1974) on the maintenance of value and other issues concerning seven United States loans designated as Loans ICAX-1, ICAX-2, and ICAX-3 (ICA loans) and DLF Loans numbered 4, 8, 9, and 156 (DLF loans). The agreement represents a settlement of a long-outstanding dispute between the United States and Sri Lanka concerning the rate of exchange to be utilized in repayment of the loans made under the authority of the International Cooperation Administration (ICA) and the Development Loan Fund (DLF).

The loans were repayable in local currency, although all billings were made in terms of U.S. dollars. The agreement calls for repayment of the three DLF loans to be made at the highest effective rate of exchange (the Foreign Exchange Entitlement Certificate— "FEEC" rate) in accordance with the terms of the Loan Agreements. The ICA Loan Agreements, however, required that in the event a dual rate of exchange were established in Sri Lanka, the repayment rate of the loans would be a rate mutually agreed by the Parties. Accordingly, the June 28 agreement calls for a 50-50 split between the ICA loans repayable at the FEEC rate and those payable at the official or lower rate of exchange. The settlement further provides for rescheduling of repayments for which billings were suspended during part of the period of negotiations.

For further background, see memorandum dated Aug. 29, 1974, from Cynthia Goldstein, Attorney in the Office of General Counsel, AID, to Charles I. Bevans, Assistant Legal Adviser for Treaty Affairs, Dept. of State, Dept. of State File L/T.

U.S.-Chile

The United States and Chile signed two agreements in 1974 on the consolidation and rescheduling of certain Chilean debts owed to, guaranteed, or insured by the United States Government and its agencies. The first agreement, signed on February 6, 1974 (TIAS 7908; 25 UST 1712; entered into force February 6, 1974), provides for the repayment of debts owed to the United States that fell due between November 1, 1971, and December 31, 1972. It implements a multilateral debt rescheduling arrangement (The Paris Minute) concluded in Paris in April 1972 between the Government of Chile and 12 creditor governments (the Paris Club).

The Paris Minute covered commercial credits of over a year guaranteed by governments or government agencies pursuant to contracts entered into on or before January 1, 1971, and loans by governments or government agencies concluded prior to January 1, 1971, with a repayment period of less than 40 years. It excluded loans extended previously for debt rescheduling purposes. The Minute distinguished

See also ch. 2, § 3, supra, p. 11; Ch. 4, § 1, supra, pp. 176–177; and C. supra, pp. 179–180. Of particular importance to the United States is the of the German Democratic Republic (G.D.R.) that losses of victims of Naz's be raised. The G.D.R. agreed during the negotiations, which were held i ington July 15-26, 1974, that a G.D.R. organization, the Committee of An" Resistance Fighters, will be authorized to discuss this category of cla: the Conference on Jewish Material Claims. The Conference is the u organization of Jewish organizations which successfully negotiated w Federal Republic of Germany an agreement to compensate victims of N

U.S.-Hungary

Public Law 93-460 (88 Stat. 1386), approved October 2 amends the International Claims Settlement Act of 1949, as an.. 22 U.S.C. 1621, to provide for the timely determination of claims of U.S. nationals settled by the 1973 United States-Hun Claims Agreement (TIAS 7569; 24 UST 522; entered into force 6, 1973; see the 1973 Digest, Ch. 9, § 3, pp. 336-337). The 1973 ment provides for the payment of $18,900,000 (in 20 equal anı stallments of $945,000) by the Hungarian Government "in ft. final settlement" of all claims of U.S. nationals against Hunger war damage, nationalization, expropriation and other tax property.

In the 1947 Treaty of Peace with Hungary, concluded betw Allied and Associated Powers and Hungary (TIAS 1651; € 2065; 4 Bevans 453), the Hungarian Government undertook: store property owned by "United Nations nationals" in Hun else provide compensation to the extent of two-thirds of the w age suffered by it (Article 26). These undertakings were not. nor were U.S. owners compensated for property which was : ized or otherwise taken subsequent to the 1947 Peace Treaty.

Article 29 of the Treaty provided that assets in the territo: of the Allied and Associated Powers belonging to Hungarian might be seized and liquidated and the proceeds used to pay t of citizens of the Powers. In 1955, Congress approved legislat 84-285) authorizing the vesting and liquidation of previous` assets (worth $3,318,614) of the Government of Hungary nationals other than natural persons. The proceeds of these :placed in a fund in the Department of the Treasury and in part the outstanding claims (approximately $58 million · can nationals against Hungary. Pursuant to the terms of l the Hungarian claims program was completed on August was not until 1965, however, that formal negotiations we

between the terms that were to be applicable to the 70% portion of the installments of principal and interest falling due on these obligations between November 1, 1971, and December 31, 1972, and the remaining 30% portion. The Agreement between the United States and Chile reflects this distinction. With regard to the 70% portion, payments amounting to $68,522,639 are to be paid over a period of six years beginning on January 1, 1975. The remaining 30% of these payments, as well as certain other credits not covered under the Paris Minute, amounting to $60,471,415 are to be paid over a four-year period beginning no later than the date of coming into force of the Agreement (February 6, 1974). The annual interest rate is 6%.

The Agreement provides that Chile will give most-favored-nation treatment to the United States with respect to the 70% portion of the rescheduled credits. In addition, Chile agreed to guarantee the full transferability of payments relating to the debts covered by the Agreement. Chile also obligated itself to carry out direct negotiations aimed at providing “just compensation" for outstanding nationalizations of U.S. interests.

The Agreement provides for implementation by separate bilateral agreements between Chile and the Agency for International Development, the Export-Import Bank of the United States, the Overseas Private Investment Corporation, and the U.S. Government with respect to P.L. 480 Agreements. All four implementing agreements were also concluded in February 1974.

The second agreement, in the form of a Memorandum of Understanding between the United States and Chile signed on June 17, 1974 (TIAS 7940; 25 UST 2683; entered into force June 17, 1974), provides the basis for repayment of debts owed to the United States falling due between January 1, 1973, and December 31, 1974. It implements another multilateral debt rescheduling agreement (The Paris Minute) concluded in Paris in March 1974 between Chile and the Paris Club. The terms are very similar to the February agreement. The second Paris Minute covered commercial credits of over a year guaranteed by governments or government agencies pursuant to contracts entered into on or before December 31, 1973, and loans by governments or government agencies concluded on or before December 31, 1973, with a repayment period of less than 40 years. It excluded loans extended previously for debt rescheduling purposes. The Minute distinguished between the terms applicable to the 80% portion of the installments of principal and interest falling due on these obligations between January 1, 1973, and December 31, 1974, and the remaining 20% portion. The Memorandum of Understanding reflects this distinction. With regard to the 80% portion, payments are to be made in

14 semiannual installments beginning on January 1, 1977, and ending on July 1, 1983. The remaining 20% of these payments will be paid over a three-year period beginning in 1974 (five percent in 1974, five percent in 1975 and 10 percent in 1976). The Memorandum of Understanding also contains the same obligations with regard to mostfavored-nation treatment, full transferability of payments, and negotiations aimed at providing just compensation for outstanding nationalizations.

For the full texts of the Paris Minutes, see the TIAS prints, cited above, for each of the 1974 agreements.

In Cali v. Japan Airlines, Inc., 380 F.Supp. 1120 (1974), decided on August 20, 1974, the U.S. District Court for the Eastern District of New York was faced with a question of the relationship between United States patent law and international conventions in this area.

The patent in this case related to a modification of JT-4 jet engines. Plaintiff alleged that the defendant international air carriers infringed the patent by using the modification in their flights to and from the United States and their overflights of the United States in the course of their scheduled air services. It was not claimed that any defendants either made or sold any engines covered by the claims of the patent in the United States. The contention was that the defendants regularly used the patent within the United States in their regular air services to this country. The defendants argued that even assuming the validity of the patent and assuming that there would have been infringement had the engines been made or sold in the United States, their use of the patent in their aircraft was not infringement because of the provisions of 35 U.S.C. 272, of Article 5ter of the 1958 Paris Convention for the Protection of Industrial Property (TIAS 4931; 13 UST 1; entered into force for the United States. January 4, 1962), and of Article 27 of the 1944 Chicago Convention on International Civil Aviation (TIAS 1591; 61 Stat. 1180; 3 Bevans 944; entered into force for the United States April 4, 1947).

Section 272 of the U.S. patent law provides, in relevant part:

The use of any invention in any . . . aircraft . . . of any country which affords similar privileges to . . . aircraft. . . of the United States, entering the United States temporarily or accidentally, shall not constitute infringement of any patent, if the invention is used exclusively for the needs of the . . . aircraft. . .