This fifteenth installment in the series dealing with the effect of the Articles of Agreement of the International Monetary Fund on litigation 1 discusses three cases decided by courts in France, the Federal Republic of Germany, and the United Kingdom, respectively, and a fourth case decided by the High Court of Justice of the European Communities. The first case examines a constitutional issue that was raised in France in connection with an increase in the quota of France in the Fund and acceptance of the Second Amendment of the Articles. In addition, the case has prompted discussion of the question whether national courts are authorized to interpret the Articles. The second and third cases involved the unenforceability of certain exchange contracts under Article VIII, Section 2(b) of the Articles. The decision in the fourth case depended on the legal effect under the law of the European Community of the establishment of a central rate by a member of the Fund and of the Community under the Fund’s decision of 1971 on central rates and wider margins.
I. Quotas and Amendment
decision of french constitutional council, april 29, 1978 2
Under the amended Article 61 of the French Constitution, the Constitutional Council can be seized of constitutional problems. A commentator has detected three stages in the practice of the Council so far. 3 In the first years of its existence, it was concerned mainly with ruling on the distribution of authority between the Legislature and the Executive. In a second stage, the Council was called upon to resolve conflicts between governmental prerogatives and individual rights. A possible third, and current, stage may be one in which the decisions of the Council, or at least those having the greatest potential impact, deal with the distribution of power between national sovereignty and new or newly strengthened international organizations. In two recent cases of this kind, the Council has been called upon to rule on monetary matters involving the International Monetary Fund and both the European Monetary System and the European Monetary Cooperation Fund. The case involving the International Monetary Fund was decided on April 29, 1978.
On April 26, 1978, a law was adopted, consisting of a single article, that authorized the Government to proceed with an increase in the quota of France from SDR 1,500 million to a maximum of SDR 1,919 million in accordance with Resolution No. 31-2 of the Board of Governors, dated March 22, 1976, on the Fund’s Sixth General Review of Quotas.4 Under the resolution, a member’s proposed increase in quota under it was not to become effective unless the member notified the Fund of its consent to the quota not later than one month after the Second Amendment became effective or such later date as the Executive Board might prescribe, and unless the member had paid the increase in its subscription in full. According to two provisos, however, no increase in quota was to become effective before the later of two dates: the effective date of the Second Amendment and the date of the Fund’s determination that members having not less than three fourths of the total of quotas on February 19, 1976 had consented to increases in their quotas. These provisos were adopted as a matter of policy. The first was designed to ensure that members would have the benefit of increased quotas only when the Second Amendment became effective. The intention was to induce members to take the necessary steps to accept the Second Amendment. The other proviso was designed as a safeguard to ensure that quotas would be increased for both members likely to use the Fund’s resources and members whose increased subscriptions were likely to be called upon by the Fund to finance these uses.
The Second Amendment became effective on April 1, 1978, so that members had to notify the Fund of their consents to increases in their quotas before May 1, 1978, unless before that date the Executive Board prolonged the period for notices. A member would have to take whatever steps were necessary under its domestic law, including the adoption of any parliamentary measures, before it would be in a position to give the notice and to pay the additional subscription. On April 24, 1978, the Executive Board extended the period to June 12, 1978 because a number of members had not yet consented to increases in their quotas. Some members had initiated the procedures leading to adoption of the necessary domestic legal measures but had not completed them. France was in that position. The National Assembly had acted on April 18, 1978, and the Senate was to act on April 25, 1978.
The Second Amendment became effective in accordance with the provisions of the Articles as they stood before that Amendment. Under those provisions, proposed modifications of all but three provisions became effective on a date prescribed by the Fund after three fourths of the members, having four fifths of the total voting power, had accepted the proposed modifications.5 France had not passed the legislation necessary to enable it to accept the proposed Second Amendment, but it was bound by the Articles as modified. On October 30, 1976 the Prime Minister had submitted to Parliament, on behalf of the Government, a bill providing both for acceptance of the Second Amendment and consent to the increase in quota. The bill was never placed on the agenda of a session because a majority did not exist in favor of it as a result of objections to some features of the Second Amendment. The Government explained in 1978 that the Second Amendment had become effective and that it was unnecessary to proceed with the bill insofar as it related to the Second Amendment in order to help bring it into effect or to make it binding on France. Parliamentary approval of consent to the increase in quota, however, continued to be necessary because under Article 53 of the Constitution a treaty imposing a financial commitment on the State must be submitted for parliamentary ratification. A similar situation had arisen with respect to authorization for France to participate in what was then the Special Drawing Account after the First Amendment had become effective without acceptance of that amendment by France. The constitutionality of the bill confined to the authorization of participation was not challenged on that occasion. The bill was enacted into law on December 26, 1969, in time for the first allocation of special drawing rights on January 1, 1970.
On the later occasion, members of the Opposition argued that the Second Amendment and the increases in the quotas of members were an inseparable whole, and that measures to approve both should have been submitted for parliamentary approval. A failure to follow this procedure would be improper (détournement de procédure) because it would be in contravention of Article 53 of the Constitution. A further argument, among others, was that the Second Amendment brought about a basic change in the initial equilibrium between the rights and obligations of members, which amounted to an impairment of national sovereignty. The responsibility for such a change rested with Parliament and could be accepted only with its express approval.
It was also argued that the procedure for amendment of the Articles by the acceptance of certain majorities of members and voting power applied only to amendments on secondary matters and not to the replacement of one international monetary system by another. The Second Amendment had this effect by eliminating the par value system.
On April 27, 1978 one of the Opposition parties in the National Assembly raised the constitutional question before the Constitutional Council, which delivered its decision on April 29, 1978.
The Constitutional Council noted that the increases in quotas were proposed in accordance with Article III, Section 2, while the Second Amendment was proposed in accordance with Article XVII. The independence of the two actions suggested by the separate legal bases was reinforced by the fact that the actions were the subject of separate resolutions of the Board of Governors. This analysis was not affected by the proviso that made the effectiveness of the Second Amendment a condition precedent for the increases in quotas. This condition did not mean that the Second Amendment was made contingent on the increases in quotas. Nor was the analysis affected by the presentation to the National Assembly on October 30, 1976 of a single bill dealing with both matters. That step had been taken for the convenience of Parliament because the two matters involved the same international organization and not because there was a legal nexus between them. Therefore, the acceptance by France of an increase in its quota could be approved without the need for a simultaneous pronouncement on the Second Amendment.
The Constitutional Council then went on to discuss the requirements for amendment under Article XVII of the original Articles, which had not been affected by the First Amendment. These requirements called for special majorities of the total voting power of the membership, and unanimity for the amendment of three provisions. One of these three provisions was the original Article IV, Section 5(b), under which no change could be made in the par value of a member’s currency except on the proposal of that member. The Constitutional Council pointed out that a provision corresponding to Article IV, Section 5(b) was to be found in Schedule C, paragraph 6 of the Second Amendment. It was true that this provision of the Second Amendment would come into play only if a widespread system of exchange arrangements based on stable but adjustable par values was to be introduced in accordance with Article IV, Section 4, but the purpose of the provision in the Schedule was to safeguard the sovereignty of members. This same purpose was served by the provisions on exchange arrangements as a whole, and in particular by the provision assuring each member of the right to apply the exchange arrangements of its choice even before a par value system was introduced.
The Constitutional Council decided that because the Second Amendment had become effective in accordance with the Articles, to which France had subscribed as authorized by the law of December 26, 1945, the Second Amendment was binding on France without the necessity for further legislative authorization. It followed that the law on the increase in quota that had been submitted to the Constitutional Council for adjudication on its constitutionality was contrary to neither the Constitution nor to the principle of national sovereignty.
Learned opinion supports the conclusion reached by the Constitutional Council, but one commentator has argued that part of the judgment was obiter. 6 In his opinion, the Council did not need to rely, and should not have relied, as it did in part of its judgment, on its analysis of the exchange rate provisions. In dealing with what amounted to the argument that unanimous acceptance of the Second Amendment was necessary because the change in the exchange rate provisions affected the sovereignty of members, the Constitutional Council was passing on the legality of an amendment that, according to the Fund’s finding, had become effective under the provisions of the Articles on amendment. The claim of a national court to pass on the Fund’s finding was a usurpation of authority. Moreover, there was an internal procedure in the Fund for the settlement of any question of interpretation that arises between the Fund and a member or between members, 7 but the French Government had not raised a question as to the legality of the Second Amendment.
This same commentator criticizes what he regards as the obiter dictum of the Constitutional Council on the ground that the dictum could be understood to mean that the Constitutional Council might have come to a different conclusion if it had thought that the new provisions on exchange arrangements were more onerous than the provisions governing the original par value system. Indeed, it was possible to argue that the Fund was able, at least in principle, to exercise more discipline over members under the “firm surveillance” that it must now exercise over the exchange rate policies of members, 8 but the Constitutional Council was not entitled to deliver an adverse judgment on any such restraint on the monetary sovereignty of members. Another commentator who agreed with this conclusion has written that the Constitutional Council would have lacked competence to pass on the legality under the Articles of an amendment even if there had been a misuse of the Fund’s procedure for amendment. 9
It is incontestable that some provisions governing the par value system that can be called into existence under the Second Amendment are, in some respects, more rigorous for members than the provisions of the original system. For example, under the original provisions of the Articles, a par value continued to exist for the purposes of the Articles in all circumstances until a new par value was substituted. The Fund had no authority to terminate a par value. Under the provisions on par values in the Second Amendment, the Fund may find that a member does not maintain rates for a substantial volume of exchange transactions within margins from parity that are consistent with the Articles, and the par value for the currency will then cease to exist for the purposes of the Articles. 10 Again, the Fund must discourage maintenance of a par value that it considers unrealistic under a provision11 for which there was no counterpart in the original Articles.
At the same time, it is not difficult to show that in many respects the new provisions on par values create fewer constraints for members than the original provisions. There are no objective criteria, however, for deciding whether on balance the new par value provisions as a whole would bear more heavily on members than the old. 12 But the validity of an amendment that has become effective in accordance with the provisions of the Articles cannot be challenged even if objective criteria did exist, and it was concluded that the new provisions on exchange arrangements, including the provisions on par values, were more onerous for members than the provisons of the original Articles. There is no special sanctity that attaches to the original provisions of a treaty that contains provisions on amendment. There is no principle that the amendment of a treaty must always be for the purpose of relaxing obligations under it unless all contracting parties agree, even though they have agreed on procedures for amendment that do not require unanimity.
In contrast to the views already mentioned, a third commentator has contended that it is not beyond the jurisdiction of French courts to inquire into the question whether a treaty that is alleged to bind France has been legally ratified or approved in accordance with French law, because, if it has not been, the effect of Article 55 of the Constitution is that it will not prevail over French domestic law. 13
Competence of national courts on interpretation
It is submitted that the following principles apply to the question whether national courts are entitled to resolve problems of interpretation of the Articles:
(i) If the Fund has adopted an authoritative interpretation of the Articles under Article XXIX of the present Articles or its predecessor, and the interpretation is binding under the law of the forum either because it is automatically binding or because it has been made binding, the court must apply the interpretation.
(ii) If the authoritative interpretation is not binding under the law of the forum of a member, the member is obliged by the Articles to take the necessary steps to make the interpretation binding. Meanwhile, the forum should regard the interpretation as persuasive.
(iii) If a question of the interpretation of the Articles has arisen between a member and the Fund or another member, neither member is bound to request an authoritative interpretation. Similarly, the Fund is not bound to initiate the procedure leading to an authoritative interpretation.
(iv) If a question of interpretation of the Articles has arisen between the parties described in (iii) above, a member may not seek the interpretation from any forum, body, or organization other than the Fund.
(v) If the Fund has not adopted an authoritative interpretation on a question that arises in litigation, the forum is entitled, subject to (vii) and (viii) below, to arrive at its own interpretation. A forum must be able to act in this way because its function is to decide the case before it.
(vi) A judicial interpretation under (v) above will cease to be a precedent for the decision of cases if it is inconsistent with a later authoritative interpretation of the Fund.
(vii) A court is not entitled to challenge a finding of fact that the Fund is authorized by the Articles to make with finality and has made. For example, the Fund is authorized to make with finality a finding that decisions have been supported by the necessary majorities.
(viii) If the issue that has arisen in litigation involves the exercise of discretionary authority by the Fund, the court cannot substitute itself and decide the issue as if it was one of interpretation. For example, in the English case Wilson, Smithett & Cope Ltd. v. Terruzzi, 14 the Court of Appeal treated the question whether certain Italian exchange control regulations were “maintained or imposed consistently” with the Articles as if the court could resolve this question by interpretation. Various provisions authorize the Fund to approve or refuse to approve exchange control regulations or to find that they are not consistent with the Articles. The actions of the Fund to approve restrictions or to find that they are not consistent with the Articles are regulatory in character. Questions involving approval or consistency can be answered only by reference to the Fund’s actions, and not as if they were abstract questions of interpretation.
If it had been relevant to decide the question of the requirements for amendment under the Articles, the principles set forth above would have entitled the Constitutional Court to decide this question as one of interpretation of the Articles. The answer would have been obvious: unanimity was not required. The problem would not be one of competence but of the correctness of an interpretation. The court would not be correct if it decided that the requirements for a particular amendment were not those set out in the Articles. If the court added or substituted a requirement, it would be acting inconsistently with a treaty that France had accepted in accordance with its law. It is pertinent to cite the hypothetical analogy of a reservation that a member sought to attach to its acceptance of the Articles requiring unanimity for a particular kind of amendment for which unanimity would not be required by the Articles. Such a reservation would be inconsistent with the Articles and would be rejected by the Fund.
Another distinction that must be made is between the binding effect of an amendment on a member and the domestic steps the member must take to enable it to perform its obligations under the amendment, including the obligation, when necessary, to make the amendment binding on its courts.
Suppose, for example, that Article VIII, Section 2(b), which is discussed in connection with the next two cases, had been incorporated in the Articles by an amendment. Under the laws of some members, such a provision must be given the force of law by a particular procedure in order to make it binding on its courts. It would be within the competence of a court called upon to apply the provision to determine whether the procedure had been followed. If the court found that the procedure had not been followed, it would be unable to apply the provision, but this conclusion would not imply that the amendment was not binding on the member whose court was seized of the litigation. Nor would the conclusion mean that the court was going beyond its competence. The situation would be one in which the member was failing to honor its commitment to the Fund that it had “accepted this Agreement in accordance with its law” and had “taken all steps necessary to enable it to carry out all of its obligations under this Agreement.” 15
Amendment, unanimity, and sovereignty
One commentator has raised the question whether a distinction should be drawn between restrictions on national sovereignty that states may accept and transfers of it that they may not accept. 16 In applying this possible distinction to amendment of the Articles, he appears to consider that, because France and all other members were invited by the Board of Governors to accept the proposed Second Amendment, an original requirement of unanimity may have been transformed by delay into a requirement of majorities. He questions whether delay can have this effect because it leads to a surrender of sovereignty. The argument appears to be that there was an original requirement of unanimous acceptance, that this requirement preserved national sovereignty, and that the Second Amendment had become effective without the acceptance of France and therefore without observance of the rule of unanimity. The reply to this argument is that there never was a requirement of anything other than the prescribed majorities in order to make the Second Amendment effective.
In the law relating to international organizations, the tendency has been to reject a rule of unanimity for the modification of a constitutive treaty but to permit members to withdraw from the organization. They can exercise this privilege if, for example, an amendment is adopted that is not to their liking and that they have not accepted. 17 A member of the Fund that does not take steps to accept an amendment of the Articles is bound by the amendment, and cannot be compelled to withdraw from membership for this reason, although this action can be taken in some organizations.
The privilege of withdrawal from an international organization is regarded as a safeguard. In the case of the Fund, a member may withdraw at any time by transmitting a notice in writing to the Fund at its principal office, and the member need not give any reason for its notice. Withdrawal becomes effective on the date when the Fund receives the notice. 18 The privilege of withdrawal is safeguarded by requiring unanimous acceptance of a proposal to modify the privilege. 19 Acceptance by “all” members is made explicit. There is no room, therefore, for holding that unanimity refers only to those members that respond. If members abstain, there is no unanimity. 20
II. Unenforceability of Certain Exchange Contracts
federal supreme court of germany, decision of march 8, 1979 21
In this case, decided on March 8, 1979, the Supreme Court of the Federal Republic of Germany ruled once again 22 on the meaning and application of the first sentence of Article VIII, Section 2(b) of the Fund’s Articles:
Exchange contracts which involve the currency of any member and which are contrary to the exchange control regulations of that member maintained or imposed consistently with this Agreement shall be unenforceable in the territories of any member.
The defendant, a business agent residing in Spain, acted in 1972 to 1974 as the collection agent of the plaintiff, who was, apparently, a resident of the Federal Republic of Germany but clearly a nonresident of Spain. From the money he collected, the defendant retained a certain amount in Spanish pesetas. The plaintiff sued in the Federal Republic of Germany to recover that amount from the defendant. The claim was for payment in pesetas, or alternatively in deutsche mark, and the plaintiff was also willing to have payment made to an account opened for him in Spain. The defendant argued that the plaintiff’s claim was unenforceable as the result of Article VIII, Section 2(b). Both Spain and the Federal Republic of Germany were members of the Fund at all the times that could be relevant. The Regional Court dismissed the claim because it was in violation of Spanish exchange control regulations. The plaintiff then assigned his claim to a Spanish lawyer residing in Spain and petitioned the court to order payment to the assignee. The plaintiff succeeded in the Higher Regional Court and in the Court of Appeals. The defendant appealed to the Supreme Court, which endorsed the decision of the lower appellate tribunals.
The main aspects of the judgment of the Supreme Court are noted in the following paragraphs.
1. The court seems to have thought in one context, although it may have reserved the point elsewhere, that the agreement between the parties, under which the defendant (the appellant) acted as collection agent for the plaintiff (the respondent), was of a character that would have justified the conclusion that it was an exchange contract within the meaning of Article VIII, Section 2(b) had the provision been applicable. It would follow from this view that “exchange contracts” are not confined to contracts for the sale of one currency against another. That this has been the court’s view is abundantly demonstrated by earlier cases. 23
2. The court declared that the object of Article VIII, Section 2(b) is to protect the currencies of members, and for this reason the provision makes exchange contracts unenforceable if they are contrary to another member’s exchange control regulations and have an effect on that member’s balance of payments. Only the test of effect on the balance of payments should have normative influence in determining whether the currency of a member is involved within the meaning of the provision. The averment that the object of the provision is the protection of the currencies of other members is a broad but not comprehensive rationalization and should not be given normative effect. It implies that the purpose with which a member maintains or imposes exchange control regulations determines whether they are exchange control regulations within the meaning of Article VIII, Section 2(b), and that the provision applies only to those regulations that a member applies to protect its currency.
Nothing in the provision supports that conclusion. The provision refers to exchange control regulations without any limitation relating to their purpose. It is true that frequently exchange control regulations are maintained or imposed in order to protect the currency of the legislator, that is, are applied for balance of payments reasons, but not invariably. They may be applied, for example, for the preservation of national or international security. The Fund has decided that restrictions imposed by exchange control regulations on the making of payments and transfers for current international transactions for these reasons are subject to its jurisdiction under Article VIII, Section 2(a). 24 Restrictions applied for these reasons are often intended to bring pressure to bear, through the medium of the balance of payments of the restricting member, on the balance of payments of a member that is responsible for a threat to national or international security.
The motives for exchange control regulations are diverse and not confined to those that have been mentioned. The motive may be, for example, the desire to protect an industry or agriculture, to levy taxation by an administrative procedure that is convenient, or to support the ties of a currency area. It should not be overlooked that there may be a mixture of motives, even when one of them is to protect the balance of payments.
The expression “exchange control regulations” cannot be restricted by reference to the motive or motives that have led to their adoption. The only qualification that exchange control regulations must satisfy in order to bring them within the scope of Article VIII, Section 2(b) is that they are “maintained or imposed consistently with this Agreement.” This analysis is reinforced by the second sentence of Article VIII, Section 2(b), which authorizes members to cooperate by going beyond the refusal to enforce certain contracts:
In addition, members may, by mutual accord, cooperate in measures for the purpose of making the exchange control regulations of either member more effective, provided that such measures and regulations are consistent with this Agreement. 25
Nothing in this sentence suggests that cooperation for making exchange control regulations more effective is authorized only if they are for the protection of the balance of payments of the member that is applying the regulations. The only condition once again is that the measures and regulations are consistent with the Articles.
There is a practical reason for skepticism about an interpretation that the motive of protecting the balance of payments determines whether exchange control regulations are within the scope of Article VIII, Section 2(b). Courts would have to find whether or not that motive is responsible for the exchange control regulations that are in issue in the litigation before them. This inquiry is a difficult one. The Fund is called upon to conduct it for various purposes in the course of its activities. Its findings are based on both subjective and objective elements. A member may announce its motive, but it may refrain. If it does declare that its intention in applying exchange control regulations is, or is not, to manage its balance of payments, the Fund will give the declaration the benefit of any reasonable doubt, but the Fund reserves the right to satisfy itself about the member’s actual motive by taking account of objective facts. In this inquiry, the Fund may give weight to the effect of the regulations on the member’s balance of payments and the exchange rate of its currency and on the balances of payments and currencies of other members as well, the member’s domestic and external conditions or policies that help to explain its choice of the regulations, expectations as to the duration of the regulations, and the prevailing practice among members in applying regulations of the kind in issue for balance of payments or for other reasons.
3. The court pointed out that the plaintiff’s claim was to the payment of Spanish pesetas by the defendant, a resident of Spain, to another resident of Spain. The payment, the court held, would be a domestic transaction with no impact on the balance of payments of Spain. There was no reason, therefore, why Article VIII, Section 2(b), which was designed to protect the balance of payments, should be applied.
Furthermore, it was not clear to the court, and it had not been asserted by the defendant, that the payment demanded by the plaintiff would violate the exchange control regulations of Spain. This aspect of the case raises the question of the extent to which courts should take the initiative in addressing inquiries to the Fund for the purpose of applying Article VIII, Section 2(b). Judicial authority exists for the proposition that, as Article VIII, Section 2(b) is designed to promote public policy, the court should take the initiative in raising the question of the possible effect of the provision on the case before it, even if the parties have not relied on the provision. Moreover, an appellate court should take this step even if the lower court has not. 26 It can be assumed that a court willing to act in this way would make a prima facie finding that the provision might be relevant. Courts have also taken the initiative in asking the Fund whether the exchange control regulations in issue in proceedings brought before them are maintained or imposed consistently with the Articles.
The question raised by the case under discussion is whether the court should have taken the initiative to discover whether Spain applied exchange control regulations that affected the payment the plaintiff sought to have the defendant make. Whatever answer this question might receive in other circumstances, there would have been no point to an inquiry by the court in this case, because it found that Article VIII, Section 2(b) was not relevant. The court held that, in the absence of any effect on the balance of payments of Spain, the provision could not apply.
4. The defendant had argued that, in order to decide whether Article VIII, Section 2(b) was applicable, it was necessary to consider the facts at the time when the contract was entered into and not at the time when performance was sought. According to this test, Article VIII, Section 2(b) did render the contract unenforceable. The court, citing its established case law and the opinions of various authors, including the present author, held that, as the provision dealt with unenforceability and not validity, the facts at the date when enforcement is sought are decisive. This approach gives effect to the objective of protecting the balance of payments, which the court understood to mean the present and not the past balance of payments. According to the practice of the court, the precise date at which the facts are relevant is when oral arguments have been concluded. At that date, the contract between the parties did not affect the balance of payments of Spain.
5. The defendant made the further argument that the plaintiff had interposed the assignee only as a “straw man” to evade the exchange control regulations. It is interesting to compare this aspect of the case with the English case that is discussed next. In the German case, the court refused to be swayed by the argument of the “straw man” for two reasons, neither of which faced the issue in substance. The first reason was purely procedural, the second partly procedural.
The first reason was that the argument had been made too late in the appellate proceedings to be entertained by the court. The second reason was that there had been no determination in the lower courts of the question whether there had been an outright assignment or an assignment only for the purpose of collection. Even if the assignment was for collection only, it did not follow that the intention was to evade Spain’s exchange regulations. The intention might have been to transfer the money to the Federal Republic of Germany only if transfer was permitted under the regulations, or the intention might have been to use the money to make payments for the plaintiff in Spain.
Subject to the caveat in (2) above, the judgment is in accord with the conclusions summarized in Section V of “The Fund Agreement in the Courts—XIV.” 27
united city merchants (investments) ltd and glass fibres and equipments ltd v. royal bank of canada, vitrorefuerzos s. a., and banco continental s. a. (“the american accord”), 1979 28
A director (O) of a Peruvian company (Vitro), which operated in the glass fiber industry of Peru, negotiated a contract between his company and a British company (Glass Fibres) under which Glass Fibres would supply a plant to produce glass fiber against a confirmed and irrevocable letter of credit. O requested Glass Fibres to quote a price to Vitro that was double the price of the plant, because Vitro would need to make further purchases of equipment for its operations and because it would be more convenient and easier if a single letter of credit could be opened for all the purchases, including the purchases of the plant from Glass Fibres. The other purchases were to be made from suppliers in the United States, although it was not impossible to make some from Glass Fibres.
Later, an agreement was entered into between Glass Fibres and a company (N Company) on the nomination of O, who was closely associated with it. N Company had an office in Miami, and the agreement was signed there. Under this agreement, Glass Fibres would remit to N Company 50 per cent of any amount duly drawn by Glass Fibres under the letter of credit in respect of the value of the goods it supplied, excluding freight.
Vitro then complied with the exchange control procedures of Peru, and its Peruvian bank (Banco Continental S. A.) opened an irrevocable letter of credit that was confirmed by the Royal Bank of Canada. The latter bank undertook to honor drafts drawn in accordance with the letter of credit by paying U.S. dollars in London. The credit provided for an immediate payment to Glass Fibres of 20 per cent of the f.o.b. value, and this amount was drawn. After complying with British exchange control regulations, Glass Fibres remitted 50 per cent of this payment to N Company in Miami. Subsequently, the payee to which Glass Fibres was to make remittances was changed from N Company to the Bankers Trust Company in Miami as payee and without the specification of any particular account at this bank. The Miami bank was informed by the London bank of Glass Fibres that it held irrevocable instructions from Glass Fibres to make the agreed remittances to the Miami bank. The total amount to be remitted was later reduced by agreement because of additional costs incurred by Glass Fibres for which Vitro was responsible.
Glass Fibres supplied the goods that it had contracted to provide, and presented its documents for payment under the letter of credit in December 1976. A dispute had developed between Vitro and Glass Fibres. The Peruvian issuing bank and Vitro took the position that payment should not be made, and the confirming bank, the Royal Bank of Canada, refused payment when the documents were presented. Glass Fibres and its London bank, United City Merchants (Investments) Ltd., to which Glass Fibres had assigned its rights under the letter of credit, sued the Royal Bank of Canada, which arranged for the Peruvian bank and Vitro to be joined as defendants. In the course of the proceedings, the Peruvian bank raised the defense of the violation of Peruvian exchange control regulations and unenforceability under Article VIII, Section 2(b). Subject to the later resolution of this issue, judgment was given in favor of the plaintiffs against the Royal Bank of Canada.
The exchange control regulations of Peru that were relied on in this case were Articles 1 and 2 of Decree Law No. 18275 and Article 7 of Decree Law No. 18891. Under Article 1 of the first of these laws, residents of Peru, with the exception of the Central Reserve Bank and the Banco de la Nación, were prohibited from maintaining and making deposits in foreign currency with Peruvian or foreign banks and other institutions. Under Article 2, residents were prohibited from maintaining or contracting credits or entering into contracts in foreign currency if the credits or contracts were to be executed in Peru. These provisions were intended to prohibit payments and transfers for international capital transactions but not to interfere with the making of payments and transfers for current international transactions. The provisions were consistent with the Articles of Agreement of the Fund under Article VI, Section 3 without the need for approval by the Fund.
Article 7 of Decree Law No. 18891 reads as follows:
Article 7. The overvaluation of imports and obligations payable in foreign exchange, as well as the undervaluation of exports, in violation of the Regime of Foreign Exchange Certificates, shall constitute an offense of fraud against the State. Any person that commits the offense described in the preceding paragraph shall be penalized in accordance with Article 19 of Decree Law No. 18275. The Minister of Economy and Finance shall be competent to bring any such violations to the attention of the judicial authorities, through the assistance of the Attorney General of the Republic in charge of matters pertaining to that Ministry.
All other violations of the provisions that regulate the Regime of Foreign Exchange Certificates shall be penalized as provided for in Articles 23 and 24 of Decree Law No. 17710.
This provision made misrepresentation of the value of the transactions referred to a violation of Peru’s exchange control regulations and a criminal offense. This provision also was consistent with the Articles of the Fund without the necessity for approval by the Fund.
In response to an inquiry from the lawyers for one of the defendants, the Secretary of the Fund was authorized by the Executive Board to make the following statement:
Articles One and Two of Decree Law No. 18275 and Article Seven of Decree Law No. 18891 did not, in themselves, involve any measures that were subject to approval by the Fund under Article VIII, during the period referred to. These Articles of the Decree Laws were consistent with the Fund’s Articles and would not be rendered inconsistent by any necessity for the Fund’s approval of other provisions of the Decree Laws.
The court held that the contract between Glass Fibres and Vitro was an exchange contract because it was a monetary transaction in disguise contrary to the exchange control regulations of Peru. It was unenforceable, therefore, under the Bretton Woods Agreements Order in Council that had given the force of law to Article VIII, Section 2(b) of the Fund’s Articles of Agreement in the United Kingdom. If the plaintiffs could recover, remittances would be made in disregard of Peru’s exchange control regulations and in circumvention of the Order in Council. The confirmed credit was unenforceable, therefore, and the Royal Bank of Canada was entitled to refuse to make payment. 29
In Wilson, Smithett & Cope Ltd v. Terruzzi, 30 the Court of Appeal in England held, incorrectly it has been submitted and in conflict with decisions of the highest courts in the Federal Republic of Germany and France, 31 that the concept of exchange contract in Article VIII, Section 2(b) is confined to contracts for the exchange of one currency against another. Lord Denning, Master of the Rolls, made the following reservation, however:
It is no doubt possible for men of business to seek to avoid Article VIII, section 2 (b), by various artifices. But I hope that the courts will be able to look at the substance of the contracts and not at the form. If the contracts are not legitimate contracts for the sale or purchase of merchandise or commodities, but are instead what Professor Nussbaum calls “monetary transactions in disguise,” … as a means of manipulating currencies, they would be caught by section 2(b). 32
The court did not sever the arrangements under which the Royal Bank of Canada was committed to make payments to the plaintiffs from the contract that had been entered into between Vitro and Glass Fibres. In Sharif v. Azad,33 L (a resident of Pakistan) gave a check for Pakistan rupees to S (a resident of the United Kingdom) in return for pounds sterling. S gave the rupee check to B (also a resident of the United Kingdom) in return for a check for sterling. B filled in his brother’s name as payee in the rupee check. The Pakistani authorities blocked the rupee proceeds of that check because they suspected that there had been a violation of Pakistan’s exchange control regulations. B stopped payment of the sterling check and S sued him. The Court of Appeal held that, although a claim under the rupee check would have been unenforceable, the claim under the sterling check by one resident of the United Kingdom against another resident was severable and enforceable. 34 Possibly, Sharif v. Azad was distinguished on the ground that the first transaction—the exchange of the rupee check for pounds sterling—was in violation of Pakistan’s exchange control regulations, but recovery in the second transaction—the exchange of that rupee check for a sterling check—would not be a violation in itself and would not lead to a further violation of Pakistan’s regulations. In the case involving Peru’s exchange control regulations, it may have been assumed that recovery against the Royal Bank of Canada would lead to a violation in the form of a remittance of part of the recovery to the Miami bank.
The judgment has not been reported at this time, and it is not possible, therefore, to describe how the court dealt with the principle that normally a letter of credit is independent of the underlying contract that gives rise to it.
III. Exchange Rates
fratelli zerbone s.n.c.v. amministrazione delle finanze dello stato (judgment of court of justice of european communities, january 31, 1978) 35
The European Court of Justice in this case had to consider a number of legal issues involving the application of monetary compensatory amounts in a total exceeding 140 million Italian lire to imports of frozen meat from various Latin American countries by an Italian importer. The contracts prescribed payments in U.S. dollars. One of the issues in the case turned on whether the Italian lira had been revalued as a result of the Smithsonian agreement and the Fund’s Decision No. 3463-(71/126) of December 18, 1971 on central rates and wider margins. 36 The court was aware of the correct legal character of exchange rates under that decision, but misunderstood the effect of Italy’s central rate as communicated to the Fund under it.
The issue depended on the meaning and application of Article 1(1) of Regulation (EEC) No. 974/71:
If, for the purposes of commercial transactions, a Member State allows the exchange rate of its currency to fluctuate by a margin wider than the one permitted by international rules, it shall be authorised to:
(a) charge on imports from Member States and third countries,
(b) grant on exports to Member States and third countries, compensatory amounts for the products referred to below under the conditions determined hereinafter.
The regulation was understood to authorize the imposition of monetary compensatory amounts only if a currency fluctuated upward, that is, was revalued or appreciated, but the question was revaluation or appreciation in relation to what standard?
To answer this question, it was necessary to determine what was meant by the words “international rules” in the regulation. The court interpreted these words to refer to the provisions on par values under the Articles. The words did not cover Decision No. 3463-(71/126) because, as the decision itself recognized, the decision did not, and could not, validate the practices it recommended in order to minimize disorder in conditions that were inconsistent with the Articles. It followed that the standard by which to determine whether the lira had appreciated was the par value of the currency that had been established under the Articles. That par value was Lit 625 per U.S. dollar of July 1, 1944, with a possibility of fluctuation up to 1 per cent on either side of parity. The par value had not been changed, but Italy declared a central rate of Lit 581.50 per U.S. dollar with margins of 2.25 per cent on either side of this relationship with the U.S. dollar. The court concluded, therefore, that there had been an appreciation of the lira that, on this part of the case, would justify the imposition of monetary compensatory amounts.
This conclusion was incorrect. The central rate of Lit 581.50 per U.S. dollar as adopted by Italy was in relation to the current U.S. dollar and not the U.S. dollar of the weight and fineness of gold in effect on July 1, 1944. Under the “international rules” of the Articles, the par value for the lira was established in terms of gold and the U.S. dollar of 1944. Under the court’s finding, the standard for determining whether there had been an appreciation was the relationship between the Italian lira and the U.S. dollar of 1944. The current U.S. dollar in terms of which the central rate was communicated was not the dollar of 1944, because the United States undertook in the Smithsonian agreement to propose a devaluation of the dollar from US$35 to US$38 per ounce of gold, but it was understood that this change would take effect immediately in the exchange markets. The central rate was expressed in relation to this depreciated dollar. Decision No. 3463-(71/126) recognized that central rates could be communicated in terms of this decision by referring not to the “parity” between a currency and the U.S. dollar but to “the effective parity relationship.” 37
The situation of the Italian lira, therefore, was as follows. As part of the Smithsonian agreement, the lira was to be devalued by 1 per cent in relation to the par value of Lit 625 per U.S. dollar of 1944. The current U.S. dollar depreciated immediately by 7.89 per cent against the dollar of 1944. The effect was an appreciation of the lira in the market of 7.48 per cent against the current U.S. dollar. This datum, however, was irrelevant under the court’s ruling on what was meant by international rules. The only relevant datum was the devaluation of 1 per cent against the par value of the lira. The rates of exchange for the lira at the critical dates were maintained within the wider margins around the central rate in accordance with the decision. If these rates of exchange had been in accordance with “international rules,” there would have been neither an appreciation nor a depreciation for the purposes of Regulation (EEC) No. 97471. Once it was concluded, correctly, that the only standard compatible with “international rules” was the par value, it followed inexorably that the lira had been devalued and not revalued, or had not appreciated to use the language of the court. The relationship of the lira to the dollar of 1944 was the same as it was to the special drawing right, which was defined at the relevant date in terms of gold (i.e., 0.888 671 gram of fine gold). 38 The relationship was Lit 631.343 per U.S. dollar, compared with the parity derived from par values of Lit 625 per U.S. dollar.
The Implications of Credit Policies for Output and the Balance of Payments—peter m. keller (pages 451-77)
Stabilization programs supported by use of Fund resources typically contain limitations on credit expansion by the domestic banking system and on foreign borrowing by the public sector. This paper analyzes some of the implications of credit policies for output and growth and how they relate to the development of the current account and overall balance of payments. The framework chosen for the analysis is one in which the availability of financing is a direct and major determinant of current and future production. The paper identifies three channels through which credit policies can affect production in the economy: (1) the indirect link between credit and overall aggregate demand in a Keynesian setting of unused capacities and unemployment; (2) the direct link between working capital availability and current production; and (3) the link between credit, investment, and future production. The principal conclusions are that limiting the overall level of credit is not a panacea for balance of payments problems; considerations regarding the distribution and the use of credit are important; in the absence of distortions, the current account objectives are best served by permitting credit expansion and investment to take place in the sector with the highest productivity, independent of whether this sector produces traded goods or nontraded goods; and tight credit policies can endanger the current account objectives when prevailing distortions lead to a “crowding out” of productive uses of credit. Reduction of price distortions and, particularly, the adoption of appropriate exchange rate and interest rate policies must, therefore, be an integral part of any program that contains limitations on domestic credit.
Multipurpose Banking: Its Nature, Scope, and Relevance for Less Developed Countries—DEENAr. khatkhate and klaus-walter riechel (pages 478-516)
The purpose of the paper is to delineate the role, nature, and scope of multi-purpose banking and to point out its relevance for less developed countries (LDCs) that are undertaking a deliberate program to develop their financial systems. After referring to the historical evolution of multipurpose banking and surveying the financial systems in some leading industrial countries, it is shown that multipurpose banking is being adopted in most industrial countries. An attempt is then made in the paper to develop criteria to evaluate multipurpose banking so as to help policymakers in developing countries with emerging financial systems to choose between alternative models of financial systems. Of the many possible evaluation criteria, five have been selected as especially important: economic efficiency, mobilization of savings, promotion of entrepreneurial skills, financial stability, and conflicts of interest.
The conclusion reached is that the final judgment about the appropriateness of a given financial system should be made on the basis of a comprehensive evaluation of the effectiveness of the system in the particular context of a given country. It is found, on the basis of the above evaluation criteria, that acceptance of the multipurpose banking approach may benefit LDCs, with their rapidly changing economic structures and patterns of demand, without generating the inefficiency that often ensues from an increase in the degree of concentration. A multipurpose banking system implies a more liberal approach to banking legislation, thereby avoiding the inefficiencies of fragmentation in the financial system that usually accompany a rigid legislated specialization.
Mineral Taxation Policies in Developing Countries: An Application of Resource Rent Tax—keith f. palmer (pages 517-42)
The central problem of mineral taxation policy in developing countries is to establish a stable fiscal framework that, under conditions of uncertainty, both obtains a high share of mineral rent for the resource-owning country and ensures for the investor the prospect of a return on his investment commensurate with his risk. The main concern of the paper is to propose a practical fiscal framework, based on the resource rent tax concept, that meets these objectives. The resource rent tax is a profits tax that is collected only after a certain specified internal rate of return has been realized. The superiority of the resource rent tax over the principal alternatives under conditions of uncertainty arises from the fact that, while predictable ex ante, it does not depend on predictions of tax liability but responds automatically and progressively to the actual outcome; it shares risk more efficiently and so maximizes expected government rent; and it is more neutral in its effect on investment and reinvestment. The pure resource rent tax has practical drawbacks, however. The paper proposes a tax structure that retains the principle but combines it with company tax and a conditional accelerated depreciation provision.
A Monte Carlo simulation model is used to investigate the properties of the proposed tax and to compare the relative impact of three alternative taxes on investor risk and expected government rent. The results confirm that, if investors are risk averse, the maximum rent consistent with a decision to invest is higher with the proposed tax than with a proportional profits tax or an ad valorem royalty. The paper concludes that under conditions of uncertainty and risk aversion the proposed tax framework is more efficient in extracting the mineral rent and more neutral with respect to the investment (and reinvestment) decision than the practical alternatives.
Demand for Money in Middle Eastern Countries—andrew d. crockett and owen j. evans (pages 543-77)
The demand for money is one of the most intensively investigated economic relationships, and one that has become increasingly important in the formulation and adaptation of programs of financial stabilization. This paper attempts to estimate a relatively simple formulation of the demand for money for the nineteen countries in the Middle Eastern Department of the Fund. To reflect the particular circumstances of these countries, national income is defined to exclude the oil sectors of their economies, where appropriate, and a number of other modifications to the basic data are made to improve the realism of the estimated relationship.
A reasonably robust income elasticity was obtained across the nineteen countries in the model, with significant coefficients being obtained for eighteen; elasticity estimates clustered in the range of 1.25 to 1.50 for a broad definition of money, and in the range of 1.00 to 1.50 for narrow money. The inflation rate was used as the opportunity cost of holding money but proved statistically significant in only three of the nineteen countries. Simple lag formulations suggested that there may be some lagged response in these countries of the demand for money to its underlying determinants but did not indicate that an unlagged formulation would be very misleading where annual data were employed. When the data for the various countries were pooled, to obtain cross-section estimates, the results were less successful, even though a number of different country groupings were used for pooling purposes. Inflation variables were insignificant, and estimated income elasticities were generally significantly lower than in the individual country equations.
Deposit Insurance: Theory and Practice—ian s. mcCarthy (pages 578-600)
The paper discusses the historical development of deposit insurance and its rationale, drawing on a survey of 12 countries’ systems. It then discusses the costs attached to deposit insurance before discussing the technical problems involved in designing an optimal deposit insurance system that will reflect the characteristics and objectives peculiar to a particular country.
In general, the study appears to suggest that practical considerations will often militate for a relatively simple system, whereas theoretical discussions have often argued for more complex systems. In particular, experience suggests that, although variable premiums are desirable in theory, in practice they are infeasible.
The Fund Agreement in the Courts—XV—joseph gold (pages 601-24)
Four cases involving the Fund’s Articles are discussed. First, the Constitutional Council of France has rejected the contention that legislation was required not only to authorize France to consent to a quota increase but also to accept the Second Amendment of the Fund’s Articles, even though the Fund had found that the Amendment had become effective for all members because the necessary majorities of members had accepted it. The case raises questions of the competence of national courts to interpret the Articles, unanimity for amendment, and national sovereignity.
Second, the Federal Supreme Court of Germany has decided that a balance of payments approach must be taken to the understanding of Article VIII, Section 2(b), under which exchange contracts contrary to another member’s exchange controls that are consistent with the Articles are unenforceable if the tests of the provision are satisfied. Where both parties were residents of Spain, the provision did not apply because Spain’s balance of payments was not involved. The question is discussed whether the provision requires a demonstration that exchange control regulations are directed against an impact on the balance of payments or, alternatively, that they are intended to protect the legislator’s currency.
Third, an English court, relying on Article VIII, Section 2(b), has refused a remedy under an irrevocable letter of credit issued and confirmed in connection with a commercial contract, on the ground that the contract was a monetary transaction disguised to evade the exchange controls of Peru that were consistent with the Articles.
Fourth, the European Court of Justice, in deciding whether Italy was justified in applying certain monetary compensatory accounts, had to determine whether the Italian lira had been revalued in accordance with “international rules” as a result of the changed relationship to the U.S. dollar under the Smithsonian agreement and the Fund’s decision on central rates and wider margins. The court found that there had been a revaluation by basing its decision on the central rate for the lira in terms of the current U.S. dollar instead of the par values of the two currencies, which were still valid at the relevant date and which the court held had to be applied. On the basis of them, the lira had been devalued.
In statistical matter (except in the résumés and resúmenes) throughout this issue,
Dots (…) indicate that data are not available;
A dash (—) indicates that the figure is zero or less than half the final digit shown, or that the item does not exist;
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“Billion” means a thousand million;
A short dash (-) is used between years or months (e.g., 1977-79 or January-October) to indicate a total of the years or months inclusive of the beginning and ending years or months;
A stroke (/) is used between years (e.g., 1978/79) to indicate a fiscal year or a crop year;
Components of tables may not add to totals shown because of rounding.
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World Economic Outlook
A Survey by the Staff of the International Monetary Fund
This publication reviews recent developments in the world economy and examines its short-term prospects. There are separate chapters on the global perspectives for balance of payments adjustment and financing, on the situations of the industrial, oil exporting, and non-oil developing groups of countries, and on key issues of policy. Appendices provide regional and country surveys, technical notes, and statistical tables.
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Sir Joseph Gold, Senior Consultant and formerly the General Counsel and Director of the Legal Department of the Fund, is a graduate of the Universities of London and Harvard. He is the author of numerous books, pamphlets, and essays on the Fund and on international and national monetary law.
The first seven articles in the series, together with another article, were issued in book form as The Fund Agreement in the Courts (Washington, 1962); the next four articles were issued as The Fund Agreement in the Courts: Parts VIII—XI (Washington, 1976). The twelfth, thirteenth, and fourteenth articles were published in Staff Papers, Vol. 24 (March 1977), pp. 193-231, Vol. 25 (June 1978), pp. 343-67, and Vol. 26 (September 1979), pp. 583-611, respectively.
Journal Officiel, April 30, 1978, pp. 1942-43.
See Léo Hamon, Recueil Dalloz Sirey, November 7, 1979, p. 543.
Selected Decisions of the International Monetary Fund and Selected Documents, Eighth Issue (Washington, 1976), pp. 222-24 (hereinafter referred to as Selected Decisions, 8th (1976)).
Article XVII(b), original and first. References in these footnotes to original, first, and second are, respectively, to the original Articles and the Articles as modified by the First and Second Amendments.
See Dominique Carreau, “L’augmentation de la quote-part de la France au Fonds Monétaire International: La decision du Conseil Constitutionnel du 29 avril 1978,” Revue générale de droit international public, Vol. 83 (Paris, 1979), pp. 209-19.
Article XVIII, first.
Article IV, Section 3(b), second.
David Ruzié, Journal du Droit International, Vol. 105 (Paris, 1978), p. 584. Professor Ruzié contends that the only available procedure in such circumstances would be a request by the Fund for an advisory opinion of the International Court of Justice. It is true that, under Article VIII of the Agreement between the Fund and the United Nations, the Fund can request advisory opinions except on certain issues not relevant here (Selected Decisions, 8th (1976), pp. 230-31). Professor Carreau’s view that the issue would be one of interpretation that the Fund itself could settle with finality under Article XXIX of the present Articles is to be preferred (see Joseph Gold, Interpretation by the Fund, IMF Pamphlet Series, No. 11 (1968)), although the Fund could decide to request an advisory opinion. It has never made a request.
Schedule C, paragraph 8, second.
Schedule C, paragraph 7, second.
For a more detailed comparison, see Joseph Gold, “The Fund Agreement in the Courts—XIII,” Staff Papers, Vol. 25 (June 1978), pp. 343-67.
Léo Hamon (cited in n. 3), p. 544.
 1Q.B. 683;  C.A. 703.
Article XXXI, Section 2(a), second.
Leo Hamon (cited in n. 3), p. 544.
Joseph Gold, Legal and Institutional Aspects of the International Monetary System: Selected Essays (Washington, 1979), pp. 301-302.
Article XXVI, Section 1, second.
Article XXVIII(b), second.
Joseph Gold, Legal and Institutional Aspects of International Monetary System (cited in n. 17), p. 296.
VII ZR/48/78, Cologne.
For earlier cases decided by the Supreme Court see
(i) Neue Juristische Wochenschrift, June 10, 1960, pp. 1101-1103; Joseph Gold, The Fund Agreement in the Courts (Washington, 1962), pp. 139-42
(ii) Wertpapier-Mitteilungen, No. 21 of May 26, 1962, pp. 601-602; Joseph Gold, The Fund Agreement in the Courts, Parts VIII-XI (Washington, 1976), pp. 9-12
(iii) BGH, Urt. v. 27.4. 1970—II ZR 12/69 (Oldenburg), Neue Juristische Wochenschrift, Vol. 23 (August 20, 1970), pp. 1507-1508; Gold (cited in (ii) above), pp. 72-82
(iv) BGH, Urt. v. 17.2. 1971—VIII ZR 84/69 (Frankfurt), Neue Juristische Wochenschrift, Vol. 24 (June 1, 1971), pp. 983-85; Wertpapier-Mitteilungen, No. 14 of April 3, 1971, pp. 411-12; Gold (cited in (ii) above), pp. 82-84.
(v) BGH, Urt. v. 11.3 1970—VIII ZR 147/68 (Dusseldorf), Neue Juristische Wochenschrift, Vol. 23 (May 27, 1970), p. 1002; Gold (cited in (ii) above), pp. 84-87
(vi) 21.12. 1976—III ZR 83/74, WM: Zeitschrift für Wirtschafts-und Bankrecht, Jahrg. 31, No. 12 (March 19, 1977), pp. 332-34; Joseph Gold, “The Fund Agreement in the Courts—XIV,” Staff Papers, Vol. 26 (September 1979), pp. 599-603
Joseph Gold, The Fund Agreement in the Courts, Parts VIII-XI (Washington, 1976), pp. 72-87.
Executive Board Decision No. 144-(52/51) dated August 14, 1952, Selected Decisions, 8th (1976), pp. 133-34.
For a recent discussion of English law on extradition for the evasion of the exchange control regulations of a Commonwealth country, see Regina v. Governor of Pentonville Prison, Ex Parte Khubchandani, The Times (London), February 15, 1980, p. 25.
Joseph Gold, “The Fund Agreement in the Courts—XIV,” Staff Papers, Vol. 26 (September 1979), p. 585.
Ibid., pp. 608-11.
Queen’s Bench Division (United Kingdom), March 12, 1979, Lloyd’s Law Reports 267, p. 270.
“Bank’s Commercial Credit: Illegality,” New Law Journal (London, March 29, 1979), p. 317; “Enforcing a Contract Which Violates Exchange Controls,” International Practitioner’s Notebook, No. 8 (New York, November 1979).
 1Q.B. 683;  C.A. 703.
Joseph Gold, “The Fund Agreement in the Courts—XII,” Staff Papers, Vol. 24 (March 1977), pp. 205-21.
 IQ.B., p. 714.
 3 All E.R. 785, pp. 789-90.
Joseph Gold, Fund Agreement in Courts, Parts VIII-XI (cited in n. 23), pp. 43-50.
Case 94177  ECR 99.
Selected Decisions, 8th (1976), pp. 14-17.
Ibid., p. 14.
Article XXI, Section 2, first.