In the last issue of the Quarterly consideration was given to the vexed question of how the Poincare gold franc unit of account is today to be converted into domestic currency equivalents for the purposes of those provisions of the Warsaw Convention which entitle the air carrier to limit its liability for injury, loss or damage. Although the issue has been troublesome for some years the problem became acute following the abolition by the International Monetary Fund in 1978 of the fixed “official” price of gold and the abandonment of gold as a unit of account for inter-governmental financial transactions.

Courts in a number of jurisdictions have offered opinions on the matter—either obiter or in considered judgments—but as pointed out in the preceding article there is a remarkable dearth of authority on the subject in the influential jurisdictions of the United States. A passing reference in Kinney Shoe Corporation v. Alitalia (15 AVI 18, 509 SDNY 1980) apart, the first decision directly to have addressed the question was handed down by the District Court for the Southern District of New York on Nov. 6, 1981 in Franklin Mint v. TWA (No. 81 CIV. 1700).

Since then, however, there have followed in quick succession two further judgments —one in Texas and one in New York. In view of the present importance of the topic it is felt that readers will wish to be kept apprised of the evolving case law. More decisions are in the pipeline—and Franklin Mint is the current subject of an appeal— but the consensus in the early authorities is likely to have a persuasive impact on subsequent judicial deliberations.

It will be recalled that in Franklin Mint v. TWA Knapp, D.J., reviewed a variety of options open to the court but concluded that the preferred alternative was to remain faithful to the old official price of gold—equivalent to U.S. $20 per kilogram— even although this amounted to the espousal of a fiction now that an official price structure no longer existed. This approach has not found favour with the Federal District Court for the Southern District of Texas.

In June, 1978, Pan American World Airways Inc. contracted to carry a blood chemistry analyser, weighing some 1,860 pounds, from Brazil to Houston, Texas.