In connection with assistance to the courts, there has been an interesting development in Fund practice. On June 30, 1965 the President of the First Civil Division of the Circuit Court of Appeals of Karlsruhe addressed a letter to the Managing Director of the Fund which was transmitted to him by the executive director appointed by the Federal Republic of Germany. The letter stated that the basic problem in a case before the court was whether the court had to apply Brazilian private law and Brazilian currency law. The letter asked whether Brazilian Decree No. 23501 of November 21, 1933 was an “exchange control regulation” that was “maintained or imposed consistently” with the Articles of the Fund within the meaning of Article VIII, Section 2(b).
The letter was brought to the attention of the Executive Directors, who authorized the General Counsel to send a reply to the President of the Court which stated that the Articles did not contain a definition of exchange control regulations, but that, in his opinion, those words did not include laws that had been designed solely to ensure the acceptance of paper currency as legal tender in the country of issue and not to protect the country’s foreign exchange resources. The Brazilian decree appeared to be of that character. He drew attention to a case decided by the Supreme Court of New York76 in which it was noted that the French courts have held that French cours forcé legislation was not regarded as foreign exchange control legislation. The General Counsel concluded, therefore, that the question whether the Brazilian decree was maintained consistently with the Articles did not arise under the provision. The Karlsruhe court decided, in accordance with this letter, that the decree was not an “exchange control regulation” within the meaning of Article VIII, Section 2(b).
This has been the only case so far in which the Fund has received a formal request from a court for assistance in connection with the application of Article VIII, Section 2(b). The request related to the consistency of a decree with the Articles and therefore did not go beyond the scope of the inquiries that the Fund habitually answers. However, the circumstances of the case required a reply that could be considered as going somewhat further. It was necessary to give some indication of the meaning of “exchange control regulations” in order to make the point that the question of the consistency of the decree with the Articles did not arise under Article VIII, Section 2(b).