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The Debate on Profound Changes of Circumstances and Interpretation of the Gold Clauses in International Transport Treaties

Published online by Cambridge University Press:  21 May 2009

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Extract

International transport treaties generally contain liability limitation clauses which limit the liability of carriers for passenger injuries and cargo damage to fixed amounts of a specified unit of account. Such unit of account serves as the basis for converting the amounts due into the national currency of the forum which is awarding judgment. Traditionally gold served as the original unit of account in these treaties.

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Copyright © T.M.C. Asser Press 1985

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References

1. See for a detailed description, Gold, J., “Legal Structure of Par Value System before Second Amendment”, Law & Pol. Int. Business (1978) p. 155Google Scholar .

2. Art. IV/1(2) Articles of Agreement of the IMF (original), December 1945, 2 UNTS 39.

3. Dam, Kenneth W., The Rules of the Game: Reform and Evolution in the International Monetary System (Chicago & London (1982)) pp. 9598Google Scholar.

4. Gold, J., “Effects of Variable Exchange Rates on Treaties”, Revue beige de droit international (19811982), pp. 172–3Google Scholar.

5. Dam, , loc. cit., pp. 137138Google Scholar.

6. Ibid., p. 138.

7. See, Proposed Amendment of the Articles of Agreement of the International Monetary Fund, A report by the Executive Directors to the Governors (1976) p. 43 et seq., where some role for gold was still considered.

8. Conclusion of Advocate General Haak NJ 1981 No. 605, pp. 1980–1981.

9. See on the original SDR's, Gold, J., Special Drawing Rights, IMF pamphlet no. 13, 1969Google Scholar; on the present SDR's, Gold, J., SDR's, Currencies, and Gold: Fifth Survey on New Legal Developments, IMF pamphlet no. 36, 1981Google Scholar.

10. Asser, T.M.C., “Golden Limitations of Liability in International Transport Conventions and the current Crisis,” 5 Journal of Maritime law and Commerce (1975) pp. 645669Google Scholar; Treves, Tullio. “Gold clauses in International Treaties: Current practice and Problems,” The Italian Yearbook of International Law (1915) pp. 132146Google Scholaret seq. see also of Treves, , “Valore dell'oro e limitazione della Responsabilità dell'Armatore espressa in Franchi poincare”, Diritto Marittimo (1974) pp. 1227; Jeffrey Gaynes, (U.S.) Civil Aeronautics Board Staff Memorandum of 18 April 1890,4Google Scholar.

11. See Art. 26, Vienna Convention on the Law of Treaties, concluded in 1969, which came into force on 27 January 1980.

12. Haraszti, , “Treaties and Fundamental Change of Circumstances,” III RdC (1975) p. 1Google Scholar; Cf., Art. 62 Vienna Convention on the law of treaties; for discussion of Art. 62. See Berilaen, André, “Kiitische beschouwingen omtrent “rebus sic stantibus” en “ius cogens” in het licht van het Verdrag van Wenen betreffende het verdragenrecht”, Tifdschrift voor Bestuurswetenschappen en Publiekrecht, (1982) p. 39Google Scholar.

13. Haraszti, , loc.cit., p. 59Google Scholar.

14. ICJ Rep. 1973, p. 3.

15. Ibid., p. 63.

16. Treves, , loc.cit., p. 146Google Scholar.

17. Cf., Free Zones of Upper Savoy and the District of Gex, PCIJ Series A/B no. 46, p. 156.

18. ILC Yearbook 1957, Vol. II, p. 63.

19. ICJ Rep. 1950, p. 128.

20. Ibid., p. 133.

21. Ibid., p. 136.

22. Gold, , pamphlet no. 36, loc. cit., supra n. 9, pp. 4243Google Scholar; Dam, loc. cit., pp. 307308Google Scholar; cf., Advocate General Haak, in Staat der Nederlanden 8 v. Liberia Giant Shipping Corp, H.R., 1–051981, NJ 1981, no. 604, p. 1982Google Scholar (N.B. citing Gold, , loc.cit., 101)Google Scholar.

23. Ibid., p. 1983.

24. Silard, S.A., “The Carriage of SDR at Sea: the unit of account of the Hamburg Rules”, 8 Journal of Maritime Law and Commerce (1978) pp. 1318Google Scholar .

25. Transport and Liability Convention and Protocols to such Conventions which use the SDR for the unit of account: Convention on Limitation of Liability for Maritime claims, London, November 1976; European Convention on Product Liability in regard to 1976; European Convention on Product Liability in regard to Personal Injury and Death, Strasbourg, January 1977; Convention on Civil Liability for Oil Pollution Damage resulting from Exploration and Exploitation of Seabed Mineral resources, London, May 1977; United Nations Convention on the Carriage of Goods by Sea, 1978 (Hamburg Rules), Hamburg, March 1978; Convention Relative aux Transports Internationaux Fenoviaires (COTIF), Berne 1980; United Nations on International Multimodel Transport of Goods, Geneva 1980; Additional Protocol no. 1 to Amend the Convention for the Unification of certain rules relating to International Carriage by Air signed at Warsaw on 12 October 1929. Montreal, September 1975 (Protocols no. 2 and 3 introduced the SDR as the unit of account into the Convention as amended by the Protocols made at The Hague on 28 September 1955 and at Guatemala City on 8 March 1971. Protocol no. 4 made substantive amendments to the Convention as amended by the Protocol made at The Hague and also introduced the use of SDR); Protocol to the International Convention on Civil liability for Oil Pollution Damage, 1969, London, November 1976; Protocol to the International Convention on the Establishment of an International Fund for compensation for Oil Pollution Damage, 1971, London, November 1976; Protocol to the Athens Convention relating to the Carriage of Passengers and their luggage by sea, 1974, London, November 1976: Protocol to the Convention on the Contract for the International carriage of Passengers and luggage by Inland Waterway (CVN), Geneva, July 1978; Protocol to the Convention relating to the Limitation of the Liability of Owners of Inland Navigation Vessels (CLN), Geneva, July 1978; Protocol to the Convention on the Contract for International Carriage of Passengers and luggage by Road (CVR), Geneva, July 1978; Protocol to Amend the Convention on Damage caused by foreign Aircraft to Third parties on the surface signed at Rome on 7 October 1952, Montreal, September 1978; Protocol amending the International Convention for the Unification of certain Rules of Law relating to Bills of Lading, August 1924, as amended by Protocol of 23 February 1968, Brussels, December 1979; Protocol amending the International Convention relating to the Limitation of Owners of Sea-Going ships dated 10 October 1957, Brussels, December 1979.

26. Silard, , loc.cit supra n. 24, p. 27Google Scholar .

27. Idem. See on this problem, Hahn, H.J., “Value maintenance in the Young Loan Arbitration14 NYIL 1983, p. 1et seq.Google Scholar

28. McNair, , Law of Treaties 2nd edn. (1965), 685Google Scholar; some suggestions in the sense of cessante ratione legis, cessat ipsa lex may be read in the following statements in a CAB Memorandum; “The Warsaw Convention was negotiated during the late 1920s when the aviation industry was in its infancy. The minutes of the negotiations show that the primary concerns of the drafters are no longer of great importance to the industry. In addition, their assumptions about how the liability limitation mechanism would work were erroneous… (and)… Warsaw has become an anachronism.” US/CAB Memorandum, 18 March 1980; But see diss. op. Stevens, , T.W.A. v. Franklin Mint et al, 17 04 1984, Reprinted in XXIII I.L.M.1984, p. 816, at 830 (Hereinafter “Franklin Mint (Supreme Court)”)Google Scholar.

29. Cf., McNair, , op.cit., pp. 687688Google Scholar.

30. CAB Memorandum, 18 March 1980; Accord, U.S. Supreme Court, Franklin Mint (Supreme Court/, loc. cit. at 820, supra note 28.

31. HR 144–1972, NJ 1972 no. 269; 4 NYIL (1973) p. 408, 7 ETL (1972) p. 951; Discussed at length by Asser, loc. cit.

32. NJ 1972, p. 733. Emphasis added. (Translation as given by Asser loc.cit.).

33. Lodo Arbitrate 10 November 1972, II Diritto Marittimo (1974) p. 175; also Association Aéronautique et al v. Veuve Thierache, Paris Tribunal de Grande Instance, 10 February 1973, Revue Française de droit aérien (1973) p. 212.

34. “Questo ultimo metodo è stato prescelto dalla Corte Supreme olandese con la sua decisione 14 aprile 1972 nel Hornlinie c. Société Nationale de Petroles d'Aquitaine per il Rilievo che esso garantisce una maggiore uniformità. Ritengo di dover aderire all'ordinamento della Corte Supreme olandese per il motivo principale che non-può ammettersi che il legislatore olandese abbia previsto una conversione in base a criteri diversi da quelli stabiliti dalla legge in vigore.”, p. 21; NB the choice of law rules applied by the arbitrator rendered the Dutch Commercial law to be the substantive law applicable to the case, ibid. p. 8–9.

35. 535 F.Supp. 833 (S.D.N.Y. 1982).

36. Ibid., p. 842.

37. Ibid., p. 843.

38. US District Court (N.D. 111. 1982), 20 ILM (1983) p. 82.

39. Ibid., p. 84; Similarly The Breda, Rb. Amsterdam, 10–1–1979, 23 S & S 1979, no. 29. These Courts have recently been joined by the U.S. Supreme Court, Franklin Mint (Supreme Court), loc.cit. supra note 28.

40. Investigation of Court of First Instance of Gotenburg (Collision SAGA), 2–10–1973, 17 ETL 1982, p. 275 et seq; (See also Zakoupolos v. Olimpic Airways, Athens Court of Appeal, Decision no. 256/1974, and Kuwait Airways Corp. v. Sanghi, Indian Court of Principal Civil judge. Both decisions are available in the author's file).

41. Ibid., p. 281.

42. Ibid., p. 285.

43. Balkan Bulgarian Airlines v. Tammaro, , 25 October 1976, Π Diritto Marittimo 1976, B 3Google Scholar, with annotation by Treves, Tulio, Rivista di diritto internazionale private e processuale (1978) p. 89Google Scholar.

44. Florencia, C.I.A. Argentina de Seguros S.A. v. Varig S.A. (1977), available in the author's file.

45. Rb. Rotterdam, 23–11–1979, 24 S & S 1980, no. 18.

46. Idem.

47. Boehringei Mannheim Diagnostics v. Pan Am World Airways, 531 F. Supp. 344 (S.D. Tex 1981).

48. Court of Appeal of Paris, Ruling of 31 January 1980, 32 Droit Maritime Français 1980, p. 285etseq.

49. Idem.

50. NJ 1981 no. 604; also Rb. Amsterdam, 12–5–1978, 23 S & S 1979, no. 59.

51. Franklin Mint Co, et al v. T.W.A. Inc., U.S. Court of Appeal 2nd Cir., 690 F. 2d 303 (1982). Appeal to the U.S. Supreme Court is pending, see 78 AJIL 1984, p. 242; Overruled by the U.S. Supreme Court, Franklin Mint (Supreme Court), supra note 28.

52. Ibid., p. 4, 11–12, 12. Quotations are from the original type-written text of the judgment.

53. Supra, note 48.

54. Idem.

55. Mint, Franklin (Judgment), loc. cit., p. 4Google Scholar.

56. Ibid., p. 12.

57. 9 ETL (1974) p. 701 et seq., at 710; See Gold, J., “Floating Currencies. SDR's and Gold: Further legal Developments”, IMF pamphlet Nr. 22 (1977), p. 56. (The Civil Court of Rome, Division IV in Linea Aerea Italiane v. Ricoli (1974), available in the author's file)Google Scholar.

58. HR 1–5–1981, NJ 1981, no. 604, S & S 1981, no. 76, 13 NYIL (1982) p. 410.

59. Ibid., p. 1975.

60. Ibid., consideration 10.

61. Ibid., consideration 14.

62. Ibid., consideration 13.

63. Ibid., p. 1976.

64. Ibid., p. 1977.

65. 36 Droit Maritime Français 1984, p. 160, The Hoge Raad was preceded in the next case, Rb. Groningen, 9–3–1979, 23 S & S 1979, no. 90, and it was followed by the Courts of Appeal of The Hague (Hof Den Haag, 12–11–1982, 27 S & S 1983, no. 30) and Amsterdam (Hof Amsterdam, 23–4–1982, 26 S & S 1982, no. 94), and by Rb. Rotterdam, 15–6–1981, 26 S &S 1982, no. 101)Google Scholar.

66. Supra n. 51.

67. Ibid., p. 4.

68. Ibid., pp. 13, 14, 15.

69. The Legal Aspects of Money, 3rd. edn. (1971).

70. Ibid., p. 143, cf. 141.

71. The Legal Aspects of Money, 4th edn. (1982) pp. 154–155.

72. Ibid., pp. 155–156.

73. Heller, P.P., “The Warsaw Convention and the Two-tier Gold Market”, 7 Journal of World Trade Law (1973) p. 126Google Scholar.

74. Heller, P.P., “The Value of the Gold Franc – A different point of view”, Journal of Maritime Law and Commerce (1974), p. 73(hereinafter “Heller 1974”)Google Scholar.

75. Drion, H., ”Limitation of Liabilities in International Air Law, (1954)Google Scholar.

76. Ibid., p. 183.

77. Heller 1974, pp. 91–92.

78. Silard, , loc.cit., 26Google Scholar.

79. Hornlinie, case, loc. cit., p. 731Google Scholar.

80. Ibid.

81. Ibid.

82. Silard, , loc.cit., p. 26Google Scholar .

83. Ibid., p. 27.

84. Heller 1974, Footnote 9, p. 102.

85. Ibid., pp. 101–102.

86. Ibid., p. 102.

87. McNair, , loc.cit., p. 534Google Scholar .

88. It is an established rule that amendments bind only those states which expressly accept them, and thus apply inter se (cf., Oscar Chinn case, PCIJ Series A/B, No. 63, p. 84); This, in fact, simply restates the basic principle of general international law that pacta tertiis nee nocent prosunt. Thus the amending agreement is binding ‘upon’ such states as have ratified it, and the original convention will remain binding ‘for’ states which have not ratified the amending instrument, as well as ‘among’ states which have ratified that instrument, on the one hand, and states which have not, on the other. See Arts. 40–41 Vienna Convention on the law of Treaties.

89. Heller, P.P., “Converting the Gold franc – a reply from an unconverted,” Air Law (1980) p. 33Google Scholar.

90. Ibid., p. 34; See also Franklin Mint (Supreme Court), Diss. Op. Stevens, loc.cit., at p. 826, supra note 28.

91. NJ 1981 no. 605, p. 1989.

92. Gold, J., SDR's, Currency, and Gold: Fourth Survey of New Legal Developments. IMF pamphlet no. 33, 1980, p. 92Google Scholar.

93. Larsen, Judith Ranking, Legal Problems in Compensation under the gold clauses of Private International Law agreements, The Georgetown Law Journal (1975) pp. 817819Google Scholar .

94. Ibid., p. 828.

95. Ibid., p. 829.

96. Ibid., p. 820.

97. Ibid., p. 830.

98. Loc. cit. supra n. 10.

99. Ibid., p. 664; see for a similar opinion, Treves, loc. cit., p. 145Google Scholar.

100. Ibid.

101. Reprinted in 5 Journal of Maritime Law and Commerce 1973, under the title “The value of the Poincaré Franc in limitation of Liability Conventions”, 125–127.

102. NJ 1981 no. 605, p. 1989.

103. Memorandum of law in support of Defendant's Motion, in the Franklin Mint case, (available in the author's file).

104. Lowenfield, A., Aviation Law, 2nd edn. (1981) & 6.51, pp. 7169Google Scholar.

105. Miller, G., Liability in International Air Transport (1977) pp. 179180Google Scholar .

106. Loc. cit., supra n. 10.

107. Ibid., p. 668.

108. Samuelson, P., Economics, 11th edn. (1980) p. 612Google Scholar.

109. McGilchrist, N., “Four New Protocols to the Warsaw Convention” Lloyds Maritime and Commercial Law Quarterly (1976) pp. 186187Google Scholar.

110. Memorandum by J. Gaynes, Legal Division, Bureau of International Aviation, C.A.B., 18 April 1980.

111. Gold, , loc. cit., supra n. 57, p. 83Google Scholar.

112. Ibid.

113. Memorandum of Law in Support of Defendants's Motion, in the Franklin Mint case, (available in the author's file).

114. NJ 1981 no. 605, p. 1990.

115. Silard, Stephen A., “U.S. Court Decision on Gold Unit of Account Holds Warsaw Liability Limits Unenforceable”, IMF Survey, 10 01 1983, pp. 1112Google Scholar.

116. Loc. cit., 1976.

117. McNair, , loc. cit., p. 365Google Scholar.

118. Ibid., p. 345.

119. Ibid., p. 346.

120. Bos, M., “Theory and Practice of Treaty Interpretation”, 27 NILR (1980) 1 and 135, p. 15Google Scholar.

121. McNair, , op.cit., p. 385Google Scholar.

122. Cf., Larsen, , loc.cit., p. 822Google Scholar.

123. Cf., Mann, F.A., “The Doctrine of Jurisdiction in International Law”, RdC (19641971) p. 116Google Scholar.

124. “If… the courts commit errors in that task or decline to give effect to the treaty or are unable to do so because the necessary changes in, or in addition to, the national law has not been made, their judgements involve the state in a breach of treaty”. McNair, , op.cit., p. 346Google Scholar. See generally on responsibility for acts of the judiciary: Vitányi, B.K.J., Internationale Aansprakelijkheid van Statert voor hun Rechtbedeling, (Nijmegen, 1983)Google Scholar.

125. Ibid., p. 352.

126. Cf., “This department has contested and denied that a government may set up the judgment of its own courts as a bar to an international claim, when such judgment is shown to have been unjust or in violation of the principles of international law”. Moore, , Digest of International Law VI (1906) p. 667Google Scholar.

127. Compare holding of the Permanent Court of Justice in its advisory opinion concerning Treatment of Polish Nationals and Other Persons of Polish Origin or Speech in the Danzig Territory (1932): “While on the one hand, according to generally accepted principles, a State cannot rely, as against another State, on the provisions of the latter's constitution, but only on international law and international obligations duly accepted, on the other hand and conversely, a State cannot adduce against another State its own constitution with a view to evading obligations incumbent upon it under international law or treaties in force” PCIJ Series A/B, no. 44, (1932) p. 24.

128. Art. 31 Vienna Convention on the law of Treaties.

129. See Bos, , loc.cit., p. 143Google Scholar, who contemplates another rule (contra proferentem) which was envisaged obiter, by the PCIJ in its judgment in the Brazilian Loan case, PCIJ Series A. no. 21, p. 114 (1929)Google Scholar.

130. See on the “freedom of Interpretation”, Bos, , loc.cit., p. 27 et seqGoogle Scholar.

131. See on four different connotations of the terms, Bos, , loc.cit., pp. 147152Google Scholar.

132. Bos, , loc.cit., p. 156Google Scholar.

133. Ibid., p. 152.

134. PCIJ Series A/B, no. 40.

135. Ibid., p. 19.

136. C.A.B. Staff Memorandum of April 18.

137. South West Africa case, Judgment, ICJ Rep. (1966) pp. 48–49.

138. Interpretation of Peace Treaties with Bulgaria, Hungaria and Romania, ICJ Rep. (1950) p. 229.

139. Ibid., p. 229.

140. C.A.B. Staff Memorandum of 20 May 1981.

141. Supra, n. 31.

142. Supra, n. 70, 71 and 86, and accompanying texts; see also the Saga decision, supra n. 40.

143. Advocate General Haak, NJ 1981 no. 605, p. 1989; Compare further on the “Non-Revision” rule, US Nationals in Morocco Case”, ICJ Rep. (1952) pp. 169, and 199.

144. Interpretation of Article 3, Paragraph 2, of the Treaty of Lausanne (Frontier Between Iraq and Turkey), PCIJ Series B, no. 12, p. 25.

145. Submitted in the case concerning Homlinie, loc.cit., supra n. 31.

146. Idem.

147. Supra, n. 145.

148. Boehringer Mannheim Diagnostics v. Pan Am., etc., 531, F. Supp. 344 (1981), p. 352.

149. C.A.B. Staff Memorandum of 20 May 1981.

150. Idem.

151. Homer, R. and Legrenz, D., Second International conference on Private Aeronautical law, Minutes, 4–12 10, 1929 Warsaw (1975), pp. 8990Google Scholar.

152. Eck v. United Arab Airlines, Inc., 360., 360 F. 2d. 804, 812.

153. Schreuer, C.H., “The Interpretation of Treaties by Domestic Courts”, BYIL (1971) pp. 255282Google Scholar.

154. Cf., South West Africa case (Judgment), loc.cit., p. 48.

155. Loc.cit., p. 14.

156. ICJ Rep. 1950, p. 128.

157. Ibid., pp. 136–137.

158. Ibid., p. 133.