Section 8. Headquarters The headquarters of the Fund shall be located at the headquarters of the OECD in Paris, France. Section 9. Designated authority Each member shall designate a single monetary authority, which shall be the Treasury, stabilization fund, central bank or any other monetary authority, to be responsible for transactions between that member and the Fund. Section 10. The Agent (a) The Fund may enter into an agreement with the Bank for International Settlements for the purpose of allowing the Bank to act as agent for the Fund for administrative purposes, including: (i) maintaining books of account; (ii) receiving monies due to the Fund; (iii) making payments due from the Fund; and (iv) depositing the assets of the Fund. (b) The agreement provided for in paragraph (a) of this Section may also include arrangements concerning borrowing by the Fund pursuant to Article VIII, Section 1(b), or Article IX. (c) The Agent shall submit a periodic report to the Governing Committee, including an account of the Fund's assets and liabilities and an income and expenditure account. Section 11. Independent audit The Governing Committee shall arrange for an independent audit of the accounts of the Fund and shall send a report on the audit, together with a description of the operations of the Fund, to each member. Article XVII CAPACITY, PRIVILEGES AND IMMUNITIES Section 1. Purpose of Article The capacity, privileges and immunities set out in this Article shall be accorded to the Fund in the territory of each member to such extent as is necessary to enable the Fund to fulfill the functions with which it is entrusted. Section 2. Capacity of the Fund The Fund shall possess juridical personality and, in particular, the capacity to contract and to institute legal proceedings. Section 3. Immunity from judicial proceedings (a) The Fund shall enjoy immunity from every form of legal process, except in cases arising out of or in connection with the exercise of any of its powers to borrow money, or to buy and sell securities, in which cases actions may be brought against the Fund in a court of competent jurisdiction in the territory of a member in which the Fund has its headquarters, or has borrowed or issued securities. In such cases the Governing Committee shall, and in any other cases the Governing Committee may, appoint an agent for the purpose of accepting service or notice of process in accordance with the domestic law of the member. b) Notwithstanding the provisions of paragraph (a) of this Section, no action shall be brought against the Fund by any member, or any agency of a member, or any person acting for or deriving claims from a member or agency of a member. Members shall have recourse to such special procedures for the settlement of controversies between the Fund and its members as may be set out in the contracts entered into with the Fund, or in the regulations of the Governing Committee established under Article XVI, Section 2(g). (c) The assets of the Fund, wherever located and by whomsoever held, shall be immune from all forms of seizure, attachment or execution before the delivery of final judgment against the Fund. Section 4. Assets of the Fund Assets of the Fund, wherever located and by whomsoever held, shall be immune from search, requisition, confiscation, expropriation or any other form of seizure by executive, legislative or administrative action. Section 5. Archives of the Fund The Archives of the Fund shall be inviolable. Section 6. Exchange control To the extent necessary to carry out the operations of the Fund, its assets shall be free from financial restrictions, regulations, controls and moratoria of any nature. Section 7. Taxation (a) Within the scope of its official activities, the Fund and its assets and income shall be exempt from all direct taxes, but not from charges for public utility services. (b) No taxation of any kind shall be levied on any obligation or security issued by the Fund, including any dividend or interest thereon, by whomsoever held: (i) which discriminates against such obligation or security solely because of its origin; or, (ii) if the sole jurisdictional basis for such taxation is the place or currency in which it is issued, made payable or paid, or the location of any office or place of business maintained by the Fund. Section 8. Representatives and officials With respect to privileges and immunities: (a) representatives of members to the Governing Committee and the members of the Advisory Board shall be regarded as representatives to an organ of the OECD; and (b) officials of the OECD shall, in respect of things done or omitted to be done by them on behalf of the Fund, be regarded as acting as officials of the OECD. Section 9. Waiver of immunity The Governing Committee shall have the right and the duty to waive any immunity accorded by this Article in any case where, in its opinion, the immunity would impede the course of justice and can be waived without prejudice to the interests of the Fund. Article XVIII PERIOD FOLLOWING LAPSE OF LENDING AUTHORITY During the period after lapse of authority to make loans referred to in Article V, Section 1, and before liquidation of the Fund, all provisions of this Agreement necessary for the purpose of meeting all obligations of and claims on the Fund contracted prior to the lapse of authority to make loans shall remain in force. The Governing Committee may decide, by a unanimous vote, that any other provision of this Agreement shall not be applied during this period. Section 1. Date of liquidation Article XIX Following the lapse of authority for the Fund to grant loans, the Fund shall remain in existence until it has discharged all its obligations to third parties and the last repayment of any loan made by it has fallen due. At that time, the Fund shall be liquidated unless the Governing Committee decides otherwise by a 70 percent majority. Section 2. Liquidation procedures At the date of liquidation the Fund's assets and liabilities shall be liquidated in accordance with the following rules: (a) Any balance in the account referred to in Article XV shall be distributed among the members which have claims pursuant to Article XIII, in proportion to those claims. Any sum remaining in the account after the foregoing distribution shall be distributed to all members in proportion to quotas, provided that no distribution shall be made to a member that has an outstanding financial obligation to the Fund. (b) Any outstanding claims on, or obligations to, the Fund of members in respect of repayment of principal and payments of interest not made to the Fund on the due date and all claims or obligations of members arising under Sections 1, 2, 4 and 5 of Article XIII shall, if denominated in a currency, be converted into SDR at the current value of the currency in terms of SDR and shall be cancelled and replaced by bilateral claims and debts calculated as follows: (i) each member shall have a bilateral debt to each of the members which has a claim on the Fund, equivalent to that fraction of that claim which is equal to the fraction which the quota of the first member represents of the sum of the quotas of all members; and (ii) each member which has an obligation to the Fund shall have a bilateral debt to each of the other members, equivalent to that fraction of that obligation to the Fund which is equal to the fraction which the quota of the latter member represents of the sum of the quotas of all the members. (c) Any unsettled amount arising under Section 7(b) of Article XIII shall be cancelled and replaced by a bilateral claim on, or debt to, the member in respect of which the unsettled amount arose. (d) The bilateral debts arising under paragraphs (b) and (c) of this Section shall bear interest and shall be repaid on terms and conditions to be agreed between the bilateral parties. Such terms and conditions shall, in the case of debts arising under paragraph (b), include the denomination of the debt. Article XX Any question of interpretation of the provisions of this Agreement, arising between any member and the Fund, or between members, shall be referred to an ad hoc committee of three experts designated by the Governing Committee upon the proposal of its Chairman. The opinion of the majority of the ad hoc committee shall be accepted by the Governing Committee, unless the Governing Committee decides otherwise. Article XXI The Governing Committee may propose amendments to this Agreement by unanimous decision of the members voting. The conditions for entry into force of an amendment shall be specified in the proposal of the Governing Committee, making provision for members to comply with their constitutional procedures. Article XXII IMPLEMENTATION OF THE AGREEMENT Each member shall take the necessary measures, including any necessary legislative measures, to implement this Agreement. In particular, each member, upon entry into force of this Agreement for that member, shall have fulfilled all requirements to meet its obligations in accordance with a notice or instruction from the Fund under Article VII or Article XIII, by having taken all necessary legislative or other action that would permit immediate payment to the Fund and shall inform the Fund accordingly. Section 1. Signature Article XXIII This Agreement shall be open for signature by any member country of the OECD at the headquarters of the OECD from April 9 until May 31, 1975. Signatures shall be subject to ratification, acceptance or approval by the signatory countries. Section 2. Entry into force (a) On the tenth day following the day on which member countries of the OECD holding at least 90 percent of the quotas, having complied with constitutional procedures and having fulfilled the requirements under Article XXII, have deposited with the Secretary General of the OECD an instrument of ratification, acceptance or approval, or a notification of consent to be bound, this Agreement shall enter into force for such member countries. (b) If the conditions of paragraph (a) of this Section have not been fulfilled, but at least fifteen member countries of the OECD holding at least 60 percent of the quotas have deposited an instrument of ratification, acceptance or approval, or a notification of consent to be bound, such member countries may decide, by unanimous agreement, to bring this Agreement into force for themselves. Section 3. Adherence after entry into force After the entry into force of this Agreement in accordance with paragraphs (a) or (b) of Section 2 of this Article: (a) For each signatory country which deposits an instrument of ratification, acceptance or approval, or a notification of consent to be bound, within twelve months from the closing date for signature, this Agreement shall enter into force for that country on the tenth day following the day of deposit. The Governing Committee shall establish, in agreement with each such country, conditions regarding any financial obligations or claims associated with whatever loans the Fund may have made. (b) Member countries of the OECD may become parties to this Agreement later than twelve months after the closing date for signature, in accordance with such terms and conditions as may be established by the Governing Committee. Section 4. Notification The Secretary General of the OECD shall notify all member countries of the OECD of the deposit of each instrument of ratification, acceptance, approval or accession, or a notification of consent to be bound, and of the entry into force of this Agreement or any amendment thereto. Section 5. Authentic texts The original of this Agreement, of which the English, French, German, Italian, Japanese, Netherlands and Spanish texts are equally authentic, shall be deposited with the Secretary General of the OECD, and a certified copy thereof shall be furnished by him to each member country of the OECD. Authorizing legislation on the part of the United States and most other OECD countries was necessary in order to become bound by the Agreement. On June 6, 1975, President Ford submitted to Congress proposed legislation that would authorize participation by the United States in the Financial Support Fund. It was introduced by Senator John J. Sparkman on June 10, 1975, as S. 1907 and referred to the Senate Foreign Relations Committee. In the House of Representatives the bill was referred to the Committee on Banking, Currency, and Housing. President Ford's letter of transmittal was accompanied by a Special Report on the Fund, prepared by the National Advisory Council on International Monetary and Financial Policies, strongly recommending U.S. participation in the Financial Support Fund as "unmistakably in the interests of the United States." In his transmittal letter, President Ford explained the financing arrangement, in part, as follows: Participants must make the fullest appropriate use of other sources before turning to the Support Fund. Loans by the Support Fund will be made on market-related terms and will require specific policy conditions in the energy and general economic areas. Support Fund loans will thus contribute directly to cooperative energy policy and to correction of the borrower's external financial difficulties. A further provision, of major importance in such a mutual support arrangement, requires that all risk involved in loans by the Support Fund will be shared equitably by all participants on the basis of pre-determined quotas, as will all rights and obligations of members with respect to the Fund. The terms of the Financial Support Fund therefore assure it will not become a regular operating part of the world's financial machinery or be used as a foreign aid device. The proposed United States quota in the Support Fund— which will determine U.S. borrowing rights, financial obligations, and voting power in the Fund-is 5,560 million Special Drawing Rights (SDR), or approximately $6.9 billion. This quota represents 27.8 percent of total quotas in the Fund. The legislation I am proposing today will permit the United States to participate in the Fund up to its SDR quota, by authorizing the issuance of guarantees by the Secretary of the Treasury. It is intended that any United States contributions will be primarily, if not exclusively, in the form of guarantees to permit the Support Fund to borrow in world capital markets as necessary to meet its lending needs. Most other members also intend to use this guarantee technique. This approach removes the need for the $7 billion in 1976 appropriations for the Support Fund, as proposed in the budget, and will also reduce outlays by $1 billion. Only if a borrower from the Support Fund failed to meet the payments on its obligations would the United States be required |