Judgment Currency Clause

Summary of Judgment Currency Clause

An indemnification provision commonly included in Eurocurrency loan agreements. The clause specifies that in the event the lender obtains a court award or judgement against the borrower by reason of default or otherwise, and the award is granted in a currency other than that in which the loan is to be repaid, the borrower will assume the burden for any resultant loss on exchange. For example, were a British borrower to obtain a loan of $1,000,000 from an American bank and subsequently default, the American bank might sue the borrower in a British court and receive a judgment in pounds sterling. The borrower, under a judgment currency clause, would be responsible for any exchange loss sustained by the bank in converting the pounds into dollars.

(Main Author: William J. Miller)