Wilson, Smithett & Cope Ltd. V. Terruzzi (Eng. 1976)
Terruzi buys and sells commodities contracts on market exchange in England. Payments are in Sterling. Terruzi lives in Milan. Italy has exchange control regulation that prohibits Italian nationals from using their money to speculate on foreign exchanges with foreign currencies. Terruzi’s speculation didn’t do so well.
Counterparties sue and say he owes a lot of Pounds Sterling, bring claim in English court. Terruzi says that contract to buy metals was an exchange contract and involved Italian lira. And bc contrary to Italian regulation, Terruzi argues Englang, as IMF member, is bound to not enforce exchange contract.
Court said “exchange contracts” refer only to contracts to exchange the currency of one country for the currency of another”
Court says sometimes there will be transaction that is merchandise transaction that is really a disguised monetary transaction, but in that case, court should look to substance not form.
If a borrower in Argentina is prohibited from repaying US dollar loan to foreigner, is that loan agreement an exchange contract under Widow Moojen yes. Is it with meaning of Terruzi case no.
Control of capital movement is consistent with IMF agreement. Restrictions on current transactions is not.
so payments on loan, payments of interest, payment of dividends, etc are current transaction, and so restrictions on those transaction would not be consistent with IMF and so not within Art VIII
