Euro exit and contractual payments
Euro exit and contractual payments

The following Commercial guidance note provides comprehensive and up to date legal information covering:

  • Euro exit and contractual payments
  • Key issue
  • Contracts governed by exiting Member State's law/jurisdiction
  • Contracts governed by English law/Jurisdiction
  • Money of account and money of payment
  • Enforceability—conflict of laws considerations
  • Other contractual considerations

Key issue

The exit of one or more Member States ('exiting state') from the Eurozone is no longer a theoretical possibility. Greece, in particular, risked exiting the Eurozone in July 2015 ('Grexit') after missing a €1.6 billion payment to International Monetary Fund. On 13 July 2015, a third bailout of Greece was approved but there is still the possibility of it leaving the Eurozone at some point in the future if, eg, it fails to adhere to the conditions of this bailout or if the bailout cannot be implemented as agreed.

European treaties establishing the Eurozone did not provide for exit, so any exit could be in breach of treaty obligations unless agreed to by other member states. A working paper published by the European Central Bank concluded in 2009 that:

a Member State's exit from EMU, without a parallel withdrawal from the EU, would be legally inconceivable; and that, while perhaps feasible through indirect means, a member state's expulsion from the EU or EMU, would be legally next to impossible.

On exit, the typical scenario will be that the existing state would enact a new currency law re-denominating its currency from the euro to a new national currency (and providing for the re-denomination of sovereign debt and debt of nationals resident in the exiting state who have obligations to pay in