Joseph Gold
Published Date:
September 1983
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Appendix A. Decision of the United Nations Commission on International Trade Law *

Recognizing that many international transport and liability conventions of both a global and a regional character contain limitation of liability provisions, wherein the limitation of liability is expressed in a unit of account.

Noting that the limitation of liability as fixed in these conventions may become seriously affected over time by changes in monetary values, thereby destroying the intended balance of the convention as adopted.

Believing that a preferred unit of account for many conventions, particularly for those of global application, would be the Special Drawing Right as determined by the International Monetary Fund.

Being of the opinion that the conventions should in any event contain a provision which would facilitate the adjustment of the limit of liability to changes in monetary values,

1. Adopts the unit of account provision and the two alternative provisions for the adjustment of the limit of liability in international transport and liability conventions as contained in the annexes to the present decision;

2. Recommends that in the preparation of future international conventions containing limitation of liability provisions or in the revision of existing conventions the unit of account provision as adopted by the Commission should be used;

3. Recommends further that in such conventions one of the two alternative provisions for adjustment of the limitation of liability as adopted by the Commission should be used;

4. Suggests that, when the sample price index provision is to be used in such a convention, consideration be given to the nature of the intended price index and the institution to be charged with its preparation, revision and calculation;

5. Requests the General Assembly to recommend the use of these provisions in the preparation of future international conventions containing limitation of liability provisions or in the revision of existing conventions.


1. The unit of account referred to in article [ ] of this Convention is the Special Drawing Right as defined by the International Monetary Fund. The amounts mentioned in article [ ] are to be expressed in the national currency of a State according to the value of such currency at the date of judgement or the date agreed upon by the panies. The equivalence between the national currency of a Contracting State which is not a member of the International Monetary Fund and the Special Drawing Right is to be calculated in a manner determined by that State.

2. The calculation mentioned in the last sentence of paragraph 1 is to be made in such a manner as to express in the national currency of the Contracting State as far as possible the same real value for amounts in article [ ] as is expressed there in units of account. Contracting States must communicate to the Depositary the manner of calculation at the time of signature or when depositing their instrument of ratification, acceptance, approval or accession and whenever there is a change in the manner of such calculation.


1. The amounts set forth in article [ ] shall be linked to [a specific price index which might be considered appropriate for a particular convention]. On coming into force of this [Protocol-Convention]. the amounts set forth in article [ ] shall be adjusted by an amount, rounded to the nearest whole number, corresponding in percentage to the increase or decrease in the index for the year ending on the last day of December prior to which this [Protocol-Convention] came into force over its level for the year ending on the last day of December [of the year in which the Protocol or Convention was opened for signature]. Thereafter, they shall be adjusted on the first day of July of each year by an amount, rounded to the nearest whole number, corresponding in percentage to the increase or decrease in the level in the index for the year ending on the last day of the previous December over its level for the prior year.

2. The amounts set forth in article [ ] shall not. however, be increased or decreased if the increase or decrease in the index does not exceed [ ] per cent. Where no adjustment was made in the previous year because the change was less than [ ] per cent, the comparison shall be made with the level for the last year on the basis of which an adjustment was made.

3. By the first day of April of each year the Depositary shall notify each Contracting State and each State which has signed the [Protocol-Convention] of the amounts to be in force as of the first day of July following. Changes in the amounts shall be registered with the Secretariat of the United Nations in accordance with General Assembly regulations to give effect to Article 102 of the Charter of the United Nations.


1. The Depositary shall convene a meeting of a Committee composed of a representative from each Contracting State to consider increasing or decreasing the amounts in article [ ]:

  • (a) Upon the request of at least [ ] Contracting States, or

  • (b) When five years have passed since the [Protocol-Convention] was opened for signature or since the Committee last met.

2. If the present [Protocol-Convention] comes into force more than five years after it was opened for signature, the Depositary shall convene a meeting of the Committee within the first year after it comes into force.

3. Amendments shall be adopted by the Committee by a [ ] majority of its members present and voting.a

4. Any amendment adopted in accordance with paragraph 3 of this article shall be notified by the Depositary to all Contracting States. The amendment shall be deemed to have been accepted at the end of a period of [6] months after it has been notified, unless within that period not less than [one-third] of the States that were Contracting States at the time of the adoption of the amendment by the Committee have communicated to the Depositary that they do not accept the amendment. An amendment deemed to have been accepted in accordance with this paragraph shall enter into force for all Contracting States [12] months after its acceptance.

5. A Contracting State which has not accepted an amendment shall nevertheless be bound by it, unless such State denounces the present Convention at least one month before the amendment has entered into force. Such denunciation shall lake effect when the amendment enters into force.

6. When an amendment has been adopted by the Committee but the [6] month period for its acceptance has not yet expired, a State which becomes a Contracting State to this Convention during that period shall be bound by the amendment if it comes into force. A State which becomes a Contracting State to this Convention after that period shall be bound by any amendment which has been accepted in accordance with paragraph 4.

(Adopted July 28. 1982)

Appendix B. Surveillance over Exchange Rate Policies *

(1) The Executive Board has reviewed the document “Surveillance over Exchange Rate Policies” as provided in paragraph 2 of Executive Board Decision No. 5392-(77/63), adopted April 29, 1977, and will review it again at an appropriate time not later than April 1, 1984.

(2) The Executive Board has also reviewed the procedures relating to the general implementation of the Fund’s surveillance over members’ exchange rate policies, as required by paragraph VI of Procedures for Surveillance in the document “Surveillance over Exchange Rate Policies” referred to in (1) above, including the procedures for the conduct of consultations under Article IV, which consultations shall comprehend the consultations under Article VIII and Article XIV, and approves the continuation of the procedures as described in SM/82/37, in the light of the attached Managing Director’s summing up, until the next annual review, which shall be conducted not later than April 1, 1983.

Decision No. 7088-(82/44)

April 9. 1982

Attachment to Decision No. 7088-(82/44)Managing Director’s Summing Up

General Remarks

The Board agreed that the principles embodied in the 1977 document on surveillance over exchange rate policies are not at this time in need of revision or reformulation.

Directors considered that, on the whole, the basic surveillance issues outlined in SM/82/37—particularly the references to the interrelationships and interactions of financial policies and to intervention—were addressed in a balanced manner.

A number of Directors considered that the surveillance function had not yet matured and was not as effective as it could be. There was a strong endorsement of the management’s efforts to strengthen surveillance by the Fund, but it was recognized that full cooperation of members is essential if this function is to be made more effective, it is my understanding that the Board believes that cooperation between members should take place on three distinct levels:

a. It is important first to reach a common view or understanding on the analytical framework within which exchange rate issues and requirements can be discussed. In this respect, several speakers pointed to the need to look for ways of improving our appraisal—both quantitative and qualitative—of competitiveness and of the role of exchange rates in the adjustment process, of better assessing the adequacy or appropriateness of different exchange rate regimes, and of adjusting those regimes when warranted.

I have also noted the interesting comments on the need to do more analytical work on these issues. The staff and management have been working toward this goal in recent months, but more needs to be done to improve our understanding of the interrelationships between balance of payments deficits, budgetary policies, interest rates, and exchange rates. It has also been suggested that we need to better understand the functioning of the European Monetary System, the currency intervention that it entails, and the relationships between EMS members and other countries.

b. The second level of cooperation is the agreement by members to discuss with the Fund, and in the Fund, the aspects of individual policy choices that have or can have an adverse impact on other countries.

c. Third, it is important for members to cooperate by taking seriously into account, in their national process of decision making, the views expressed and conclusions reached by the Board in the form of “a” and “b” above.

Such cooperation is in fact what surveillance is all about. Things are not as simple as they were under the fixed exchange rate system. We have to reach common views on matters that are very difficult to assess scientifically; and we know very well that it is a conceptual difference of approach among a number of member countries with respect to exchange rate relationships which presently makes the exercise of surveillance particularly difficult. If there was a convergence of views on the role of the exchange rate in the adjustment process, some of the problems would be alleviated, but 1 believe that the needed cooperation would be made possible by a more objective approach to issues that lend themselves to objective analysis.

A number of Directors felt that there remains some asymmetry in the exercise of surveillance between members that use Fund resources and those that do not, or between small countries and major industrial countries. Those Directors considered that there was a need to move toward a more symmetrical treatment. I should note that we are very vigilant in this regard and attach great importance to treating members on a uniform basis. Indeed, a reading of the language employed in the staff reports for more recent Article IV consultations with industrial countries will show that the formulation of policy recommendations has tended to be more candid and more precise than in the past. And, in the spirit of the comments made today, I shall be continuing my efforts to be frank and forthcoming in my summing up statements on all consultation discussions. Of course, an evenhanded approach does not mean that consultations will be perfectly symmetrical. The situations of countries themselves are not symmetrical; and we know that a country that is dependent on Fund resources is de facto more likely to be the object of active surveillance by the Fund than one not in need of the Fund’s assistance. Given that natural distinction, we try especially hard to treat the appraisals and recommendations for different categories of countries in a uniform and evenhanded way.

While we have reaffirmed today that the basic framework within which surveillance should be exercised is the individual Article IV consultation, we have also agreed that, for the exercise of surveillance to be really effective, it must be looked at in a multilateral context. One idea mentioned in this regard was the possibility, within the framework of the Fund, of holding informal discussions with or on the industrial countries as a group or those whose currencies make up the SDR basket. Directors also referred to the World Economic Outlook exercise as a very helpful method of integrating the individual judgments or assessments into a more collective framework. In this respect, the forthcoming April 19th discussion on the World Economic Outlook is particularly timely and should provide us with the opportunity to study in very practical terms the effects of the economic policies of industrial countries on one another and on the rest of the world. We should devote the first day’s discussion of the Outlook to these interactions. The staff will be providing Executive Directors with a list of illustrative questions to facilitate such a discussion, which should be a helpful element in our approach to surveillance.

Role of the Managing Director in Surveillance

A number of Directors stressed the role of the Managing Director in the surveillance process in conducting personal consultations with member countries and making public statements in this regard. In my own view, there are three levels to this role. First, the Managing Director must make every effort to keep abreast of the work of the staff and its assessment of world developments in order to come to conclusions about where and when surveillance needs to be exercised.

Second, he must keep in close contact with the countries that play an important role in the international monetary system, either through the Executive Directors or through direct contact with the officials of the countries themselves. In the course of such discussions, the Managing Director should focus on the concerns of individual countries with respect to the surveillance process so that he can take the “pulse’’ of the membership as a whole.

With the above information in hand, the Managing Director must then formulate proposals to the Executive Board about how surveillance or adjustment should be conducted. At this level, he must not serve simply as a conduit for the views of the membership—which are often divergent—but must exercise some independence in synthesizing these views and making proposals that, in his view, will best serve the membership as a whole. It is understood, of course, that such proposals must be expressed in a way that does not impinge on the sovereign right of members to make policy.

Consultation And Surveillance Procedures

Before turning to specific points on procedure, I feel it is appropriate to acknowledge, as the staff has already done, the broad support given by Directors to the staff’s efforts to intensify and improve the content of the reports. It is encouraging to know that we are moving in the right direction in taking account of the views of the Board as we prepare material for discussion.

Frequency and Scheduling of Missions

A number of Directors endorsed the present frequency of consultations, but some of them stressed that any further fall in frequency should be avoided if possible. Several Directors could accept the staff’s suggestion of a somewhat reduced frequency of consultations for members whose economies are small, whose underlying economic situations remain basically unchanged, and who are not using Fund resources. Several Directors stressed that visits by senior staff to such members should not be a substitute for consultations and it was agreed that adequate advance notice of such visits should continue to be given to the Executive Directors concerned in order to permit them to play their proper role in relation to their constituent countries. Two Directors stressed that the outer time limit for consultations should not exceed two years; increased frequency and better synchronization of consultations with major currency countries were also advocated. Several Directors suggested that updated reports on Recent Economic Developments (REDs) be issued in cases in which a fairly long time lag between consultations was developing.

Several Directors stressed the desirability of coordination in the timing of Board consideration of consultations with major member countries a matter which relates to the importance of taking a global view of the effects of economic policies of members on one another in conducting the Fund’s surveillance procedures. Some speakers suggested grouping consultations with members participating in a currency union, while others underlined certain difficulties—both practical and otherwise—that may arise if such a course were to be adopted.

Role of the Executive Director in Consultations

A number of Directors, either directly or indirectly, requested clarification of the role of Executive Directors in the consultation process and about the role of Executive Directors and perhaps of the Board itself in the briefing stage The role of the Executive Board in the consultation process is clearly defined in the Articles, which provide that the Managing Director and the staff shall conduct the ordinary business of the Fund, including consultation missions, under the direction of the Board. The Board has the power and the responsibility to adopt policies and establish procedures for the conduct of consultations and negotiations with member countries, but the actual consultation discussions and negotiations are the responsibility of the management and staff.

The individual Executive Director plays a different but very important role in the consultation process. He is obviously responsible for presenting and explaining the views of his countries during Board discussions; but there are also many ways in which he can play a particularly useful intermediary role at an earlier stage by helping the staff mission to understand the policies and views of his countries and vice versa, and I wish to take this opportunity to express the appreciation of management and staff for the efforts made over the years by individual Directors in this regard.

Combining Consultation and Use of Fund Resources Missions

Most Directors preferred, in principle, to have the Article IV consultations precede negotiations on, and Board consideration of, requests for use of Fund resources. When it is possible to arrange an Article IV mission before a negotiation—especially when a long time has elapsed since the prior Article IV consultation with the member—it would probably be best to follow such a procedure, particularly since the guidance given to the staff in the course of an Article IV consultation discussion in the Board can be very helpful in the conduct of further negotiations with the member country. Several speakers believed that this was the ideal scheme, but added that it would not always be practical in view of countries’ sometimes urgent need for Fund resources. One Director felt that, in cases of urgent need for Fund resources, there should be no presumption that an Article IV consultation would precede discussions on use of Fund resources. Generally the Board felt that flexibility had to be employed in this regard. The Board’s views on this matter will of course be carefully considered: but. in a number of cases, it may be a good idea to maintain the current practice of arranging the schedule of missions and discussions in such a way as to obtain maximum benefit from combining Article IV consultations with missions on the use of Fund resources.

Size and Duration of Missions

Many Directors stressed the heavy burden of country missions on the staff in area departments. The current duration and size of missions was broadly endorsed. The view was also put forward that technical assistance departments in the Fund—especially the Fiscal Affairs Department—should be more actively involved in Article IV consultation missions where their participation was relevant. Several Directors suggested that the present strain on the staff might be eased by additional recruitment; this matter will be considered further by the Board during the forthcoming discussion of the financial year 1983 administrative budget.

Reporting on Consultations

Several Directors acknowledged improvements in the analytical quality of staff papers on country matters, although a number of speakers wished to see further efforts with respect to external competitiveness, the exchange rate setting, the appropriateness of the exchange rate regime, external reserves, reserves policies, and the interrelationships between monetary, fiscal, exchange rate, and incomes policies. It was also stressed that staff reports on industrial countries should focus more precisely on clearly identifiable issues in order to facilitate the conduct of the discussion.

Several Directors endorsed the techniques developed by the staff for reporting on the sensitive subject of the exchange rate, but others cautioned against too explicit a discussion of exchange rate policies in the reports, in view of the great sensitivity of the subject. Some Directors, while agreeing that exchange rate questions must be treated carefully in the reports, considered that in cases of inappropriate exchange rate policy or maintenance of an unrealistic exchange rate level, the staff reports should treat the issues sufficiently forthrightly.

There was general agreement that staff reports should continue to cover trade issues in supporting the efforts of the GATT, keeping in mind, of course, the respective jurisdictions of the two organizations. One Director noted that progress by members toward acceptance of Article VIII had been inadequate.

The staff was encouraged to improve the form and usefulness of RED reports, inter alia, by regularly updating the reports when warranted and feasible. One Director questioned the need to have a RED report with each consultation, and several cautioned against including judgmental material in REDs.

Timing of Article IV Discussions

Directors endorsed the existing three-month rule, while generally agreeing on the four weeks’ delay given to the Board for consideration of the report before the discussion. One Director suggested that the staff or management should report to the Board if a consultation was not completed within, say, six months from the discussion.

Special Papers and Seminars

There was a strong endorsement by Executive Directors of the current and prospective range of special papers and seminars on exchange rates or exchange rate policies in certain groups of countries, on economic policies of oil producing countries, and on the Fund’s approach to centrally planned economies. A number of Executive Directors called for further consideration of the matter of exchange rate policies in LDCs.

Supplemental Consultations and Informal Visits

Directors generally endorsed existing procedures on supplemental consultations, although some of them wished to have more precise reporting on such consultations. The staff will keep this suggestion in mind in the preparation of World Economic Outlook papers.

Exthange Arrangements

On the subject of exchange arrangements maintained by members. Directors expressed agreement with the staff recommendations regarding the need for prompt notification of changes in exchange rate regimes and improvements in the Fund’s classification of regimes. It is important that the international community, through the Fund, should be provided with timely and meaningful information in this area. The staff and management agree with the suggestion of Directors that the general rule for ensuring prompt notification would be notification within three days of the date of change in arrangements. The information also needs to be comprehensive and provided on an evenhanded basis, including intervention policies of members with flexible exchange rate regimes as well as developments in pegged or managed arrangements. The Fund must be kept up to date on policies conducted by members or actions taken by them affecting their exchange markets. This information plays an essential role in ensuring that the surveillance process keeps abreast of developments; and the need to be current is a concern that has been widely voiced today. Directors have thus reaffirmed their commitment to ensuring that the provisions of the Article IV, Section (b) regarding notification of exchange arrangements are implemented effectively. The staff will be continuing its work on this area, including, as was suggested by some Directors, the policy implications of exchange regimes. When the staff can elaborate on the categories of different groups of countries pursuing exchange arrangements of different types, it will do so.

Appendix C. Text of Joint Statement on Monetary Undertakings Annexed to Versailles Communiqué*

Following is the text of a joint statement on international monetary undertakings issued on June 6 at the conclusion of the economic summit in Versailles, France:

1. We accept a joint responsibility to work for greater stability of the world monetary system. We recognize that this rests primarily on convergence of policies designed to achieve lower inflation, higher employment, and renewed economic growth: and thus to maintain the internal and external values of our currencies. We are determined to discharge this obligation in close collaboration with all interested countries and monetary institutions.

2. We attach major importance to the role of the IMF as a monetary authority and we will give it our full support in its efforts to foster stability.

3. We are ready to strengthen our cooperation with the IMF in its work of surveillance: and to develop this on a multilateral basis taking into account particularly the currencies constituting the SDR.

4. we rule out the use of our exchange rates to gain unfair competitive advantages.

5. We are ready, if necessary, to use intervention in exchange markets to counter disorderly conditions, as provided for under Article IV of the IMF Artcles of Agreement.

6. Those of us who are members of the EMS [European Monetary System] consider that these undertakings are complementary to the obligations of stability which they have already undertaken in that framework.

7. we are all convinced that greater monetary stability will assist freer flows of goods, services, and capital. We are determined to see that greater monetary stability and freer flows of trade and capital reinforce one another in the interest of economic growth and employment.

Appendix D. Policy on Multiple Currency Practices *

The Executive Board has reviewed the Fund’s policy with respect to multiple currency practices. The Fund shall be guided by the approach outlined in the conclusions set forth below.

1. Official action should not cause exchange rate spreads and cross rate quotations to differ unreasonably from those that arise from the normal commercial costs and risks of exchange transactions.

a. (i) Action by a member or its fiscal agencies that of itself gives rise to a spread of more than 2 per cent between buying and selling rates for spot exchange transactions between the member’s currency and any other member’s currency would be considered a multiple currency practice and would require the prior approval of the Fund.

(ii) An exchange spread that arises without official action would not give rise to a multiple currency practice.

(iii) Deviations between the buying and selling rales for spot transactions and lor other transactions would not be considered multiple currency practices if they represent the additional costs and exchange risks for these other transactions.

b. Action by a member or its fiscal agencies which results in midpoint spot exchange rates of other members” currencies against its own currency in a relationship which differs by more than I per cent from the midpoint spot exchange rates for these currencies in their principal markets would give rise to a multiple currency practice II the differentials of more than 1 per cent in these cross rates persist for more than one week, the resulting multiple currency practice would become subject to the approval of the Fund under Article VIII, Section 3.

When difficulties are encountered in the interpretation and application of these criteria in specific cases, particularly concerning the nature of official actions, the staff will present the relevant information to the Executive Board for its determination.

2. The policy of the Fund on the exercise of its approval jurisdiction over exchange measures subject to Article VIII, as set forth in paragraph 2 of Executive Board Decision No. 1034-(60/27), adopted June 1, 1960, remains broadly appropriate. In accordance with this policy, the Fund will be prepared to grant approval of multiple currency practices introduced or maintained for balance of payments reasons provided the member represents and the Fund is satisfied that the measures are temporary and are being applied while the member is endeavoring to eliminate its balance of payments problems, and provided they do not give the member an unfair competitive advantage over other members or discriminate among members. The Fund will continue to be very reluctant to grant approval for the maintenance of broken cross exchange rates.

3. In accordance with the Fund’s policy on complex multiple currency practices, as stated in Executive Board Decision No. 649-(57/33), adopted June 26, 1957, the Fund will not approve multiple currency practices under complex multiple rate systems unless the countries maintaining them are making reasonable progress toward simplification and ultimate elimination of such systems, or are taking measures or adopting programs which seem likely to result in such progress.

4. While urging members to apply alternative policies not connected with the exchange system, the Fund will be prepared to grant temporary approval of multiple currency practices introduced or maintained principally for nonbalance of payments reasons, provided that such practices do not materially impede the member’s balance of payments adjustment, do not harm the interests of other members, and do not discriminate among members.

5. To assist the Executive Board in reaching a decision concerning approval or nonapproval of a multiple currency practice subject to approval under Article VIII, Section 3, the reasons underlying the practice and its effects will be analyzed in reports on Article IV consultations or in other staff papers dealing with exchange systems. In all cases, consistent with the cycle of consultations under Article IV, approval will be granted for periods of approximately one year, in order to provide for a continual review by the Executive Board.

Decision No.6790-(81/43)

March 20.1981

Appendix E. English Law Commission’s Working Paper No. 80: Summary of Provisional Conclusions on Major Issues of Policy *

1. The principle underlying the decision in Miliangos and the consequences which flow from it are greatly to be preferred to the rules which it superseded.

2. Legislative intervention is not required to determine the question whether a plaintiff should be able to obtain judgment in sterling in cases where the relevant obligation is properly to be expressed in a foreign currency; the matter can be left for judicial decision.

3. The present rale that conversion of a foreign currency judgment into sterling is to be effected at the date of actual payment or the date on which the court authorises enforcement of the judgment, whichever is the earlier, provides the best practical implementation of the Miliangos philosophy, and should therefore be retained as the general rule.

4. The parties to an agreement should be free to agree:

  • (a) the date and rate of any conversion: and

  • (b) that payment in England should be made in a particular foreign currency alone, that is, with no option for the debtor to pay in sterling.

5. It should be possible to obtain and enter judgment in a foreign currency alone (in which case the judgment debtor would not have the option of satisfying the judgment in sterling); but a successful plaintiff should not have a right to judgment in that form without leave of the court.

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