, and that they shall be proved by means of duly authenticated official certificates.68
(iii) Taking of evidence within the EU:69 Council Regulation (EC) No 1206/2001
This matter is regulated by Council Regulation (EC) No 1206/2001 on co-operation between the courts of the Member States in the taking of evidence in civil or commercial matters.70 In order to facilitate the proper functioning of the internal market, it was thought necessary to improve co-operation between the courts of Member States in the taking of evidence; in particular to simplify and accelerate relevant procedures for the transmission and execution of requests for taking evidence,71 and also to allow a court in one Member State (the requesting court), in accordance with its own law, to take evidence directly in another Member State (the requested court), if accepted by the latter State and subject to such conditions as the requested court may determine.72 Each Member State is required to designate a “central body” to assist in the operation of the European scheme,73 but it is expected that the transmission and execution of requests for the taking of evidence generally should be made directly and by the most rapid means possible between the courts of the Member States.
In terms of Article 21, the Regulation shall prevail over other provisions contained in bilateral or multilateral agreements concluded by Member States, including, in particular, the 1970 Hague Convention on the Taking of Evidence Abroad in Civil or Commercial Matters (to which the United Kingdom is a party), in relations between the Member States party thereto.
References(p. 82) (a) Evidence by means of request
Chapter II of the Regulation deals with the transmission and execution of requests for the taking of evidence. Article 4 lays down strict rules regarding the form and content of requests, which must be presented in an official (or accepted) language of the requested state.74
The requested court is required to execute the request expeditiously75 and in accordance with its own law.76 If it is not possible for the request to be executed by the requested court within ninety days of the court’s receipt thereof, the court should inform the requesting court, stating reasons for the delay in execution.77 If the request cannot be executed because it does not contain all information required in terms of Article 4, the requested court shall inform the requesting court thereof without delay, and shall request that it send the missing information.78
If permitted by the law of the requesting court, parties and their representatives are entitled to be present at the taking of evidence,79 and it is competent also for representatives of the requesting court to be present at the taking of evidence, if compatible with the law of the Member State of that court (and subject to such conditions as may be imposed by the requested court),80 in order to enhance the evaluation of the evidence.81 Alternatively, the requesting court may ask the requested court to utilise communications technology, such as video conferencing or teleconferencing.82
Where necessary in executing a request, the requested court shall apply the appropriate coercive measures in the instances and to the extent as are provided for by the law of the Member State of the requested court for the execution of a request made for the same purpose by its national authorities or one of the parties concerned.83
Possibilities for the requested court to refuse the request are confined to strictly limited, exceptional situations,84 such as where a person claims the right to refuse to give evidence, or to be prohibited from giving evidence, under the law of the State of the requested court, or under the law of the State of the requesting court (subject to confirmation by the requesting court);85 or where the request falls outside the scope of the Regulation, or where execution of the request falls outside the functions of the judiciary of the requested court.86 Significantly, Article 14.3 provides that execution of the request cannot be refused solely on the ground that under the law of the State of the requested court that court has exclusive jurisdiction over the subject matter of the action, or because the law of the State of the requested court would not admit the right of action on it.
As regards costs, Article 18 provides that the execution of a request for the taking of evidence shall not give rise to a claim for any reimbursement of taxes or costs. Nevertheless, the requested court may require the requesting court to ensure the prompt reimbursement of experts’ and interpreters’ fees, and costs occasioned by use of communications technology.87
References(p. 83) (b) Direct taking of evidence by the requesting court
A request by the court of one Member State for the direct taking of evidence may be made in relation to judicial proceedings, commenced or contemplated.88 Direct taking of evidence can take place only if it can be performed voluntarily, without need of coercive measures.89 The taking of such evidence shall be performed by a member of the judicial personnel, or by a designated expert, in accordance with the law of the Member State of the requesting court.90
As with the taking of evidence by means of request, the requested court is required to act expeditiously and in accordance with its own law.91 The central body of the requested Member State must inform the requesting court within thirty days of receipt if the request is accepted, and, if necessary, under what conditions the performance is to be carried out.92 Similarly, the grounds for refusal to allow the direct taking of evidence are restricted to cases where the request does not fall within the scope of the Regulation; or where the request does not contain all the necessary information pursuant to Article 4; or where the direct taking of evidence requested is contrary to fundamental principles of law in its Member State.93
(iv) Taking of evidence outside the EU: Evidence (Proceedings in Other Jurisdictions) Act 1975; Protection of Trading Interests Act 1980
The Evidence (Proceedings in Other Jurisdictions) Act 197594 gives effect to the Hague Convention on the Taking of Evidence Abroad in Civil and Commercial Matters (1970).95 It empowers the High Court to order the taking of evidence (including its video recording)96 in England when requested to do so by a foreign court, if the evidence is to be obtained for the purpose of actual or contemplated proceedings in any civil or commercial matter97 or actual criminal proceedings.98 In general, the court has a discretion whether or not to order such taking of evidence and it will refuse permission where the request amounts to a “fishing expedition”;99 but under the Protection of Trading Interests Act 1980 it must refuse to make an order References(p. 84) if the request by the foreign court infringes the jurisdiction of the United Kingdom or is otherwise prejudicial to the United Kingdom.100 The 1980 Act was passed because of concern over the effect of American anti-trust litigation involving British companies101 and it also permits102 the Secretary of State to give directions prohibiting compliance with an order of a foreign court requiring a person in the United Kingdom to produce commercial documents, not within the territorial jurisdiction of the foreign court, or to provide commercial information from such documents if it appears to the Secretary of State that the request infringes United Kingdom jurisdiction, or is otherwise prejudicial to the United Kingdom, or if compliance would be prejudicial to the security of the United Kingdom or its relations with other governments.103
(v) Interpretation distinguished from evidence
Evidence must be distinguished from interpretation.104 The rule of English law, for instance, that if a contract is written, “the writing is the grand criterion of what terms are intended to be contractual and what not”105 and that therefore oral evidence is inadmissible to add to, vary or contradict the writing, is a rule of evidence properly so called that must be applied in every English action.106 But, despite its deceptive similarity, the rule which admits oral evidence to show that the parties intended to incorporate a certain condition customarily included in a contract of a particular kind is a rule of interpretation that is not necessarily applicable merely because the action is in England. It concerns interpretation, not proof.107 Owing to the imperfect manner in which the contract has been drafted, the intention of the parties is not clear and the object of the particular rule is to explain what they meant.
A distinction must also be made between facts that are relevant and the evidence by which such facts are proved, for the former fall to be decided according to the law governing the transaction, while the latter is a matter of procedure for the law of the forum. This was considered in The Gaetano and Maria.108
An action was brought in England on a bottomry bond given at the Azores by the master of a ship flying the Italian flag, without any communication with his owners. By Italian law the bond was valid; by English law its validity depended on proof that at the time it was given the ship was in distress and in need of repair and that the circumstances were such as to render it impossible for the master to communicate with the cargo-owners. It was argued that, since proof of the necessity of immediate repairs is a matter of evidence, the question of the validity of the bond must be determined by English law, being the law of the forum. The flaw in this argument was exposed by the Court of Appeal.
The sole fact in issue was one of substance, namely, whether the master had authority to give a valid bond. This was a question that fell to be determined by Italian law, the law of the flag. The equivalent English rule on this question no doubt differed from that under Italian law, but since it affected substance, not procedure, it was not to be invoked merely because the action was brought in England.
References(p. 85) (vi) Presumptions and burden of proof
A controversial question is whether presumptions and burden of proof are matters that affect procedure or substance.109 The classification of presumptions will depend on their nature and effect.110 Presumptions of fact pose no problem for they raise no legal issue. Presumptions of law may be either irrebuttable or rebuttable. The former would appear to be substantive in effect,111 but it is not clear how the latter should be classified. It has been suggested112 that those which apply to a restricted class of case should be treated as substantive, but that it is uncertain how presumptions of general application, such as the presumptions of death or validity of marriage, should be classified. There is authority for treating the presumption as to the validity of a marriage as substantive so that a marriage may be upheld under the presumption of the foreign governing law.113 But if the English law presumption favoured the validity of marriage whilst the foreign one did not, it is tempting to conclude that the public policy of the forum in favour of validity would prevail.
Whilst there may be much to be said for the view that the burden of proof is regulated by the law governing matters of substance,114 the contrary view has been voiced.115 Indeed, in Re Fuld’s Estate (No 3)116 Scarman J concluded that the English Probate Court “must in all matters of burden of proof follow scrupulously its own lex fori”.117
The question whether a rule distributing the burden of proof affects substance or procedure has arisen in the USA on a plea of contributory negligence. There is authority for the view that the burden of proving contributory negligence is a question of substantive law, to be determined by the law governing such substantive issues.118
Again, in the case of contractual and non-contractual obligations, there are special legislative rules. The Contracts (Applicable Law) Act 1990 provides119 that the rules of the law governing the substance of the contract which “raise presumptions of law or determine the burden of proof” shall be applied. It is only if these rules are to be classified as ones of substance that they are to be applied in place of the law of the forum. If they are merely procedural, they are inapplicable.120 As regards non-contractual obligations, Article 22(1) of the Rome II Regulation121 provides an equivalent rule, to the effect that the law governing a non-contractual obligation under the Regulation shall apply to the extent that, in matters of non-contractual obligations, it contains rules which raise presumptions of law or determine the burden of proof.
References(p. 86) (c) Parties
Two questions need to be considered in connection with the identity of the parties to the action. The first is the determination of the appropriate person to sue,122 and the second concerns the identity of the person to be sued.123
(i) The proper claimant
The first question is whether the name in which an action may be brought falls to be determined exclusively by the law of the forum on the ground that it is a mere matter of procedure. It is a question that arises principally where the claimant is not the original owner of the subject matter of the dispute, but has acquired it derivatively from the original owner, as, for instance, in the case of the assignment of a debt or other intangible movable. In those cases where English law requires the assignee to sue in the name of the assignor, it has been said,124 and indeed on one occasion held,125 that the requirement must be observed in an action in this country, even though it is not necessary by the law governing the transaction.
But on principle it is doubtful whether every rule that regulates the name in which an action must be brought is merely procedural in character. It would seem to be an unwarranted extension of the province of procedure, at any rate in cases falling within the sphere of private international law, to regard a rule as procedural if the effect is to deprive the claimant of a right which he has definitely acquired under the governing legal system.126 If, for instance, English law still regarded a contractual right as so essentially personal as to be actionable only at the suit of the original contracting party, it would surely be the negation of principle, and indeed of justice, to enforce such a rule indiscriminately as being one of procedure, and thus to defeat a claimant who had acquired a contractual right derivatively under some legal system that regarded the transaction as valid. To adopt this attitude would be to mistake substance for procedure. There is little authority on the matter, but the early case of O’Callaghan v Thomond127 at least shows that the English courts have not always adopted this attitude: the assignee of an Irish judgment brought an action of debt in his own name in England to recover the amount of the judgment. He was entitled so to sue by Irish law. The argument of counsel for the defendant was instructive. Though admitting the general principle that the law of one country would recognise and enforce obligations raised by the law of another country, he contended that the principle applied only to the substance of the contract, and could neither affect the form of enforcing an obligation in another country nor be allowed to contravene the general rule of English law that intangible movables were unassignable. He therefore argued that no action could be maintained in the present circumstances except in the name of the person who recovered the judgment. The court, however, was unanimous that the rule was a matter of substance, not procedure.
One problem which can arise in determining who is a proper claimant is whether a person will be permitted to sue in England in a representative capacity, relying on an appointment References(p. 87) made under a foreign law. In Kamouh v Associated Electrical Industries International Ltd128 the plaintiff was Lebanese and, because his brother had disappeared, he caused himself to be appointed by a court in Beirut as his brother’s “judicial administrator” and, in that capacity, sought to bring an action in England on a contract made between his brother and the defendants. Parker J refused to recognise his title to sue, observing129 that, in such cases, there are two conflicting principles to be examined: first, that these courts should as a matter of comity give effect to the curator’s or tuteur’s right under foreign law to sue in his own name; secondly, that municipal procedure should be applied. The first principle prevails in the case of bankruptcy,130 receivership131 and the curatorship of the mentally ill;132 whilst the second holds sway in respect of an administrator of the property of a deceased133 or absent134 person.
(ii) The appropriate defendant
The second question relates to the party sued. It has to be decided whether a foreign rule determining the identity of the party to be sued, or prescribing the order in which parties must be sued, is one of substance or of procedure. In order to do this, it is necessary to classify the exact nature and effect of the rule according to the legal system of which it forms a part.
The question is of special importance in partnership cases.135 The doctrine, for instance, of English law that any one partner may be sued alone for the totality of the partnership debts is in sharp contrast with the rule, obtaining in many other jurisdictions, that a creditor cannot sue an individual partner until he has first sued the partners jointly and the assets of the firm have been exhausted. If a rule of this nature is pleaded as a bar to an English action, it has to be classified in its foreign context. It must not be dismissed as procedural, if the result will be to impose a liability that does not exist by the law governing the transaction; but if it merely requires the enforcement in a particular manner of an admitted liability, it must be dismissed as a rule affecting only the mode of process. The principle applied by the courts appears to be as follows:
If the law governing matters of substance considers there to be no doubt as to the defendant’s liability, even though the action is conditional on other parties being sued first, then this is a rule of procedure which, unless it obtains in England, is ignored in English proceedings. If, on the other hand, the governing law regards the defendant as being under no liability whatever unless other parties are sued first, it imposes a rule of substance that must be observed in English proceedings.136
Thus in an action brought against the executors of a deceased member of a Spanish firm, a claim that, according to Spanish law, creditors could not institute a suit against the separate estate of a deceased partner until they had had recourse to and had exhausted the property References(p. 88) of the firm was not upheld because the rule in question merely determined the mode of procedure.137
The distinction was neatly raised in the leading case of General Steam Navigation Co v Guillou,138 where the facts were as follows:
The plaintiffs brought an action in England to recover damages for injury caused to one of their ships by the negligent navigation of a French ship which at the time of the accident was under the direction and management of the defendant’s servants. The offending ship belonged to a French company of which the defendant was a shareholder and acting director.
The third plea to the action stated that:
By the law of France the defendant . . . was not . . . responsible for or liable to be sued . . . individually, or in his own name or person, in any manner whatsoever, in respect of the said causes of action, . . . but by the law of France the said company alone . . . or the master in command for the time being of the said ship, was . . . responsible for, and liable to be sued . . . for, the said causes of action.
The one question, therefore, that fell to be decided here was whether the French law, as disclosed in the plea, absolved the defendant from all liability in any circumstances, or whether it imposed on him an undoubted, though a joint, liability. Although the court unanimously took this distinction,139 the judges of the Court of Exchequer were equally divided on the question on the facts, although the plea clearly alleged a denial of liability by French law. Lord Abinger and Alderson B held that French law merely required the defendant to be sued jointly with his co-owners in the name of the company; while Barons Parke and Gurney considered that according to the plea the defendant incurred no responsibility whatsoever, joint or several, for the acts of the master. This judicial difference of opinion on the question of fact is of no great moment, for the importance of the decision lies in the clearness with which the general principle is stated.
A different approach is applied if the Rome II Regulation applies.140 Its article 15(a)141 provides for the application of the substantive applicable law (lex causae) to “the determination of persons who may be held liable for acts performed by them”142 and this also encompasses the question of capacity to incur liability.143 Article 15(c) then goes on to apply the law applicable to the non-contractual obligation to the question whether “a right to claim damages or a remedy may be transferred, including by inheritance”. And finally that law also applies to determine the persons who are entitled to compensation for damage they sustained personally144 and the liability for the acts of another person.145 This restricts the scope of the law of the forum as the procedural law in this area greatly.
References(p. 89) (d) Priorities
It has consistently been held that the order in which property in the possession of the court is distributable among creditors must be governed by English law. The priority of creditors in such a case is a procedural matter that is determinable by the law of the forum;146 though it does not necessarily follow that the forum’s rule as to priorities should be the same in an international claim as in a purely domestic case.147 The law of the forum governs because the issue of priority forms no part of the transaction under which a creditor has acquired his right. It is extrinsic and comprises in effect a privilege dependent on the law of the country where the remedy is sought.148 Thus priorities of creditors claiming in bankruptcy or in the administration of a deceased insolvent’s estate are governed exclusively by the law of the forum.149 It is the same in the case of liens. Where, for instance, two or more persons prosecute claims against a ship that has been arrested in England, the order in which they are entitled to be paid is governed exclusively by English law.150
In the case of a right in rem such as a lien, however, this principle must not be allowed to obscure the rule that the substantive right of the creditor depends on the governing law. The validity and nature of the right must be distinguished from the order in which it ranks in relation to other claims. Before it can determine the order of payment, the court should examine the law governing the transaction upon which the claimant relies in order to verify the validity of the right and to establish its precise nature. Once the nature of the right is ascertained in this way, then the principle of procedure should come into play and determine that the order of payment prescribed by English law for a right of that particular kind shall govern.
Whilst this is the basis on which courts ought to proceed, decisions in relation to maritime liens have not consistently followed this line.151 A clear and, it is suggested, correct illustration of the approach to be adopted is provided by The Colorado.152
At least one earlier decision153 had failed154 to draw the crucial distinction between the substance of the right, an issue for the governing law, and the question of priorities, a remedial matter for the law of the forum. A similar failure is evident in the decision of the majority in the Privy Council in The Halcyon Isle.155
An English bank had a mortgage on the Halcyon Isle, a British registered ship being repaired in the USA by American ship repairers. The repair bill was unpaid and the ship was arrested in Singapore and ordered by the court to be sold, but the proceeds were insufficient to satisfy the claims of both the bank and the repairers. So a question of priorities arose. Under Singapore law (which was the same as English law), the mortgagees had priority because the ship repairers were not regarded as having a maritime lien. Under US law, the repairers were regarded as having such a lien as would give them priority.
The Singapore Court of Appeal held in favour of the repairers,156 but was reversed by a majority in the Privy Council who gave priority to the English bank. Whilst both the majority and the dissenting minority in the Privy Council agreed that matters of priority are procedural and to be governed by the law of the forum, they disagreed as to the analysis of the claims to be ranked in order of priority. Lord Diplock, for the majority, concluded that the issue of priority depended “upon whether or not if the repairs to the ship had been done in Singapore, the repairers would have been entitled under the law of Singapore to a maritime lien on the Halcyon Isle for the price of them. The answer to that question is that they are not. The mortgagees are entitled to priority.”157
This approach fails to give due consideration to the law of the USA. It is for that law, as the governing law, to consider both whether the claim by the repairers was valid and whether it would lead to the creation, under US law, of a maritime lien. The basis of the majority judgment seems to be that whether the repairs are entitled to a lien is solely a procedural matter, and Lord Diplock claimed that such analysis is consistent with the decision in The Colorado.158
Much to be preferred is the analysis of the minority,159 who found in favour of the ship repairers. The essence of their approach is succinctly expressed thus:
The question is—does English law, in circumstances such as these, recognise the maritime lien created by the law of the United States of America, ie the lex contractus where no such lien exists by its own internal law? In our view the balance of authorities, the comity of nations, private international law and natural justice all answer this question in the affirmative. If this be correct then English law (the lex fori) gives the maritime lien created by the lex loci contractus precedence over the mortgagees’ mortgage. If it were otherwise, injustice would prevail. The ship-repairers would be deprived of their maritime lien, valid as it appeared to be throughout the world, and without which they would obviously never have allowed the ship to sail away without paying a dollar for the important repairs.160
It is obvious that a claimant who seeks to enforce a foreign claim in England can demand only those remedies recognised by English law. Even then, he cannot demand such remedies unless they harmonise with the right according to its nature and extent as fixed by the foreign law.161 “Put in another way”, to quote Lord Parker CJ, in Phrantzes v Argenti,162 “if the machinery by way of remedies here is so different from that in Greece as to make the right References(p. 91) sought to be enforced a different right, that right would not, in my judgment, be enforced in this country”. Phrantzes was concerned with the Greek law relating to the obligation of a man to provide a dowry for his son-in-law.163 By that law, a father was obliged to establish a dowry for his daughter on her marriage, the amount of which depended, inter alia, on his finances, the number of his children and the social position of himself and his son-in-law. If a father failed to fulfil this obligation, his daughter, and she alone, had a cause of action to compel him to enter into a dowry contract not with herself, but with her husband. If the father was abroad, he could be directed by the Greek court to conclude the contract, wherever he might happen to be, in the presence either of a public notary or the Greek consul. It was against this background that Mrs Phrantzes brought an action in England against her father, claiming a declaration that she was entitled to be provided with a dowry and petitioning that the amount properly due to her should be assessed. All parties were Greek nationals, and it was assumed that the father was domiciled in Greece.
Lord Parker was satisfied that the obligation of a man to establish a dowry in favour of his son-in-law was one that on general principles was enforceable in England. It could not be excluded on the ground that the right of the beneficiary was unknown to English law.164 Nevertheless, he held that for at least two reasons the action must fail.
First, there was no remedy at common law appropriate to enforce the exact right vested in the plaintiff by Greek law, namely, “a right to obtain an order condemning someone to enter into a contract in a particular form with a person not even a party to the proceedings”.165
Secondly, the daughter did not come to the English court possessed of a right to a definite sum of money. What she was entitled to was such sum as, failing agreement, a court in its discretion might assess; and this assessment depended on a wide variety of factors such as the social position of the parties in a Greek environment.
All these enquiries and decisions are essentially matters for the domestic courts, and matters largely for the discretion of those courts and not our courts.166
It is established that a claim to set-off affects procedure, not substance, since the issue that it raises is whether the relief claimed by the defendant shall be granted in the claimant’s action or whether it is obtainable only by a counter-action.167 If the court, in accordance with its own procedural code, refuses the privilege of set-off, it makes no attack on the substance of the defendant’s claim, but, without adjudging the merits of the claim, merely rules that it must be put in suit in separate proceedings.168
The subject of damages raises a problem of some difficulty in private international law, not because the principles are obscure but because the English authorities are scanty.
References(p. 92) Various questions must be segregated. In brief, remoteness of damage and heads of damage must be distinguished from measure of damages. The rules relating to remoteness indicate what kind of loss actually resulting from the commission of a tort or from a breach of contract is actionable; the rules for the measure of damages show the method by which compensation for an actionable loss is calculated. There is one principle of remoteness in tort, another in contract, with similar variations between the two causes of action as to the heads of damage or loss for which recovery may be made. However, the rule that regulates the measure of damages is the same for contracts as it is for torts. It requires restitutio in integrum.
(i) Remoteness of damage
There can be no doubt, at least in principle, that remoteness of damage must be governed by the law governing the obligation that rests on the defendant. Both the existence and the extent of an obligation, whether it springs from a breach of contract or the commission of a wrong, must be determined by the system of law from which it derives its source.170 The governing law admittedly determines the nature and content of the right created by a contract, and it is clear that the kind of loss for which damages are recoverable on breach forms part of that content. Both the nature and the content of a contractual right depend in part on the question whether certain consequential loss that may ensue if the contract is unperformed will be too remote in the eye of the law. If the governing law determines what constitutes a breach, it also determines the consequences of a breach.171
Suppose, for the sake of argument, that by French law a purchaser who sues a seller for non-delivery of goods is entitled to recover for the loss that he has suffered through failure to carry out any sub-contracts he may have made.
On this hypothesis, a purchaser under a French contract for the sale of goods acquires a right of perfectly definite extent. Furthermore, the principles of private international law as embodied in the Contracts (Applicable Law) Act 1990172 require that his position in this respect shall be neither improved nor prejudiced by the fact that he happens to bring his action in England. If the court applies the rule of internal English law, that compensation cannot be recovered for sub-contract losses, the result is to diminish the content of the right as fixed by the governing law. The law applicable to the contract will therefore govern the issue of remoteness of damage. Of course, an exception must be made when the type of loss for which recovery may be had in the foreign country is contrary to the distinctive policy of the law of the forum.173
In D’Almeida Araujo Lda v Becker & Co Ltd, a case of breach of contract, Pilcher J based his decision on the distinction between remoteness of damage and measure of damages.174 The facts were these:
By a contract, made on 20 March and governed by Portuguese law, the plaintiffs, merchants in Lisbon, agreed to sell 500 tons of palm oil to the defendants, a British company carrying on business in London. With a view to the fulfilment of their undertaking, the plaintiffs agreed to buy 500 tons of palm oil from one Mourao, a Portuguese dealer. This contract provided that, in the event of its breach, the party in default should indemnify the other to the extent of 5 per cent of the total value of the contract, a sum that in fact amounted to References(p. 93) the equivalent of £3,500. The plaintiffs were forced into the payment of this sum, since the defendants broke the contract of 20 March.
In the present action, the plaintiffs claimed to recover by way of damages the £3,500 which they had been obliged to pay under the indemnity. It was admitted that according to English law the loss suffered by reason of this payment would found no claim to damages, since it was not the kind of loss that ensued in the usual course of things from such a breach of contract. The judge, however, held that English law was irrelevant, concluding that the question whether the plaintiffs were entitled to claim from the defendants the £3,500 which they paid to Mourao, depended on whether such damage were too remote, a question which fell to be determined in accordance with Portuguese law.175
It should logically follow from the D’Almeida case that remoteness of damage in tort is also a matter of substance to be determined by the governing law,176 for to rule otherwise would permit a claimant to exact compensation for what did not constitute a ground of liability under that law. This principle has been given legislative effect in Article 15(c) of the Rome II Regulation.177
(ii) Heads of damage
A further issue in which the distinction between substance and procedure has arisen is that of deciding whether a particular head of damage is recoverable, ie whether this is a matter of the quantification of the measure of damages and thus procedural, or whether it raises a substantive issue. Whilst there seems little doubt that, in the field of contract, this is a substantive issue for the law governing the contract, tort claims caused more difficulty because of the basic choice of law rule that the claim had to be actionable both by English law as the law of the forum and by the law of the place of the tort.178 Although tort choice of law rules have now been placed on a statutory basis,179 the determination of whether an issue is a matter of procedure or of substance is left to the common law.180 It seems clear that, at common law, a claim for damages for pain and suffering or,181 in a fatal accidents claim, for solatium,182 is to be classed as substantive. Similarly, the question whether recovery may be had in a tort action for heads of economic loss is a matter of substance and not of procedure,183 as is a claim for exemplary damages.184 The position is less certain in relation to statutory caps on damages.185
References(p. 94) One should also note that the Rome II Regulation now deals with the classification of damages for matters that fall within its scope.186 The Regulation does not deal with procedure,187 but its concept of scope is very wide and it treats the availability of a certain head of damages as a substantive matter, as it does with the issue of remoteness discussed above.188
(iii) Measure of damages
The next question is by what law is the measure of damages governed?189 A rule as to the measure of damages in the narrow sense is a mere rule of calculation. Its function is to quantify in terms of money the sum payable by the defendant in respect of the injury, whether it be a tort or breach of contract, for which his liability has already been determined by the governing law. A claimant who seeks to recover compensation in England in respect of an obligation that is governed as to substance by a foreign law has already acquired a right the nature and extent of which have been fully determined. His object is that his right as established shall be converted by the English court into a right to receive a definite sum of money. He is entitled to be paid in full for the injury suffered and he takes advantage of the English process and machinery in order to exact this payment.
It would seem, therefore, that all questions that arise in the course of this quantification of the amount payable should be governed by English law as the law of the forum. This has been the approach, traditionally, of courts in the United Kingdom. Although Pilcher J has said that, “the quantification of damage, which according to the proper law is not too remote, should be governed by the lex fori”,190 some opposition has been expressed.191 Indeed McNair J found, “the greatest possible difficulty in appreciating the distinction . . . between remoteness of damage and measure of damage”.192 Moreover, if the quantification of damages is considered to be a matter of procedure, to be governed by the law of the forum (lex fori), “difficulties will arise if the applicable law recognises a cause of action which is unknown to English domestic law [the lex fori], for the simple reason that there will be no English domestic rules on quantification and assessment for the English court to apply as the lex fori”.193 Nevertheless, the distinction has long been held both valid and valuable by the House of Lords.194
Opportunity for the House of Lords to revisit the distinction, and to review its merits, arose in Harding v Wealands,195 the facts of which were as follows:
The claimant, Giles Harding, an English national, domiciled in England, was rendered tetraplegic as a result of a motor accident in New South Wales in February 2003. The defendant References(p. 95) was Mr Harding’s partner, Tania Wealands, an Australian national who had lived in Australia until June 2001, at which time she moved to England to live with the claimant in a settled relationship. Ms Wealands conceded liability, but a preliminary issue arose before Elias J concerning the law applicable to the assessment of damages. Elias J held in favour of the claimant, concluding, inter alia, that the New South Wales statutory damages provisions were to be treated as procedural in nature, and subject, therefore, to the English lex fori.
Upon Ms Wealand’s appeal, the Court of Appeal, by a majority,196 reversed the decision of the judge at first instance,197 and upheld Ms Wealand’s contention that the claim for damages was to be determined in accordance with the law of New South Wales. The House of Lords, however, allowed Mr Harding’s appeal, restoring the judgment of Elias J and affirming the “damages principle”, holding that the question of the assessment of damages in tort, in terms of section 14(3) of the Private International Law (Miscellaneous Provisions) Act 1995, is to be regarded as a matter of procedure, governed by the law of the forum. In the instant case, the provisions of the New South Wales Motor Accidents Compensation Act 1999198 were characterised as procedural, meaning that the claimant’s damages were to be quantified in accordance with English law.
Reference of the issue of measure of damages to the law of the forum will mean that if, for instance, the defendant pleads a tender of the amount due, he must prove that the tender is in accordance with English law. This is because if the task of the court is to fix the amount payable it must also be competent to decide whether in its view payment has in effect already been made.199 Furthermore, the question whether the damages should be paid in a lump sum or by means of periodic payments is a procedural matter for the law of the forum.200 The question whether collateral benefits accruing from the death of a deceased person ought to be deducted in calculating an award of damages for loss of dependency has been judged to be a matter of procedure, to be determined by the law of the forum.201 Conversely, the question whether a claimant is contributorily negligent, leading to a reduction in the award of damages payable, has been held to be a factor relevant to the scope of the defendant’s liability for the victim’s injuries and the identification of actionable damage, and thus a substantive issue, rather than merely an aspect of the assessment of damages.202
This traditional approach of the English courts to the matter of quantification of damages has now been superseded by the provisions of the Rome I and Rome II Regulations and it is therefore now confined to those areas of law not covered by the Regulations, such as defamation. By virtue of Article 15(c) of Rome II, not only the existence and the nature of damage, but also the assessment of damage are matters to be determined by the law applicable to the non-contractual obligation.203 There is no role left for the law of the forum. This provision represents a major change in English private international law. Article 15(c) adopts the position taken in most Member States, which regard assessment of damages as a substantive matter to be determined by the applicable law, and it has the virtue of References(p. 96) preventing forum shopping within the European Union for an assessment of damages advantage.204 In looking at the provisions of the substantive law the English courts will also need to consider the relevant judicial practices and guidelines that come with them in order to be able to award the level of damages that would be awarded in the country whose law is applicable.205
In this sense the Rome II Regulation broadly follows Article 10(1)(c) of the Rome Convention on the Law Applicable to Contractual Obligations, now Article 12(1)(c) Rome I Regulation. This means that both under the Contracts (Applicable Law) Act 1990 and the Rome I Regulation the law governing the substance of the contract also governs “the consequences of breach, including the assessment of damages in so far as it is governed by rules of law”, provided that the court of the forum has these powers according to its procedural law.206 This is intended only to apply rules of law for the assessment of damages to be found in the governing law, since “questions of fact will always be for the court hearing the action”.207 This ‘governed by rules of law’ restriction is however absent from the provisions of the Rome II Regulation,208 which is therefore even more wide ranging on this point.
(iv) Payment of interest
The issue as to whether interest is payable necessitates consideration of whether interest is claimed by virtue of a term in a contract or as damages and whether what is in issue is the right to interest or the rate at which it is payable. It was well established at common law that whether interest was payable on a contractual debt, and if so at what rate, was a matter to be determined by the law governing the essential validity of the contract.209 This would still appear to be the case under the Contracts (Applicable Law) Act 1990.210 This rule has been applied in the case of dishonour of a bill of exchange. So, whether interest is recoverable on dishonour depends on the law governing the contract under which the defendant rendered himself liable.211 Where damages for breach of contract are being claimed, rather than a debt, then the right to interest on the damages is governed by the law applicable to the contract.212 There is authority for the conclusion that the right to interest on damages in tort is governed by the law applicable to the substantive tort issue.213
Turning now to the rate at which interest is to be paid, or whether the interest is to be compound or simple, there seems little doubt again that, in the case of a contractual claim for interest, these matters are governed by the law applicable to the contract.214 There is less References(p. 97) certainty as to the law to determine the rate of interest payable on damages. In an action for damages for breach of contract, it was decided in Miliangos v George Frank (Textiles) Ltd (No 2)215 that the question of the rate of interest is a matter relating to measure of damages, and thus a matter of procedure governed by the law of the forum.216 This has been dissented from by Kerr J: “Both the right to interest and its amount should be determined by the proper law. The proper law results from the express or implied choice of both parties or from the nature of the transaction.”217
There are no clear answers to be discerned from the Contracts (Applicable Law) Act 1990 which simply excludes matters of procedure from its scope, without defining them.218 So we are thrown back on the common law decisions for guidance. There are difficulties with Kerr J’s approach in the case, for example, of contractual claims for damages in foreign currency. The currency of the law governing the contract may be different from the currency of account, the currency of the loss and the currency of the forum.219 The rates of interest relevant to each may well reflect the strength and weaknesses of the various currencies. If the rate of interest is governed by the law of the forum,220 this means that, in England, the court has a discretion as to the rate221 and it has been made clear by the Court of Appeal that, prima facie, interest should be awarded at the rate applicable to the currency of the judgment.222 This might not be possible if the governing law of the contract determined the rate. The Law Commission has considered this issue and concluded, though without proposing legislation on the matter, that the practical arguments in favour of the application of the law of the forum should prevail.223
(g) Judgments in foreign currency224
It was accepted in England for many years that an English court could not order payment of debts or damages except in English currency.225 The amount due to the plaintiff in foreign currency had to be converted into sterling and the appropriate exchange rate was that at the date the cause of action arose, eg the date of the breach of a contract226 or the commission of a tort.227
References(p. 98) (ii) Miliangos v George Frank (Textiles) Ltd
The rule that judgment must be in sterling came under increasing attack, culminating in the decision of the House of Lords in Miliangos v George Frank (Textiles) Ltd.228
By means of a contract governed by Swiss law, the plaintiff, a Swiss national, had agreed to sell a quantity of polyester yarn to the English defendants. The yarn was delivered in 1971. The money of account and of payment was Swiss francs. The defendant having failed to pay, the plaintiff sought payment of the sterling equivalent of the sum due in Swiss francs, at the date when payment should have been made. However, after a decision of the Court of Appeal allowing judgment to be given in a foreign currency,229 the plaintiff in Miliangos was given leave to amend his claim so as to claim the amount due to him in Swiss francs.
The problem facing the House of Lords was a fairly simple one. Were they to act on the Practice Direction of 1966230 and reverse an earlier but fairly recent decision of their own231 and accept the line already taken by the Court of Appeal, or were they to confirm the well-established rule that judgment could only be given in sterling with a conversion date as of the date of breach? The significance of the decision to the plaintiff, in an era of rapidly fluctuating interest rates, was very considerable and especially given that the Swiss franc was strong and sterling weak. Judgment in Swiss francs, converted into sterling as at the date of judgment, would give him almost 50 per cent more in sterling than conversion as at the date of the breach. Their Lordships decided to abandon the old rule and allow judgment to be given in foreign currency, here Swiss francs.232 This was a decision of major commercial and financial significance but it left a whole range of further issues undecided, many of which have since been resolved by judicial decision. The most important of them are: how far beyond judgments for debts expressed in foreign currency does the Miliangos decision go? And in what currency may a court give judgment?
The first issue to be considered is the scope of the Miliangos decision. Their Lordships were very careful to limit their new principle to the type of case before them, leaving it to future decisions to work out the further implications of it. Indeed, Lord wilberforce said:
I would confine my approval at the present time . . . to claims such as those with which we are here concerned, ie, to foreign money obligations, sc. obligations of a money character to pay foreign currency arising under a contract whose proper law is that of a foreign country and where the money of account and payment is that of that country, or possibly of some other country, but not of the United Kingdom.233
Development came very rapidly. It started with cases of debt, then extended to liquidated damages for breach of contract and eventually to claims for unliquidated damages.234 The result is References(p. 99) that it is now established that the court can give judgment for a sum in foreign currency as damages for breach of contract235 and as damages in tort.236 Furthermore, the principle applies in contractual claims whether the law governing the contract is English law237 or foreign law.238 It also extends to restitutionary claims,239 winding up orders240 and voluntary liquidations,241 and it also seems clear that it will apply to salvage claims.242
In all these cases it has normally been the claimant who sought payment in a currency other than sterling because of the depreciation of sterling. There is now much greater variation in exchange rates. “Sterling is no longer a stable currency, nor are US dollars, nor French francs. No currency is stable. They all swing about with every gust that blows.”243 So what happens when sterling appreciates? In the case of an action for a debt it seems clear that the claimant ought to be entitled to judgment in the currency of the debt, converted into sterling as at the date of payment, and not judgment in sterling converted from the currency of the debt as at the date of breach. As was said in Miliangos, “the creditor has no concern with pounds sterling: for him what matters is that a Swiss franc for good or ill should remain a Swiss franc”.244 A similar rule ought to apply to claims for damages in foreign currency. The claimant should be entitled to judgment in the currency of his loss245 and not in sterling calculated as at the date the cause of action arose. In this way the claimant is protected against changes in the value of his currency as against sterling, but is not, and should not be, protected against changes in the internal value of his own currency.246
Interest may be allowed in an action for payment of a debt or damages in foreign currency at a rate which may be different from the English rate for sterling.247 The rate of interest to be paid on a judgment given in a foreign currency is within the discretion of the court, and is not confined to the English statutory rate for judgment debts.248
References(p. 100) (v) Procedural nature of the Miliangos rule
The rule propounded in the Miliangos decision is a rule of procedure and not of substance;249 thus English law is applied as the law of the forum. This can be seen from the fact that the rule has been applied where the law governing the substance of the contract in question was foreign,250 and without reference, at common law in tort, to the law of the place of the tort.251
Although judgment may be given in foreign currency, a question of conversion into sterling may still arise. The judgment may be satisfied by payment of the sum in foreign currency252 but, failing such satisfaction, the claimant will seek to enforce the judgment and this will necessitate conversion of the judgment into sterling.253 In fact in Miliangos itself, the House of Lords considered that the claim could be in the alternative, either for the foreign currency or the sterling equivalent at “the date of payment”. It has been stated in the Court of Appeal that the conversion should be made “as close as practicable to the date of payment, having regard to the realities of enforcement procedures”.254 In normal cases, the “date of payment” at which conversion must be made will be the date at which the court authorises enforcement of the judgment in terms of sterling,255 and this also applies to the case of an arbitrator’s award.256 In the case of the winding up of a company (both compulsory and voluntary), the appropriate date will be the date of the winding-up order.257
There are various cases where it has been provided by statute that the conversion into sterling shall be made according to the rate of exchange prevailing at the time of judgment and, of course, these are unaffected by the Miliangos decision. The judgment-date rule applies to carriage by air258 but not to carriage of goods by road.259 In the case of foreign judgments expressed in foreign currency and registered in England under the Foreign Judgments (Reciprocal Enforcement) Act 1933260 for the purposes of recognition and enforcement, they were to be registered in the foreign currency with conversion at the date of payment261 just References(p. 101) as if the claimant had sued on the original cause of action, or, it is assumed, as if there was an action on the judgment at common law.262 There is no provision in the Civil Jurisdiction and Judgments Act 1982,263 which governs the recognition and enforcement of judgments given in European Union States,264 indicating the date for converting into sterling the currency in which the foreign judgment was given. It is assumed,265 however, that the same principles will apply. The rules are different for the enforcement of foreign maintenance orders,266 where the conversion date is not that, under the Miliangos rule, of actual payment or when enforcement is authorised, but rather the earlier date of the registration of the order.267 This difference of approach can be justified on grounds of convenience.268 It is quite impracticable for the sums due under a foreign maintenance order, often payable weekly, to vary from week to week in the light of currency fluctuations.269 In the case of claims for damages falling within section 183 of the Merchant Shipping Act 1995270 the rate of exchange is either that at the date of judgment or at the date agreed by the parties.271
We have seen that the question whether damages can be given in a foreign currency is a procedural issue. This leads to a further issue of classification. Given that an English court can award damages in a foreign currency, is it for English law as the procedural law of the forum to provide the legal rules for deciding in which currency this is to be done, or is the question of the identification of the currency a matter of substantive law? For example, if the governing law of a contract is French, and the English court is prepared to give damages in a foreign currency, does the court use the English or the French rules for deciding which is the appropriate currency? This issue would appear to be a matter of substance. In the field of contract, the currency in which damages are to be calculated has been held to be a matter for the law governing substantive issues,272 as in Kraut AG v Albany Fabrics Ltd,273 in which the facts were as follows:
The plaintiff, a Swiss company, sold cloth to the English defendants, by means of contract governed by Swiss law. The defendant failed to pay and the plaintiff sought payment of various sums owing to it and damages for breach of contract. The issue before the court was whether judgment could be given in Swiss francs.
This was the first case after Miliangos v George Frank (Textiles) Ltd 274 where the court had to consider whether the principle of that decision extended to a claim for damages for breach of References(p. 102) contract, rather than a claim for the payment of a debt. In allowing the claim in Swiss francs, Eveleigh J relied on Swiss law, the law governing the contract, under which law the defendant was treated as if it was a debtor. This justified the application of the Miliangos principle that judgment may be given in a foreign currency, but also indicated that the currency in which the loss is to be calculated should be determined by the governing law. The questions whether, in a contract action, judgment should be given in a foreign currency and, in a case where there is more than one possible currency, in which currency, have been held to depend on general principles of the law of contract and on rules of private international law:
The former require application, as nearly as possible of the principle of restitutio in integrum, regard being had to what was in the reasonable contemplation of the parties. The latter involve ascertainment of the proper law of the contract, and application of that law. If the proper law is English, the first step must be to see whether, expressly or by implication, the contract provides an answer to the currency question.275
It ought logically to follow that, if the determination of the currency in which damages for breach of contract are to be calculated is a matter of substance for the law governing the contract, it should also be a matter of substance so far as claims in tort are concerned. The tort position is less clear because in the one relevant decision, The Despina R,276 English law was applied without reference to the fact that the tort in question was committed in China. One can argue that, where foreign law is not pleaded, it is deemed to be the same as English law.277
Turning now to the English rules for determining the currency in which damages should be assessed, the House of Lords has taken the view278 that, once the obligation to give judgment in sterling has been abandoned, any rule279 that, where damages consisted of loss incurred directly in a foreign currency, the damages must be assessed in that currency, should also be abandoned. Instead the court must identify the currency of the claimant’s loss for:
a plaintiff, who normally conducts his business through a particular currency, and who, when other currencies are immediately involved, uses his own currency to obtain those currencies, can reasonably say that the loss he sustains is to be measured not by the immediate currencies in which the loss first emerges but by the amount of his own currency, which in the normal course of operation, he uses to obtain those currencies. This is the currency in which his loss is felt, and is the currency which it is reasonably foreseeable he will have to spend.280
Guidance in determining the currency of loss in claims for damages is provided by two decisions, which were consolidated on appeal to the House of Lords in 1979, one in contract, the other in tort. In Services Europe Atlantique Sud v Stockholms Rederiaktiebolag SVEA, The Folias281 the facts were as follows:
By contract governed by English law, the plaintiff, a French company, chartered a Swedish ship from the defendants. Owing to defective refrigeration, the cargo was damaged on arrival in Brazil. The plaintiff settled a claim by the receiver of the cargo, paying him in Brazilian References(p. 103) currency. In arbitration proceedings, the defendants admitted liability, but maintained that they should reimburse the plaintiff in Brazilian currency, the currency the plaintiff had used to settle the claim, and not in French francs, the currency used by the plaintiff to buy the Brazilian cruzeiros.
Judgment was given in French francs as the currency most truly expressing the plaintiff’s loss. Again, the significance of the decision lies in inflation, because the Brazilian currency had weakened greatly against the French franc between the date of settling the claim and the date of judgment. The decision, therefore, protected the plaintiff from the effects of this fluctuation.
Where a contract is governed by English law, the determination of the currency in which payment is to be made is ascertained in the first instance by reference to the terms of the contract. If it provides expressly or impliedly for the currency in which damages are to be calculated282 then judgment should be given in that currency. In the absence of such provision in the contract, where the claimant incurs expenditure as a consequence of the defendant’s breach of contract, judgment for damages should be in the currency most truly expressing the claimant’s loss,283 provided the parties can be taken reasonably to have this in contemplation.284 This will not necessarily be the currency of the expenditure which may285 or may not286 be the currency of the contract.
The other 1979 House of Lords decision is in the tort field, The Despina R.287
The plaintiff’s ship and the defendants’ ship, both Greek, were in collision in Shanghai harbour. The plaintiff’s ship received temporary repairs in Shanghai and then went to Japan and eventually to the USA for further repairs. The plaintiff, having expended sums on repairs and other expenses in Chinese and Japanese currencies, in US dollars and in sterling, sought payment of these sums as damages for the harm negligently done to its ship, arguing that they should be expressed in US dollars, that being the currency in which it carried on its business.
Their Lordships held that damages in tort, as in contract, are payable in the currency of the plaintiff’s loss, here US dollars, being the currency which the plaintiff is able to show is that in which he normally conducts trading operations.288
Reference to the currency of the claimant’s loss must be qualified. This is because, if the claimant has exacerbated his loss by use of his own currency, he runs the risk that the use of his own currency may be too remote a consequence of the defendant’s conduct as to justify quantifying his loss by reference to it.289 The principle laid down in The Despina R is of general application, whatever the basis of the tort claim, even though that case only related to the torts of negligence and damage to property.290 In Hoffman v Sofaer291 the court was prepared to award the plaintiff, an American, damages in dollars for loss of earnings stemming from negligent medical treatment suffered in England. Damages for pain, suffering and loss of References(p. 104) amenity were given in sterling, however, on the ground that it would be impossible to assess them in dollars.292
We have seen that judgments, other than for unliquidated damages, may be given in foreign currency. In the case of a debt or claim for liquidated damages, the contract may provide for the currency in which the debt is to be paid; and judgment should be given in that currency.293 In other cases, where the money of account (the currency in which the obligation is measured) is different from the money of payment (the currency in which the obligation is discharged), judgment should normally be given in the former.294 If, however, the contract provides an agreed rate of exchange between the two, judgment should be given in the money of payment.295 In the case of a restitutionary claim,296 the award should be related not to the claimant’s loss, but to the currency of the defendant’s benefit. Where the benefit is money, the award should normally be for repayment by the defendant in the same currency as that in which he received payment. If the benefit is other than money, then the award should be in the currency in which the benefit can be “most fairly and appropriately valued”.297
Judgments and the execution of judgments, being integral parts of the process which the claimant has elected to adopt, are necessarily subject to the law of the forum. The particular mode of execution admitted by that law, whether more or less favourable to the claimant than that recognised by the law governing the transaction, has exclusive application. This principle covers such matters as whether the judgment may be satisfied out of land or goods;298 whether debts in the hands of third parties can be attached by third party debt order; whether a receiver may be appointed; whether a writ ne exeat regno is procurable; or whether personal constraint is permissible. Thus, where a Portuguese, who had been arrested in the course of English proceedings for non-payment of a debt which was due to a Spaniard under a Portuguese contract, applied to be discharged from custody on the ground that he was not liable to arrest by the law governing the contract, the application was refused.299
2 Cf Cook (1932–33) 42 Yale LJ 333; Szaszy (1966) 15 ICLQ 436, 455–6; and see Spiro (1969) 18 ICLQ 949. This distinction is, in principle, drawn by the Contracts (Applicable Law) Act 1990, infra, p 704 (article 18 Rome I Regulation), which excludes (in Sch 1, Art 1(2) (h)) from its rules for determining the law applicable to a contract matters of evidence and procedure, subject to a number of limited exceptions, discussed infra. Similar provision is made in the case of tort by the Private International Law (Miscellaneous Provisions) Act 1995, s 14(3)(b).
3 British Linen Co v Drummond (1830) 10 B & C 903; De la Vega v Vianna (1830) 1 B & Ad 284; Huber v Steiner (1835) 2 Bing NC 202; Don v Lippmann (1837) 5 C1 & Fin 1 at 13; Chaplin v Boys  AC 356 at 378–9, 381–2, 392–3, 394, Cox v Ergo Versicherung AG (formerly Victoria)  UKSC 22, paras 13–14. Cf, in Canada, Somers v Fournier (2002) 214 DLR (4th) 611, CA (Ont); and Volger v Szendroi 2008 NSCA 18.
7 (1852) 12 CB 801; and see Morris v Baron & Co  AC 1 at 15. The statute now just applies to a contract of guarantee: Law Reform (Enforcement of Contracts) Act 1954, s 1. In the case of contracts concerning land they need to be made by signed writing. If not, the contract is invalid: Law of Property (Miscellaneous Provisions) Act 1989, s 2.
9 Williams v Wheeler (1860) 8 CBNS 299 at 316; Gibson v Holland (1865) LR 1 CP 1 at 8. This view has been adopted in the USA; Bernkrant v Fowler 55 Cal 2d 588, 360 P 2d 906 (1961). However, in G & H Montage GmbH v Irvani  1 WLR 667 it was suggested that the reasoning in Leroux v Brown was “unassailable” and that only the House of Lords could overrule the decision:  1 WLR 667 at 684, and see at 690. On the other hand, in considering the Contracts (Applicable Law) Act 1990 and the Rome Convention on the Law Applicable to Contractual Obligations (infra, pp 758–9) it should be borne in mind that it has been suggested that whether a contract has to be in writing may be regarded as a matter of the substantive formal validity of a contract: Giuliano and Lagarde Report OJ 1980 C 282/31. This line is continued in the Rome I Regulation.
14 Carruthers, op cit, 696.
15 Poyser v Minors (1881) 7 QBD 329 at 333; adopted in Re Shoesmith  2 KB 637. See Carruthers, op cit, pp 694–6.
18 Cook, op cit, at 344, 352 and 356.
20 Cook, Logical and Legal Bases of the Conflict of Laws, p 166. A more radical solution has been suggested by Cavers, The Choice-of-Law Process, p 289, that “Before trial each party could move . . . for the use of one or more specifically identified procedural rules, to be drawn from the law of the state supplying the substantive law of the case relevant to the issue or issues to which the procedural rules related and to be used for specified purposes in the trial or other proceedings in the case. If the motions were granted, the rules thereby allowed to be used would take the place of the rules of the forum that would otherwise be applied for the same purposes.”
28 Lord Reid has said in Carl Zeiss Stiftung v Rayner and Keeler Ltd (No 2)  1 AC 853 at 919 that “estoppel is a matter for the lex fori but the lex fori ought to be developed in a manner consistent with good sense,” see infra, Chapter 15.
30 British Linen Co v Drummond (1830) 10 B & C 903; Huber v Steiner (1835) 2 Bing NC 202; Don v Lippmann (1837) 5 C1 & Fin 1; Harris v Quine (1869) LR 4 QB 653. Contrast Tolofson v Jensen (1994) 120 DLR (4th) 289.
34 See Law Commission Working Paper No 75 (1980), paras 25–6. But see, in South Africa, Society of Lloyd’s v Price; Society of Lloyd’s v Lee 2006 5 SA 393 (SCA), discussed by Forsyth (2006) 2 J Priv Int L 169, and (2006) 2 J Priv Int L 425, and by Neels 2007 Journal of South African Law 178. See also Society of Lloyd’s v Romahn 2006 4 SA 23 (C).
36 Sch 1, Art 10(1)(d); and see North, Contract Conflicts (1982), p 16. Cf Rome I Regulation, Art 12 (1) (d) and Rome II Regulation, Art 15(h), examined infra, p 865. On the impact of the Rome I and II Regulations on the distinction between substance and procedure see Schoeman  LMCLQ 81; Briggs (2009) 125 LQR 1291, at 195; Illmer (2009) CJQ 237.
46 It might be noted that the Scottish Law Commission, having toyed with a similar idea, rejected it as inappropriate and undesirable; Scot Law Com No 74 (1983), para 7.8; cf Carter (1985) 101 LQR 68, 70.
53 S 4(3). Section 3 of the 1984 Act which deals with foreign judgments on limitation points is discussed infra, Chapter 15. Cf, in Canada, Vogler v Szendroi 2008 NSCA 18.
59 (1852) 12 CB 801, supra, p 76. See now the Contracts (Applicable Law) Act 1990 and the Giuliano and Lagarde Report OJ 1980 C 282/31, infra, Chapter 19. The Australian Courts explicitly rejected the approach in Leroux v Brown, see Tipperary Developments Pty Ltd v The State of Western Australia  WASCA 126, endorsing John Pfeiffer Pty Ltd v Rogerson (2000) 203 CLR 503. The English courts however refused to follow the latter decision, see Harding v Wealands  UKHL 32.
62 Infra, Chapter 20.
67 As amended by the Oaths and Evidence (Overseas Authorities and Countries) Act 1963, s 5; Fentiman, Foreign Law in English Courts (1998), p 225. Evidence of documents may also be admitted under s 7 of the Civil Evidence Act 1995 (see formerly, s 1 of the Evidence Act 1938: Henaff v Henaff  1 WLR 598). See Dicey, Morris and Collins, para 17-039 et seq.
70 Entered into force on 1 July 2001, and having effect throughout the EU, with the exception of Denmark, as from 1 January 2004. See Report from the Commission to the Council, the European Parliament and the European Economic and Social Committee on the application of Regulation (EC) No 1206/2001 (COM (2007) 769 final), prepared in accordance with Art 23 of the Regulation. See also Practice Guide for the application of the Regulation, drawn up by the Commission Services, and available at: http://ec.europa.eu/civiljustice/evidence/evidence_ec_guide_en.pdf.
86 Art 14(2)(a) and (b). Additionally, the request may be refused if the requesting court does not comply within thirty days with the request by the requested court to supply information pursuant to Art 8 (Art 14(2)(c)), or if a deposit or advance asked for in accordance with Art 18.3 has not been made within sixty days (Art 14(2)(d)).
95 The English courts regard their jurisdiction hereunder as wholly statutory: Boeing Co v PPG Industries Inc  3 All ER 839. However, the US Supreme Court has held that the procedures of the Hague Convention are optional, not mandatory: Société Nationale Industrielle Aérospatiale v United States District Court for the Southern District of Iowa 107 S Ct 2542 (1987); Slomanson (1988) 37 ICLQ 391; Minch (1988) 22 Int Lawyer 511; Prescott and Alley, ibid, 939; Born and Hoing (1990) 24 Int Lawyer 393; Griffin and Bravin (1991) 25 Int Lawyer 331; Black (1991) 40 ICLQ 901. For a comparative analysis, see Morse in Plender (ed), Legal History and Comparative Law: Essays in Honour of Albert Kiralfy (1990), p 159.
96 Barber & Sons v Lloyd’s Underwriters  QB 103,  2 All ER 845; and R v Forsyth (1997) Times, 8 April, CA. For implications of the use of video and audio conferencing technology in transnational litigation, see Davies (2007) 55 AJCL 205.
97 Re State of Norway’s Application (Nos 1 and 2)  1 AC 723; Carter  BYBIL 494; Lipstein (1990) 39 ICLQ 120. The House of Lords held that the proceedings had to be so classified under the law of both the requesting and requested states and, on this basis, included fiscal proceedings. A Special Commission (1989) of the Hague Conference on Private International Law has preferred an autonomous interpretation of the phrase; see Mann (1990) 106 LQR 354.
98 Re Westinghouse Electric Corpn Uranium Contract  AC 547; Re Asbestos Insurance Coverage Cases  1 WLR 331, HL; R v Rathbone, ex p Dikko  QB 630; and see Sutherland (1982) 31 ICLQ 784.
99 Re State of Norway’s Application (Nos 1 & 2)  1 AC 723 at 766–767, 810; First American Corpn v Zayed  1 WLR 1154; cf Lord Advocate, Petitioner 1993 SC 638; and Lord Advocate, Petitioner 1998 SLT 835.
102 S 2. For the effect of the 1980 Act on the recognition and enforcement of foreign judgments, see infra, Chapter 15.
118 See Fitzpatrick v International Rly 252 NY 127 (1929); Hancock, Torts in the Conflict of Laws, 159 et seq; Webb and Brownlie (1962) 50 Can Bar Rev 79, 87–9; Morse, Torts in Private International Law, pp 174–8.
120 Indeed they fall outside the legislation altogether: Art 1(2)(h), infra, Chapter 19.
121 Infra, Chapter 20.
126 In Bumper Development Corpn v Metropolitan Police Comr  1 WLR 1362, the Court of Appeal, whilst accepting that the issue of whether a foreigner (here a ruined Indian Hindu temple recognised in India as a juristic person) could sue in England was a matter for English law as the law of the forum, took the broad view that it would not be contrary to public policy so to permit it.
131 Schemmer v Property Resources Ltd  Ch 273, where it is emphasised, at 287, that recognition will depend on there being sufficient connection between the defendant and the country in which the receiver was appointed; and see Thorne, Ernst & Whinney Inc v Sulpetro Ltd (1987) 47 DLR (4th) 315; White v Verkouille  2 Qd R 191.
135 Eg Oxnard Financing SA v Rahn (Legal Personality of Swiss Partnership)  1 WLR 1465 (CA). It may also arise in cases where, under the foreign law, a creditor must sue the principal debtor before he can sue a surety. This rule has been held to be procedural: Waung v Subbotovsky  3 NSWR 499; affd on other grounds 121 CLR 337.
136 General Steam Navigation Co v Guillou (1843) 11 M & W 877; Bank of Australasia v Harding (1850) 9 CB 661; Bullock v Caird (1875) LR 10 QB 276; Re Doetsch  2 Ch 836. The suggested principle is criticised by Wolff, p 240.
142 Direct actions against the insurer in cases of road accidents are dealt with in Article 18. See also Maher v Groupama Grand Est  EWCA Civ 1191 and already in a pre-Rome II setting Keefe v Mapfre Mutualidad Compania de Seguros y Reaaseguros SA  EWCA Civ 598, paras 76–86.
146 Pardo v Bingham (1868) LR 6 Eq 485; Re Melbourn (1870) 6 Ch App 64; The Colorado  P 102; The Halcyon Isle  AC 221; distinguish priority of assignees of intangible movables, infra, Chapter 30.
149 See Council Regulation (EC) No 1346/2000 on Insolvency Proceedings, Art 4(2)(i), now Regulation (EU) 2015/848 of the European Parliament and of the Council of 20 May 2015 on insolvency proceedings  OJ L 141/19, Art 7(2)(i).
150 The Milford (1858) Sw 362 at 366; The Tagus  P 44; American Surety Co of New York v Wrightson (1910) 16 Com Cas 37; The Colorado  P 102; The Halcyon Isle  AC 221. In relation to aircraft there is now a substantive priority rule benefitting international interests, see International Interests in Aircraft Equipment (Cape Town Convention) Regulations 2015 (SI 2015/912).
152  P 102, in which the Court of Appeal held that while French law determined the substance of a mortgagee’s right to a ship, English law determined whether the right ranked before or after an opposing claim. See also The Acrux  P 391 at 404. In The Zigurds  P 113, German necessaries men sought reimbursement from the proceeds of sale of a ship but failed to gain priority over the English mortgagee because, although they enjoyed such priority under German law, that was as a matter of German procedural (and not substantive) law; and it was for English procedural law to determine priorities. Also The Ship Betty Ott v General Bills Ltd  1 NZLR 655.
164 Distinguishing in this respect such decisions as Re Macartney  1 Ch 522, and De Brimont v Penniman (1873) 10 Blatch 436, where a New York court refused to enforce the duty, recognised by French law, of a father-in-law to support his son-in-law, infra, Chapter 15.
167 Meyer v Dresser (1864) 16 CBNS 646; and see Wood, English and International Set-off (1989), Chapter 23. One can distinguish another type of set-off that amounts to an equity directly attaching to the claim. Here the link with the claim will prevail and the substantive law that applies to it will also apply to the set-off. See LBI HF v Stanford  EWHC 3921 (Ch), para. 2013.
168 But see Wolff, pp 233, 234, where it is shown that under Continental laws set-off is extra-judicial and is regarded as a matter of substance; and see Wood, op cit, Chapter 24.
169 See, generally, Carruthers, op cit.
171 Contracts (Applicable Law) Act 1990, Sch 1, Art 10(1)(c) and cf Rome I Regulation, Art 12(1)(c), infra, Chapter 19; and see Drew Brown v The Orient Trader (1972) 34 DLR (3d) 339.
177 Infra, Chapter 20.
182 Eg Naftalin v London, Midland and Scottish Rly Co 1933 SC 259; McElroy v McAllister 1949 SC 110; and see Mackinnon v Iberia Shipping Co Ltd 1955 SC 20; but cf Walker, The Law of Delict in Scotland (2nd edn), pp 67–8.
185 See Stevens v Head (1993) 176 CLR 433 at 458; Morse (1996) 45 ICLQ 888 at pp 895–6; and Harding v Wealands  2 AC 1, per Lord Hoffman at –. Also, in Harding, per Lord Rodger at : “Lord Hoffman has analysed the passage in Dicey & Morris, The Conflict of Laws [7th edn, 1958, p 1092], to the effect that ‘statutory provisions limiting a defendant’s liability are prima facie substantive; but the true construction of the statute may negative this view’. I respectfully agree with his analysis. In any event, as the passage recognises, in any given case the answer to the question must depend on the construction of the relevant provision in the context of the particular statute.” See Dicey, Morris and Collins, paras 7-040–7-043.
189 See Edmunds v Simmonds  WLR 1003; Roerig v Valiant Trawlers Ltd  1 Lloyd’s Rep 681; Hulse v Chambers  1 WLR 2386; and Harding v Wealands  2 AC 1. Also Carruthers, op cit; Panagopoulos (2005) 1 J Priv Int L 69; and Carruthers (2005) 1 J Priv Int L 323.
191 See the minority in Stevens v Head (1993) 176 CLR 433. Also John Pfeiffer Pty Ltd v Rogerson  HCA 36; Régie National des Usines Renault SA v Zhang  187 ALR 1; and Re T & N Ltd and Ors (No 2)  1 WLR 1792 at .
192 N V Handel Maatschappij J Smits Import-Export v English Exporters Ltd  2 Lloyd’s Rep 69 at 72. This is a view with which Lord Upjohn has sympathised, in Boys v Chaplin  2 QB 1 at 31; and see Livesley v Horst  1 DLR 159 at 164.
201 Roerig v Valiant Trawlers Ltd  1 WLR 2304 at –. The court indicated that the question of deductions is closely tied to policy considerations, and “with the way in which damages under the particular head are to be assessed overall” (at ).
202 Dawson v Broughton, 31 July 2007 (unreported), considered at (2007) Journal of Personal Injury Law C186. See now Rome II Regulation, Art 15(b) (“division of liability”), examined, infra, Chapter 20.
203 Infra, Chapter 20.
204 For possible difficulties in application, see, infra, Chapter 20.
209 Montreal Trust Co v Stanrock Uranium Mines Ltd (1965) 53 DLR (2d) 594; and see Shrichand & Co v Lacon (1906) 22 TLR 245; Mount Albert Borough Council v Australasian Temperance and General Mutual Life Assurance Society  AC 224; Law Com No 124 (1983), para 2.29.
212 See, at common law, Miliangos v George Frank (Textiles) Ltd (No 2)  QB 489; cf Midland International Trade Services Ltd v Sudairy (1990) Financial Times, 2 May. Similarly, in a claim for restitutionary relief based on frustration, the law governing the frustrated contract has been applied to determine a claim to interest: BP Exploration Co (Libya) Ltd v Hunt (No 2)  1 WLR 783 at 845–50; affd  2 AC 352.
213 Maher v Groupama Grand Est  EWCA Civ 1191; see also Ekins v East-India Co (1717) 1 P Wms 395. But see Kuwait Oil Tanker Co SAK v Al Bader (No 3)  2 All ER (Comm) 271, per Moore-Bick J at 339–44.
214 This was clearly the position at common law: Fergusson v Fyffe (1841) 8 C1 & Fin 121 at 140 (compound interest); Mount Albert Borough Council v Australasian Temperance and General Mutual Life Assurance Society  AC 224 (rate of interest).
220 See Lesotho Highlands Development Authority v Impregilo SpA  2 Lloyd’s Rep 497, per Brooke LJ, at para 50; and Rogers v Markel Corpn  EWHC 1375, per Treacy J, at –, and  EWHC 2046. See Dicey, Morris and Collins, at paras 33-397–33-400.
222 Shell Tankers (UK) Ltd v Astro Comino Armadora SA  2 Lloyd’s Rep 40 at 45–7; and see Miliangos v George Frank (Textiles) Ltd (No 2)  QB 489; Swiss Bank Corpn v State of New South Wales (1993) 33 NSWLR 63. The prima facie rule was displaced in Helmsing Schiffahrts GmbH & Co KG v Malta Drydocks Corpn, supra.
224 Mann, The Legal Aspect of Money, (2005) 6th edn, Chapter 4; Goode, Payment, Obligations and Financial Transactions (1983), Chapter V; Bowles, Law and the Economy (1982), Chapter 9. The whole question of foreign money liabilities was considered by the Law Commission in Law Com No 124 (1983).
228  AC 443. It had already been decided that an arbitral award (Jugoslavenska Oceanska Plovidba v Castle Investment Co Inc  QB 292) and a judgment for a debt (Schorsch Meier GmbH v Hennin  QB 416) could be made in foreign currency. For Scots law on this issue, see Moran (1995) 44 ICLQ 72.
232 Lord Simon of Glaisdale dissented, believing that such a revolutionary change should only be made by Parliament;  AC 443 at 470. However, the Law Commission subsequently examined the whole question of foreign money liabilities and concluded that “the principle underlying the decision in Miliangos and the consequences which flow from it are greatly to be preferred to the rules which that decision superseded”: Law Com No 124 (1983), para 3.8; cf Bowles and Whelan (1982) 45 MLR 434.
235 Services Europe Atlantique Sud v Stockholms Rederiaktiebolag SVEA, The Folias  AC 685; and see Kraut AG v Albany Fabrics Ltd  QB 182; Federal Commerce and Navigation Co Ltd v Tradax Export SA  QB 324 at 341–2; revsd on other grounds  AC 1; The Texaco Melbourne  1 Lloyd’s Rep 473.
237 Eg Services Europe Atlantique Sud v Stockholms Rederiaktiebolag SVEA, The Folias, supra; Barclays Bank International Ltd v Levin Bros (Bradford) Ltd  QB 270; Federal Commerce and Navigation Co Ltd v Tradax Export SA, supra, at 341–2.
247 Miliangos v George Frank (Textiles) Ltd (No 2)  QB 489; Helmsing Schiffahrts GmbH & Co KG v Malta Drydocks Corpn  2 Lloyd’s Rep 444; Shell Tankers (UK) Ltd v Astro Comino Armadora SA  2 Lloyd’s Rep 40; Maschinenfabric v Altikar Pty Ltd  3 NSWLR 152; The Kefalonia Wind  1 Lloyd’s Rep 292 n; and see Bowles and Phillips (1976) 39 MLR 196.
248 Private International Law (Miscellaneous Provisions) Act 1995, s 1(1), inserting a new s 44A to that effect into the Administration of Justice Act 1970. This provision implements a recommendation of the Law Commission, in Law Com No 124 (1983), para 4.15.
255 Ibid, at 468–9, 497–8, 501–2; and see Practice Direction  1 WLR 83, as amended by Practice Direction  1 WLR 197; The Halcyon Skies (No 2)  1 Lloyd’s Rep 22; George Veflings Rederi A/S v President of India  1 WLR 59. The Law Commission re-examined this rule and supported its retention, but also made a number of detailed proposals for changes to the relevant procedural laws: Law Com No 124 (1983), Part V. On garnishee orders against foreign currency bank accounts, see Choice Investments Ltd v Jeromnimon  QB 149,  All ER 225; and now, Third Party Debt Orders per Civil Procedure Rules, Pt 72, in respect of which see Dicey, Morris and Collins, paras 24R-080–24-084. In the case of set-off, see The Transoceanica Francesca and Nicos V  2 Lloyd’s Rep 155 (tort); Smit Tak International Zeesleepen Berginsbedrijk BV v Selco Salvage Ltd  2 Lloyd’s Rep 398 (contract); and see The Lu Schan  1 Lloyd’s Rep 259.
257 Re Dynamics Corpn of America  1 WLR 757; cf Miliangos v George Frank (Textiles) Ltd  AC 443 at 469, 498 (compulsory); Re Lines Bros Ltd  Ch 1; Re Lines Bros (No 2)  Ch 438 (voluntary); and see Re Gresham Corpn Pty Ltd  1 Qd R 306.
260 S 2, for the main provisions see infra, Chapter 15.
262 East India Trading Co Inc v Carmel Exporters and Importers Ltd  2 QB 439,  1 All ER 1053 would, it is suggested, be decided differently after Miliangos; see Batavia Times Publishing Co v Davis (1978) 88 DLR (3d) 144 especially at 151–4; and see Law Com No 124 (1983), para 2.38.
264 Infra, Chapter 16.
266 Infra, Chapter 24.
267 Maintenance Orders (Reciprocal Enforcement) Act 1972, s 16; Civil Jurisdiction and Judgments Act 1982, s 8; Civil Jurisdiction and Judgments Act 1991, Sch 2, para 2; cf Re May’s Marriage (1987) 90 FLR 134.
269 English maintenance orders may be made in foreign currency (eg R v Cambridge County Court, ex p Ireland  Fam Law 23) but in such cases conversion is effected at the date the enforcement procedure is initiated: see Law Com No 124 (1983), para 2.52.
281  AC 685; Bowles and Whelan (1979) 42 MLR 452; and see Ozalid Group (Export) Ltd v African Continental Bank Ltd  2 Lloyd’s Rep 231; Food Corpn of India v Carras (Hellas) Ltd  2 Lloyd’s Rep 577; Société Francaise Bunge SA v Belcan NV  3 All ER 378.
296 BP Exploration Co (Libya) Ltd v Hunt (No 2)  1 WLR 783 at 837–45 (affd  2 AC 352); see infra, Chapter 20.
298 But where, in the case of a mortgage, the governing law provides that both the property mortgaged and other property of the debtor are liable for the debt, this amounts to a substantive rule, applicable even though the law of the forum restricts the claim to the property mortgaged; Sigurdson v Farrow (1981) 121 DLR (3d) 183; and see 243930 Alberta Ltd v Wickham (1990) 73 DLR (4th) 474.