Whilst the full effect and implications of the vote to leave the EU will not be known for some considerable time, perhaps one of the most widely reported and wide-reaching consequence so far is the fall in value of sterling.
The 31-year low seen in the days after the referendum, and the continuing comparative low, is already impacting businesses of all shapes and sizes. From a litigation perspective, for some of our clients with international businesses or business interests the cost of issuing proceedings here claiming in a foreign currency has already gone up substantially.
It is possible to issue claims in the English Courts seeking judgment in a foreign currency. Such claims require an attributed exchange rate to be stated and judgment will ultimately require the defendant to pay in that foreign currency. If resident here they will need to find the Sterling equivalent at the time of payment, which with the current low is an added expense.
A judgment ordering a defendant to pay a sum in a foreign currency will now cost that defendant more than it would have before 24 June 2016. A defendant ordered to pay US $200,000 in damages before the referendum result would have been set back approximately £133,333 (based on an exchange rate of £1.00 to $1.50). On mid-August exchange rates the same monetary judgment will cost the defendant approximately £153,846 (based on an exchange rate of £1.00 to $1.30).
An extra cost of £20,000 may not concern larger companies who can absorb the increase. It is likely however to have a huge impact on individuals and SMEs ordered to pay out in a foreign currency, or settle a judgment debt for the equivalent in Sterling.
This is but one immediate example of Brexit. Whether, and if so when, Article 50 is triggered remains uncertain but it is clear the referendum result is already affecting businesses and individuals in significant ways. For up to the minute information on all matters Brexit related which may affect you and your business, follow the @GL_BrexitBrief Twitter feed or read our previous article here. Click here for information about how I can help with dispute resolution services.