Article VIII Section 2(b) provides “Exchange contracts which involve the currency of any member and which are contrary to the exchange control regulations of that member maintained or imposed consistently with this agreement shall be unenforceable in the territories of any member.”
Overrides CoL principles.
Remedy of uneforceability might be more than just enforceable by court. Might mean whole contract is void.
Deboer, Widow Moojen v. Ducro et al (1961)
Contract involved sale (assignment) of stock in company. Company is French real estate holding company with holdings in France. Seller is Dutch national, generally living in France, but current in nursing home in Netherlands. Purchaser is German. Payment was in francs. Netherlands had exchange control regulations prohibiting sale to foreigners for foreign currency. Seller later decides he wants stock back. Goes into Dutch court, says sale was against regulations, and contract is void. Dutch court agrees. Then goes to French court saying France must void contract just like Dutch court said you should. Buyer asks how could sale of French stock for Francs be exchange contract.
Court adopts broad interpretation of “exchange contracts”
“The Court will consider whether the contract in question might have any detrimental effect on the financial situation of the concerned member state. In other words, we will consider whether this particular transaction was apt in any way to affect the currency resources of the country.”
