INTERNATIONAL TRUSTEE FOR THE PROTECTION OF BONDHOLDERS AKTIENGESELLSCHAFT v. THE KING.

(1937) 57 Ll.L.Rep. 145

HOUSE OF LORDS.

Before Lord Atkin, Lord Russell of Killowen, Lord Macmillan, Lord Maugham and Lord Roche.

Contract-Conflict of laws-Bonds issued by British Government in the United States of America-Issue in exchange for Secured Loan Convertible Gold Notes-Repayment of principal-Payment of interest-Mode of payment- Petition of right brought by holders of bond for 1000 dols.-Obligation of Government under gold clause providing (inter alia): "Such principal sum and the interest thereon will be paid at the option of the holder, either in the City of New York, State of New York, United States of America, at the office or agency which will be maintained in said city by the obligor for the service of the bonds of this issue in gold coin of the United States of America of the standard of weight and fineness existing February 1, 1917, or in the City of London, England, in sterling money at the fixed rate of 4.8612 dols. to the pound." -Joint Resolution of Congress of United States, 1933, providing (inter alia): "Every provision contained in or made with respect to any obligation which purports to give the obligee a right to require payment in gold or a particular kind of coin or currency, or in an amount in money of the United States measured thereby, is declared to be against public policy; and no such provision shall be contained in or made with respect to any obligation hereafter incurred. Every obligation, heretofore or hereafter incurred, whether or not any such provision is contained therein or made with respect thereto, shall be discharged upon payment, dollar for dollar, in any coin or currency which at the time of payment is legal tender for public and private debts"-Illegality of payment in gold in United States-Construction of gold clause- Whether bondholders entitled to be paid in New York such a sum in dollars as represented on the due date of payment the gold value (ascertained in accordance with the standard of weight and fineness existing on Feb. 1, 1917) of the nominal amount of the bonds, or only to be paid "dollar for dollar" of the nominal amount-Law applicable - Intention of parties - Inference to be drawn from contract terms and from surrounding circumstances -Sovereign State as party to contract.