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ment by U.S. "small business" companies, and to give preferential consideration to projects in the least developed countries. OPIC is also directed to encourage U.S. investors to take measures to lessen any adverse effects of their projects on the environment.

Berne Union

On June 12, 1974, OPIC joined the Berne Union, an international association of export credit and investment insurance agencies, upon the establishment by the Union of a committee for investment insurance as a second branch of the organization. The Union had previously been concerned only with export credit. The new Investment Insurance Committee, in which OPIC will participate, will establish its

own program.

Marshall T. Mays, president of OPIC, made a statement to the Committee on June 12 in which he said that the restructuring of the Berne Union creating an international association of investment insurers "opens up many possibilities for the exchange of technical information on investment insurance practices and policies. We have long needed an international vehicle for commissioning research and publications designed to strengthen international standards of fair treatment for foreign investors," he said, "and we believe that this is a significant step forward."

As one possible future development, Mr. Mays foresees the establishment of expert panels of independent consultants on investment appraisals or other technical services which might assist in the settlement of investment disputes. "Ultimately," he said, "we hope the Committee will facilitate formation of an expropriation risk reinsurance pool among interested member agencies."

OPIC press release, No. TS/282, June 12, 1974.

Claims

On November 4, 1974, a commercial arbitration tribunal of the American Arbitration Association ruled that OPIC was legally obligated to pay an undetermined amount to the International Telephone and Telegraph Corporation (ITT) on its $95 million claim filed in connection with the expropriation of the Chile Telephone Company. The claim had been denied by OPIC on April 9, 1973. See the 1973 Digest, Ch. 9, § 5, p. 339. The amount of compensation due under the ruling was not determined by the arbitrators since the parties had agreed to reserve a number of complex accounting issues bearing on this question for a second stage of the arbitration proceedings.

ITT had engaged in settlement discussions with the Government of Chile, but the talks were broken off in March 1972 following the publication of a number of internal ITT documents describing certain company activities, both within and outside Chile, with respect to the

Allende Government. OPIC's main contentions before the arbitration panel were that (a) ITT committed a breach of an alleged duty under its insurance contracts with OPIC to negotiate with the Government of Chile; (b) ITT did not perform an alleged contractual duty to disclose material information to OPIC, including its efforts to influence U.S. policy in Chile; (c) ITT committed a breach of an alleged duty under its contracts to preserve for OPIC all rights to be subrogated to ITT's claims against the Government of Chile for expropriation. The panel unanimously rejected each of OPIC's arguments.

For full statements of the arbitrators' findings, see In the Matter of the Arbitration between International Telephone and Telegraph Corporation, Sud America (ITTSA) and Overseas Private Investment Corporation (OPIC), Case No. 16 10 0038 73, Nov. 4, 1974. The panel of arbitrators included Robert B. Williamson, former chief justice of the Supreme Judicial Court of Maine; Richard Ammi Cutter, former associate justice of the Supreme Judicial Court of the Commonwealth of Massachusetts; and John Van Voorhis, former associate judge of the New York State Court of Appeals. The proceeding was conducted in accordance with the rules of the American Arbitration Association. Marshall T. Mays, president of OPIC, said after the ruling: "Following a payment to ITT, OPIC will take over ITT's rights in the Chile Telephone Company to the extent of the claim paid, and pursue a settlement directly with the Chilean Government. It is possible, however, that ITT and the Chilean Government, with OPIC's prior consent, may reach a settlement as to the amount of compensation to be paid to ITT by Chile." (OPIC press release, TS/303, Nov. 4, 1974, p. 3.)

Structure

Chapter 10

INTERNATIONAL ECONOMIC LAW

§ 1 International Monetary Law

International Monetary Reform

The Committee of the Board of Governors of the International Monetary Fund on Reform of the International Monetary System and Related Issues met at Rome January 17-18, 1974. The communiqué issued at the conclusion of the meeting on January 18 contained a provision concerning the future structure of the IMF. The Committee agreed

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that in the reformed system it would be desirable to establish, between the full Board of Governors and the Executive Directors, a permanent and representative Council of Governors with twenty members. They agreed that the Council should meet regularly, three or four times a year as required, and should have the necessary decision making powers to manage and adapt the monetary system, to oversee the continuing operation of the adjustment process and to deal with sudden disturbances which might threaten the system, while maintaining the role of the Executive Board. As an interim step, pending the establishment of the Council, it was agreed that a Committee of the Board of Governors should be created, with an advisory role in the same areas as the Council and with the same composition and procedures. This Committee would come into being when the Committee of Twenty has completed its work. The Executive Board was invited to prepare for the Board of Governors a draft Resolution to create such a Committee, giving due consideration to the need for adequate consultative machinery and the protection of the interests of all Fund members.

For the full text of the communiqué, see the Dept. of State Bulletin, Vol. LXX, No. 1807, Feb. 11, 1974, pp. 150-152.

The Committee held its final meeting in Washington on June 1213, 1974. Secretary of the Treasury William E. Simon headed the

U.S. Delegation to the meeting. A communiqué was issued on June 13 which included the following program of immediate action:

(a) Establishment of an Interim Committee of the Board of Governors of the Fund with an advisory role, pending establishment by an amendment of the Articles of Agreement of a Council with such decisionmaking powers as are conferred on it.

(b) Strengthening of Fund procedures for close international consultation and surveillance of the adjustment process.

(c) Establishment of guidelines for the management of floating exchange rates.

(d) Establishment of a facility in the Fund to assist members in meeting the initial impact of the increase in oil import costs.

(e) Provision for countries to pledge themselves on a voluntary basis not to introduce or intensify trade or other current account measures for balance of payments purposes without a finding by the Fund that there is balance of payments justification for such

measures.

(f) Improvement of procedures in the Fund for management of global liquidity.

(g) Further international study in the Fund of arrangements for gold in the light of the agreed objectives of reform.

(h) Adoption for an interim period of a method of valuation of the SDR [special drawing right] based on a basket of currencies and of an initial interest rate on the SDR of 5 per cent.

(i) Early formulation and adoption of an extended Fund facility under which developing countries would receive longer term balance of payments finance.

(j) Reconstruction by the Interim Committee, simultaneously with the preparation by the Executive Board of draft amendments of the Articles of Agreement, of the possibility and modalities of establishing a link between development assistance and SDR allocation.

(k) Establishment of a joint ministerial Committee of the Fund and World Bank to carry forward the study of the broad question of the transfer of real resources to developing countries and to recommend measures.

(1) Preparation by the Executive Board of draft amendments of the Articles of Agreement for further examination by the Interim Committee and for possible recommendation at an appropriate time to the Board of Governors.

Dept. of State Bulletin, Vol. LXXI, No. 1829, July 15, 1974, pp. 129-130.

On October 2, 1974, the Board of Governors of the International Monetary Fund adopted several resolutions relating to the work of the Ad Hoc Committee on Reform of the International Monetary System.

Pending the establishment of a permanent Council, the Board established an Interim Committee of the Board of Governors on the Inter

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