THIS INSTALLMENT of the survey of cases involving the Articles of Agreement of the International Monetary Fund deals with cases in the courts of New York, Austria, and the Netherlands which were concerned with the unenforceability of certain exchange contracts; a case in Oregon, now to be reviewed by the United States Supreme Court, which considers the effect of exchange control on a nonresident heir’s right to inherit; and a case in Chile which dealt with the currency in which a claim to compensation for requisition should be discharged.
Mr. Gold, General Counsel, is a graduate of the Universities of London and Harvard, and was formerly a teacher of law and a member of a wartime British Government mission in Washington, D.C. He is the author of articles published in various law journals.
173 N.Y.S.(2d) 509 (1958). The proceedings in the New York Supreme Court were discussed in an earlier article; see Joseph Gold, “The Fund Agreement in the Courts—V,” Staff Papers, Vol. VI (1957–58), pp. 471–74.
178 N.Y.S.(2d) 1019 (1958).
190 N.Y.S.(2d) 352 (1959).
First National City Bank of New York v. Southwestern Shipping Corporation, 80 S. Ct. 198, 361 U.S. 895 (1959). The name of the plaintiff had been changed.
190 N.Y.S.(2d), p. 356.
190 N.Y.S.(2d), pp. 358–59. Italics in the original.
190 N.Y.S.(2d), p. 360.
59 Stat. 512 (1945).
33 Hong Kong Law Reports (1949) 231–82, discussed in “The Fund Agreement in the Courts—V,” Staff Papers, Vol. VI (1957–58), pp. 461–64.
Unreported. Discussed by Hartwig Bülck in Jahrbuch für Internationales Recht, Vol. 5, Part 1 (1955), pp. 113–23, and in “The Fund Agreement in the Courts—V,”Staff Papers, Vol. VI (1957–58), pp. 464–68.
This point is related to the one made in the minority opinion of the Court of Appeals. The minority held that, if National City had discovered the illegality of the assignment to Southwestern, it could have refused to carry out the assignment, and could have discharged itself by paying Anlyan, the assignor. National City should not be in a worse position because it did this unwittingly. On this point, it is interesting to compare Société ‘Filature et Tissage X. Jourdain’ v. Epoux Heynen-Bintner (see Pasi-crisie Luxembourgeoise , pp. 36–39, and “The Fund Agreement in the Courts—V,”Staff Papers, Vol. VI [1957–58], pp. 468–70). J., a resident of Luxembourg, entered into a valid and enforceable contract with S, a resident of France. W, another resident of France, attempted to pay J, on behalf of S, in a way which was inconsistent with French exchange control regulations. A French court held that this did not discharge S., and the Luxembourg Court held that Article VIII, Section 2(b) required it to recognize this judgment. In the Luxembourg case, the issue was the effect of a judgment based on a payment inconsistent with the exchange control regulations of another member. In the Southwestern case, an issue raised by the minority in the Court of Appeals was the effect of a payment consistent with the exchange control regulations of another member.
See Joseph Gold, “The Fund Agreement in the Courts,” Staff Papers, Vol. I (1950–51), pp. 326–27.
Juristische Blätter, February 7, 1959, pp. 73–74.
See footnote 9.
See footnote 11.
Joseph Gold, “The Fund Agreement in the Courts—IV,” Staff Papers, Vol. V (1956–57), pp. 297–301.
304 N.Y. 533, 110 N.E.(2d) 6 (1953); see Joseph Gold, “The Fund Agreement in the Courts—III,” Staff Papers, Vol. III (1953–54), pp. 303–08. It is not clear whether the decision in this case was based on Article VIII, Section 2(b), or on the effect of the Fund Agreement as a whole.
For a discussion of the relation of Article VIII, Section 2(b), to quasi-contractual claims, see “The Fund Agreement in the Courts—V,” Staff Papers, Vol. VI (1957–58), pp. 467–68, and the Maastricht decision discussed later in the present article.
I am indebted to my colleague, Mrs. Philine R. Lachman, who obtained and translated the reports of the Dutch cases considered in this article. I have also benefited from discussing these cases with her, but she cannot be held accountable for any of the views that I have expressed.
Nederlandse Jurisprudentie 1960, No. 290. The headnote to the report refers to the article by Philine R. Lachman entitled “Overtreding van buitenlandse deviezen-bepalingen” in Nederlands Juristenblad, 1958, An. 17 (April 26, 1958), pp. 383–40.
“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.” The reference to Article VI, Section 6, is a slip. The obvious intention was to refer to Article VI, Section 3.
For the definition of current transactions in the Fund Agreement, see Article XIX(i).
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), Doc. 191, p. 230; Doc. 343, p. 576.
“Other members.—Membership shall be open to the governments of other countries at such times and in accordance with such terms as may be prescribed by the Fund.”
Resolution No. 7–9 adopted on September 11, 1952.
“… The Fund may, if it deems such action necessary in exceptional circumstances, make representations to any member that conditions are favorable for the withdrawal of any particular restriction, or for the general abandonment of restrictions, inconsistent with the provisions of any other article of this Agreement. The member shall be given a suitable time to reply to such representations. If the Fund finds that the member persists in maintaining restrictions which are inconsistent with the purposes of the Fund, the member shall be subject to Article XV, Section 2 (a).”
“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.”
See footnote 12.
See International Monetary Fund, Annual Report, 1960, pp. 7–8, 29–31, and International Financial News Survey, Vol. XIII (1961), p. 41.
See, for example, “The Fund Agreement in the Courts—V,” Staff Papers, Vol. VI (1957–58), pp. 466–67, 470; “The Fund Agreement in the Courts—IV,” Staff Papers, Vol. V (1956–57), p. 284.
See footnote 18.
Nederlandse Jurisprudentie 1960, No. 149.
Cf. Solicitor for the Affairs of His Majesty’s Treasury v. Bankers Trust Co., 304 N.Y. 282, 107 N.E.2d 448 (1952). This was an action by the Treasury Solicitor of the United Kingdom to recover funds deposited with the defendant by a British resident. The defendant had failed to comply with an order under British exchange control legislation to surrender the funds in return for their sterling equivalent. The funds were then vested in the U.K. Treasury, which assigned them to the Solicitor, who demanded them from the defendant. The decision in this case was based on purely procedural considerations.
349 P. (2d) 255 (1960).
The marginal note sets out the text of Article XIV, Section 2, with emphasis supplied to the phrase “as soon as conditions permit.”
349 P.(2d), pp. 267–68.
See p. 290, supra.
A footnote elsewhere in the brief discusses Article VI, Section 3, and makes the point that under it members are permitted to exercise such controls as are necessary to regulate international capital movements; and under Section 1 members may be subject to sanctions in certain circumstances if they do not impose such controls. Capital transfers are basically those where no quid pro quo is involved, as in the case of payments of the shares of decedent estates. The footnote concludes that even if these are considered “current” payments, their control is permitted under Article XIV.
See footnote 17.
U.S. Law Week, October 11, 1960 (29 LW 3094–95).
International Law Reports (ed. Lauterpacht), Year 1956, pp. 752–54, from which the quotation infra is taken. The case is reported in Revista de Derecho, Jurisprudencia y Ciencias Sociales y Gaceta de los Tribunales, Vol. 52, Nos. 9 and 10 (November-December 1955), p. 444 et seq.
Article IV, Section 1. “Expression of par values.—(a) The par value of the currency of each member shall be expressed in terms of gold as a common denominator or in terms of the United States dollar of the weight and fineness in effect on July 1, 1944.”
Note : Shortly before publication of this article, the Supreme Court unanimously reversed the Supreme Court of Oregon in the Stoich case. Fund aspects of the Supreme Court decision will be discussed in a later article.