As the euro crisis deepens both sides of the "Merkozy" couple are full of gloom, and with due cause as this year could see the partial or complete collapse of the currency.

For banks and businesses with contracts which are to be performed in euros the uncertainty is scary.

In this Advisory we ask the central question “What effect would a Eurozone breakup (of whatever form) have on private international obligations denominated in euros?” and address some of the English law and private international law issues that in our view will affect this question, namely:

  • the principle of lex monetae;
  • the language used to express the debt obligation;
  • the English law concepts of frustration and impossibility;
  • the choice of governing law in the contract; and
  • the manner and extent of a Eurozone break-up.

Lex Monetae

It is a long upheld principle that a sovereign state has the freedom to chose its currency, and it is the law of the relevant country in force from time to time which gives the meaning to the currency in which a debt is expressed. This is the lex monetae.

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