Prof. Dr. Zeina Hazem Al-Jubouri
Professor of Private International Law – College of Law – Private Law Branch

“Payment shall be made in the currency of the place of payment according to the exchange rate prevailing at the place of payment at the time payment is due. However, if the debtor fails to pay at the time payment is due, the creditor may require payment according to the exchange rate prevailing either at the time payment is due or at the time of actual payment.”

A unified international treatment in substantive rules for the change in foreign currency exchange rates and its impact on private international obligations, particularly international contracts, is found in the text of Article 6.1.9 of the UNIDROIT Principles of International Commercial Contracts 2010 under the title (Currency of Payment). These are international principles for the unification of private law rules that are not binding in themselves, but they can be relied upon as common international principles, and the parties to the relationship may agree to apply them in private international contracts before the judiciary and in international commercial arbitration. In particular, they addressed the issue with a clear conflict-of-laws rule in determining the law governing the currency in general, and then determining the date of the exchange rate in particular, in paragraphs 3 and 4 thereof, as follows:

“(1) If a monetary obligation is expressed in a currency other than that of the place for payment, it may be paid by the obligor in the currency of the place for payment unless
(a) that currency is not freely convertible; or
(b) the parties have agreed that payment should be made only in the currency in which the monetary obligation is expressed.
(2) If it is impossible for the obligor to make payment in the currency in which the monetary obligation is expressed, the obligee may require payment in the currency of the place for payment, even in the case referred to in paragraph (1)(b).
(3) Payment in the currency of the place for payment is to be made according to the applicable rate of exchange prevailing there when payment is due.
(4) However, if the obligor has not paid at the time when payment is due, the obligee may require payment according to the applicable rate of exchange prevailing either when payment is due or at the time of actual payment.”

Article (6.1.9) Currency of Payment:

1. If a monetary obligation is expressed in a currency other than that of the place for payment, it may be paid by the obligor in the currency of the place for payment unless:
   (a) that currency is not freely convertible; or
   (b) the parties have agreed that payment should be made only in the currency in which the monetary obligation is expressed.

2. If it is impossible for the obligor to make payment in the currency in which the monetary obligation is expressed, the obligee may require payment in the currency of the place for payment, even in the case referred to in paragraph (1)(b).

3. Payment in the currency of the place for payment is to be made according to the applicable rate of exchange prevailing there when payment is due.

4. However, if the obligor has not paid at the time when payment is due, the obligee may require payment according to the applicable rate of exchange prevailing either when payment is due or at the time of actual payment.