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Official Citation: 2026 LHC 3261
Court / Jurisdiction: Lahore High Court (Honorable Mr. Justice Khalid Ishaq)
This judicial decision was delivered by the Lahore High Court (Honorable Mr. Justice Khalid Ishaq). The matter involves proceedings between Petitioner and Respondent, officially reported as 2026 LHC 3261. The court reviewed applicable Pakistani statutes, procedural requirements, and governing case-law authorities. The full text below contains the complete facts, arguments, and legal reasoning rendered by the honorable bench.
COURT: Lahore High Court (Honorable Mr. Justice Khalid Ishaq) DECISION DATE: 20-04-2026 TAGLINE: 1) Payment Day Rule v. The Breach Day/Transaction Day Rule (2) Under the 'Payment Day Rule', the Court determines the judgment debt in the foreign currency but calculates the final conversion rate using the exchange rate prevailing on the actual date when the debt is repaid by the debtor. CASE DETAILS: Execution Application (B) CM/4/16218/25 ============================================================ Form No.HCJD/C-121 ORDER SHEET IN THE LAHORE HIGH COURT LAHORE. JUDICIAL DEPARTMENT
Ex.A. No.16218 of 2025
Metro Metals Northwest Inc. Versus Mughal Iron & Steel Industries Ltd.
Sr. No. of Order/ Proceeding Date of order/ Proceeding Order with signature of Judge, and that of parties or counsel, where necessary
20.04.2026. M/s. Muhammad Umer Akram Ch., Wyena Qureshi and Minahil Fatima, Advocates for the decree holder M/s. Muhammad Ahsan Bhoon, Imran Anjum Alvi, Muhammad Faizan Sarwar & Muhammad Afzal Srod, Advocates for the judgment debtor
CM No.4 of 2025 1 Before proceeding to decide the merits of the captioned application, some pivotal facts, which are germane to the filing and decision of the application in hand are being explicated herein below: a. The decree holder M/s. Metro Metals Northwest, Inc. filed a Petition under Section 6 of the Recognition and Enforcement (Arbitral Agreement and Foreign Arbitral Award) Act, 2011 ( Act, 2011) for recognition and enforcement of Final Award dated 07.01.2022 (“Award”), passed in furtherance of the arbitration proceedings conducted in terms of clause 20 of the arbitration agreement dated 24.02.2020 executed between the decree holder and the judgment debtor. b. In response to notices issued by this Court, the judgment debtor appeared and contested the Petition by filing a reply,
1 Filed by the applicant/judgment debtor in terms of provisions contained in Order XXI Rule 23(2) & 1(a) read with Section 47 of the Code of Civil Procedure, 1908 (“CPC”). Ex.A. No. 16218 of 2025 Continuous Sheet No. ___2___ Sr. No. of Order/ Proceeding Date of Order/ Proceeding Order with signature of Judge, and that of parties or counsel, where necessary
however, the defence so raised by the judgment debtor was rejected and the Award was ordered to be recognized and enforced as a judgment of this Court. Consequently, by virtue of judgment and decree dated 26.02.2025 (the “Decree”) the decree sheet was ordered to be drawn, whereby, it is held that the Award is recognized as a binding and enforceable Award; the Decree holder has been granted judgment in ‘the Award Amount’, which Decree is now being executed through these proceedings as the same was converted into execution. c. On 19.04.2025, the decree holder filed Fard Taleeqa containing details of properties and moveable assets belonging to judgment debtors. d. On 23.04.2025, CM No.1 of 2025 filed by the decree holder was taken up for hearing and while incorporating the details of the accounts of the judgment debtor, as supplied by the decree holder, the concerned bankers were directed to file latest statements of accounts and the amounts as well as balance maintained in those accounts. It was specifically ordered that no further amounts shall be debited from the accounts. e. In compliance of the above order dated 23.04.2025, the statements of accounts were produced by the learned law officer of the Court, which statements transpired substantial Ex.A. No. 16218 of 2025 Continuous Sheet No. ___3___ Sr. No. of Order/ Proceeding Date of Order/ Proceeding Order with signature of Judge, and that of parties or counsel, where necessary
debit entries in at least two bank accounts maintained with Bank Al Habib and Faysal Bank Ltd., which debit entries were taken note of and judgment debtors were directed to render explanation for such debit entries as the amounts were evidently withdrawn subsequent to the order dated 23.04.2025. f. On 20.10.2025, CM No.4 of 2025 was filed by the judgment debtor, whereby, it is pleaded that since the Award transformed into the Decree was in US Dollars, therefore, the amount payable for satisfaction of the Decree in Pak rupees will be calculated as per the rate of the US$, which was prevailing at the time when the transaction took place between the parties. To be precise, it is argued that the transaction took place in April, 2021, thus, the rate of Pak Rs.152.41=1 US Dollar, be made basis for computing the value of foreign currency in Pakistani Rupee for the payment of decretal debt. g. A reply to CM No.4 of 2025 has been filed by the Decree holder, whereby, the decree holder has pleaded and relied upon the ‘Payment Day Rule’. h. For the purpose of clarity and convenience, the operative part of the Award, which has been converted into an executable and enforceable Decree of this Court, is reproduced herein below: Ex.A. No. 16218 of 2025 Continuous Sheet No. ___4___ Sr. No. of Order/ Proceeding Date of Order/ Proceeding Order with signature of Judge, and that of parties or counsel, where necessary
"For the reasons stated above, I award as follows: A. Within thirty (30) days from the date of transmittal of this Final Award to the parties, respondent Mughal Iron & Steel Industries Limited, referred to herein as "Mughal Steel" shall pay to Claimant Metro Metals Northwest, Inc., referred to herein as “Metro Metals”, the sum of USD $ 2,463,377.54. B. The administrative fees and expenses of the International Centre for Dispute Resolution (ICDR) totaling USD $19,350.00 shall be borne by Respondent Mughal Steel and the compensation and expenses of the arbitrator totaling USDS25,575.00 shall be borne by respondent Mughal Steel. Therefore, respondent Mughal Steel shall also reimburse Claimant Metro Metals, the sum of USD $44,925.00, representing that portion of said fees and expenses previously incurred by Claimant Metro Metals Northwest, Inc. (The Award Amount) C. This award is in full settlement of all claims and requests for relief submitted to this Arbitration. 2. Neither the parties are at dispute that the Courts in Pakistan can pass the judgment(s) in foreign currency nor the determination of such question, even if so raised, fall within the scope and contours of exercise of jurisdiction of an Executing Court as it is Ex.A. No. 16218 of 2025 Continuous Sheet No. ___5___ Sr. No. of Order/ Proceeding Date of Order/ Proceeding Order with signature of Judge, and that of parties or counsel, where necessary
well settled that an Executing Court cannot travel beyond the decree. Therefore, the precise questions of law, which are required to be determined for deciding CM No.4 of 2025, may be summed up in the following terms: i. What exchange rate is to be applied for payment of the decreetal amount in Pak Rupees? a. The exchange rate as it stood on the ‘transaction day’?; or b. The exchange rate which is applicable on the ‘payment day’? 3. In a nub, the applicant/judgment debtor has confined its submissions on the principle of the ‘Transaction Day Rule’, whereas, the decree holder seeks to rely upon the ‘Payment Day Rule’. 4. While placing reliance upon the case reported as Henry Stanley Ramsden and 2 others v. S.M.Fazail and Co. (PLD 1964 (W.P.) Karachi 290), learned counsel for the judgment debtor/applicant contends that where a payment is payable in foreign currency and an action is brought in this country for its recovery, the amount expressed in foreign currency has to be converted in Pakistani Rupees with reference to the rate of exchange prevailing at the time when ‘the same became payable’. The reliance has further been placed upon the cases of Industrial Development Bank of Pakistan v. M/s. Williamsons and Co. Ltd. and 2 others (PLD 1980 Karachi 576) Ex.A. No. 16218 of 2025 Continuous Sheet No. ___6___ Sr. No. of Order/ Proceeding Date of Order/ Proceeding Order with signature of Judge, and that of parties or counsel, where necessary
and Dr. Muhammad Rafi ud Din and another v. Federation of Pakistan (PLD 1960 Karachi 506), to argue that it has consistently been held by the Courts in Pakistan that in case of breach of a contract, the material date of exchange for converting foreign currency into Pakistani Rupees or vice versa would be the exchange rate prevalent on the date of breach of the contract and not the date of suit or that of decree. Much emphasis has been placed upon the enunciation of law by the Supreme Court of Pakistan in the case of Central bank of India v. Muhammad Islam Khan (PLD 1962 SC 251 [4-MB]) to submit that a debt expressed in currency of any Country involves an obligation to pay the nominal amount of debt, in whatever is the legal tender at the time of payment according to the law of the Country in the currency of which the debt is expressed, irrespective of any fluctuation of that currency in terms of other currency. The submissions have been summed up by the learned counsel for the judgment debtor/applicant while arguing the distinction sought to be drawn between the cases of damages for breach of contract and the case of damages for tort; learned counsel contends that in the cases where the damages are being sought for breach of a contract, the exchange rate prevailing on the day when the breach occurred is the material date for exchange rate, whereas, only in the cases of damages for tort, the rate of exchange prevailing on the date when loss or expenditure cured, shall be the relevant date for the purpose of exchange rate. Ex.A. No. 16218 of 2025 Continuous Sheet No. ___7___ Sr. No. of Order/ Proceeding Date of Order/ Proceeding Order with signature of Judge, and that of parties or counsel, where necessary
5. On the other hand, it is argued by the learned counsel for the Decree holder that the decree’s valuation sets the baseline for its execution and as per the Decree being executed by this Court, the judgment debtor/applicant is required to make the payment of the decree drawn by this Court, which decree is in US dollars; contends that by the dint of Decree, the Court recognized and enforced the final Award and converted the same into the Decree of this Court while adopting the currency denomination of the Award, therefore, there is no substance in the submission that the exchange rate on the basis of the principle of ‘Transaction Day Rule’ be applied; submits that the old rule i.e. the ‘Transacting Day Rule’ being followed by the Courts in the United Kingdom, was subsequently reviewed and settled by the House of Lords in the case of Miliangos v. George Frank (Textiles) Ltd. [(1975) 3 All ER 801]; adds that the said old principle has also been unequivocally reviewed by the Supreme Court of Pakistan while handing down the judgment in the case of Terni S.P.A. v. Peco (Pakistan) Engineering Company Ltd. (1992 SCMR 2238); learned counsel has further placed reliance upon the law laid down by the Courts in Pakistan in the cases of Sandoz Ltd. v. Federation of Pakistan ( 1995 SCMR 1431), Trading Corporation of Pakistan v. Cowasjee & Cons (PLJ 2003 Karachi 36), Overseas Pakistani Foundation v. Joint Management (Pvt.) Ltd. (2021 CLC 1689), Iron Central Iron Ore Company v. Pakistan Steel Mills Corporation (Pvt.) Ltd. (2021 YLR 613). Ex.A. No. 16218 of 2025 Continuous Sheet No. ___8___ Sr. No. of Order/ Proceeding Date of Order/ Proceeding Order with signature of Judge, and that of parties or counsel, where necessary
6. Arguments heard. Record perused. 7. The ‘Payment Day Rule’ and ‘Breach Day Rule’ are primarily used in International commercial litigation and the conflict of laws to address the specific problem as to which exchange rate should a Court use to convert a debt or damages calculated in a foreign currency into the local currency. The concept of ‘Breach Day Rule’ was to convert the foreign currency to the local currency at the exchange rate that existed on the day when the contract was breached or the date when the injury was caused. The primary objective of this ‘Breach Day Rule’ was to put the injured party in the exact financial position, they would have been in on the day the default occurred, assuming the said party would have mitigated its losses immediately by converting the money. This was fair when the currencies were relatively stable and plaintiff can access the market immediately, however, it can over or under compensate the plaintiffs in the changed realities of rapid currency rate fluctuations. Keeping these issues in mind, the shift towards the ‘Payment Day Rule’ was implemented in various jurisdictions while following the principle of restitution in integrum (resorting to the original state). The rationale, as evident, is to put the plaintiff/claimant in the same position, had he was paid the debt or damages on the day when breach occurred as the plaintiff was supposed to receive the foreign currency on the due date. Consequently, the ‘Payment Day Rule’ ensures that the plaintiff/ claimant still gets the exact Ex.A. No. 16218 of 2025 Continuous Sheet No. ___9___ Sr. No. of Order/ Proceeding Date of Order/ Proceeding Order with signature of Judge, and that of parties or counsel, where necessary
equivalent value of that foreign currency in local tender on the day it finally gets paid. This principle was quickly adopted and followed for the fairness, which is rooted in this principle as it obviates the injustice caused to the innocent party and shifts the burden of exchange rate fluctuations onto the breaching party. 8. In private international law, the Courts in common law countries previously consistently used the ‘Breach Day Rule’, which was to the effect that where any debt denominated in a foreign currency had to be converted into pound sterling or any other local currency, the exchange rate on the date of breach of contract was applied, however, this rule was altered by the House of Lords in the landmark judgment in the case of Miliangos supra, which ruling established that English Courts could give judgments for a sum of money expressed in a foreign currency, which if converted into pound sterling will be valued at the date of enforcement or payment, which principle is often used as ‘Payment Day Rule’ in the international context. The purpose of this shift was to ensure that the claimant is not denied the full restitution despite currency fluctuation. Needless to observe that even in the United Kingdom and all other jurisdictions across the continents, there are no unified statutes, which have been made basis for following the ‘Payment Day Rule’, however, in United Kingdom, France, Australia, India and also now in Pakistan, the phrase is used in reference to two Ex.A. No. 16218 of 2025 Continuous Sheet No. ___10___ Sr. No. of Order/ Proceeding Date of Order/ Proceeding Order with signature of Judge, and that of parties or counsel, where necessary
distinct legal doctrines i.e. ‘Payment Day Rule’ & ‘Transaction Day Rule’. 9. International judgments on the ‘Payment Day Rule’ primarily address how Courts handle foreign currency debts and exchange rate fluctuations. Historically, Courts strictly applied the ‘Breach Day Rule’ (conversion at the time of default), however, there is an overwhelmingly shift in the international jurisprudence towards the ‘Payment Day Rule’. The ‘Payment Day Rule’ may be explained from a situation when a debit is denominated in one currency but brought before a Court in another jurisdiction, currency fluctuations between the due date and the judgment can cause severe financial losses. It was this unjust and untenable situation which was arrested by the Courts across the continents. Under the ‘Payment Day Rule’, the Court determines the judgment debt in the foreign currency but calculates the final conversion rate using the exchange rate prevailing on the actual date when the debt is repaid by the debtor. This, as evident, protects the innocent party from bearing the burden of a depreciating currency. Thus the Courts and international legal instruments approached this rule with an overwhelming adoptability apart from United Kingdom, the French civil law and commercial courts have also favoured the ‘Payment Day Rule’ allowing the debtors to settle obligations based on exchange rate as of the actual day payment is tendered. The United States traditionally applied the ‘Breach Day Rule’, however, the national conference of Commissioners on uniform Ex.A. No. 16218 of 2025 Continuous Sheet No. ___11___ Sr. No. of Order/ Proceeding Date of Order/ Proceeding Order with signature of Judge, and that of parties or counsel, where necessary
state laws promulgated the Uniform Foreign – Money Claims Act (UFMCA), which codified the ‘Payment Day Rule’ for the Courts in many US jurisdictions for directing the risk of currency fluctuations to the judgment debtor rather than the claimant. Although, certain jurisdictions and international arbitrations still follow the ‘Due Payment Rule’ for applying the exchange rate which was active when the debt was originally due, nonetheless, this rule is not applied universally to all the cases and instead, the same is applied as per the peculiar facts of a case, mainly taking into consideration, the conduct of a debtor, who acted in good faith but the delay in payment is found beyond his control. 10. As regards to the submission of the learned counsel for the judgment debtor/applicant that the ‘Payment Day Rule’ is only applicable to cases relating to claims lodged for the tortious liabilities, the said submission is not sustainable either. The ‘Payment Day Rule’ is not confined to the claims relating to torts. While it is commonly associated with civil law suits where a Court award damages, which can include torts like negligence or personal injuries, the underlying concept of payment and debt settlement is a fundamental principle of contract law, therefore, the distinction sought to be placed for confining the scope of ‘Payment Day Rule’ towards the tortious claims is utterly misplaced. In civil litigation, including the claims of intentional torts, negligence and breach of contract, a Court may issue a money decree and the ‘Payment Day Rule’ Ex.A. No. 16218 of 2025 Continuous Sheet No. ___12___ Sr. No. of Order/ Proceeding Date of Order/ Proceeding Order with signature of Judge, and that of parties or counsel, where necessary
generally dictates that once the final judgment or decree is issued, the judgment debtor is under an obligation to deposit or tender the amount of decree forthwith and in case, the judgment debtor fails to do so, the said judgment debtor can only blame himself for the fluctuation of the exchange rate as had the payment was made in compliance of the decree, no question of fluctuation of exchange rate would arise. When a commercial dispute arises, the Courts across almost all jurisdictions primarily address how the foreign currency debts and exchange rate fluctuations are handled. As mentioned above, historically, Courts applied the ‘Breach Day Rule’, however, the consistent practice now prevalent is the principle of ‘Payment Day Rule’, when a debt is denominated in one currency but brought before a Court in another jurisdiction, as is the case in hand. The currency fluctuation between the due date, the judgment and the date when the payment is actually made, can cause severe financial losses to a decree holder, whose claim stood established. Thus, under the ‘Payment Day Rule’, the Court determines the judgment debt in the foreign currency but calculates the final conversion rate using the exchange rate prevalent on the actual day the debtor pays. 11. Likewise, in Pakistan, the principle of ‘Payment Day Rule’ has now been consistently followed ever since the judgment passed by the Supreme Court of Pakistan in Terni v. Peco supra, wherein, the precise question of ‘Payment Day Rule’ against ‘Transaction Day Rule’ has been settled while Ex.A. No. 16218 of 2025 Continuous Sheet No. ___13___ Sr. No. of Order/ Proceeding Date of Order/ Proceeding Order with signature of Judge, and that of parties or counsel, where necessary
elucidating the raison d'être for such shift. The same principle was subsequently followed in the case of Sandoz Ltd. supra, whereby, it has been enunciated by the Supreme Court of Pakistan that a decree in Pakistan can be passed in foreign currency, and the rate of exchange applicable would be the one prevailing on the date of payment. The operative paragraphs from Terni v. Peco supra, which unequivocally settles the questions posed for determination before this Court, are reproduced herein below: “27. For all the above reasons, we consider that fresh considerations of a substantive nature have emerged which compel us to change the old view. Justice demands that the creditor should not suffer from fluctuations in the value of the Pakistani rupee. If his contract is for a foreign currency and he has g bargained for the same, he should get that currency and no other. The observation in Milliangos' case (1975) 3 All E.R. 801 that if the proper law of the contract was the law of a foreign country and the money of account and money of payment was of the same country, the plaintiff could bring an action for a sum .of money expressed in the currency of that foreign country, was not fully accepted by the Queen's Bench Division in Barclays Bank International Ltd. v. Levin Bros. (Bradford) Ltd. (1976) 3 All E.R. 900, which held that even if the, lex loci contractus, the lex loci solutionis and the proper law of acceptance of the bills of exchange were English, yet if the money of account and the money of payment were American, judgment could be given in US- dollars. If the currency of contract is a foreign currency, or where under the contract the particular amount claimed is payable in a particular foreign currency and payment is demanded in that foreign currency, that is a substantive matter, and no procedural rule or regulation should, in principle, be allowed to affect the creditor's rights. If a judgment can be given "for so much in foreign currency or .the Pak rupees equivalent thereof'; it is giving effect to the substantive obligation of the contract and the Civil Procedure Code would not in any case stand in the way. This Court can depart from a previous rule or interpretation, if it feels that circumstances have changed and that not to do so would lead to injustice. Ex.A. No. 16218 of 2025 Continuous Sheet No. ___14___ Sr. No. of Order/ Proceeding Date of Order/ Proceeding Order with signature of Judge, and that of parties or counsel, where necessary
The development of the law should not be permitted to be stifled. It should move with the time and articulate the changes coming in. We would therefore hold that a Pakistani Court can grant a judgment for "so much in foreign currency or the Pak Rupees equivalent thereof'. 28. The next question that arises is what should be the date which this Court should impose for converting into rupees the equivalent of the foreign currency. The old rule in England that where a debt was payable in a foreign currency, a Court was bound to permit the said debt being paid in the currency of the country at the exchange rate prevalent at the time when the debt became due or was payable, has been overruled by the Court of Appeal in Schorsch Meir GmbH v. Hennin (1975) 1 All E.R. 152, which not only held that the Court could give a money judgment in a foreign currency when that currency was the currency of the contract, but that it could also say that the plaintiff could have the foreign currency converted to sterling at the exchange rate when the final payment was made, instead of the rate when the debt was actually payable. . . . . The Pakistani Courts have been following the old English rule. The impugned High Court decision before us is a case in instance. . . . . . However, in view of the change in the circumstances detailed above, it is necessary to also effect similar change here. . . . Therefore, in keeping with the moving trend and the sweeping changes in the economic field that have been ushered in and to support the same and be in line with the law in England, we would, for reasons stated in para. 27 above, hold that if a judgment and decree is given for "so much in foreign currency or the Pak rupees equivalent thereof at the time of payment", we would be articulating the correct law in keeping with the changing time. . . . . We would therefore, hold that where the money of account in respect of a contract is a foreign currency, or where it is not so but under the contract the particular account claimed is payable in a particular foreign currency, and demand is made for payment in that foreign currency, the Pakistani Courts can give judgment in "so much of that. foreign currency or the Pak rupees equivalent thereof at the time of payment". Here it must be stated that where the decree is in such terms, the language of the decree, as stated in para. 18 above,…
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