Foreign exchange

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Foreign exchange, the conversion of one currency into another, is often conveniently — even a little wittily — referred to as “FX”. It is a subject which prompts whoops of excitement from some people and howls of anguish from others.

Some fun little facts:

FX and breaches of contract

There was an unbroken golden stream of authority, dating back 200 years, that an English court would award you damages in sterling, and that was that. This thread was broken in the celebrated case of Miliangos v George Frank (Textiles) Limited wherein the House of Lords decided it could award damages in Swiss Francs.

In other news, whether you can claim FX losses for breach of contract was considered, in President of India v Lips Maritime Corporation (fondly known to all as “The Lips”) to be a matter for ordinary remoteness of damage principles. Which is why you will see draftspeople at pains to specifically include “FX conversion losses” as part of the measure of loss in a contract: if plainly contemplated by the parties (or reasonably within their contemplation), you should have no trouble making out your claim in damages.

FX and MiFID 2

Spot FX is not a “financial instrument” within the scope of MiFID 2. See Article 10(2) of Commission Delegated Regulation (EU) 2017/565.

See also