The opinion of the court was delivered by: MOTLEY
MEMORANDUM OPINION AND ORDER
This court's opinion and order of July 11, 1983 granted plaintiffs' motion for summary judgment. On July 15, 1983, the date this court was prepared to enter judgment in this case, defendant Banco Nacional de Costa Rica, S.A. (Banco Nacional) moved to reargue the motion. In its July 11, 1983 opinion, this court held that since the act of state doctrine was inapplicable to this case, this court would give no effect to the Costa Rican decrees because "they [were not] consistent with the policy and law of the United States." Republic of Iraq v. First National City Bank, 353 F.2d 47, 51 (2d Cir. 1965) (Friendly, J.), cert. denied, 382 U.S. 1027, 15 L. Ed. 2d 540, 86 S. Ct. 648 (1966).Defendant now contends that the nonenforcement of the loan agreement is consistent with the policies and laws of this nation as evidenced by Article VIII, section 2(b) of the Articles of Agreement of the International Monetary Fund (the Bretton Woods Agreement or the Agreement), Dec. 27, 1945, 60 Stat. 1401, T.I.A.S. No. 1502, 2 U.N.T.S. 39, amended by 20 U.S.T. 2775, T.I.A.S. No. 6748, 726 U.N.T.S. 266 (May 31, 1968), amended by 29 U.S.T. 2203, T.I.A.S. No. 8937, U.N.T.S. (April 30, 1978).
After considering the briefs of the parties on this newly raised question of law, the court reaffirms its decision granting plaintiffs' motion for summary judgment and denies defendant's motion to reargue.
Article VIII, section 2(b) of the Bretton Woods Agreement provides:
Exchange contracts which involve the currency of any member and which are contrary to the exchange control regulations of that member maintained or imposed consistently with this Agreement shall be unenforceable in the territories of any member.
Defendant contends that both the United States and Costa Rica are signatories of the Agreement, that each element of Article VIII, section 2(b) is present in this case, and that the loan agreement is unenforceable.
By definition, Article VIII, section 2(b) applies only to "exchange contracts." Relying primarily upon the views of a commentator, defendant urges this court to adopt a broad definition of these terms, sufficiently expansive to include international loans. See Williams, Extraterritorial Enforcement of Exchange Control Regulations Under the International Monetary Fund Agreement, 15 Va. J. Int'l Law 319, 338 (1975) (Williams). However, Williams himself acknowledges that he advocates a broad interpretation of the terms and that "[n]o American decision unequivocally supports a liberal interpretation of the term 'exchange contract.'" Id. at 342.
The broad and narrow interpretations of "exchange contracts" are set forth by a leading commentator as follows:
The narrow view of "exchange contracts" in Article VIII, Section 2(b) is that they are contracts for the exchange of one currency against another or one means of payment against another. The broad view is that they are contracts involving monetary elements.
J. Gold, The Fund Agreement in the Courts: Volume II 425 (1982) (Gold). A review of the decisions that have directly addressed the meaning of these terms reveals that they consistently adhere to the narrow interpretation of the terms "exchange contracts."
In Banco Do Brasil, S.A. v. A.C. Israel Commodity Co. Inc., 12 N.Y.2d 371, 190 N.E.2d 235, 239 N.Y.S.2d 872 (1963), cert. denied, 376 U.S. 906, 11 L. Ed. 2d 605, 84 S. Ct. 657 (1964), the Court of Appeals endorsed a narrow view of the terms "exchange contracts" as contracts which have as their immediate object the exchange of international media of payment, viz. the exchange of one currency for another:
It is far from clear whether this sale of coffee is covered by subdivision (b) of section 2.... Subdivision (b) of section 2 has been construed as reaching only "transactions which have as their immediate object 'exchange,' that is, international media of payment"..., or a contract where the consideration is payable in the currency of the country whose exchange controls are violated.... More recently, however, it has been suggested that it applies to "contracts which in any way affect a country's exchange resources"....A similar view has been advanced to explain the further textual difficulty existing with respect to whether a sale of coffee in New York for American dollars "involves the currency" of Brazil, the member whose exchange controls were allegedly violated. Again it is suggested that adverse effect on the exchange resources of a member ipso facto "involves" the "currency" of that member.... We are inclined to view an interpretation of subdivision (b) of section 2 that sweeps in all contracts affecting any members' exchange resources as doing considerable violence to the text of the section. It says "involve the currency" of the country whose exchange controls are violated; not "involve the exchange resources".
12 N.Y.2d at 375-76, 190 N.E.2d at 236, 239 N.Y.S.2d at 873-74 (emphasis added; citations omitted).
In J. Zeevi & Sons, Ltd. v. Grindlays Bank (Uganda), Limited, 37 N.Y.2d 220, 333 N.E.2d 168, 371 N.Y.S.2d 892 (Zeevi), cert. denied, 423 U.S. 866, 46 L. Ed. 2d 95, 96 S. Ct. 126 (1975) the Court of Appeals adhered to its narrow interpretation of the terms "exchange contracts." On March 24, 1972, Hiram Zeevi & Company (Uganda) Ltd., an Israeli corporation, deposited with defendant Grindlays Bank (Uganda) Ltd., local currency valued at $406,864.80 in American dollars. The purpose of the deposit was to provide an account against which plaintiff J. Zeevi & Sons, Ltd., a partnership, could draw money. ...