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Dissenting Opinion of Messrs. Robinson, Bathurst and Monguilan

Pursuant to the provisions of Rule 44 (c) of the Rules of Procedure we submit the following opinion.
1.
We are in agreement with that part of the judgment which deals with jurisdiction and its exercise. We are unable to agree with the result reached by the majority of the Tribunal or with the reasoning in support of that result.

The Object and Purpose of the London Agreement on German External Debts

2.
We initially seek guidance from the Vienna Convention on the Law of Treaties of 23 May 1969. Two Articles of that Convention are significant. Article 31 describes the general rule of interpretation and Article 33 deals with treaties authenticated in two or more languages. Under both Articles it is provided that, unless a special meaning has been given to the term in issue, the object and purpose of the treaty must be taken into consideration when interpreting ambiguous language. There is a significant difference, however, between these Articles. Pursuant to Article 31 it is the ordinary meaning that is to be given to the terms of the treaty in their context, whereas under Article 33 it is the meaning that best reconciles divergent texts that governs.
3.
In an Exchange of Letters (appended to the LDA as Appendix A) on 6 March 1951 the Allied High Commissioners informed the Chancellor of the Federal Republic of Germany that the Governments of the French Republic, the United Kingdom and the United States of America were preparing proposals designed to arrive at "an orderly overall settlement of pre-war claims against Germany and German debtors and of the debt arising out of the post-war economic assistance, which would be fair and equitable to all the interests affected, including those of the Federal Government". The Exchange of Letters was, as the fourth recital in the preamble of the LDA recorded, the "basis" of the LDA.

In the Exchange of Letters the Respondent confirmed that it was liable for the pre-war external debt of the German Reich and expressed its desire to resume payments on the German external debt (Letter dated 6 March 1951 from the German Federal Chancellor to the Allied High Commission, I, III: Appendix A to the LDA). One of the "principles and objectives" which guided the London Conference on German External Debts was the need to negotiate a Settlement Plan which would "eliminate the state of default of Germany", i.e. of the German State, "by suitable treatment of matured and maturing debts and of arrears of interest", so as "to contribute to the recovery of Germany’s international credit by the restoration of confidence in her financial standing and reliability as a borrower, while giving a reasonable assurance that Germany will not again default on her undertakings" (Report of the LDC, paragraph 11 (c) (i), (iii): Appendix B to the LDA). The "suitable treatment" adopted was a genuine composition with Germany’s creditors reached by the Respondent; it was "not a dictate of the creditor powers and/or the creditor representatives" but was "negotiated and agreed upon" (CM para. 95 p. 31). A requirement of equality of treatment as between creditors of the same class and as between the tranches of multiple currency bond issues can therefore be said to have been dictated by the very nature of the collective settlement which was negotiated, it being of the essence of a composition with creditors made by a debtor in difficulties that all creditors who participate should do so on equal terms. Consequently it was natural that the concepts of fairness and equity were recurrent themes in the events leading to the convening of the LDC, in the negotiations at the LDC, in the Report of the LDC, and in the LDA itself.

4.
In May 1951, in an Enclosure (No. 3) sent with a Note to all interested Governments about plans for the settlement of German external debts, the three Allied Governments gave notice that they would "wish to ensure that the settlement arrangements do not lead to inequity or preferential treatment as between some groups of creditors and others", and that they were agreed "that the terms of the debt settlement should not vary according to the currencies in which obligations are denominated" (M p. 21).
5.
In a Memorandum of December 1951 communicated to States invited to participate in the LDC, the Tripartite Commission on German Debts (which the three Governments had set up in April 1951 to represent them in the settlement negotiations and to organize the LDC) looked to "a satisfactory and equitable settlement of Germany’s pre-war debts" and "a reasonable settlement of these debts which will be fair to all concerned" (Paragraphs 16, 17 of the Memorandum, M p. 25). The Memorandum also commented (paragraph 23) that the Commission’s basic concern was that the "settlement, and all payments made in respect of German external pre-war debt, should be fair and equitable both for the creditors as a whole and as among all categories of creditors" (M p. 25).
6.
At the LDC a Steering Committee, composed of the three members of the Tripartite Commission, thirteen creditor representatives from nine countries, and five members representing public and private debtor interests, had the duty "to ensure that all recommendations submitted to plenary meetings were such as to achieve an equitable overall settlement and equal treatment for all creditors within each category" (LDC Report, para. 7 (a)).

In carrying out its work the LDC was guided by the principle and objective, among others, that the settlement plan should "provide for an orderly overall settlement and assure fair and equitable treatment of all the interests affected" (LDC Report, para. 11 (b) (ii)). The LDC considered that the recommendations made in its Report conformed to that principle and to the others that guided its work (LDC Report, para. 34). The three Allied Governments also found that the recommendations provided "a satisfactory and equitable plan for the settlement of German external debts" (LDA, tenth recital in the preamble); and the Parties to the LDA themselves regarded the provisions of the LDA and its Annexes "as satisfactory and equitable to the interests concerned" (LDA, Article 1).

7.
The LDC declared that no discrimination or preferential treatment in the fulfilment of the terms agreed on as among categories of debts or currencies in which they were payable, or in any other respects, should be permitted by the Federal Republic or sought by the creditor countries (LDC Report, para. 23); and Article 8 of the LDA prohibited, either in fulfilment of the settlement terms or otherwise, "any discrimination or preferential treatment among the different categories of debts or as regards the currencies in which debts are to be paid or in any other respect" (except, of course, as the settlement terms themselves provided for differing treatment) (emphasis added).

The Tribunal has held that non-discrimination was "the principle" underlying the settlement plan adopted at the LDC: Swiss Confederation v. Federal Republic of Germany, (1958) Reports of Decisions and Advisory Opinions, 37 at p. 44. In our opinion, where a provision of the LDA requires interpretation and so does not clearly come within the exception to the general principle of Article 8, the provision should be interpreted to give effect to this principle of non-discrimination, rather than otherwise.

8.
As certain creditor representatives observed (see M p. 24), "in the case of a loan having tranches expressed in different currencies, an equitable solution should provide for equivalent treatment of all bondholders", and during the settlement negotiations at the LDC this was emphasized with regard to the Young Loan. Representatives of the Bank for International Settlements, the Trustee of the Young Loan, drew the attention of the LDC to the "very precise terms of the Loan Contract" which made it "quite clear that the Young Loan, both in law and in fact, constitutes a single and indivisible loan, giving identical rights to all the holders in all circumstances"; and to the Article (II) of the General Bond which provided that all tranches "shall rank pari passu in all respects irrespective of date or place of issue or otherwise", which meant, in the opinion of the Trustee, "that no tranche should be preferred in any way over any other" (A I Annex XX p. 154; A I Annex XXI p. 167). The Trustee’s representative ended his statement to the LDC on the Dawes and Young Loans with these words:

No matter what the final terms of settlement may be the two great principles underlying the issue of these bonds can and must be preserved—that is, their priority and equality of treatment of all Bonds of their respective issues. (A I Annex XXI, p. 169.)

On equality of treatment of all tranches, the Governments of the French Republic, the United Kingdom and the United States of America were agreed. At an Informal Meeting between the Tripartite Commission and creditor representatives of Negotiating Committee "A" (Reich debts and other debts of public authorities) on 30 July 1952, Sir George Rendel, the United Kingdom Member of the Commission and Chairman of the meeting, said this:

It was important to work out a practical compromise (i.e. on a substitute giving "currency protection" in place of the gold clause) and it was important that the tranches of the Young Loan received equality of treatment, even if they did not receive the full treatment provided for in the General Bond... the U.S. Government accepted the U.K. and French point of view on equality of treatment of the tranches. (A I Annex XXXI pp. 290-291.)

This view was shared by the German Delegation to the LDC. At a meeting of Committee A on 11 March 1952, Dr. Granow of that Delegation, speaking on its behalf, had answered his own rhetorical question—"What, then, would be such a practical and equitable solution of the gold clause problem?"—in this way:

In our view such a solution would only be equitable if it guaranteed the equal treatment of all debts, in other words, the equal treatment of all creditors. In my opinion such equal treatment cannot involve the full application of the gold clause. On the other hand, treatment of debts without any allowance at all being made for the gold clause, which had after all been agreed, in other words payment in currencies at the present rates of exchange, will not come into consideration. (CM para. 57 p. 23; CMAA Annex 5 p. 17.)

9.
The Report of the LDC specifically expressly acknowledged the attitude of the three Governments represented on the Tripartite Commission "with respect to the Young Loan"; the three Governments "regarded it as essential that the equality of treatment for the different issues of that Loan provided for under the loan contract should be maintained" (paragraph 30, second sub-paragraph).

The statement last quoted, from paragraph 30 of the LDC Report, followed immediately the statement in the first sub-paragraph of that paragraph, that "On the question of the gold clause in general... the Governments of France, the United Kingdom and the United States of America had decided that, in so far as the German Debt Settlement was concerned, gold clauses should not be maintained but might be replaced by some form of exchange guarantee". The juxtaposition of these two statements is significant.

The Context of the Clause in Dispute

10.
By Article 31 (1) and (2) of the VCT, the "context" for the purpose of the interpretation of a treaty comprises (i) the text; (ii) the preamble; (iii) the annexes; (iv) any agreement made by all the parties in connexion with the conclusion of the treaty; and (v) any instrument (a term not defined in the VCT) made by one or more of the parties in connexion with the conclusion of the treaty and accepted by the other parties as an instrument related to the treaty.

The context, for the purposes of interpreting the LDA, therefore includes its ten Annexes and, although not designated as "Annexes", the two Appendices also annexed to the LDA, copying, respectively, the Exchange of Letters of 6 March 1951 and the Report (without its Appendices) of the LDC.

11.
We do not consider that the United States Dollar Extension Bonds (the only tranche to have replacement bonds—the bonds of other tranches being the original texts overprinted with an enfacement referring to the LDA) and the Funding Bonds in the various currencies of issue are comprised within "the context" as being instruments within the meaning of Article 31 (1) and (2) (b) of the VCT. Although they were instruments "made by one (of the) parties in connexion with the conclusion of the treaty", it is not possible to regard each one of them as having been "accepted by the other parties as an instrument related to the treaty". Nor do we consider that they represent "subsequent practice in the application of the treaty which establishes the agreement of the parties regarding its interpretation" within the meaning of Article 31 (3) (b) of the VCT. In any event, the only aspect of the United States Dollar Extension Bonds and the United States Dollar Funding Bonds bearing upon the issue before the Tribunal would be the provisions making (as Article III of the General Bond did for itself and for the Definitive Bonds which also included such a provision) the English text of those bonds decisive in case of divergence between the texts in the three languages —English, French and German. Even apart from the fact that these American Extension and Funding Bonds do not set out or describe the provisions of the disputed clause (as the Funding Bonds in other currencies of issue and their coupons do), we agree with the Respondent that the primacy of the English text of those bonds cannot influence or displace the requirement that the Tribunal, in interpreting the disputed clause, must apply the provisions of Article 33 of the VCT in view of the fact that the LDA makes the three texts, in English, French and German, "equally authoritative". We take the same view of the facts that the Conversion Bonds (being reprints, with an enfacement referring to the LDA, of the Definitive Bonds of 1930) provide, as does the General Bond of 1930 (reproduced on the reverse of the Conversion Bonds), that in case of divergence between the texts the English shall prevail; and that the Funding Bonds, containing the disputed clause in its divergent texts, incorporated, subject to the modifications made by the LDA, the terms of the General Bond. This is not to say that we do not consider that the English language text of the disputed clause has no significance in the present case—a matter which is considered later in this dissenting opinion (see paragraphs 37 to 41 below).
12.
The LDA has provisions dealing with non-German currency debts (other than those expressed in gold dollars or gold Swiss francs and other than the Young Loan Bonds) which were subject to gold clauses; see LDA: Article 12 (b); Annex II, Article V, paragraph 2 (b); Annex IV, Section B, Article 7. The provisions define such debts in relation not to gold but to the United States dollar and they differ in this respect from the provision applied to the Young Loan, which was to benefit from "an additional form of exchange guarantee" as the Press Communiqué approved at the Fifth Plenary Session of the LDC on 8 August 1952 stated:

Payments on loan contracts containing gold clauses will be made as though the currencies of issue of the loan had been defined in relation not to gold but to the United States dollar. The Young Loan agreement contains an additional form of exchange guarantee. (A II Annex XXXIX p. 342).

Those provisions maintained (as the Arbitral Tribunal noted, as regards Annex II, Article V, in Swiss Confederation v. Federal Republic of Germany, supra, at p. 46) "equality of treatment" of all nonGerman debts with gold clauses, That treatment would, under those provisions, have included (if the event had occurred) receiving the benefit of a formal revaluation of the United States dollar after 1 August 1952 resulting in an appreciation above its rate of exchange on that date. In our opinion it would not accord with the object and purpose of the LDA to give to the currency exchange guarantee of the Young Loan Bonds an interpretation which would deny the bondholders of all tranches—those issued in German currency and those issued in nonGerman currency—similar equality of treatment.

It is clear from the text and the context, as well as from the preparatory work at the LDC, that an object and purpose of the LDA was that an overall settlement of German external debts, which was fair and equitable to debtors and creditors alike, should also ensure equality of treatment as between classes of creditors, as between creditors of the same class, as between the currencies in which the obligations were expressed, and as between the various tranches of multiple currency bond issues.

The Clause in Dispute

13.
Annex I (Agreed Recommendations for the Settlement of Reich debts and debts of other public authorities), Section A (Debts of the Reich), Article 2 (The 5 1/2 per cent International (Young) Loan 1930), paragraph (d) dealt with arrears of interest on that Loan and with the Funding Bonds (20-year Bonds carrying 3 per cent per annum interest and after 5 years 1 per cent sinking fund) representing arrears of interest, recalculated at 4 1/2 per cent, due to 31 December 1944. Paragraph (e) of Article 2 in Annex I A has itself two parts: the first is concerned with the "amounts due in respect of the various issues of the 5 1/2 per cent International Loan 1930"; the second is the disputed clause at issue in the present case.

The first part of Annex I A 2 (e) provides that:

The amounts due in respect of the various issues of the 5 1/2 per cent International Loan 1930 are payable only in the currency of the country in which the issue was made.

... the basis for calculating the amount of currency so payable shall be the amount in US dollars to which the payment due in the currency of the country in which the issue was made would have been equivalent at the rates of exchange ruling when the Loan was issued.

The nominal amount in US dollars so arrived at will then be reconverted into the respective currencies at the rate of exchange current on 1st August, 1952.

These provisions result in a sum expressed in the currency of the country in which the particular bond was originally issued. The nominal value of the Extension Bonds of the American issue was the same as that of bonds issued in 1930. Bonds issued in 1930 with a nominal value of RM 1000 became bonds with a nominal value of DM 1000.50, the difference of DM 0.50 being paid in cash when the first coupon was paid.

The second part of Annex I A 2 (e) expresses the currency exchange guarantee for the Young Loan bondholders as follows:

Should the rates of exchange ruling any of the currencies of issue on 1st August, 1952, alter thereafter by 5 per cent, or more, the instalments due after that date, while still being made in the currency of the country of issue, shall be calculated on the basis of the least depreciated currency (in relation to the rate of exchange current on 1st August, 1952) reconverted into the currency of issue at the rate of exchange current when the payment in question becomes due.

Au cas où les taux de change en vigueur le 1er août 1952 entre deux ou plusieurs monnaies d’émission subiraient par la suite une modification égale ou supérieure à 5%, les versements exigibles après cette date, tout en continuant à être effectués dans la monnaie du pays d’émission, seront calculés sur la base de la devise la moins dépréciée par rapport au taux de change en vigueur au 1er août 1952, puis reconvertis dans la monnaie d’émission sur la base du taux de change en vigueur lors de l’échéance du paiement.

Sollte sich der am 1. August 1952 für eine der Emissionswährungen maßgebende Wechselkurs später um 5 v. H. oder mehr ändern, so sind die nach diesem Zeitpunkt fälligen Raten zwar nach wie vor in der Währung des Emissionslandes zu leisten; sie sind jedoch auf der Grundlage der Währung mit der geringsten Abwertung (im Verhältnis zu dem Wechselkurs vom I. August 1952) zu berechnen und zu dem in Zeitpunkt der Fälligkeit der betreffenden Zahlung maßgebenden Wechselkurs wieder in die Emissionswährung umzurechnen.

The Multiple Currency Exchange Guarantee

14.
The abandonment of the gold clause in the Young Loan was not the only feature of an "equitable solution". In the view of the Tripartite Commission a second criterion of such a solution was the removal of options, such as the option de place provided for by Article VI (b) of the General Bond. Indeed, the German Delegation at the LDC was opposed to options de change in order "to protect the balance of payments and ensure the execution of the settlement plan" (M para. 182 p. 70).
15.
It must be recalled furthermore that, independently of and in addition to the pari passu clause in Article II of the General Bond 1930, the gold clause inserted in Article VI (a) of that Bond established among all the bondholders of all the tranches of the Loan an equality of treatment assuring that every bondholder, no matter in what currency he was to be paid, would always receive the same gold value as that defined at the time of the issue of the Loan, but each of the currencies of issue was regarded separately and solely in its relation to gold.
16.
The guarantee system adopted in London does exactly the opposite. It no longer treats every currency of issue in its relation to gold but solely in its relation to the other currencies which it links, the one to the others, by referring exclusively to their exchange rates. In fact, Article 2 (e) of Annex I A of the LDA starts in its first part by re-establishing, with effect from 1 August 1952, between all tranches of issue the equality which they had lost as the result of the abandonment of the gold clause, the nominal amount of the American dollar having been chosen to replace gold in the calculations of adjustment. This amounted to substituting, for the past, a dollar clause for the gold clause.

For the future, Annex I A 2 (e) then established in its second part an exchange guarantee among all currencies of issue, including the American dollar, which guarantee was to come into operation in case the exchange rates, in force on 1 August 1952, between two or more currencies of issue sustained an alteration equal to or in excess of 5 per cent.

The Respondent rejects the description of "multiple currency exchange guarantee", which the Applicants use for such a clause, and confines itself to calling it the "5 per cent clause".

However, the Report of the LDC (Paragraph 30) expressly uses the term "exchange guarantee" and we fail to see how one could, in monetary law, describe otherwise a clause which, in the event of an alteration of the exchange rate, offers to the bondholder the right to receive payment calculated "on the basis of’ a currency of issue other than the currency of his issue. In this case such other currency serves as a unit of account and the adjustment is to be calculated according to the new rate of exchange.

17.
In "Les Valeurs Mobilières" (Librairie du Recueil Sirey, Paris 1939) Olivier Moreau-Néret has studied currency options (vol. I, p. 137 et seq.). He writes:

... le contrat peut permettre de demander le paiement effectif en différentes monnaies, ce qui implique des domiciles de paiement dans chacune des places dont la monnaie est stipulée; il s’agit en ce cas d’une option de monnaie assortie d'une option de place, que l’on désigne sous le nom d’ option de change.

Ou bien le contrat ne prévoit qu’une seule monnaie de paiement, les autres monnaies indiquées au contrat servant uniquement de monnaie de compte pour déterminer le nombre d’unités monétaires de la monnaie de paiement à verser à chaque échéance; c’est ce que l’on appelle la garantie de change.

a) Option de change :... Le capital du titre, par exemple, est de 500 francs ou 19 livres sterling 16 sh. 6 d. ou 240 florins... Le porteur a le choix... Si, le 15 décembre 1937, il veut se faire rembourser un titre, comme la livre au premier cours vaut 147 fr. 25 et le florin 16 f 3875, s’il encaisse son titre en France, il reçoit 500 francs; s’il l’encaisse à Londres (19 livres 16 sh. 6 d.) et vend ses livres au premier cours, il reçoit 2,919 fr. 23; s’il se fait payer à Amsterdam dans les mêmes conditions (240 florins), il reçoit 3,933 francs. Il choisit donc le florin.

b) Garantie de change :... Dans ce cas le paiement n’est prévu que sur une place mais soit pour le montant stipulé en la monnaie de cette place, soit pour la contre-valeur en cette même monnaie d’une ou de plusieurs autres monnaies. Le porteur, par exemple, d’un titre émis en France aura droit : soit à 500 francs, soit à la contre-valeur en francs français de 19 livres 16 sh. 6 d. ou de 240 florins. Il ne pourra pas se faire payer à Londres ou Amsterdam. Il ne pourra pas recevoir des livres ou des florins, mais il pourra choisir la monnaie qui s’est le moins dépréciée et se faire payer à Paris en francs français la contre-valeur de la monnaie choisie.

Le 15 décembre 1937, il calcule que 19 livres 16 sh. 6 d. valent 2,919 fr. 23 et que 240 florins valent 3,933 francs; son choix se portant sur les florins, il reçoit 3,933 francs.

Le résultat en francs est donc le même...

18.
Such characteristics are to be found in the text of the Funding Bonds which were issued by the Federal Republic of Germany in implementation of the LDA. Let us take, for example, the 3 per cent Bond of 1953, a photostat copy of which was made available to the Tribunal in the course of the oral hearing.

The heading reads:

Bond to Bearer for 3,000 French Francs, equivalent at the rate of exchange current on 1st August 1952

to 8,578 United States Dollars

or 3 Pounds Sterling 1 Shilling 3 Pence

or 37,500 Swiss Francs

or 44,342 Swedish Kronor

or 32,571 Dutch Guilders

or 428,571 Belgian Francs

or 5,355,000 Italian Lire

or 36,000 Deutsche Mark."

Further down we read:

The Bonds are issued in two series with a nominal amount of 3,000... French Francs... or the equivalent of such amount, computed at the rate of exchange current on 1st August 1952, in one of the designated currencies...

Finally we read:

Payment of the coupons and of the bonds... will be made in French Francs...

The Bonds due will be payable at the minimum amount of 3,000 French Francs.

Should the rates of exchange applying to any of the currencies mentioned in the text of this Bond on 1st August, 1952, thereafter change to the extent of 5 per cent or more, the instalments due after that date, while still being made in French Francs, shall be calculated on the basis of the least depreciated currency (in relation to the rate of exchange current on 1st August, 1952) reconverted into French Francs at the rate of exchange current when the payment in question becomes due.

Thus, the debt will always be paid in French francs but its amount will be expressed in several currencies linked with each other by the rate of exchange which was effective on the first of August 1952 and on the basis of which the monetary equivalents enumerated in the title have been calculated.

On the due date a minimum amount of 3,000 French francs will be paid to the bearer but, in case of an alteration of the rates of exchange of 5 per cent or more after the first of August 1952, the payments due after that date will be subject to a new calculation.

In fact, the bearer is entitled to the monetary equivalents as fixed on the first of August 1952, that is to say, that the moment the payment is due he is entitled to receive, on the basis of the rate of exchange current at that very moment, the counter value in French francs of 8,578 dollars, or 3 pounds sterling 1 shilling 3 pence, or 37,500 Swiss francs, or 44,342 Swedish crowns, or 32,571 Dutch florins, or 428,571 Belgian francs, or 5,355,000 Italian lire, or 36,000 Deutsche Mark.

Such an adjustment in favour of the bearer will be calculated "on the basis of the least depreciated currency (in relation to the rate of exchange current on 1st August 1952)".

We are, in fact, concerned here with a multi-currency exchange guarantee because the money of account could be any one of the enumerated currencies, with which the French franc will be compared and which will be compared with each other, on the basis of the rate of exchange current on the due date for the payment, in order to determine which at that very moment is the least depreciated currency (in relation to the rate of exchange current on 1 August 1952). See Tullio Treves in Rivista di Diritto Internationale Privato e Pro-cessuale, Anno VII, 1971, p. 784.

19.
It was in a single day, namely 5 August 1952, on the basis of one and the same concept that the clause in dispute was presented for the first time, then redrafted by a working group, then proposed by the Tripartite Commission to Committee A, then accepted by that Committee subject to certain drafting changes, then at last approved in its final version by the Tripartite Commission.
20.
Counsel for the Respondent referred the Tribunal to the decision of the Second Chamber of the Arbitral Commission on Property, Rights and Interests in Germany in the case The Italian Republic v. The Federal Republic of Germany, reported in Volume III of the Commission’s Decisions at page 253, which Counsel described as the principal judicial authority on reference to preparatory work, on which subject the decision had, Counsel added, acquired the status of the fundamental source. (On appeal, the Plenary Session did not find it necessary to resort to the travaux préparatoires or to decide their admissibility: see Decisions, vol. VI, pp. 156, 167.) The Commission’s judgment considered, in part, "the question whether the travaux préparatoires of a multilateral treaty may be set up against a State which acceded to it without having participated in the negotiations or to which these documents have not been accessible" (vol. III, p. 269). The Commission held that there was no "absolute" principle of interpretation barring such use of preparatory work, even against a State which had neither taken part in negotiating nor become a party to a multilateral treaty, and expressed the "opinion that the problem of recourse to the travaux préparatoires of a multilateral treaty, even if they were neither published nor made accessible to one of the Parties, should be left to the discretion of the judge and solved in accordance with the circumstances of the case" (p. 271). It was for the Commission, "in the exercise of its unfettered discretion, to decide whether the travaux préparatoires should be used for the interpretation" of the treaty in question (p. 271). One of the considerations which led the Commission to make such use of them was "that, even before the conclusion of the... Convention, the Italian Government well knew what were, essentially, the solutions which the Governments of the Three Powers contemplated introducing" on the subject in issue (pp. 273-274). The Commission held that an acceding State, "having been so informed", could not oppose the consideration of the travaux préparatoires, "especially if one considers that the preliminary documents laid down the guiding principles of the multilateral agreement to be concluded and that their contents became known" to the acceding State (p. 275). In its decision in the case The Government of the Kingdom of Greece v. The Federal Republic of Germany (Decisions, vol. III, p. 329), the Second Chamber of the Arbitral Commission confirmed "the long argumentation" on travaux préparatoires in its decision in the Italian case and confined itself to pointing out that it was not an absolute rule of international law that the travaux préparatoires of a multilateral treaty cannot be set up against a State which acceded to it without having taken part in the negotiations or without having had access to these travaux préparatoires (p. 349). The Commission also reaffirmed its opinion that the question "must be left to the discretion of the judge and solved according to the special circumstances of the case at issue" (p. 350). In this case also the Commission took into account, "in the exercise of its power of judgment to decide" on use of the travaux (p. 350), "the fact that the complainant Government well knew, even before the conclusion of the... Convention, what essentially would be the solutions which the Three Powers contemplated introducing..." (p. 351).

In our opinion, without in any way impugning the good faith of the Federal Government of Germany in the present proceedings, that Government "well knew", before it signed and ratified the LDA, what were, "essentially", the solutions contemplated for replacement of the abandoned gold clause in the Young Loan; the "guiding principles" had been made plain at the LDC and in its Report.

We therefore consider that the Tribunal, "in the exercise of its unfettered discretion", should apply to a signatory State which participated in the negotiation of a multilateral treaty the considerations which led the Arbitral Commission to set up travaux préparatoires against an acceding State which had not participated in the negotiation of the treaty in question. Just as the Arbitral Commission would not "encourage an interpretation... which would lead to distinguishing between the Signatory Parties against whom the travaux préparatoires may undoubtedly be set up, and the Acceding Parties who (argue for) the right to oppose any resort" to them (see Decisions, vol. III, p. 351), we cannot accept an argument which would allow the preparatory work on the disputed clause on 5 August 1952 to be set up against the Three Powers, but deny resort to them when the obligations of the Federal Republic of Germany are in issue. With the Arbitral Commission, we consider "such a duality of interpretation contrary to the equal status" (id.) of the States parties to the LDA. Accordingly, we consider the drafts of the disputed clause which were prepared at the LDC in the course of 5 August 1952.

21.
One reads, indeed, in the Minutes of the 99th Meeting of the Tripartite Commission on Tuesday, 5 August 1952, at 10 a.m., under the presidency of Sir George Rendel (CMAA Annex 13 p. 71):

6. There was, however, one other alternative, to which reference had been made in previous meetings, namely the adoption of a multiple currency exchange guarantee. The Commission had not worked out a draft of such a guarantee, but... the Chairman had himself attempted a first draft which he would like to submit to his... colleagues.

The draft dated 4 August 1952 appended as Annex 1 of those Minutes was as follows:

1. In view of the present economic and financial position in Germany, it is agreed that payments in respect of the various issues of the (Young) Loan will be made only in the currency in which each issue is denominated. But the basis for calculating the amount of currency so payable shall be the amount in U.S. Dollars to which the payment due in the currency of denomination would have been equivalent at the rates of exchange ruling when the Loan was first issued, (and specified in the General Bond or in the individual bonds). The nominal amount in U.S. Dollars so arrived at will then be reconverted into the respective currencies at the rate of exchange current on the date when each payment becomes due.

2. Should the rates of exchange ruling between the various currencies of issue at the date when the Intergovernmental Agreement on German Debts comes into force materially alter thereafter, it will be open to any bondholder to ask that any payment due to him after that date, while still being made in the currency in which his bonds are denominated, shall be calculated on the basis of the amount of any other currency of issue to which it would have been equivalent at the rate of exchange current when the loan was first issued, reconverted into the currency of his bond at the rate of exchange current when the payment in question becomes due."

The Minutes of the same Meeting also state:

8. Mr. Gunter said that he would be prepared to consider something on the lines of the draft submitted by the Chairman... which he understood to be to provide for the future a multiple currency guarantee. If this were so... it might be better to relate the calculation of depreciated currencies to the value of the currencies as at 1st August, 1952... and he would propose that a tripartite working party should be asked to look into this without delay.

9. The Commission set up a working party to work immediately on the preparation of a draft multiple currency exchange guarantee to apply to the Young Loan...

Then come the Minutes of the 100th Meeting of the Tripartite Commission on Tuesday, 5 August 1952, at 2.30 p.m. (A II Annex XXXV at p. 315) which begin as follows:

Multiple Currency Exchange Guarantee

1. The Commission considered a draft text, prepared by the Working Party set up that morning, of a Multiple Currency Exchange Guarantee for the Young Loan. The Commission agreed to put forward this text, subject to certain minor amendments, at the ensuing meeting with Creditor Representatives of Negotiating Committee "A". The text as amended is given in Appendix 1 to these minutes.

That text was as follows:

1. In view of the present economic and financial position in Germany, it is agreed that amounts due in respect of the various issues of the 5 1/2 per cent International Loan 1930 will be paid only in the currency of the country in which the issue was made. But the basis for calculating the amount of currency so payable shall be the amount in U.S. Dollars to which the payment due in the currency of the country in which the issue was made would have been equivalent at the rates of exchange ruling when the loan was issued. The nominal amount in U.S. Dollars so arrived at will then be reconverted into the respective currencies at the rate of exchange current on 1st August, 1952.

2. Should the rates of exchange ruling between the various currencies of issue on 1st August, 1952, alter thereafter by 5 per cent or more, any bondholder shall be entitled to demand that any payment due to him after that date, while still being made in the currency of the country of issue, shall be calculated on the basis of the amount of any currency of issue to which it was equivalent at the rate of exchange current on 1st August, 1952, reconverted into the currency of issue at the rate of exchange current when the payment in question becomes due.

Finally, there are the Minutes of the Meeting, of the Tripartite Commission with Committee "A" on Tuesday, 5 August 1952, at 3 p.m. —Chairman: Sir George Rendel (A II Annex XXXIV at p. 307)—in which one reads in particular:

The Chairman said that the purpose of the present meeting was to give the Tripartite Commission’s reply to Committee A’s formula on the Young Loan which Committee A had submitted to the Commission on Friday, August 1st. The Commission had heard that morning... that... the U.S. Government could not accept that formula.... Under the circumstances, the Commission had considered that the bondholders might find it worthwhile to give further thought to the possibility of a Multiple Currency Exchange Guarantee which the U.S. Delegation had said they could agree to in principle. The Commission had attempted to draft a paragraph along those lines which it submitted to Committee A...

... Sir Otto Niemeyer said that Committee A regretted that the Commission had not been able to accept the formula which it had suggested...

... that Committee A would recess for 15 minutes to consider the Commission’s formula...

... On the resumption of the meeting, Sir Otto said that Committee A had several drafting points to suggest in the Commission’s proposal which did not appreciably alter the sense but were merely inserted for purposes of clarification....

... Mr. Vieli, the Swiss representative, said that Committee A was prepared to agree the Commission’s formula, subject to slight drafting changes....

... The Commission agreed to accept the following redraft...:

22.
It is this latest version of the multiple currency exchange guarantee (see para. 13) which contains in its second paragraph the disputed clause.

It is contrary to common sense to suggest that the drafting changes thus made in the aforementioned second paragraph of the draft currency exchange guarantee at the request of Committee A, which had always shown its concern for the interests of the creditors, should have had the object and purpose of bringing about a fundamental amendment contrary to the interests of the creditors by depriving the clause—as is contended by the Respondent—of its character of an exchange guarantee, reducing it to a simple promise of protection for the sole event of a devaluation (Abwertung) of the currency of issue in which payment could be demanded. The preliminary work leading to the adoption of the disputed clause has been made available and it shows in precise detail each step of the drafting process. In particular it discloses that in its initial formulation the 5 per cent triggering device gave a bondholder the right to choose any of the currencies of issue as the basis for computation as of 1 August 1952. The version eventually adopted substituting "least depreciated currency" for "any currency of issue" was not, in our opinion, a diminution of the bondholders’ benefits. Rather, it was simply designed to facilitate the mechanics of payment by giving all of the bondholders, automatically, the rate of exchange most advantageous to them, without the need for notification of a chosen currency by every bondholder to the paying agents on the occasion of every payment.

Three witnesses (Baron van Lynden, Mr. Spang and Mr. Gunter) who were leading participants in the relevant negotiations on 5 August 1952 gave testimony that fully supports our opinion in this regard.

The fact that the bondholder is not given the choice among several currencies on the basis of one of which he will be paid and that a payment to him is automatically calculated by the Trustee on the basis of "the least depreciated currency", "la devise la moins dépréciée", "der Wahrung mit der geringsten Abwertung" does not reduce to any extent the guarantee. Such a situation is not unknown in loans which offer to the bondholder an option de change between several currencies. A modern example is the Republic of South Africa loan of European Currency Units (ECU) 25 M. 1971-86 which combines both the mechanism of the creditor’s choice among six currencies and, if he has not chosen by a certain date, the automatic mechanism of a decision by the paying agent, which is then obliged to choose for the calculation of the amount due the currency "which it considers in its sole discretion to be [sic] the best interest of the Bondholders..." ("la monnaie qui selon lui est la plus intéressante pour les détenteurs des titres").

See Jacquemont: L’Emission des Emprunts Euro-Obligataires, Paris 1976, vol. 3, pp. 279-280.

23.
Moreover, the Respondent’s contention is inconsistent with an analysis of the text of the disputed clause itself.

Indeed, the second part of Annex I A 2 (e), which consists of one sentence only, does not refer at any time to the value of the currencies in relation to an external and fixed standard but refers exclusively—and this on three occasions—to the rates of exchange, that is to say solely to the relationships of the currencies of issue inter se.

The sentence defines, at first, the contingency in which the alteration of exchange rates gives rise to a calculation of re-adjustment, in order that each bondholder of the Young Loan, no matter the currency in which he receives payment, stands assured that the equality, re-established as of 1 August 1952 on a dollar basis, will be preserved among all the tranches. This contingency is described as follows:

Should the rates of exchange ruling any of the currencies of issue on 1st August 1952, alter thereafter by 5 per cent or more...

We agree with the majority of the Members of the Arbitral Tribunal that the use of the words "alter", "andern" and "subiraient... une modification" is the use, in each text, of a neutral word which could indicate either a rise or a fall in a rate of exchange. Moreover, as we are concerned with exchange rates, it is evident that if the exchange rate of one currency of issue improves the exchange rates of the other currencies of issue deteriorate correspondingly. If, for example, the exchange rate of the DM improves in relation to the dollar the exchange rate of the dollar deteriorates in relation to the DM. In other words, as the result of this alteration of the exchange rate more dollars are needed in order to buy the same quantity of DM just as fewer DM are needed to buy the same quantity of dollars as before. The dollar has depreciated in relation to the DM while the DM has appreciated in relation to the dollar.

The same applies, mutatis mutandis, to all the other currencies of issue, since—to repeat—every currency is, according to the text, not regarded with respect to its own value but solely in its relation to the other currencies, which relationship is expressed by the rate of exchange.

In case the alteration of the exchange rates is equal to or exceeds 5 per cent, on which basis should the calculation of re-adjustment be made? That basis is indicated by the second part of the sentence which reads as follows:

... on the basis of the least depreciated currency (in relation to the rate of exchange current on 1st August 1952)...

According to the Respondent, the very use in the second part of the sentence of the words "the least depreciated currency", "Wahrung mit der geringsten Abwertung", "la devise la moins dépréciée", for specifying in the three languages the basis of calculation, operates to restrict the ordinary meaning of the first part of the sentence by limiting its scope to the sole contingency of a devaluation (Abwertung) of the currency of payment.

Now, the first part of the sentence appears to us to be the more important one, since it is that which defines the sphere of application of the clause by envisaging—as we have seen—the appreciation as well as the depreciation of the various currencies of issue in their exchange relationships.

That is why the theory of the Respondent which deprives this first part of the sentence of much of its normal effect is, in our opinion, inconsistent with a rule of interpretation generally accepted in international law, the so-called rule of "l’effet utile" (Charles Rousseau, Droit International Public, 1970, vol. I, p. 270, No. 240).

24.
According to the terms of the first paragraph of Article 31 of the VCT, a treaty must be interpreted in good faith; and as a corollary of this essential directive the principle is

qualifié par certains auteurs (Ehrlich) de règle de l’efficacité du traité ou de règle de l’interprétation utile (Ch. Rousseau, ibid.).

Les applications jurisprudentielles du principe sont nombreuses, tant en ce qui concerne les traités bilatéraux que les traités collectifs. Quelques décisions l'ont rattaché à la maxime du droit romain: ut res magis valeat quam pereat. (Ch. Rousseau, ibid.).

In the VCT the principle of effectiveness expressed in this maxim is subsumed in the references to "good faith" and to the "object and purpose" in Article 31 (Sinclair, The Vienna Convention on the Law of Treaties, 1973, p. 75). Thus

When a treaty is open to two interpretations one of which does and the other does not enable the treaty to have appropriate effects, good faith and the objects and purposes of the treaty demand that the former interpretation should be adopted. (Yearbook of the International Law Commission, 1966, vol. II, p. 219.)

In Problèmes d’Interpretation Judiciaire en Droit International Public, 1963 (p. 86) Charles de Visscher wrote:

... de façon générale, entre deux interprétations dont l’une assure au traité une efficacité qui correspond à son objet certain tandis que l’autre tend à l'en dépouiller, préférence doit être donnée à la première sur la seconde, ce qui peut parfois conduire à donner aux termes employés une portée plus large que celle qui est apparue au premier abord.

Sir Gerald Fitzmaurice (The Law and Procedure of the International Court of Justice, 1951-54: Treaty Interpretation and Other Treaty Points, British Yearbook of International Law 1957, vol. 33, p. 211) regards as a major principle of interpretation the principle of effectiveness (ut res magis valeat quam pereat)'.

Treaties are to be interpreted with reference to their declared or apparent objects and purposes; and particular provisions are to be interpreted so as to give them the fullest weight and effect consistent with the normal sense of the words and with other parts of the text, and in such a way that a reason and a meaning can be attributed to every part of the text.

In the case of Swiss Confederation v. Federal Republic of Germany (supra, p. 38) the Arbitral Tribunal already pointed out that the practice followed by the International Court of Justice in interpreting the terms of a treaty coincides with the resolution which the Institute of International Law adopted in Granada in April 1958 according to which:

1) L’accord des parties s’étant réalisé sur le texte du traité, il y a lieu de prendre le sens naturel et ordinaire des termes de ce texte comme base d’interprétation. Les termes des dispositions du traité doivent être interprétés dans le contexte entier, selon la bonne foi et à la lumière des principes du droit international.

2) Toutefois, s’il est établi que les termes employés doivent se comprendre dans un autre sens, le sens naturel et ordinaire de ce terme est écarté.

In the same decision (p. 50) the Arbitral Tribunal pointed out that "the usual practice in interpreting words and phrases in a treaty is to give them a reasonable, as distinguished from a restricted or technical meaning".

In the case of Kingdom of Greece v. Federal Republic of Germany (1970/1972 Reports of Decisions and Advisory Opinions, p. 12) the Arbitral Tribunal, which said it was guided by the general rule of interpretation as stated in Article 31 paragraph 1 of the VCT, stressed that:

The Agreement must be considered as a whole. The different clauses must so be interpreted as to avoid depriving any one of them of practical effect in order to credit others with a literal meaning. (P. 50.)

25.
It appears to us to be contrary to the principle thus expressed to curtail, in the present case, the completely clear and general sense of the first part of the sentence on the pretext that the expression "the least depreciated", "mit der geringsten Abwertung", "la moins dépréciée", which appears in the second part, should be understood in a restrictive and technical sense.

Indeed, the first part of the sentence manifestly had in view the establishment of an exchange guarantee among all currencies of issue, as we have outlined in paragraphs 16 to 22 above.

A limitation, without regard to the context, of the guarantee only in the case of an Abwertung, that is to say, according to the Respondent, an official and formal devaluation of the currency of issue, would thus be tantamount to depriving the first part of the sentence of its ordinary and normal meaning.

The Young Loan, the tranches of which comprise nine currencies of issue, constitutes an international multiple currency loan of an exceptional but not unique nature.

One must not, therefore, show surprise—as does the Respondent— at the so-called unknown character of a "multiple currency" exchange guarantee.

The number of the currencies involved does not alter the nature or the principle of such a guarantee.

26.
The triggering of the system is in no way dependent on the formal devaluation (Abwertung) of a currency of issue. To advance such an assertion leads to a complete distortion not only of the sense but even of the construction of the sentence.

The application of the guarantee, promised to the bondholder, comes into operation as soon as there is an "alteration" of the exchange rate of 5 per cent or more.

It matters little whether this alteration originated from a formal devaluation (Abwertung) or formal revaluation (Aufwertung) or from some other cause of depreciation or appreciation.

The only thing that matters is the objective fact that after 1 August 1952 an alteration of the exchange rate equal to or in excess of 5 per cent has occurred, no matter for what reason.

The search for the least depreciated currency arises only later for the calculation to be made.

Contrary to the order and the logic of the sentence which constitutes the clause in dispute the Respondent argues as if the clause in dispute began as follows:

Should one of the currencies of issue sustain a devaluation equal to or in excess of 5 per cent in relation to the par value in force on 1 August 1952, the instalments due...

One sees how far that would depart from the text which is before us.

27.
The misconception of the Respondent is, in our opinion, caused by concentrating on the gold or the gold dollar standard—by its insisting on regarding each of the currencies of issue separately. The Respondent considers that the guarantee given to the bondholders in replacement of the gold clause gives only that protection which the gold clause gave to bondholders, namely protection against a formal devaluation of the currency of issue of the bonds which they held.

If one starts with the preconceived idea that the new guarantee must not give the bondholders of the various tranches a protection other and, possibly, better than that which was accorded to them by the gold clause, it would mean leaving out of consideration that the guarantee system, which was adopted, in extremis, in London when the representatives of the European bondholders were compelled to renounce the gold clause (cf. LDC Report, para. 30), constitutes a legal situation entirely different from that which governed when the gold clause applied.

One can compare only that which is comparable, and when one is concerned with clauses which have different bases, one must not be surprised at reaching differing results. This is the inevitable result of the change of system.

Under the protection system as it was accorded in the General Bond of 1930 the bondholder would not, in case the currencies of issue were depreciated or devalued, irrespective of his tranche, have suffered any loss since he would always have received the same gold value.

If one or more currencies of issue were revalued, the bondholders of the tranches made payable in those currencies would have benefited by the revaluation as the result of the application of the so-called nominal value clause, which constituted an exception, in favour of the creditors, to the normal operation of the gold guarantee.

If under the system of the multiple currency exchange guarantee all currencies of issue are depreciated or devalued in the same proportion the bondholders receive no compensation for the loss which they suffer.

If one or more of the currencies of issue are revalued the bondholders, irrespective of the currency of their tranche, benefit by the revaluation since they have the right to the most favourable exchange. That is the normal effect of the operation of the system.

The Federal Debt Administration was under no misapprehension in this respect when it wrote to the Schweizerische Kreditanstalt on 8 August 1953 regarding the wording of the Funding Bonds of the Swiss tranche, and when in describing the possible application in favour of the Swiss franc of the guarantee contained in the second part of Article 2 (e) of Annex I A it expressed itself as follows:

For the purposes of this calculation the currency most favourable to bondholders will be selected. (A II Annex XLVIII, at p. 385.)

Such a phrase takes full account of the normal operation of the exchange guarantee instituted among all currencies of issue.

28.
Having adopted the principle on which an exchange guarantee is founded, one cannot reject a result which follows from the very nature of the principle, on the ground that that result was not expressly mentioned at the time of agreement on its adoption.

Ch. de Visscher wrote specifically in his above-mentioned work, at p. 101:

Interprétation par recours aux principes généraux régissant la matière : Certains traités, par les intérêts qu’ils réglementent, par les principes dont ils s’inspirent, par le mouvement général des idées auxquels ils se rattachent, se présentent prima facie comme appartenant à une catégorie connue.

The same author has also written (p. 30):

... l’interprétation consiste non pas simplement à retrouver la signification primitive d’un instrument juridique mais à lui donner, sous réserve toujours du respect du texte, la signification spécifique que postule son application pratique...

In the Employment of Women during the Night Case the Permanent Court of International Justice declared that an international treaty which sets up a rule of general application cannot be limited to the particular cases envisaged by one party or the other.

(P.C.I.J. 1932, Series A/B No. 50 p. 377).

It follows from the foregoing that the expression "on the basis of the least depreciated currency", "auf der Grundlage der Währung mit der geringsten Abwertung", "sur la base de la devise la moins dépréciée", used to designate the manner of calculation, must not, if one considers it in its context and in the light of its object and purpose, be given a limited interpretation in the restrictive and technical sense which the Respondent places on the word "Abwertung".

29.
Our conviction on this point is reinforced if one considers the practice followed, since the signing of the LDA, in the application of the clause in dispute.

Although, as mentioned in paragraph 11 above, actions of the Respondent after the entry into force of the LDA and in fulfilment of its obligations thereunder cannot be within either Article 31 (2) fib) or Article 31 (3) fib) of the VCT, recourse may nevertheless be had to them as "supplementary means of interpretation" under Article 32 for one of the purposes permitted by that Article (to confirm the meaning resulting from the application of Article 31, or when such application fails to yield a clear and reasonable result).

As the International Law Commission commented on its draft article which became, with some changes, Article 32 of the VCT:

The practice of individual States in the application of a treaty... may be taken into account only as one of the "further" means of interpretation mentioned in article 70 [which became Article 32 of the VCT with the word "supplementary" replacing the word "further"]. (Report of the International Law Commission to the United Nations General Assembly, Yearbook of the International Law Commission 1964, vol. II, p. 204.)

"The practice of an individual State may", the Commission added, "have special relevance when it relates to the performance of an obligation which particularly concerns that State" (ibid.). In the Status of South West Africa Opinion the International Court of Justice said:

Interpretations placed upon legal instruments by the parties to them, though not conclusive as to their meaning, have considerable probative value when they contain recognition by a party of its own obligations under an instrument. (I.C.J. Reports 1950, pp. 135-136.)

In the present case we consider that some actions by the Respondent after the entry into force of the LDA and in fulfilment of its obligations arising therefrom in respect of the Young Loan Bonds have value in the assessment of the arguments advanced on behalf of the Respondent.

30.
Before the revaluation of the DM in 1961, the exchange guarantee was put to the test by the French franc in 1957 and in 1958. It is important to recall that France, which had become a member of the IMF on 27 December 1945, had no longer a par value agreed with the Fund between 26 January 1948 and 29 December 1958.

Following a decree of 10 August 1957, which introduced an internal tax on the currency settlements between France and foreign countries, the French franc sustained a de facto alteration on the foreign markets, in that it fell by more than 5 per cent of its exchange rate.

We note that there was no alteration of the par value agreed with the IMF since at that time there was no agreed par value in force for the French franc; there was not even a change of the "official" rate of the franc in relation to other currencies.

Yet, this purely de facto depreciation was taken into account in connection with the payments on the Young Loan Bonds and the payments that subsequently fell due for the French tranche were consequently increased.

The application of the clause in dispute thus made shows that there was an unequivocal acceptance that the word "Abwertung" was to be understood in a wider sense than "devaluation" in its strict sense (that is to say voluntary, formal and official reduction by a government of the external value of its currency) which the Respondent now assigns to it.

The import of the precedent does not stop here.

On the basis of which currency was, then, the adjusting calculation made for the payments on the French tranche?

The basis was the US dollar which between 1952 and 1958 did not suffer any depreciation.

That it was nevertheless chosen as the currency of reference is attributable to the fact that the parties concerned were in agreement that this "non-depreciated" currency was at the relevant time "the least depreciated currency" within the meaning of the guarantee clause.

31.
The Respondent contends that, as the dollar had, in 1957, served for the basis of calculation as being "the least depreciated currency", when it was not depreciated, this means that the depreciation of the dollar was then minus zero. We might add that if this analysis is correct it would be equally correct to say that the dollar had then appreciated by plus zero.

But such an explanation in the abstract, which is based on the absence of movement of the dollar in relation to its gold standard, departs from the context since one must, again, recall that one is dealing here with exchange rates and that the clause refers for its application solely to "exchange rates", that is to say, the relative values of currencies among themselves and not to the value of each, taken separately, in relation to a fixed standard.

When the French franc lost value (depreciated) in 1957 the exchange market automatically quoted a corresponding "appreciation" of the dollar (and the other currencies of issue) in relation to the franc.

One needed more French francs in order to buy the same quantity of dollars as before while, correspondingly, one needed fewer dollars to buy the same quantity of francs.

Thus, the dollar was not only a "depreciated" currency at the rate of zero, it was "appreciated" in relation to the French franc.

The debtor, the creditor and the trustee accepted it as "the least depreciated currency" within the meaning of the clause in dispute.

Such a precedent, as the Bank of International Settlements, the trustee of the Young Loan, emphasized in its memorandum of 17 April 1961 (A II Annex LIII p. 457), appears to us to furnish the guide for examining the situation created by the revaluations of the DM in March 1961 and October 1969.

32.
According to the monetary system then in force, the official revaluation of a currency of issue by the alteration of its par value (to use the terminology of the IMF) did not entail any formal devaluation of the other currencies, unless there were voluntary interventions by the respective governments.

The Committee of Governmental Experts of the Council of Europe, commenting in 1968 on the text of a draft European Convention on Obligations in Foreign Currency, stated (Rapport Explicatif, p. 7) that

Le Comité d’experts estime opportun de préciser que le concept de "dépréciation" utilisé dans la Convention et dans l’annexe n’a pas un sens technique. Il se réfère à tous les cas où la valeur d’une monnaie diminue par rapport à la valeur d’une autre monnaie, même si l’une des monnaies est réévaluée par rapport à l’autre. (Emphasis added).

In his work The Legal Aspect of Money, third edition, p. 194, note 5, Professor Dr. F. A. Mann, in considering the alteration of the exchange rate between the Pound Sterling and the Dollar as the result of a revaluation of the latter, wrote:

... the appreciation of the dollar means that sterling depreciates in terms of the dollar, although its own monetary system has not been subject to any direct action by the British authorities.

Such an analysis seems to us to be self-evident since (to use again the concepts of the IMF) each change of the par value of a currency provokes by itself an alteration of the rate of exchange with regard to other currencies.

33.
In the present case it cannot be denied that there was a fall in the value of the currencies of issue in relation to the DM on the exchange market.

It suffices to look back to the earlier situation and, in particular, to make a comparison with the exchange rates which existed among each of the said currencies, on the one hand, and the DM, on the other, on 1 August 1952, the date of reference contained in the disputed clause.

It results from this comparison that, in terms of rates of exchange, all the other currencies of issue were depreciated in relation to the DM.

It is, therefore, on the basis of the only "non-depreciated" currency in relation to the other Young Loan currencies that one must, in conformity with the interpretation given in 1957 by the Respondent itself, make the calculation of adjustment, subject to the condition, of course, that the requirement of the threshold of 5 per cent or more alteration has been met.

The Respondent’s contrary view sanctions, to the benefit of the holders of the German tranche of the Young Loan, an inequality of treatment such as could have occurred under the system of the gold clause included in the General Bond of 1930. That Bond provided in Article VI (a) that the sum paid to the bondholder should never be less than the nominal amount. So the revalued nominal amount would buy more gold.

The Respondent’s argument against the Applicants’ case involves a persistent return to the abolished gold clause system and it overlooks the equality of treatment among all bondholders and all tranches of the Loan which was one of the essential objects and purposes of the negotiations and the agreements of the LDC.

34.
In order to deny an adjustment to the holders of the nonGerman tranches to correspond to the position of the holders of the German currency tranche, the Respondent argues that the bonds held by the former have not, in themselves, lost anything of their value.

It appears to us purely theoretical and not in conformity with reality to state that the revaluation of the DM, by which the bondholders of the DM tranche of the Young Loan profited, did not entail any loss for the bondholders of the tranches issued in non-German currencies.

The Respondent itself explained that when the Bundesbank, following the revaluation of the DM in 1961, proceeded to make a new assessment of its reserves in foreign currency, there appeared a loss of DM 1,265 million for the Federal Budget and that the same operation in 1969 had caused a loss of DM 4,099 million (see Rj para. 8).

What is true for the Bundesbank must be true for the bondholders of non-German currencies, particularly for those who reside inside the Federal Republic.

As the result of the revaluation of the DM all bonds expressed in non-German currencies were automatically depreciated in terms of DM.

35.
We are not called upon to examine how the payments on the Young Loan have operated since the "floating" of the currencies and since the official abolition in 1978 of the par values which led to the revision of the Articles of the IMF and the creation of another monetary system.

However, limiting ourselves to the period which was submitted for the Tribunal’s decision, we observe, in conclusion, that the interpretation which the Respondent would put upon the disputed clause would lead not only to unjustifiable inequalities but, on occasion, to unreasonable results or to impasses which would frustrate the operation of the disputed clause.

For example, let it be assumed that at the same time as the DM the other currencies of issue held also been revalued with the exception of one and that this last one was subsequently devalued by at least 5 per cent.

In that case one would not find any currency of issue on the basis of which the adjustment could be calculated since, according to the Respondent, every revalued currency of issue—no matter how small above zero the percentage of its revaluation—would be disqualified as the currency of reference for that calculation.

36.
During the oral hearing one of the members of the Tribunal suggested a case in which only the DM was revalued and all the other currencies of issue devalued at exactly 5 per cent by formal acts of governments. The representatives of the parties were asked whether "even in those circumstances" the DM would not have been regarded as the least depreciated currency.

The question was answered by the Agent of the Government of the Federal Republic of Germany in the following terms:

We consider this to be a purely theoretical question to which we can only give a theoretical answer. In this case the devalued currencies would be fully compensated for their 5 per cent devaluation.

Such a result of the Respondent’s theory seeks to return to a kind of fixed level or standard, like gold, which was abandoned by the LDA, and amounts to a denial that the terms of the disputed clause apply at all. The disputed clause requires that the adjustment be calculated on the basis of a "currency", but in the Respondent’s reply in the suggested example there is no currency serving as the basis of calculation.

Resort to the Original Language

37.
The assertion in Article 33 paragraph 3 of the VCT that the terms of the treaty are presumed to have the same meaning in each authentic text is, of course, a presumption only and can be rebutted.

Article 33 paragraph 4 provides:

4. Except where a particular text prevails in accordance with paragraph 1, when a comparison of the authentic texts discloses a difference of meaning which the application of articles 31 and 32 does not remove, the meaning which best reconciles the texts, having regard to the object and purpose of the treaty, shall be adopted. (Emphasis added.)

In cases where it is obvious that the terms used in the different authentic languages have different meanings that can be "reconciled" only by adopting one or the other, it becomes necessary to apply rules of interpretation not specifically codified by the Convention. For this purpose the rules of customary International Law will govern. Resort to such customary rules is specifically affirmed in the last paragraph of the preamble of the Convention which reads:

Affirming that the rules of customary international law will continue to govern questions not regulated by the provisions of the present Convention...

In the operative part of the VCT its authors were "careful to preserve, where appropriate, the operation of rules of customary international law relating to treaties" (Sinclair, The Vienna Convention on the Law of Treaties, 1973, p. 8, referring to Articles 3 (b), 4, 38 and 43 of the VCT). We do not accept the view that, even apart from the fact that the VCT does not apply in the present case, the codification effected by Article 33 (1) renders incompatible with its terms other customary rules relating to the interpretation of multilingual treaties. Article 33 (1) does no more than re-state a customary rule which existed, in the same terms, before the VCT was drafted. When a treaty was signed or otherwise adopted in more than one language and no provision was made on which was to be the authoritative text, "the generally accepted rule" was "that of the equality of the languages employed" (Manual of Public International Law, ed. by Max Sorensen, 1968, Ch. 4, Section Four, 4.37); "the equal authenticity of the texts derives from the mere fact that the instrument has been concluded in this and that language" (Hardy, L’interprétation des traités internationaux rédigés dans plusieurs langues, typewritten thesis, Paris 1960, and The Interpretation of Plurilingual Treaties by International Courts and Tribunals, British Yearbook of International Law, 1961, vol. 37, p. 74).

Furthermore, writers (Germer, Interpretation of Plurilingual Treaties: A Study of Article 35 of the Vienna Convention on the Law of Treaties, 11 Harvard International Law Journal (1970) 400; Hilf, Die Auslegung mehrsprachiger Vertrage, Berlin 1973) who take the view that to seem to give any precedence or superiority to the original text "in the working language in which the treaty was negotiated" (McNair, Law of Treaties, 1961, p. 434) would be incompatible with the principle of equality of authentic texts enunciated in Article 33 (1), and with the comparison of texts called for by Article 33 (4), do not exclude any reference to the original text in the process of interpretation under Articles 31 and 32. Germer accepts that

An examination of the preparatory work of a treaty and the circumstances of its conclusion may, however, display the causes of a divergence between the different language versions and thus help to establish the meaning intended by the parties to be attached to the provision in question. (Op. cit., p. 418.)

Hilf envisages such a case as when only one text was negotiated in common and the provision of other texts, designated as binding, was left to a separate group of translators:

Im Einzelfall kann sich gleichwohl ergeben, daß nur ein Text gemeinsam ausgehandelt wurde, wobei die Erstellung der übrigen als verbindlich bezeichneten Texte entweder den einzelnen Partnern oder einer gesonderten Gruppe von Übersetzern überlassen wurde... so wird man, wenn andere Auslegungsregeln versagen, den Urtext bei der Auslegung berücksichtigen können. (Op. cit., pp. 93, 94; example omitted.)

38.
The method to follow in the present case is to ascertain the true object and purpose of the clause from the original language in which its travaux préparatoires were drafted.

The practice of resorting to the original language in which the negotiations were conducted has been adopted by international tribunals as an aid to the ascertainment of the true intent of the parties. As one commentary summarised the practice:

unless the treaty provides otherwise, all the texts or versions are authoritative (but) where a treaty has been drafted in one language and later translated into several versions of equal authority Courts have shown a tendency to resort to the "basic" language when confronted with a divergence. (Original emphasis. Harvard Research Draft Convention on the Law of Treaties, 29 American Journal of International Law Supplement, 1935, pp. 971, 972; see, to the same effect, McNair, Law of Treaties, 1961, p. 434.)

This procedure becomes most useful when in its ordinary sense the term or expression is more restricted in one text than in the other or others. Necessary adjustments may then be made by modifying the scope of the term or expression either by extending it in one text or restricting it in the other or others.

The Permanent Court of International Justice, in its Advisory Opinion on the Competence of the International Labour Organisation with respect to Agricultural Labour, adopted the above-mentioned method and extended the scope of a limited expression found in the French text to the more general meaning of the term used in the English. The issue before the Court was whether or not the competence of the ILO extended to the regulation of the working conditions of persons employed in agriculture. The French Government contended that the Treaty of Versailles, which defined the competence of the ILO, did not refer to agriculture, but that, on the contrary, the terms "industrie" and "industriel" appeared in several places in the treaty. On the other hand it was submitted that in the preparation of the treaty the Commission on International Labour Legislation had taken, as a basis of its discussion, an English text prepared by the British delegation, and that the word "industrial", as used in that text, applied to both industry and agriculture. In answering the question put to it in the affirmative, the Court observed that notwithstanding the validity of the principle, according to which conventions involving the abandonment of certain rights inherent in sovereignty must be interpreted restrictively, one must in every case resolve issues in terms of what a treaty actually meant. (PCIJ, Series B Nos. 2 and 3, pp. 23-27 and 33-41).

The equality of texts in international treaties is neither a bar to establishing an order of precedence among them with regard to specific points nor a bar to recognizing the superiority of an original version (Hardy, op. cit., p. 98). A reference to the preparatory work generally enables the judge to determine from the original text the true intentions of the parties.

In its Advisory Opinion on the interpretation of the Convention (of 1919) concerning Employment of Women during the Night, the Permanent Court of International Justice held that there was no reason to believe that the Convention in its application was limited to working women despite the fact that the authentic French text spoke of "ouvrières". It noted that the original report submitted to the drafting committee was in the English language. Presumably the Court concluded that the English text of the report was a more accurate expression of the committee’s opinion (PCIJ, Series A/B, No. 50, pp. 378-379).

In the Guastini Case, confronted with equally authoritative English and Italian versions, the Umpire said:

The text of the Protocol is in English and in Italian. It was the result of long negotiations between the representatives of England, Germany, and Italy on the one hand, and Mr. Bowen, Venezuela’s representative, on the other. These negotiations were carried on almost altogether in English, and the drafts (afterwards becoming protocols) were in English. It is therefore evident that the basic language is English, and in case of difference of translation resort should be had to it. (Ralston, Venezuelan Arbitrations of 1903, pp. 730, 749.)

In a case involving patent rights in Alsace-Lorraine the French Civil Tribunal of Strasbourg pointed out that the relevant provision —Article 311 of the Treaty of Versailles—had been drawn up originally in English and held that the English text should be given greater weight than the French in reaching the proper construction of the provision (Société Audiffren-Singrun v. Liquidation Morlang, Binger et Société Atlas, Annual Digest, 1927-28, Case No. 294; 55 Journal du Droit International (1928) 734).

39.
The Mavrommatis Case is often cited as an authority for the principle that versions of all languages of a treaty must be considered together with a view to finding a common meaning which harmonizes with the provisions in the several languages. In that case the Permanent Court held:

Where two versions possessing equal authority exist one of which appears to have a wider bearing than the other, it is bound to adopt the more limited interpretation which can be made to harmonize with both versions and which, as far as it goes, is doubtless in accordance with the common intention of the Parties. In the present case this conclusion is indicated with especial force because the question concerns an instrument laying down the obligations of Great Britain in her capacity as Mandatory for Palestine and because the original draft of this instrument was probably made in English. (PCIJ, Series A, No. 2, p. 19.)

Hardy explains at length that the assertion of certain authors that the Permanent Court thus endorsed "limited interpretation" as a rule for solving discrepancies between authentic texts is erroneous (Hardy, op. cit., p. 80).

In a report of the International Law Commission to the General Assembly the Hardy view was cited with approval. The Commission then added that although "the Permanent Court was thought by some jurists to lay down a general rule of restrictive interpretation in cases of divergencies between authentic texts..." the Mavrommatis Case "is not thought to call for a general rule laying down a presumption in favour of restrictive interpretation in the case of an ambiguity in plurilingual texts" (Yearbook of the International Law Commission 1964, vol. II, p. 208). There is certainly no rule that "a species of lowest common denominator of the texts is to be sought—a hybrid version imposing the least obligation" (Manual of Public International Law, 1968, ed. by Max Sorensen, Ch. 4, Section Four, 4.37).

For our purpose it suffices to point out that in the Mavrommatis Case the Court considered that the original draft of the disputed instrument was "probably" made in English and that that played a significant role in adopting the English version.

The value of the original text as evidence was discussed, at length, by Hardy in his exhaustive work. He expressed it this way:

... it is agreed that for purposes of interpretation the "critical moment" is the moment of the conclusion of the treaty. To that extent—and to that extent only— it can be said that all the incidents of the negotiation—initial proposals, counterproposals, amendments, sub-amendments, declarations pertaining to interpretation, and the like—merge in the final text (the merger theory). But it does not follow that that text always and necessarily expresses the common intention of the parties at the time of signature. The authority attaching to the text does not derive from its intrinsic superiority but from the fact that it marks the moment of the conclusion of the treaty and that there is a presumption, for that very reason, that the negotiators drew it up with a full knowledge of the facts and all the necessary care, using the appropriate words in the knowledge that the instrument would be interpreted and applied. They may, however, have expressed themselves badly or failed, through inadvertence, to say what seemed to them obvious. Accordingly, strong as it is, the presumption in favour of the text is always rebuttable. In principle, it can be rebutted by any form of evidence that may be available, including a study of the successive phases in the preparation of the instrument; and nothing could be more arbitrary than the automatic rejection of the preparatory work on the pretext that it is rarely conclusive and often gives rise to abuse. (Original emphasis.)

Hardy continued:

If the texts prove incompatible, it must be supposed that, as far as the provision in question is concerned, the parties made a mistake as to the equivalence of the texts and erroneously conferred the same authority on them all. The com-mon intention of the parties at the time of the conclusion may in principle be established by any means available, but first and foremost, for the reasons stated above, on the basis of the texts themselves; the fact that one text is defective on a given point is not enough to justify the automatic rejection of all the texts. A choice must then be made between incompatible texts; and it is only normal that the presumption should be in favour of the original version, because that was the basis on which the negotiators in fact first reached agreement and the authoritative value of the other texts is subordinated to their equivalence to the original. The strength of the presumption in favour of the original version depends on the circumstances in which the other versions were drawn up. It will be weak if the negotiators all participated directly in the elaboration of those texts; stronger if they only exercised partial control over it, as, for example, by entrusting the task to a small drafting committee; and decisive if they left the entire job of drawing up those texts to one of the parties or to some specified body. Since the drafting process may assume any one of many varied forms, the evidential value of the original text tends to depend on the facts of each case; and only a study of the preparatory work, in the widest sense of that expression, will enable the judge to appraise it in each particular instance. (Hardy, op. cit., pp. 104-105.)

40.
In the present case only the English language was employed during the negotiating process that resulted in an agreement on a clause that became Annex I A 2 (e). There is no dispute that the written text shown to Herr Abs on 5 August 1952 was in the English language.

The evidence does not disclose the identity of the person responsible for the German version of the disputed clause. We do not know what may have passed through the mind of that unidentified individual when he translated the words "depreciated" and "dépréciée" but we do know what material was available for a translation of those words into German. According to the chief translator at the LDC, glossaries entitled "Consultations on German Debts Vocabulary English— French—German (Unofficial)" were prepared by the secretariat for its own use. Though not official documents these glossaries "were in constant use by the translation section for the purpose of translating technical terms between English, French and German".

In his evidence Mr. Cridland, the Secretary General of the LDC for most of its duration, testified that the glossary was always available for use by the translators.

In the English section of the glossary the following appears:

depreciation (of currency) — dépréciation (d’une monnaie) — Währungsabwert-ung, Abschreibung

The French section contains the following:

dépréciation (d’une monnaie) — depreciation (of currency) — Währungsabwert-ung, Abschreibung

The German section contains the following:

Währungsabwertung—dépréciation (d’une monnaie)— depreciation (of currency)

Währungsentwertung — dépréciation (d’une monnaie) — depreciation (of currency)

It is significant that the German section draws no distinction between an "Abwertung" and an "Entwertung". It is idle to speculate why, in translating "depreciation" into German "Entwertung" had not been chosen, since according to the glossary it had the same meaning as "Abwertung".

What is significant is that the strength of the presumption in favour of the original English use of "depreciated" is particularly great because here the negotiators did not participate in the translation process. On the contrary, the entire task of drafting the authentic nonEnglish texts was left to the translation section, which in turn could rely on the glossaries prepared by it for use in translating.

Those professionals who are engaged in the exacting task of putting into one language that which is the exact effect of another can undoubtedly feel gratified that judicial recognition of their product, once it is termed "authentic", has been given in some cases. But it cannot be responsibly contended that simply because one language is as authentic as another, no argument can be entertained which seeks to show that it does not correctly reflect the meaning of the other, particularly when the other was the basic language in the negotiations. The affairs of sovereign States cannot, and should not, be influenced by the fortuitous choice of words selected by a nameless translator.

41.
Under the circumstances of this case, resort to the preliminary work has to be made and special weight may be given to the original language in which the disputed term is used. The meaning of that term, as used in the original language, should be given pre-eminence.

Article 13 of the London Debts Agreement

42.
In support of its interpretation of the clause in dispute and its interpretation of the words "Abwertung", "depreciated", "dépréciée", the Respondent relies on Article 13 of the LDA, entitled "Rates of Exchange", which reads as follows:

Wherever it is provided in the present Agreement and the Annexes thereto that an amount shall be calculated on the basis of a rate of exchange, such rate shall, except in the cases provided for in Annex III and in Article 8 of Annex IV of the present Agreement, be—

(a) determined by the par values of the currencies concerned in force on the appropriate date as agreed with the International Monetary Fund under Article IV, Section 1, of the Articles of Agreement of the International Monetary Fund; or

(b) if no such par values are or were in force on the appropriate date, the rate of exchange agreed for current payments in a bilateral payments agreement between the Governments concerned or their monetary authorities; or

(c) if neither par values nor rates in bilateral payments agreements are or were in force on the appropriate date, the middle rate of exchange generally applicable for transactions ruling for cable transfers in the currency of the country in which payment is to be made in the principal exchange market of the other country on that date, or on the last date before that date on which such rate was ruling; or

(d) if there is or was no rate of exchange as specified under (a), (b) or (c) at the appropriate date, the cross-rate of exchange resulting from the middle rates of exchange ruling for the currencies in question in the principal exchange market of a third country dealing in those currencies on that date or the last date before the said date upon which such rates were ruling.

43.
Paragraphs (b), (c) and (d) are apparently of no interest to the Respondent which bases its entire reasoning exclusively on paragraph (a).

In the CM it is said in fact (paragraph 35):

(bb) The question of an alteration in the rate of exchange must be decided pursuant to Art. 13 LDA. It appears that the Applicants themselves admit this in para. 138 (under "18") of the Memorial but apparently they disregard it in their interpretation of the 5 per cent clause. Just as the new amounts payable were calculated pursuant to Art. 13 (for details see the statement made in paras. 18 to 24 above), the determination when and in what manner the alteration in the rate of exchange occurred can only be made on the basis of that provision.

To the extent to which a par value was agreed with the International Monetary Fund, an alteration in the rate of exchange within the meaning of the 5 per cent clause therefore presupposes that in respect of the currency concerned a different par value was agreed with the International Monetary Fund. Such changes of the par value constitute a devaluation or revaluation of the currency concerned. From this, too, it follows that in the case of the 5 per cent clause "depreciate" ("déprécier") should be understood as "devalue" ("dévaluer").

Thus, according to the Respondent, the terms of Article 13, on the one hand, restrict the scope of the clause in dispute and, on the other, clearly indicate the meaning to be attached to the "least depreciated currency", for:

(1) the "alteration" referred to in the first part of the clause must be a change in "par value", that is to say, either a devaluation or a revaluation;

(2) the verb "depreciate" in the second part of the clause must be understood to mean "devalue".

44.
The same arguments have been advanced with particular emphasis during the oral hearing by the Respondent’s Counsel who, at the beginning of the first pleading on the merits of the case stated:

It is my belief that the solution of this case lies within a very narrow compass of monetary law,

and he distributed to the members of the Tribunal the plan which he intended to follow, the first two points of which are as follows:

1) The alteration which is the generating event is reduction (as opposed to increase) of value of any of the currencies.

2) The reduction must occur in the "rate of exchange" as defined in Art. 13(a).

Counsel later said that there is

an essential point for your appreciation of the situation—the word "rate of exchange" in the London Agreement has a special meaning, a special meaning which is defined by Clause 13.

Then, after having analysed the Articles of the IMF and having commented upon the monetary system then in force, he closed by saying:

I can tell you now in one sentence my overall submission. My overall submission will be that, under the IMF System of international currencies, every depreciation—if you prefer the word—presuppose(s) a devaluation in the strict sense, that the one is not possible without the other and that, if you please, the two words are synonymous.

In his third and last pleading Counsel reverted to this point to state once more:

... The rate of exchange could not change without a change of gold parity, of the par value, and therefore it is the same, which term you employ.

45.
It appears that the arguments put forward by the Respondent with respect to Article 13 of the LDA lead to the following conclusions:

(1) Article 13 paragraph (a) gives a particular and special definition of "rate of exchange".

(2) It follows directly from the terms of the said Article 13 (a) that "rate of exchange" and "par value" in the LDA are synonymous.

(3) This also follows indirectly from the reference made in article 13 (a) to Article IV, Section 1, of the Articles of the IMF.

Thus, the Respondent’s Counsel claims that, in order to interpret the disputed clause,

(a) the term "alter" in the first part of the sentence must be understood to mean "change in gold parity (par value)";

(b) the expression "the least depreciated currency" in the second part of the sentence must be understood to mean the "least devalued currency".

46.
We can neither accept the argument nor the results derived from it as they do not take into account the terms of the text.

First of all, it is unacceptable to us to place the concept of alteration of the rate of exchange on the same footing as the concept of an alteration of gold parity (par value). Article 13 of the Agreement does not contain in any of its four paragraphs a definition of the expression "rate of exchange", nor does it attribute to this expression a special and particular meaning which would differ from its ordinary and normal meaning.

This article is limited to stating in precise terms the particular rate of exchange to be used as a basis of calculation in individual cases.

It is well known, in fact, that in international financial practice there is not a single rate of exchange between two currencies but several categories (traveller’s cheques, bank notes, telegraphic transfers etc.) of rates of exchange each of which comprises various rates (cf. in particular Le Cambisme et le Jeu Monétaire International, Presses Universitaires de France, 1970, pp. 32-35, by Bertrand Munier, preface by Oskar Morgenstern).

Each time a calculation had to be made in execution of the Agreement and its Annexes it was therefore necessary to indicate clearly the rate of exchange to be taken into consideration.

This is what Article 13 of the Agreement does in its four paragraphs.

Paragraph (a) thus does not lay down a general principle in the light of which the other paragraphs should be understood and interpreted.

Each paragraph relates to a different case, but in all of them the meaning of "rate of exchange" remains the same.

47.
From the outset, paragraph (a) rightly emphasises the fact that the rate of exchange is a relation between currencies in that the said paragraph lays down that the rate of exchange to be applied for the calculations shall be that "determined by the par values of the currencies concerned in force on the appropriate date..." (emphasis added).

The words "determined by" have escaped the attention of the Respondent which wrongly curtails the text when it stated in its analysis of Article 13 (paragraph 19 of the CM):

Pursuant to the said provision the decisive factors are:

(a) firstly,

the par values agreed with the International Monetary Fund (IMF);

(b) secondly,

the rates of exchange agreed in a bilateral payments agreement;

(c) thirdly,

the rate of exchange applicable for transactions ruling for cable transfers;

(d) finally,

the rate of exchange called the cross-rate.

Likewise, when the Respondent later declared in the CM (paragraph 35, already cited):

... an alteration in the rate of exchange within the meaning of the 5 per cent clause therefore presupposes that in respect of the currency concerned a different par value was agreed... (emphasis added).

upon with the IMF and that such an alteration constitutes

a devaluation or a revaluation of the currency concerned,

the Respondent commits the same error for it always considers each currency separately, taken in its relation to gold or the gold dollar, whereas the text speaks of "the currencies concerned" (emphasis added).

Two currencies and, accordingly, two par values effective on the date in question are thus necessary to produce a rate of exchange. That is what is expressed unequivocally in Article 13 (a).

If one assumes that the par values of two currencies are reduced, both in exactly the same proportion, such an alteration of the par values will not entail an alteration of the rate of exchange between the said currencies.

The disputed clause thus corresponds to Article 13 (a) in the following manner: the alteration which the clause has in view is calculated in relation to a rate of exchange, and that rate of exchange is calculated in relation to the par values in force.

Moreover, the relationship between rates of exchange and par values disappears completely in paragraphs (b), (c) and (d) of Article 13, which fact shows that the guarantee provided by the disputed clause is a pure exchange guarantee without any link to gold or the gold dollar, as the agreement of the three Powers on the unacceptability of any provision resembling a gold clause required it to be.

48.
The exclusive importance attached by the Respondent to paragraph (a) of Article 13 appears to us to be unjustified, and we observe, moreover, that in 1952 and 1953, that is to say, at the time of the negotiations on and the signing of the Agreement and its Annexes, two of the nine currencies of the Young Loan, the Swiss franc and the French franc could not be within the provisions of the said paragraph (a).

It is therefore not possible to speak of a general rule for all the Young Loan currencies.

The mere reference to Article IV, Section 1, of the Articles of the IMF does not make the provisions of that Article applicable to the case in point. The reference made in Article 13 (a) to Article IV, Section 1, of the Articles of Agreement of the IMF has no other purpose than to indicate clearly the par values which will determine the rate of exchange. The IMF Articles do not thereby become applicable in the present case nor are the provisions of the LDA thereby subordinated to those of the IMF Agreement.

In any event, no provision of the Articles of the IMF justifies the conclusion that "rate of exchange" and "par value" could be synonymous expressions. Each of these expressions must always be employed according to its proper meaning.

"Rate of exchange" and "par value" being two different concepts, it follows that we cannot accept the restricted meaning of "devalued"— "dévalué"—"Abwertung" (by official alteration of the par value) which the Respondent attributes to the word "depreciated" (dépréciée) in the clause in dispute.

The juxtaposition in the disputed clause of the expressions "rate of exchange" and "depreciated" shows, in fact, that the depreciation within the meaning of the text is definitely an alteration of the rate of exchange and not an alteration of the par value.

49.
It is this interpretation alone which allows us to reconcile the two parts of the multiple currency exchange guarantee—alteration of "the rates of exchange" and "the least depreciated currency (in relation to the rate of exchange current on 1st August 1952)"—and which gives to the expression "rate of exchange" the ordinary meaning attached to it by Article 13 of the LDA.

Any other interpretation would not respect the terms of the disputed clause.

Conclusion

50.
In reaching our conclusion, we recall the word of the late Judge Sir Hersch Lauterpacht:

... there may be no common intention for the reason that the parties, although using identical language, did not intend the same result. Such cases may be due to the fact that the parties, acting in good faith, attached differing meanings to the language of the treaty. Thus, for instance, a party may have attached to a term a meaning dictated by the peculiarity of its own language or of its own law or practice; the other party may have done the same... In such cases it would be idle to speak of the common intention of the parties, and the judge may legitimately have recourse to what may be considered the common intention of the treaty taken in its entirety, by reference to the historical circumstances of its creation, to its object as ascertained by the general tendency of its clauses, and, in cases of discrepancy of versions in different languages, to an analysis of the history of the adoption and of the meaning of all relevant versions.1

1 See the method adopted by the Permanent Court of International Justice in the case relating to the Competence of the International Labour Organisation (Series B, No. 2, pp. 35 ff.) and in the Mavrommatis Palestine Concessions Case (Series A, No. 2, pp. 19, 20).

(Restrictive Interpretation and the Principle of Effectiveness in the Interpretation of Treaties, vol. XXVI (1949), British Yearbook of International Law, p. 48, at p. 76.)

This is what we have done.

We reach the conclusion that a currency of issue which has appreciated, whether by formal governmental act or otherwise, in relation to other currencies of issue may be "the least depreciated currency", "la devise la moins dépréciée", "Währung mit der geringsten Abwertung", for the purposes of the application of Annex I A 2 (e) of the LDA.

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