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The introduction of the single European currency on Jan 1, 1999 raises legal issues that need to be addressed by British companies even though the UK is outside the euro zone. UK government policy provides for participation in the European Monetary Union (Emu) should it chose to do so in the next Parliament, which is scheduled to begin not later than May 2002. In addition, English courts are expected to recognize Emu monetary provisions despite the country's non-membership in the union. The legal framework paving the way for the introduction of the euro was created by the implementation of EU Council Regulations 1103/97 and 974/98. Reg 1103/97 provides for the substitution of the European currency unit with the euro, contract continuity, accuracy of conversion rates and rounding rules. Reg 974/98 provides for the replacement of national currencies by the euro and addresses such issues as the transitional period and euro banknotes.

The Court of Appeal in Great Britain, has upheld the Siebe Gorman decision, meaning clearing banks can continue to take fixed charges on book debts. In a recent test case, Re Spectrum Plus Ltd., the court upheld a fixed charge taken by a clearing bank. The Privy Council in the Agnew decision of 2001 had highlighted that a charge holder must exercise a substantial degree of control over book debts if a fixed charge is to be effective. The treatment of book debts matters because, even though the position has been altered by recent legislation, a fixed charge continues to have several advantages over a floating charge under English law Barclays introduced the modern use of a fixed charge over book debts in a debenture in 1968. It was clear that this charge could not be fixed if, until the charge holder took some future step, the company could carry on its business with regard to those debts in the ordinary way. The Court of Appeal unanimously allowed an appeal in May 2004 and held that a fixed charge had been created. INSETS: Why a fixed charge still matters;How much control is enough?.

This article reports that the House of Lords of Great Britain has reversed Siebe Gorman, the landmark case on establishing a fixed charge, meaning that there is no longer a simple way for a clearing bank to take an effective fixed charge on book debts. The House of Lords has decided, in the test case of National Westminster Bank PLC v. Spectrum Plus Ltd., that a general charge taken on a company's book debts by a clearing bank in a debenture is effective only as a floating charge, where the proceeds are paid into the company's current account with the bank. The House of Lords confirmed that it is conceptually possible to create a fixed charge over book debts.

New guidance has given clarity to lawyers providing English opinion letters [ABSTRACT FROM AUTHOR]