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Timestamp: 2019-04-22 18:17:55+00:00

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In Broome v. Cassell & Co. Ltd,l the House of Lords blocked the Court of Appeal from overriding a House of Lord's position because it was considered by the Court of Appeal to be wrong. And now, in Miliangos v. Geo. Frank (Textiles) Ltd,2 where the Court of Appeal has renewed its attack on the authority of a House of Lords position because its underlying social forces had weakened, the House of Lords has again firmly blocked the way. But it is doubtful that the Court of Appeal has been deterred from challenging the House of Lords when it feels the need. Exhortations by the House of Lords, unsupported by any strength of reason, that the Court of Appeal treat its decisions as "absolutely binding"3 are less than compelling. The history of the issues in Miliangos reinforces the claims that judge-made law should be adjusted to new social conditions and that lower courts should be allowed to join in the process.
In Miliangos, a Swiss seller and an English buyer had contracted for the sale of goods according to Swiss law with payment in Swiss Francs. Delivery of the goods was completed but the buyer did not pay. Between the time of the breach by the buyer and the issue of an order for judgment in the seller's favour, the value of the Swiss Franc had changed from 9.9 per pound to 6 per pound. So, if the judgment debtor were ordered to deliver Swiss Francs, he would have to pay 166 per cent of the value in Sterling, which he had originally agreed to pay. If the judgment debt were paid in Sterling, the allocation between the parties of the exchange risk during the dispute resolution period depends on the date chosen for converting the damages in the contract currency to the judgment debt in the court currency. If judgment is given in the Sterling equivalent as of the date of the default, the Swiss creditor loses forty per cent of his expected Swiss Franc payment. But, the House of Lords decided the parties' intention that their business be transacted in Swiss Francs should prevail over the procedural convenience of giving judgment in Sterling. In doing so their Lordships not only reversed a particular rule of law that had endured for over three centuries but also reversed the House of Lords' traditional emphasis on formal, even at the expense of substantial, justice.
This was robust common sense appropriate to trading conditions in which there were no telephones, no radio, no telex and news took seven days to get to London from Paris and a month from Rome.
We are engaged in settling the law upon a question in which any rule is artificial and to some extent arbitrary. In other systems of law different rules have been adopted, and there is no doubt that one system may benefit one creditor and another another. No rule can do perfect justice in every case. In this country the rule is settled so as to bind our courts that where the claim is in damages for breach of contract, or for a tortious act, the date of conversion is the date of that breach or that act. It would, in my opinion, introduce a sort of refinenent into the law, against which 1 have striven and shall ever strive, if a different rule were adopted in the case of a foreign debt.
The origin of the rule ... lies in the fact that for long years Sterling was regarded as "a stable currency of whose true-fixed and resting quality there is no fellow in the firmament". Sterling is the constant unit of value by which, in the eye of the law, everything else is measured.
The question is whether the rule is to apply when Sterling loses the value which it once had. It may be said that in these conditions the rule is apt to produce an injustice to a creditor in the United States who is owed money in Dollars: because, if he comes to our courts after devaluation, he does not recover sufficient Sterling to compensate him for his loss. But 1 am afraid that, if he chooses to sue in our courts instead of his own, he must put up with the consequences. Our courts here must still treat Sterling as if it were of the same value as before: for it is the basis on which our monetary transactions are founded.
I am afraid that the common law rule on this subject is most unsatisfactory. It was fixed at the time when the Pound Sterling was a stable currency ... but that enviable state of affairs is gone. Sterling is no longer the most stable currency in the world. It bas been devalued more than once. We ought to recognize this. We should modify the common law to meet the new situation. . . .
By 1973, Lord Denning's minority opinion in The Teh Hu had become the view of the majority of the Court of Appeal in the case of Jugoslavenska Oceanska Plovidba v. Castle Investments Co.15, That case involved a time charter on the standard New York Products Exchange form between Yugoslav shipowners and a company registered in Panama. All payments under the charter were expressed in United States Dollars. A dispute arose over unpaid hire and was referred to two arbitrators in London who, in accordance with the City practice, made an award in favour of the shipowners in United States Dollars. When the charterers did not honour the award, the owners sought leave of the court to enforce the award under the Arbitration Act 1950. The Master refused leave and Kerr J. upheld this decision on the ground that English arbitrators were not entitled to make awards in foreign currencies. The Court of Appeal reversed these rulings declaring that the restriction on the ability of English courts to grant judgments in foreign currencies did not apply to arbitrators. Lord Denning justified this distinction on the grounds that resort to execution is less frequent in arbitrations than court proceedings. Accordingly, the difficulties of effecting execution using a foreign currency of account and payment are supposed to occur less frequently in arbitrations.16 Even in the case of execution of an arbitration award in foreign currency, conversion to local currency could be made on the day of payment of the debt.
currency: and then let the exchange rate be made into Sterling when it comes to be enforced. 1 know that this is not yet the law.... At any rate there is no reason why the rule about judgments of the court should be extended to awards by arbitrators.
Each member state undertakes to authorize, in the currency of the member state in which the creditor ... resides, any payments connected with the movement of goods, services or capital, ... to the extent that the movement of goods, services, capital and persons between member states bas been liberalised pursuant to this Treaty.
It is a maxim which can be applied by these courts as well as by the House of Lords or by Parliament. From time to time they have done so. A good instance is the Court of Common Pleas in Davies v. Powell (1737) Willes 46, 51, where Willes L.C.J. said: "When the nature of things changes, the rules of law must change too." So when the nature of Sterling changes, the rule of law may change too.
In fact, however, Sterling had ceased to be a stable currency even before the Havana Railways case. In Havana Railways, Lord Denning himself had specifically related the issues of the case to the departure of Sterling from the gold standard and its devaluation. Consequently, the majority's argument in Schorsch Meier was founded on a change of circumstances but in reality all that had changed was the court's appreciation of the circumstances. Had not the per incuriam route for challenging House of Lords decisions been closed in Broome v. Cassel, the Court of Appeal might have been able to state its position more candidly. The Schorsch Meier decision was not appealed to the House of Lords. So it was only on the appeal in Miliangos that the House of Lords had the opportunity to pass judgment on the Court of Appeal's avoidance of the Havana Railways decision on the grounds that shifting social conditions had made that rule obsolete.
... inappropriate and unnecessary to say that, in the circumstances of the time and on the arguments and authorities presented, the decision was wrong or is open to distinction or explanation.
But if 1 am faced with the alternative of forcing commercial circles to fall in with a legal doctrine which bas nothing but precedent to commend it or altering the doctrine so as to conform with what commercial experience bas worked out, 1 know where my choice lies. The law should be responsive as well as, at times, enunciatory, and good doctrine can seldom be divorced from sound practice.
These considerations and the circumstances that 1 have set forth, when related to the arguments which moved theirLordships in the Havana Railways case . . lead me to the conclusion that, if these circumstances had been shown to exist in 1961, sortie at least of their Lordships, assuming always that the interests of justice in the particular case required, would have been led, as one of them very notably bas been led, to take a different view.
The House of Lords in Miliangos looked to precedents with more interest in the force of their argument than their hierarchical status. Lord Wilberforce referred to the different evolution of the allocation rule by arbitrators as a "very important"31 development. Lord Wilberforce cited cases from the Commonwealth and even the United States in support of his position and also referred to juridical writings32 Lord Simon of Glaisdale acknowledged that he lent "great weight" to the views of one particular judge-Lord Radcliffe-because of "his knowledge, unusual in a judge, of public and commercial finance".33 Lord Simon also cited the report of an expert legal committee-the Private International Law Committee-to show that commercial circles, at least as of 1962 when the Committee reported, felt no urgency to amend the Havana Railwavs rule.34 The House of Lords' decisions in Miliangos refer to some of the self-restraints that should be exercised in judicial law reform.
comprehensive reform, in this field of foreign currency obligation, is practicable. Questions as to the recovery of debts or of damages depend so much upon the individual mixtures of facts and merits as to make them more suitable for progressive solutions in the courts.
... a long established rule of law almost always gathers juridical adhesions, so that its abrogation causes dislocations elsewhere in the legal system. Parliament, on executive or expert advice, can allow for these. the judiciary can rarely do so.
Another important limitation on the exercise of the power to judicially review established rules of law relates to the significance of the interests implicated by the rule. If the rule is in fact an arbitrary mechanism by which to settle disputes in which the private interests weigh equally and the social interests weigh equally or not at all, then the establisbed rule should be retained for the sake of convenience. As noted above, some members of the Havana Railways court felt able to treat the rule allocating the exchange risk during the dispute resolution period as arbitrary since currency fluctuations were rare and consequently there were few interests effected by the rule. Had the rule actually been arbitrary in its application, then there would have been no urgency for change. But when private or public interests are effected by changes in currency values, then the courts have a duty to adopt rules that account for the interests at issue.
Lord Simon of Glaisdale, while shying away from participating in judge-made law reform, nevertheless proposed some measures which might overcome his reluctance to do so in the future. Specifically, His Lordship proposed the use of prospective overruling and the participation as amicus curiae of representatives of the executive branch.42 Certainly the use of prospective overruling is desirable. In fact, the House of Lords has already applied the technique in the Practice Statement of 1966 which announced that the House of Lords would no longer consider itself absolutely bound by its prior decisions.43 But judge-made law by prospective overruling need not and should not bc the only technique available to the courts for reforming outmoded rules of law. What justice after ail is there in enforcing one last time a rule now considered so unjust that it will not bc enforced in subsequent cases? Surely such a margin of certainty cannot outweigh the merits of doing justice in the case immediately at hand.
In short, the most significant contribution of the Miliangos case is that the House of Lords has committed itself to judge-made law reform as required by changes in social conditions. Yet in what seems a contradiction of this spirit the House of Lords would exclude the lower courts from the process.
think that it is worth nothing: but that is a different matter.
Thus the House of Lords has closed every visible avenue by which the Court of Appeal might depart from prior House of Lords decisions.
Meier decision and barely touched on the substantive issues of the appeal.51 In Miliangos, the House of Lords took up the Court of Appeal's position in Schorsch Meier on the substantive issues but rapped the Court of Appeal for their artificial reasoning and breach of precedent. While abandoning its position in Havana Railways for the Court of Appeal's position in Schorsch Meier, the House of Lords unanimously declared that the only judicial means by which its decisions could be reviewed was by the House of Lords itself under the Practice Statement of 1966.
But no matter how categorical the House of Lords pronouncements may be, it would be surprising if they actually dissuaded the Court of Appeal from slipping away from House of Lords rules that are antiquated or clearly wrong for whatever other reason. The House of Lords still has not responded rationally and persuasively to the Court of Appeal's challenge to the binding effect of precedent.
Binding lower courts by upper court decisions does not increase predictability where the court of ultimate appeal can change the rule by which all other courts are bound. Assuming that two parties to a dispute both believe their arguments are sustainable and that each will carry the debate to the next level if it loses until the parties reach the final level of decision-making, then it makes no difference whether the lower courts follow the established rule or set off in a new direction. And it makes no difference in principle whether there are five levels of review (as may occur in arbitrations) or only one (under the "Leap-Frog" procedures).52 The point is that once the House of Lords can change its rules, then there are no gains in expediency by holding lower courts to the old rule because close cases will probably be appealed anyway.
But while the efficiency gains of binding precedent are few, the potential gains from its abolition are considerable. In Schorsch Meier, the Court of Appeal departed from the House of Lords rule and there was no appeal. It is of course difficult to read the intentions of the parties from the case reports but one cannot but suspect that counsel were convinced that the change in the rule accomplished by the Court of Appeal was good law and would have been upheld by the House of Lords.53 Had the Court of Appeal applied the Havana Railways rule, either the case would have been appealed involving wasted expense or, if the case had gone no further, both the law and the defeated party would have suffered from the Court of Appeal's inability to break new ground.
is bound to follow previous decisions of its own as well as those of courts of co-ordinate jurisdiction. The only exceptions to this rule (two of them apparent only) are those already mentioned which for convenience we here summarize: (1) The court is entitled and bound to decide which of two conflicting decisions of its own it will follow. (2) The court is bound to refuse to follow a decision of its own which, though not expressly overruled, cannot, in its opinion, stand with a decision of the House of Lords. (3) The court is not bound to follow a decision of its own if it is satisfied that the decision was given per incuriam .... Where the court is satisfied that an earlier decision was given in ignorance of the terms of a statute or a rule having the force of a statute ... (it) cannot, in our opinion, be right to say that in such a case the court is entitled to disregard the statutory provision and is bound to follow a decision of its own given when that provision was not present to its mind. Cases of this description are examples of decisions given per incuriam.
It was wrong for the Court of Appeal in this case to follow the Schorsch Meier decision. It is no doubt true that the decision was not given "per incuriam" but 1 do not think Lord Greene when he said in Young v. Bristol Aeroplane Co. Ltd that the only exception to the rule that the Court of Appeal is bound to follow previous decisions of its own were those which he set out, can fairly be blamed for not foreseeing that one of his successors might deal with a decision of the House of Lords in the way in which Lord Denning dealt with the Havana Railways case.
The other Lords chose not to comment on the problem perhaps hoping that such a conflict of views between levels of courts would never again present itself.
What emerges is that, if the court of ultimate appeal can change its earlier rules, little marginal certainty is gained by compelling lower courts to follow the earlier decisions of the highest level. Also, there is little point in restricting the grounds on which lower courts can reconsider the law as previously stated by a higher level in the hierarchy. If the House of Lords can now change the law to account for new social conditions, why restrict a lower court in its ability to hear evidence of change in circumstances and to pass judgment on that evidence? What is accomplished by a decision such as Lord Justice Lawton's in Schorsch Meier in which the rule established by the higher court is described as "founded on archaic legalistic nonsense" but applied nevertheless because the judge is "timorous" and stands in "awe of the House of Lords"?57 Such a decision is a clear-cut invitation to appeal and, short of impecuniosity, the defeated party would appeal. If the defeated party cannot afford to appeal, what sort of justice is this? If he does appeal, what was accomplished by the token heeding of the superior court's earlier decision? And if the lower court does vary the higher court's rule, the defeated party can accept that the change in the law is for the better or he can rely on the higher court's decision to found his appeal.
The moment is rapidly approaching when the House of Lords will finally abandon the intellectual confines of analytical jurisprudence. In the nineteenth century, the English courts sought refuge from the policy implications of their decisions by applying established concepts to analogous problems. In Miliangos the analytical approach virtually disappeared from the rhetoric of the House of Lords. Perhaps the only remaining areas of its influence are in subjects where the rules of law are arbitrary, or so pervasively integrated into the network of legal relations as to require extensive ancillary law reform, or where the implications of a reform in the law are overridinglypolitical in nature.
The use by the House of Lords of sociological reasoning in Miliangos contrasts sharply with its iconoclastic view of the role of lower courts in the law reform process. This attitude is probably a lingering vestige of the analytical approach seeking once and for all answers in specific rules of conduct. But the search for certainty in law is futile and often counter-productive. If laws are to be adjusted to changing social conditions, then rules of law can be no more stable than their social environment. To preclude lower courts from participating in updating rules of law, at best, only delays the reform until the case can be brought to the highest court of appeal thus putting the parties to unnecessary expense. But if the case is not appealed it postpones the law reform indefinitely. The balance of real flexibility versus pretended certainty shows the value of allowing all levels of court to assess social change and evaluate whether and how rules of law must be adjusted. The House of Lords will surely be frustrated in its campaign to exclude the lower courts from the law reform process.
of Decisions of House of Lords on Lower Courts (1974), 53 Can. Bar Rev. 128.
3 - Per Lord Simon of Glaisdale, ibid., at p. 775.
4 -Bagshaw v. Playn (1595), 1 Cro. Eliz. 536.
5 - Schorsch Meier v. Hennin,  3 W.L.R. 823, at p. 832.
6 - Manners v. Pearson & Son,  1 CW 581, at p. 587.
7 - Per Lord Denning, supra, footnote 2, at p. 563.
10 Ibid., at pp. 1052-1053.
11 Ibid, at p. 1069.
13 (19691 3 W.L.R. 1135.
14 Ibid., at pp. 1147-1149.
15 - (1973) 3 W.L.R. 847.
16 - Ibid., at p. 852.
18 - Supra, footnote 5, at p. 830.
19 - Ibid., at p. 827.
2O - Supra, footnote 2, at p. 771.
21 - Ibid., at p. 776; per Lords Wilberforce and Frazer of Tullybelton, ibid., at pp. 769 and 804 respectively.
22 - Ibid., at P. 764.
23 - Ibid., at p. 797.
Printing and Promotions) Ltd, (19731 A.C. 435, at p. 455.
25 - Ibid., at P. 768. 213 Ibid., at p. 798.
26 - Ibid., at p. 798.
27 - Ibid., at p. 802.
28 - Ibid., at pp, 772-773.
29 - Ibid., at p. 770.
Fuentes v. Shevin (1972), 407 U.S. 67. Sec also the comment on these cases in (1973), 86 Harv. L. Rev. 1307.
31 - Supra, footnote 2, at p. 767.
32 - Lord Wilberforce cites the decision of Mr. Justice Holmes in Deutsche Bank Filiale Nurnberg v. Humphrey (1926), 272 U.S. 517; the case of In re Dawson, dec'd, [19661 2 N.S.W.R. 211, and F.A. Mann, The Legal Aspect of Money (3rd ed., 1971); see Lord Wilberforce's decision, ibid., at pp. 769 and 711. In the United States, federal courts continue to follow the Deutsche Bank reliance on the date of judgment for conversion of the damages into local currency. While the New York courts have in the past used the date of the wrong for conversion, there has been a tendency toward using the judgment date. The other countries in the Western World either allow judgment in foreign currencies or provide for conversion dates closer to the date of actual judgment than the breach date. Sec F.A. Mann, op. cit., ibid., at pp. 350-376. The Canadian courts generally follow the breach date conversion rule (The Custodian v. Blucher,  S.C.R. 420), but see Quartier v. Farah (1921), 64 D.L.R. 37 which used the date of judgment of first instance for conversion. Also see: J.-G. Castel, Private International Law (1960), pp. 92-93.
33 - Supra, footnote 2, at p. 787.
34 - Ibid., at p. 784.
36 - Ibid., at p. 773.
37 - Ibid., at p. 789.
cases such as bankruptcies, which involve the distribution from a fund, require special rules. Sec also, F. A. Mann, op. cit., footnote 32, pp. 347-352.
39 - The Warsaw Convention as am. at The Hague, 1955, art.
Eliz. 2, c. 27, s. 1.
40 - Convention on the Contract for the International Carriage of Goods by Road (1956), art. 27(2), adopted by Carriage of Goods by Road Act 1965, c. 37, s. 1.
41 - 45 & 46 Vict., c. 61, s. 72(4).
42 - Supra, footnote 2, at p. 792.
43 - Practice Statement (Judicial Precedent),  1 W.L.R.
Department of State: First National City Bank v. Banco Nacional de Cuba (1972), 66 Am. J. Int. L. 795-, also the comment on the case in (1973), 14 Harv. Int.	L.J. 13 1.
45 - (1968) A.C. 58 (H.I,.).
46 - Supra, footnote 5, at p. 829.
47 - Ibid., at p. 828.
49 - Ibid,, at p. 798; per Lord Simon of Glaisdale, at p. 779.
50 - Ibid., at p. 775; per Lord Wilberforce, ibid., at p. 769; per Lord Cross of Chelsea, ibid., at p. 798; per Lord Frazer of Tulleybelton, ibid., at p. 804.
52 - Administration of Justice Act 1969, Part IL Under these provisions, application may be made to a judge of first instance for a certificate allowing an appeal directly to the House of Lords. The applicant must have a "Sufficient case" for such an appeal and in exercising his Discretion to issue the certificate the judge must be satisfied that the point of law is one of "general public importance" relating either to the construction of a piece of legislation or the application of a previous "fully-considered" decision of the House of Lords or the Court of Appeal.
of Chelsea, ibid., at p. 799.
54 -  K.B. 718, at pp. 729-730.
55 - Supra, footnote 2, at p. 780.
56 - Ibid., at p. 797.
57 - Supra, footnote 5, at pp. 833-834.

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