This paper discusses the power of interpretation conferred upon the IMF by Articles of Agreement. The power of interpretation is an internal one in the sense that at no stage of the interpretative process is there any recourse to an agency external to the IMF itself. Moreover, no special organ of the IMF itself has been created for the purpose of exercising this power. It is exercised by the same organs of the IMF—the Executive Directors and the Board of Governors—that exercise most of the other powers of the institution.
International Monetary FUND Pamphlet Series
(All pamphlets have been published in English, French, and Spanish, unless otherwise stated)
*1. Introduction to the Fund, by J. Keith Horsefield. First edition, 1964. Second edition, 1965. Second edition also in German.
*2. The International Monetary Fund: Its Form and Functions, by J. Marcus Fleming. 1964. In English only.
3. The International Monetary Fund and Private Business Transactions: Some Legal
Effects of the Articles of Agreement, by Joseph Gold. 1965.
4. The International Monetary Fund and International Law: An Introduction, by Joseph Gold. 1965.
*5. The Financial Structure of the Fund, by Rudolf Kroc. First edition, 1965. Second edition, 1967.
6. Maintenance of the Gold Value of the Fund’s Assets, by Joseph Gold. First edition, 1965. Second edition, 1971.
7. The Fund and Non-Member States: Some Legal Effects, by Joseph Gold. 1966.
8. The Cuban Insurance Cases and the Articles of the Fund, by Joseph Gold. 1966.
9. Balance of Payments: Its Meaning and Uses, by Poul H0st-Madsen. 1967.
*10. Balance of Payments Concepts and Definitions. First edition, 1968. Second edition, 1969.
11. Interpretation by the Fund, by Joseph Gold. 1968.
12. The Reform of the Fund, by Joseph Gold. 1969.
13. Special Drawing Rights, by Joseph Gold. First edition, 1969. Second edition, with subtitleCharacter and Use,1970.
14. The Fund’s Concepts of Convertibility, by Joseph Gold. 1971.
15. Special Drawing Rights: The Role of Language, by Joseph Gold. 1971.
16. Some Reflections on the Nature of Special Drawing Rights, by J.J. Polak. 1971.
17. Operations and Transactions in SDRs: The First Basic Period, by Walter Habermeier. 1973.
18. Valuation and Rate of Interest of the SDR, by J.J. Polak. 1974.
19. Floating Currencies, Gold, and SDRs: Some Recent Legal Developments, by Joseph Gold. 1976. Also in German.
20. Voting Majorities in the Fund: Effects of Second Amendment of the Articles, by Joseph Gold. 1977.
21. International Capital Movements Under the Law of the International Monetary Fund, by Joseph Gold. 1977.
22. Floating Currencies, SDRs, and Gold: Further Legal Developments, by Joseph Gold. 1977. Concluding section also in German.
23. Use, Conversion, and Exchange of Currency Under the Second Amendment of the Fund’s Articles, by Joseph Gold. 1978.
24. The Rise in Protectionism, by Trade and Payments Division. 1978.
25. The Second Amendment of the Fund’s Articles of Agreement, by Joseph Gold. 1978.
26. SDRs, Gold, and Currencies: Third Survey of New Legal Developments, by Joseph Gold. 1979. Concluding section also in German.
27. Financial Assistance by the International Monetary Fund: Law and Practice, by Joseph Gold. First edition, 1979. In English only. Second edition, 1980.
28. Thoughts on an International Monetary Fund Based Fully on the SDR, by J.J. Polak. 1979.
29. Macroeconomic Accounts: An Overview, by Poul H0st-Madsen. 1979.
30. Technical Assistance Services of the International Monetary Fund. 1979.
31. Conditionality, by Joseph Gold. 1979.
32. The Rule of Law in the International Monetary Fund, by Joseph Gold. 1980.
33. SDRs, Currencies, and Gold: Fourth Survey of New Legal Developments, by Joseph Gold. 1980.
34. Compensatory Financing Facility, by Louis M. Goreux. 1980.
35. The Legal Character of the Fund’s Stand-By Arrangements and Why It Matters, by Joseph Gold. 1980.
36. SDRs, Currencies, and Gold: Fifth Survey of New Legal Developments, by Joseph Gold. 1981.
37. The International Monetary Fund: Its Evolution, Organization, and Activities. First edition, 1981. Fourth edition, 1984.
38. Fund Conditionality: Evolution of Principles and Practices, by Manuel Guitiân. 1981.
39. Order in International Finance, the Promotion of IMF Stand-By Arrangements, and the Drafting of Private Loan Agreements, by Joseph Gold. 1982.
40. SDRs, Currencies, and Gold: Sixth Survey of New Legal Developments, by Joseph Gold. 1983. In English. French and Spanish in preparation.
41. The General Arrangements to Borrow, by Michael Ainley. 1984. In English. French and Spanish in preparation.
42. The International Monetary Fund: Its Financial Organization and Activities, by Anand G. Chandavarkar. 1984. In English. French and Spanish in preparation.
43. The Technical Assistance and Training Services of the International Monetary Fund. In English. French and Spanish in preparation.
*Out of print. Photographic or microfilm copies of all English editions, including numbers that are out of print, may be purchased direct from University Microfilms International, 300 North Zeeb Road, Ann Arbor, Michigan 48106, U.S.A., or, for those living outside the Western Hemisphere, from University Microfilms Limited, 30/32 Mortimer St., London, WIN 7RA, England.
Copies (unless out of print) may be requested from:
Article XII, Section 5: “Voting.—(a) Each member shall have two hundred fifty votes plus one additional vote for each part of its quota equivalent to one hundred thousand United States dollars.
(b) Whenever voting is required under Article V, Section 4 or 5, each member shall have the number of votes to which it is entitled under (a) above, adjusted
(i) by the addition of one vote for the equivalent of each four hundred thousand United States dollars of net sales of its currency up to the date when the vote is taken, or
(ii) by the subtraction of one vote for the equivalent of each four hundred thousand United States dollars of its net purchases of the currencies of other members up to the date when the vote is taken;
provided, that neither net purchases nor net sales shall be deemed at any time to exceed an amount equal to the quota of the member involved.
(c) For the purpose of all computations under this Section, United States dollars shall be deemed to be of the weight and fineness in effect on July 1, 1944, adjusted for any uniform change under Article IV, Section 7, if a waiver is made under Section 8 (d) of that Article.
(d) Except as otherwise specifically provided, all decisions of the Fund shall be made by a majority of the votes cast.”
Proceedings and Documents of the United Nations Monetary and Financial Conference (U.S. Department of State Publication 2866, International Organization and Conference Series I, 3, hereinafter referred to as Proceedings and Documents), Document 255, p. 428.
International Monetary Fund, First Annual Meeting of the Board of Governors, Report of the Executive Directors and Summary Proceedings, September 27 to October 3, 1946, p. 107; Selected Decisions, p. 95.
The National Advisory Council was established by Section 4 of the U.S. Bretton Woods Agreements Act to coordinate the policies and operations of the U.S. representatives on the Fund and Bank and of all agencies of the U.S. Government that make or participate in making foreign loans or that engage in foreign financial, exchange, or monetary transactions.
“The Fund may require members to furnish it with such information as it deems necessary for its operations, including as the minimum necessary for the effective discharge of the Fund’s duties, national data on the following matters: (i) … (xii)….”
“… Five years after the date on which the Fund begins operations, and in each year thereafter, any member still retaining any restrictions inconsistent with Article VIII, Sections 2, 3, or 4, shall consult the Fund as to their further retention….”
Much material relating to the case will be found in International Monetary Fund, Summary Proceedings of the Ninth Annual Meeting of the Board of Governors (1954), pp. 97-101, 112-14, 121-22, and 135-80.
In a few instances, the decisions state that they are adopted as interpretations (even though they are not under Article XVIII). See Selected Decisions, pp. 2, 6, and 52. The reference to interpretation occurs in these cases in order to avoid any impression that the decision is an expression of policy. They do not differ in effect from other decisions of an interpretative character which do not state that they are interpretations. The reader of Selected Decisions should also note that some of the decisions which obviously are mainly declarations of policy may include a sentence or two resolving a legal problem, often one that had to be disposed of before agreement could be reached on the policy. See, for example, the sentence beginning at the bottom of page 81, for the significance of which see Gold, The International Monetary Fund and Private Business Transactions: Some Legal Effects of the Articles of Agreement, International Monetary Fund, Pamphlet Series No. 3 (Washington, 1965), pp. 9-11.
Rule A-l of the Rules and Regulations (Twenty-sixth issue, August 10, 1966). The By-Laws of the Board of Governors and the Rules and Regulations of the Executive Directors are adopted under Article XII, Section 2(g): “The Board of Governors, and the Executive Directors to the extent authorized, may adopt such rules and regulations as may be necessary or appropriate to conduct the business of the Fund.”
Gold, “The Fund Agreement in the Courts—VIII,” Staff Papers, Vol. XI (1964), pp. 459-60; Gold, The Fund Agreement in the Courts, International Monetary Fund (Washington, 1962, hereinafter referred to as Gold (1962), op. cit.), p. 146.
“Waiver of conditions.—The Fund may in its discretion, and on terms which safeguard its interests, waive any of the conditions prescribed in Section 3(a) of this Article, especially in the case of members with a record of avoiding large or continuous use of the Fund’s resources. In making a waiver it shall take into consideration periodic or exceptional requirements of the member requesting the waiver. The Fund shall also take into consideration a member’s willingness to pledge as collateral security gold, silver, securities, or other acceptable assets having a value sufficient in the opinion of the Fund to protect its interests and may require as a condition of waiver the pledge of such collateral security” (Article V, Section 4).
“Each member shall pay in gold, as a minimum, the smaller of
(i) twenty-five percent of its quota; or
(ii) ten percent of its net official holdings of gold and United States dollars as at the date when the Fund notifies members under Article XX, Section 4(a) that it will shortly be in a position to begin exchange transactions.
Each member shall furnish to the Fund the data necessary to determine its net official holdings of gold and United States dollars” (Article III, Section 3(b)).
“Payments when quotas are changed.—(a) Each member which consents to an increase in its quota shall, within thirty days after the date of its consent, pay to the Fund twenty-five percent of the increase in gold and the balance in its own currency. If, however, on the date when the member consents to an increase, its monetary reserves are less than its new quota, the Fund may reduce the proportion of the increase to be paid in gold” (Article III, Section 4(a)).
Subject to the power of the Fund to reduce this amount if the member’s monetary reserves are below the level of its new quota on the date when the member consents to the increase. In practice, the Fund has never reduced the amount of the gold subscription payable in respect of a quota increase.
It can hardly be doubted that these are now doctrines of international law. See the many references to and discussions of them in C. W. Jenks, The Prospects of International Adjudication (London, 1964). There was less international authority on which to base this conclusion in 1950, and more weight had to rest at that time on private law sources and analogies.
McNair, The Law of Treaties (Oxford, 1961), fn. 2, p. 487. Lord McNair refers to his dictum in International Status of South-West Africa,  I.C.J., p. 148: “To what extent is it useful or necessary to examine what may at first sight appear to be relevant analogies in private law systems and draw help and inspiration from them? International law has recruited and continues to recruit many of its rules and institutions from private systems of law. Article 38 (I) (c) of the Statute of the Court bears witness that this process is still active, and it will be noted that this article authorizes the Court to ‘apply … (c) the general principles of law recognized by civilized nations’. The way in which international law borrows from this source is not by means of importing private law institutions lock, stock and barrel’, ready-made and fully equipped with a set of rules. It would be difficult to reconcile such a process with the application of ‘the general principles of law’.” See also Case Concerning The Temple of Preah Vihear,  I.C.J., particularly at p. 62.
International Bank for Reconstruction and Development and Inter-national Monetary Fund v. All America Cables and Radio, Inc., The Commercial Cable Company, Mackay Radio & Telegraph Company, Inc., R.C.A. Communications, Inc., The Western Union Telegraph Company, F.C.C. Docket No. 9362, 8 RR 927 (1953).
The case is discussed in terms of the Fund and the Fund’s charter, but the same question arose under the charter of the IBRD, and the two organizations were associated as complainants. The discussion should thus be understood to apply equally to the IBRD.
On appeal, it was held that the plaintiff could succeed because its claim was based on a contract severable from the one tainted by violation of the Italian exchange control legislation. 178 N.Y.S.2d 1019 (1958); 190 N.Y.S.2d 352 (1959); 80 S.Ct. 198, 361 U.S. 895 (1959); Gold (1962), op. cit., pp. 102-108.
“The ruling has probably no legal effect in England, but it merely expresses what is obvious and an English court will be able to give effect to it without relying upon it” (F. A. Mann, “The Private International Law of Exchange Control under the International Monetary Fund Agreement,” The International and Comparative Law Quarterly, Vol. 2 (London, 1953), fn. 37, p. 104).
See Russell J. in Stoeck v. Public Trustee  2 Ch. 67, 71 (cited by Dr. Mann in footnote 16, page 100, in the article referred to in footnote 67, above: “… a suggestion was made by the Solicitor-General that the court should be reluctant to construe, and indeed should in the exercise of some discretion refrain from construing, an international document such as the Treaty of Peace, executed between high contracting parties and capable of alteration of interpretation at their hands. I do not appreciate this contention. I apprehend it is the right of a litigant to assert before the Courts of this country, and the duty of those Courts to adjudicate upon, claims founded upon a consideration of the municipal law of this country, and not the less so because the law involved has been derived from, and has been enacted for the purpose of giving effect to, certain provisions of a document of an international character.”
“Subject to the provisions of Article VII, Section 3(b), and Article XIV, Section 2, no member shall, without the approval of the Fund, impose restrictions on the making of payments and transfers for current international transactions” (Article VIII, Section 2(a)).
“Controls of capital transfers.—Members may exercise such controls as are necessary to regulate international capital movements, but no member may exercise these controls in a manner which will restrict payments for current transactions or which will unduly delay transfers of funds in settlement of commitments, except as provided in Article VII, Section 3(b), and in Article XIV, Section 2” (Article VI, Section 3).
Article VII, Section 3. “Scarcity of the Fund’s holdings.—(a) If it becomes evident to the Fund that the demand for a member’s currency seriously threatens the Fund’s ability to supply that currency, the Fund, whether or not it has issued a report under Section 1 of this Article, shall formally declare such currency scarce and shall thenceforth apportion its existing and accruing supply of the scarce currency with due regard to the relative needs of members, the general international economic situation, and any other pertinent considerations. The Fund shall also issue a report concerning its action.
(b) A formal declaration under (a) above shall operate as an authorization to any member, after consultation with the Fund, temporarily to impose limitations on the freedom of exchange operations in the scarce currency. Subject to the provisions of Article IV, Sections 3 and 4, the member shall have complete jurisdiction in determining the nature of such limitations, but they shall be no more restrictive than is necessary to limit the demand for the scarce currency to the supply held by, or accruing to, the member in question; and they shall be relaxed and removed as rapidly as conditions permit.
(c) The authorization under (b) above shall expire whenever the Fund formally declares the currency in question to be no longer scarce.”
“1. Only States may be parties in cases before the Court.
2. The Court, subject to and in conformity with its Rules, may request of public international organizations information relevant to cases before it, and shall receive such information presented by such organizations on their own initiative.
3. Whenever the construction of the constituent instrument of a public international organization or of an international convention adopted thereunder is in question in a case before the Court, the Registrar shall so notify the public international organization concerned and shall communicate to it copies of all the written proceedings.” See also Articles 62 and 63.
“Measures to replenish the Fund’s holdings of scarce currencies.— The Fund may, if it deems such action appropriate to replenish its holdings of any member’s currency, take either or both of the following steps:
(i) Propose to the member that, on terms and conditions agreed between the Fund and the member, the latter lend its currency to the Fund or that, with the approval of the member, the Fund borrow such currency from some other source either within or outside the territories of the member, but no member shall be under any obligation to make such loans to the Fund or to approve the borrowing of its currency by the Fund from any other source.
(ii) Require the member to sell its currency to the Fund for gold”
There shall be no formal voting in committees and subcommittees. The Chairman of the committee or subcommittee shall determine the sense of the meeting (including alternative points of view) which shall be reported” (Rule C-ll of the Rules and Regulations, which applies to the Executive Directors).