The Gazette 1986

accordingly, would not be enforced. In the leading Irish

case,

Namlooze Venootschap de Faam

-v-

Dorset Man-

ufacturing

Co.," in pursuit of an agreement a Dutch

firm supplied a Dublin company with goods, which

were to be paid for in guilders. Payment of foreign cur-

rency to anyone outside of the sterling area was forbid-

den by a war-time exchange control regulation, subject

to the Minister's consent to make the payment. The

Dublin company had got such consent to pay the equiv-

alent of £5,419 in guilders within a specified time.

However, the total value of what was bought was £7,161,

and the equivalent of £4,038 in guilders was paid over

before the time limit expired. The Minister refused his

consent to any further payments. Dixon J. declined to

order that the defendants pay over the outstanding

amount; and he refused even to give a declaratory judg-

ment that that amount was owing although it could not

at that time be paid in guilders. The court would not

make an order "the legal effect of [which] would be to

put the plaintiffs in a position to secure payment of the

amount in question and it would thus, even if indirectly,

compel the defendants to do an act prohibited by law

for the time being in force."

There are special circumstances, however, where

some legal effect will be given to such contracts. Of

particular relevance is whether at the time of the making

of the contract the party seeking enforcement or recovery

under it realised that exchange control was being violated;

and if he or she was not aware of that, whether Central

Bank consent was sought on becoming so aware. In the

Swiss Bank Corporation

case, when the parties consid-

ered that they had broken exchange control they sought

Bank of England approval, but were refused. However,

it was held there that the regulations in question had not

been broken.

Shelly

-v-

Paddock,"

where, without realising that

she had done so, the plaintiff made a contract contra-

vening exchange control, the Court of Appeal gave

some effect to that contract. The plaintiff agreed with

the defendants to buy a house in Spain, paid a deposit

of £80 cash, and later paid the balance of £9,500 into the

defendant's joint bank account in England. It transpired

that the defendants had no title to the house in Spain,

and had defrauded the plaintiff. But the entire trans-

action was in breach of exchange control. Nevertheless,

she sought damages from the defendants for fraud. It

was held that in these circumstances she should get

TO EMPLOY OR TO BE EMPLOYED?

Confidentiality

Speed

Minimisation of Expense

Practitioners should note that the Society

maintains a comprehensive and easily acc-

essible register of solicitors in search of

employment. Those seeking employment

and those offices with posts to be filled are

invited to contact, confidentially, the Edu-

cation Officer, Mr. Albert Power, The

Incorporated Law Society, Blackball Place,

Dublin 7.

damages. According to Lord Denning, M.R.,

"It is said that . . . no person can recover on a trans-

action which is illegal [and that the plaintiff] founds

her cause of action upon an illegal act . . . [but the

defendants] were swindlers right from the beginning

who dishonestly obtained £9,500 from [her].

In those circumstances, . . . the principle stated . . .

does not apply. There are some cases where a person

has not been able to recover when he has been guilty

of evading the exchange control regulations, [but] in

these cases both parties were participating in the

illegal act and there was nothing to choose between

them. But it is altogether different when the parties

are not in

pari delicto

. . . It is better to allow [the

plaintiff] to recover here rather than to allow the

[defendants] to remain in possession of their unlaw-

ful gains . . . these parties are not in

pari delicto. "

In none of the above-mentioned instances was it

asserted that the contract in question was governed by a

foreign law. Nor did the defendants in them raise Article 8

(2)(b) of the Bretton Woods Agreement.

2. Transnational Contracts and the Bretton Woods

Clause

Where the parties to the circumstances of the contract

are not entirely domestic but have a significant inter-

national element, International Law comes into the

picture in several ways. Public International Law

imposes limits on State's criminal jurisdiction; there

must be a sufficient real connection between the act pro-

hibited and the proscribing State.

Where one party to

the contract is abroad and the contract is substantially

performed abroad, then the contract is most likely

governed by a foreign law and not Irish Law.

It was

partly to overcome difficulties posed by Public Inter-

national Law and Private International Law that Article

8 (2)(b) of the Bretton Woods Agreement

was adopted.

According to it,

"Exchange contracts which involve the currency of

any member of [the International Monetary Fund]

and which are contrary to the exchange control

regulations of any member maintained or imposed

consistently with this Agreement shall be unenforce-

able in the territories of any member."

The relevance in this clause to Irish law is that in 1957

Ireland became a member of the International

Monetary Fund when it adhered to the Bretton Woods

Agreement; and by virtue of Section 3 (8)(c) of the Bret-

ton Woods Agreement Act, 1957, the provisions of

Article 8 (2)(c) above "have the force of law in the

state." Accordingly, that clause is now part of Irish

domestic law.

The English Court of Appeal has held that Article 8

(2)(b) supplants the general principles of international

comity and international public policy as regards

exchange contracts; and that the effect of foreign

exchange regulations on contracts which are the subject

of dispute in the English courts "is regulated not by the

several rules of . . . conflict of laws, but by . . . statute,

namely the Bretton Woods Agreement Act."

The

Court of Appeal has also held that where a contract is

unenforcible under Article 8 (2)(b) but this defence is

not raised, the court nevertheless has a duty to apply the