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.
References to articles in Staff Papers that are identified by a prefatory Roman numeral and not by title are to the earlier six articles on “The Fund Agreement in the Courts.” Quotations in the present article from the German and French cases are, of course, translations from the original language.
VI, Staff Papers, Vol. VIII (1960-61), pp. 306-10.
81 S.Ct. 922 (1961).
81 S.Ct., p. 927.
81 S.Ct, pp. 927-28.
The Fund Agreement distinguishes between exchange controls and exchange restrictions. For example, under Article VI, Section 3, members may regulate capital transfers but not in such a way as to restrict payments for current transactions. This distinction in the treatment of the two categories means that, if a country wishes to restrict capital transfers, its controls may have to be applied to all transactions so as to segregate the one category from the other. Thus, controls may be applied to payments and transfers for current international transactions even though these payments and transfers may not be restricted under Article VIII, Section 2(a).
81 S.Ct., p. 925.
81 S.Ct., p. 928.
This is, of course, literally true in the sense that the Fund Agreement does not deal at all with the question of who may be an heir or with other questions of inheritance as such. However, this was probably not the point that the United States intended to make. Presumably, the argument was that the Fund Agreement did not permit Yugoslavia to restrict the transfer of inheritances to U.S. heirs in the United States. For a fuller statement of the arguments in the briefs, see VI, Staff Papers, Vol. VIII (1960-61), p. 310.
Article XIX(i): “Payments for current transactions means payments which are not for the purpose of transferring capital, and includes, without limitation:
(1) All payments due in connection with foreign trade, other current business, including services, and normal short-term banking and credit facilities ;
(2) Payments due as interest on loans and as net income from other investments;
(3) Payments of moderate amount for amortization of loans or for depreciation of direct investments;
(4) Moderate remittances for family living expenses.
The Fund may, after consultation with the members concerned, determine whether certain specific transactions are to be considered current transactions or capital transactions.”
81 S.Ct., p. 928.
304 N.Y.533,110 N.E. (2d) 6 (1953). See III, Staff Papers, Vol. Ill (1953-54), p. 305. See also pp. 273-75, infra.
215 N.Y.S. (2d) 3.
N.Y. Civil Practice Act:
“§ 902. In what actions attachment of property may be had. A warrant of attachment against the property of one or more defendants may be granted upon the application of the plaintiff, as specified in the next section, in any action for the recovery of a sum of money only.
§ 903. What must be shown to procure warrant of attachment. To entitle the plaintiff to such a warrant, he must show that a cause of action specified in the last section exists against the defendant, and, if the action is to recover damages for breach of contract, that the plaintiff is entitled to recover a stated sum, over and above all counter-claims known to him. He must also show that the defendant
1. Is either a foreign corporation or not a resident of the state; …”
215 N.Y.S. (2d), pp. 4-6.
The brief supported this by reference to § 610 of the Restatement of the Law of Conflicts of Laws (“No action can be maintained on a right created by the law of a foreign state as a method of furthering its own governmental interests.”), and by the following argument:
“… The reason for the public policy against enforcement of such claims is well illustrated by the present case. If plaintiff herein were to succeed in having this court enforce Brazilian foreign exchange regulations, the courts of New York, a world trade center, would be swamped with cases from the scores of nations having foreign exchange control laws, with which the inhabitants of this state do business. Foreign governments or their agencies would sue for dollars against Americans here rather than seek to fine or recover from their own residents in local currency.
“Many of such exchange laws are extremely detailed and complicated. The exact extent and validity of such laws are many times questioned even within the foreign jurisdiction and if they were enforceable here, New York courts might have to decide the validity of such laws under foreign constitutions. For example, it appears arbitrary that coffee exporters should receive from Banco do Brasil, S.A., 90 cruzeiros for each United States dollar assigned to said Bank while the value of the dollar on the free market in Brazil is 220 cruzeiros … All this would not only increase the burden on the courts of New York but might also lead to embarrassment in the international relations of the United States. …”
“… Plaintiff contends that the Perutz case could not have intended to apply Article VIII, Section 2(b) for the reason that it involved a pension claim and not an ‘exchange contract.’ The history of the development of the Bretton Woods Agreement indicates that the phrase ‘exchange contract’ was not intended to be used in a narrow sense but rather to cover any transaction having its basis in contract and involving exchange. (See Meyer, “Recognition of Exchange Controls after the International Monetary Fund Agreement,” 62 Yale Law Journal 867.) In speaking of the Perutz case, Meyer states that it involved an exchange contract ‘because the pension agreement was a deliberate contractual arrangement, enforcement of which was sought in dollars rather than in kronen.’ (p. 901).”
216 N.Y.S. (2d) 669; 218 N.Y.S. (2d) 545 (June 6,1961).
Anderson v. N.V. Transadine, etc., 289 N.Y. 9 (1942). State of Netherlands v. Federal Reserve Bank, 79 F. Supp. 966 (1948), 99 F. Supp. 655 (1951), 201 F 2d 455 (2 Cir., 1953). Cf. the Ontario case, pp. 290-92, infra.
Neue Juristische Wochenschrift, June 10,1960, pp. 1101-03.
See Ulrich Drobnig, “Die Anwendung des Devisenrechts der Sowjetzone durch westdeutsche Gerichte,” in Neue Juristische Wochenschrijt, June 10 1960 pp. 1088-93.
Ernst Mezger in Revue Critique de Droit International Prive, Vol. LI (1961) pp. 318-26.
See also Rules M-3 through M-6 of the Fund’s Rules and Regulations.
140 N.Y.S. (2d) 323 (1955). IV, Staff Papers, Vol. V (1956-57), pp. 292-93.
140 N.Y.S. (2d), p. 326.
Revue Critique de Droit International Prive, Vol. LI (1962), p. 67; Note by Yvon Loussouarn, p. 72. The decision of the lower court can be found in Journal du Droit International (Clunet), Vol. 85 (1958), pp. 1050-53.
The Court of Appeals agreed that this did not oust the jurisdiction of the Dutch courts where the issue was the validity of the assignment itself rather than questions raised by the assignment.
Annual Report of the Executive Directors, 1949, pp. 82-83; cf. I, Staff Papers, Vol. I (1950-51), pp. 326-27.
IV, Staff Papers, Vol. V (1956-57), pp. 297-301.
V, Staff Papers, Vol. VI (1957-58), p. 470.
Juristenzeitung (Tubingen), Vol. 8 (1953), pp. 442-16; The Legal Aspect oj Money (London, 2nd ed„ 1953), p. 382; IV, Staff Papers, Vol. V (1956-57), p. 299.
VI, Staff Papers, Vol. VIII (1960-61), pp. 298-300.
For a discussion of this argument, see Joseph Gold, “Article VIII, Section 2(b), of the Fund Agreement and the Unenforceability of Certain Exchange Contracts: A Note,” Staff Papers, Vol. IV (1954-55), pp. 331-32; IV, Staff Papers Vol. V (1956-57), p. 300.
G. R. Delaume, “De Pelimination des conflits de lois en matiére monetaire realisée par les Statuts du Fonds Monetairé International et de ses limites,” Journal du Droit International (Clunet), Vol. 81 (1954), pp. 338-45.
1960 A.C. 244, 255. Section 33(1) of the Act reads as follows:
“It shall be an implied condition in any contract that, where, by virtue of this Act, the permission or consent of the Treasury is at the time of the contract required for the performance of any term thereof, that term shall not be performed except in so far as the permission or consent is given or is not required: Provided that this subsection shall not apply in so far as it is shown to be inconsistent with the intention of the parties that it should apply, whether by reason of their having contemplated the performance of that term in despite of the provisions of this Act or for any other reason “
Pasicrisie Luxembourgeoise (1957), pp. 36-39. V, Staff Pavers, Vol. VI (1957-58), pp. 468-70.
This proposition has a bearing on the following passage in V, Staff Papers, Vol. VI (1957-58), p. 463: “… In dealing with Article VIII, Section 2(b) most courts have taken confidence from the fact that the law of the member whose currency was involved under that provision was also the governing law under traditional private international law. There is probably no case so far in which a contract which was enforceable under what was found to be the governing law under private international law, was nevertheless declared unenforceable because of the provision, although it is significant that in the Hamburg case discussed in an earlier article the Court appears to have found it unnecessary to determine what was the governing law under traditional private international law. Moreover, in In re Sik’s Estate the Surrogate’s Court of New York found that the contract was unenforceable under New York law, the governing law, but nevertheless went on to consider the effect of Yugoslav exchange control regulations. However, it found that there was justification for not obtaining the license required by these regulations, and the enforceability of the contract was upheld.”
220 N.Y.S. (2d) 903.
Ibid., p. 904.
Ibid., p. 904.
(1961) 29 D.L.R. (2d) 673.
Ibid., pp. 710-11.
Ibid., pp. 712-13.
US. Department of State Publication 2187 (Conference Series 55), pp. 22-24.