[p5] The Court,
composed as above, [p6]
having heard the observations and conclusions of the Parties,
delivers the following judgment:
 The Governments of the French Republic and of the Kingdom of the Serbs,
Croats and Slovenes have submitted to the Permanent Court of International
Justice, by means of a Special Agreement concluded at Paris on April 19th,
1928, between the aforesaid Governments, duly ratified by both Parties on
May 16th, 1928, and filed with the Registry of the Court, in accordance with
Article 40 of the Statute and Article 35 of the Rules of Court, by letters
dated May 24th, 1928, signed by the French Minister at The Hague and by the
Minister of the Serb-Croat-Slovene State in London (also accredited to The
Hague) respectively, the dispute which has arisen between the
Serb-Croat-Slovene Government and the French holders of the Serbian 4 %
1895, 5 % 1902, 4½ % 1906, 4½ % 1909 and 5 % 1913 loans and also of the 4½ %
land bonds (obligations foncieres) of 1910 and of the 4½ % communal bonds of
1911 (Ouprava Fondova) and of the shares of the Serbian Red Cross Society,
with regard to the question upon what monetary bases payment of the
principal and interest of these loans should be effected.
 The letter of the Minister of the Serb-Croat-Slovene State reached the
Registry only on June 4th, 1928; but, in view of the fact that Article III
of the Special Agreement provides that the latter may, as soon as
ratifications have been exchanged, be submitted to the Court by means of a
notification addressed to the Registry by either Party, the Court was duly
made cognizant of the case on May 24th, the date on which the letter of the
French Minister at The Hague was received.
 According to the terms of the Special Agreement, the Court is asked to
decide the following questions:
"(a) Whether, as held by the Government of the Kingdom of the Serbs, Croats
and Slovenes, the latter is entitled to effect in paper francs the service
of its 4 % 1895, 5 % 1902, 4½ % 1906, 4½ % 1909 and 5 % 1913 loans, as it
has hitherto done;
(b) or whether, on the contrary, the Government of the Kingdom of the Serbs,
Croats and Slovenes, as held [p7] by the French bondholders, is under an
obligation to pay in gold or in foreign currencies and at the places
indicated hereinafter, the amount of the bonds drawn for redemption but not
refunded and of those subsequently drawn, as also of coupons due for payment
but not paid, and of those subsequently falling due for payment of the
Serbian loans enumerated above, and in particular:
1° With regard to the Serbian 4 % loan of 1895, whether holders of bonds of
this loan are entitled, whatever their nationality may be, to obtain, at
their free choice, payment of the nominal amount of their coupons due for
payment but not paid and of those subsequently falling due for payment, as
also of their bonds drawn for redemption but not refunded and of those
subsequently drawn, at Paris, London, Berlin, Vienna, Geneva and Belgrade,
in the currency in circulation at one of these places;
2° With regard to the 5 % 1902, 4½ % 1906, 4½ % 1909 and 5 % 1913 loans and,
subsidiarily with regard to the above-mentioned 4 % loan of 1895, whether
holders of these bonds are entitled to obtain payment of the nominal amount
of their coupons due for payment but not paid and of those subsequently
falling due, as also of their bonds drawn for redemption but not refunded
and of those subsequently drawn, in gold francs at Belgrade, Paris, Brussels
and Geneva, or at the equivalent value of the said amount at the exchange
rate of the day in the local currency at Berlin, Vienna and Amsterdam, in so
far as concerns the 1902, 1906 and 1909 loans;
3° Lastly, how the value of the gold franc is to be determined as between
the Parties for the above-mentioned payments."
 It is to be noted that no question is put to the Court respecting the 4½
% land bonds of 1910, the 4½ % communal bonds of 1911, or the "shares of the
Serbian Red Cross Society".
 Conforming to the proposals jointly made in Article IV of the Special
Agreement, in accordance with Article 32 of the Rules of Court, the
President, having regard to that article, as also to Article 48 of the
Statute and Articles S3 and 39 [p8] of the Rules, made an order on May 26th,
1928, fixing July 25th and September 25th, 1928, as the dates for the
expiration of the times allowed to each of the Parties for the filing of
their Cases, formulating their submissions, and of their Counter-Cases in
reply, setting out also, if necessary, any additional submissions; in the
same order, the President, whilst recording that the Parties were to be held
to have agreed, in accordance with Article 39, paragraph 1, of the Rules, to
waive the right to submit Replies, reserved the right of the Court to call
upon them, should it see fit, to submit Replies within a time subsequently
to be fixed. The Court has not made use of this right.
 The Cases and Counter-Cases were duly filed with the Registry by the
dates fixed and were communicated to those concerned as provided in Article
43 of the Statute.
 In the course of public sittings held on May 15th, 16th, 17th, 18th,
22nd, 23rd and 24th, 1929, the Court has heard the oral pleadings, reply and
rejoinder, presented by the above-mentioned Agents for the Parties, as also
by Me Albert Montel, Counsel before the Court of Appeal of Paris, on behalf
of the French Government, and by Me Albert Deveze, Counsel before the Court
of Appeal of Brussels, on behalf of the Serb-Croat-Slovene Government.
 In support of their respective statements, the Parties have submitted to
the Court, either as annexes to the documents of the written proceedings or
during the hearing, the documents a list of which is given in the annex to
this judgment [FN1].
[FN1] See p. 85.
 Under Article IV of the Special Agreement, the Parties' Cases were to
contain their submissions, whilst the Counter-Cases were, if necessary, to
set out any additional submissions.
 The submissions of the French Government as formulated in its Case are
It is submitted that:
"(1) With regard to the Serbian 4 % 1895 loan, the holders of the bonds of
this loan, whatever their nationality may be, are entitled to obtain, at
their free choice, payment of the nominal amount of their coupons, due for
payment but not [p9] paid, and of those subsequently falling due, as also of
their bonds drawn for redemption but not refunded and of those subsequently
drawn at Paris, London, Berlin, Vienna, Geneva and Belgrade in the currency
in circulation at one of these places;
(2) With regard to the 4 % 1895, 5 % 1902, 4½ % 1906, 4½ % 1909 and 5 % 1913
loans, the holders of bonds of these loans are entitled to obtain payment of
the nominal amount of their coupons, due for payment but not paid, and of
those subsequently falling due, as also of their bonds drawn for redemption
but not refunded and of those subsequently drawn, in gold francs, at
Belgrade, Paris, Brussels and Geneva, or at the equivalent value of the said
amount at the exchange rate of the day in the local currency at Berlin,
Vienna and Amsterdam, in so far as concerns the 1902, 1906 and 1909 loans;
(3) For the purpose of the above payments which are to be made in gold
francs at gold parity, the value of the gold franc is that of a weight of
gold corresponding to one twentieth part of a piece of gold weighing 6 gr.
45161 900/1000 fine."
 For its part, the Serb-Croat-Slovene Government, in its Case, submits:
" .... that the French Government's claims are unfounded and that the
Serb-Croat-Slovene State, in paying the principal and interest of the loans
in dispute in French francs, is carrying out its obligations to the full;
And consequently that the claim of the French State should be dismissed."
 This submission is preceded by an enumeration of grounds on which it is
based and summarizing the Serbian standpoint in regard to the various points
forming the subject of argument; these grounds are headed by a preamble, the
terms of which should be set out:
"Whereas the purpose of the action brought by the French State on behalf of
the holders of bonds of the Serbian 1895, 1902, 1906, 1909 and 1913 loans,
is to obtain judgment to the effect that the service of these loans should
be effected in gold;
And whereas the Serbian State in its submissions expressly reserves all
rights which may belong to it either by reason of the forfeiture of certain
rights by the bondholders, or under the provisions of the Peace Treaty
regarding the property of ex-enemy subjects...."
 The French Government has not availed itself of the right accorded by
the Special Agreement to formulate additional [p10] submissions in its
Counter-Case; it has simply contented itself with reproducing in that
document word for word the submissions made in the Case, but, like the
Serb-Croat-Slovene Case, it has preceded them by an enumeration of grounds
summarizing its standpoint in regard to the various points in dispute.
 Similarly, the Serb-Croat-Slovene Government has not made use of its
right to formulate additional submissions in its Counter-Case, and has
confined itself to stating that it "maintains the submissions set out" in
its "first Case".
 With regard to Article 1 (b), No. 2, of the Special Agreement, a
passage which is reproduced almost word for word in the submissions of the
French Government, the Court has been informed by that Government's Agent,
in reply to a question put by the Court to the two Parties, that the words
"and Amsterdam in so far as concerns the 1902, 1906 and 1909 loans", which
in a preliminary draft of the Special Agreement were enclosed in brackets,
should be read to mean: whereas, in the case of the holders of bonds of the
four loans of 1902, 1906, 1909 and 1913, the question is one of the
existence of a right to obtain at Berlin and at Vienna only payment of the
corresponding value at the exchange rate of the day in the local currency of
the nominal amount in gold francs of their coupons and bonds, in the case of
holders of bonds of the 1902, 1906 and 1909 loans, there is also the
question of the existence of a similar right at Amsterdam.
 The Agent for the Serb-Croat-Slovene Government has not disputed the
explanation thus given, which is, moreover, confirmed by the wording of the
 According to the documents and information submitted to the Court by
the Parties, the origin of the controversy now before the Court is as
 I. At a conference held on June 20th, 1895, at Carlsbad, between the
Serbian Minister of Finance, representatives of the Serbian National Bank
and representatives of three other banks, the Minister explained that the
Serbian Government had decided "to convert the existing 5% loans into a
consolidated 4% loan to be redeemed in 72 years, to maintain for the benefit
of this new conversion loan the securities appropriated to the existing
loans; further, to create by law, for the control of these securities, an
Administration of Monopolies entirely independent of political occurrences,
in order that the securities appropriated to the conversion loan should be
administered independently, and to utilize independently the revenues which
it receives for the payment of interest and for the redemption of the
conversion loan". Thereupon the representatives of the banks expressed the
"opinion that the proposals of H.E. the Minister of Finance were calculated
considerably to increase confidence in Serbia's credit and to compensate
Serbia's creditors for the reduction of the rate of interest resulting from
the exchange of the existing 5% stock for 4% bonds". It was accordingly
agreed that the Serbian Government should submit to the Skupshtina a bill
containing certain provisions agreed upon by the Conference.
 The law in question was in effect promulgated on July 8th/20th, 1895.
It authorized a "new consolidated loan" of a nominal capital of 355,292,000
dinars (francs); it was divided into 710,584 bonds, the certificates of
which which are analysed hereinafter were signed at Belgrade on August
1st/13th, 1895. The loan was issued in the same year at various places other
than London, with the exception of an amount of 73,460,000 francs which
remained in the hands of the Serbian Government.
 According to a circular of the Comptoir national d'Escompte of Paris
dated August 28th, 1895, it was more a question of an exchange of
certificates this moreover was in accordance with the character of the
1895 loan as a conversion loan , and this exchange could be demanded until
[p12] September 24th, 1895. The Court has before it no prospectus properly
so called, but merely a "first notice distributed in France in May 1896", as
also a "notice concerning the Serbian 4% consolidated 1895 funds", which
mentions no date but is said to have been published in October 1902, the
authenticity of which however is disputed by the Serbian Government.
 Under a contract concluded at Paris on April 3rd/15th, 1896, the
Serbian Government made over to a group of banks "the nominal sum of
70,460,000 francs" of the 4% redeemable loan of 1895; a portion of the
amount thus made over was made the subject of an agreement concluded at
Paris on June 27th/July 9th, 1897, with regard to the issue in London of
£1.000.000 sterling (25 million dinars). The prospectus relating to this
section, dated July 23rd, 1897, states that subscription would take place in
London on July 27th, 1897.
 II. On July 26th/August 8th, 1902, a Serbian law was promulgated
authorizing the Government to issue a loan of a nominal amount of "60
million francs in gold", and designed to liquidate a part of the floating
debt. With a view to the issue of this loan, the Serbian Government
concluded at Paris on August 23rd/September 5th, 1902, with a group of
banks, a contract under which the Government was to hold at the disposal of
the banks, on certain specified conditions, the bonds to be issued to the
number of 120,000. The bonds were signed at Belgrade on the same day; they
will be analysed hereinafter. The prospectus, which is dated February 12th,
1903, indicates that the subscription list will be open at Paris during the
day of February 26th, 1903.
 III. A Serbian law promulgated on December 14th/27th, 1906,
authorized the Serbian Government to contract a loan "of a nominal amount of
95 million francs in gold", destined for the construction of railways and
the acquisition of war material. As early as November 12th, 1906, however, a
contract had been concluded at Geneva between the Serbian Government and a
group of banks, the object of which was the issue of the loan contemplated
by the law of December 14th/27th, to which it expressly refers. Under [p13]
the contract, the Serbian Government was to hold at the disposal of the
banks the bonds to be created to the number of 190,000 "as from the
signature of the contract". The bonds, which will be analysed hereinafter,
were signed at Belgrade on December 14th/27th, 1906, that is to say, on the
day on which the law authorizing the loan was promulgated. According to the
prospectus, which is dated January 23rd, 1907, the subscription list was to
be open at Paris on February 9th, 1907.
 IV. On October 9th, 1909, a contract was concluded at Paris between
the Serbian Government and a group of banks concerning the issue of a "loan
of 150 millions of gold francs which the Government intended to ask the
Skupshtina for authority to contract"; the Government undertook to hand over
to the banks the bonds to be issued "as from the date of the passing and
promulgation of the law"; bonds to the number of 300,000 were to be issued
75% in France and 25% in Germany; the contents of these bonds will be
analysed hereinafter. On December 15th/28th, 1909, a Serbian law was in
effect promulgated approving "the contract of October 27th/November 9th,
1909," concerning the loan "of 150,000,000 francs intended for the
construction of railways and the completion of the stock of war material".
The bond certificates were signed the same day at Belgrade, and, according
to the prospectus of February 5th, 1910, concerning the issue in France of
225,000 bonds, applications for allotments were to be received at Paris, on
and after February 19th, 1910; on the other hand, the prospectus concerning
the German issue (75,000 bonds), dated "February 1910", states that
subscription would take place at Berlin, Frankfort-on-the-Main and Hamburg,
on February 26th, 1910.
 V. Lastly, a contract signed at Belgrade on August 26th/September
8th, 1913, between the Serbian Government and the group of banks fixed the
conditions for the issue by the latter of a loan which the Government
"intended to ask the Skupshtina for authority to contract". The loan was to
be of 250,000,000 francs and divided into two equal parts, one devoted to
payment of the expenditure resulting from the wars of 1912 and 1913, and the
other to expenditure in [p14] connection with the requirements of the public
services and the economic development of the Kingdom, and especially of the
new territories. The bonds, to the total number of 500,000, were to be held
at the disposal of the banks as from the date of the passing and
promulgation of the law authorizing the loan. This law, which was actually
promulgated on October 18th/31st, 1913, approved the contract of August
26th/September 8th, 1913, concerning the loan "of 250,000,000 gold francs
for the payment of the urgent expenditure incurred during the war and for
urgent needs of the State". The bonds, which will be analysed hereinafter,
were signed at Belgrade the same day. According to the prospectus, dated
December 10th, 1913, the subscription list, which was opened at Paris,
Geneva and Belgrade, was to be closed on January 14th, 1914, at latest.
 It has not been denied and this moreover appears from the actual
terms of the Special Agreement that the service of the five loans has
hitherto been effected in respect of the French holders in French francs at
their current value. This also appears to be the case, since July 1920, as
regards coupons of the 4 % 1895 loan belonging to French holders who had
previously been paid in London in English money. The service of the loan was
conducted in this manner, in particular, during the period, in the course of
the war of 1914-1918, when it was met, either by the French Government as
contended by the Serb-Croat-Slovene Government or out of funds advanced by
the French and British Governments. It was from 1924 or 1925 onwards that
the holders began to refuse to accept payment of their coupons on this basis
and to make protests, contending that the loan-service should be on a gold
 It is also common ground that the yield of the various loans was
credited to the Serbian Government in French francs at the current value and
that, when that Government, in 1913, asked for remittances in gold specie,
it was obliged to accept responsibility for certain expenses in respect
thereof, the character of which is differently construed by the Parties.
 When their attention had been directed to the question whether the
service of the Serbian loans should be effected in francs at gold value or
in francs at the current value, the French bondholders requested their
Government to intervene. According to the statements of the Parties' Agents
before the Court, diplomatic negotiations followed and the Court has had
before it certain documents relating to these negotiations, in the course of
which "the Government of the French Republic held that the French holders of
the loans in question were justified in the claim they were making to obtain
payment in gold currency of arrears and of bonds of those loans drawn for
redemption", whilst "the Serb-Croat-Slovene Government, on the other hand,
held that it was right in maintaining that payment was due only in French
 This is "the dispute" which, being unable to settle it by diplomacy,
the two Governments have, according to the preamble of the Special Agreement
of April 19th, 1928, decided to "submit to the Court"; it is true, however,
that, in the preamble, as also in Article I above quoted, the Special
Agreement defines the dispute by stating, not the respective contentions of
the two Governments, but, on the one hand, that of the Serb-Croat-Slovene
Government and, on the other, that of the French bondholders; the Court will
revert to this point.
 According to the Special Agreement, the Court's judgment, though
deciding the questions formulated in Article I, is not however destined
finally to settle the manner in which the service of the loans is to be
effected. For Article II of the Special Agreement provides that, within one
month from the delivery of the judgment, the Serb-Croat-Slovene Government
and the representatives of the bondholders will begin negotiations with a
view to concluding an arrangement which:
"1° In the event of the Court's award being in accordance with the views of
the Government of the Kingdom of the Serbs, Croats and Slovenes, will
determine whether considerations of equity do not require that the
Government [p16] of the Kingdom of the Serbs, Croats and Slovenes should
make the bondholders certain concessions over and above that which in the
event of an award by the Court in favour of its contentions it would be
strictly obliged to do.
2° In the event of the Court's award recognizing the justice of the claims
of the bondholders, will make to the Government of the Kingdom of the Serbs,
Croats and Slovenes, having regard to its economic and financial situation
and capacity for payment, certain concessions over and above that which it
would be strictly entitled to claim."
 The same article also provides that, failing the conclusion within a
specified time of such an arrangement, "the question of the concessions
referred to" in the paragraph quoted above "and of the method of giving
effect to them" shall, in all circumstances, be decided by a special
arbitral tribunal, to which the question may be referred by "either of the
two contracting Parties".
 Finally, it should be observed that, according to Article V of the
Special Agreement, "as regards any matter not provided for by the present
Special Agreement, the provisions of the Statute of the Permanent Court of
International Justice shall be applied".
The Court's jurisdiction.
 Before approaching the questions submitted to it, the Court feels that
it should define, with reference to the provisions governing its
jurisdiction and functions, the task entrusted to it by the Special
 This is made necessary because of the fact that the jurisdiction which
the Court is called upon to exercise under the Agreement between France and
the Serb-Croat-Slovene State, seems at first sight to constitute a departure
from the principles which the Court, in previous judgments, has laid down
with regard to the conditions under which a State may bring before it cases
relating to the private rights of its nationals.
 According to Article 14 of the Covenant, the Court is competent to hear
and determine "any dispute of an international character which the Parties
thereto submit to it"; [p17] and, according to Article 36 of its Statute,
"the jurisdiction of the Court comprises all cases which the Parties refer
to it". Having been brought before the Court by a Special Agreement between
the Government of the French Republic and the Government of the
Serb-Croat-Slovene Kingdom, the present case appears on this ground to be
admissible, as far as considerations of form are concerned.
 Nevertheless, according to the strict terms of the Special Agreement,
the controversy submitted to the Court does not appear as a dispute between
the two Governments, but as one between the Government of the
Serb-Croat-Slovene Kingdom and the French bondholders of certain Serbian
loans: it is this dispute, concerning the question on what monetary bases
the service of these loans should be effected, which the said Government and
the Government of the French Republic would appear to have submitted to the
Court by agreement. Now, Article 34 of the Statute expressly provides that
"only States or Members of the League of Nations can be parties in cases
before the Court" (in the French text "ont qualite pour se presenter devant
la Cour"); this principle has its origin in Article 14 of the Covenant, the
terms of which, especially if regard be had at the same time to both the
official versions, hardly admit of a doubt that the disputes of an
international character contemplated therein are disputes between the actual
Parties who submit them to the Court.
 It follows that if the dispute referred to the Court by the Special
Agreement between France and the Serb-Croat-Slovene State were to be
regarded as a dispute between the Government of the Serb-Croat-Slovene
Kingdom and certain bondholders of the loans, one of the essential
conditions of procedure before the Court, namely, the legal capacity of the
Parties, would be unfulfilled.
 In this connection, reference should be made to what the Court has said
on several occasions, and in particular in Judgments Nos. 2 and 13, namely,
that by taking up a case on behalf of its nationals before an international
tribunal, a State is asserting its own right that is to say, its right to
ensure in the person of its subjects, respect for the rules of international
law. Accordingly, in all cases with which the Court has so far had to deal
and in which private interests [p18] have been involved, the State's claim
has been based upon an alleged breach of an international agreement. The
controversy submitted to the Court in the present case, on the contrary,
solely relates to the existence and extent of certain obligations which the
Serbian State is alleged to have assumed in respect of the holders of
certain loans. It therefore is exclusively concerned with relations between
the borrowing State and private persons, that is to say, relations which
are, in themselves, within the domain of municipal law.
 It is however to be noted that the question whether the manner in which
the Serb-Croat-Slovene Government is conducting the service of its loans is
in accordance with the obligations accepted by it, is no longer merely the
subject of a controversy between that Government and its creditors. When the
holders of the Serbian loans, considering that their rights were being
disregarded, appealed to the French Government, the latter intervened on
their behalf with the Serb-Croat-Slovene Government. Diplomatic negotiations
followed: but whatever took place during these negotiations, it is common
ground that the Serb-Croat-Slovene Government did not reject the
intervention of the French Government, but contended that the service of the
loans was being effected by it in full conformity with the obligations
resulting from the contracts. This view however was not shared by the
Government of the French Republic. As from this point, therefore, there
exists between the two Governments a difference of opinion which, though
fundamentally identical with the controversy already existing between the
Serb-Croat-Slovene Government and its creditors, is distinct therefrom; for
it is between the Governments of the Serb-Croat-Slovene Kingdom and that of
the French Republic, the latter acting in the exercise of its right to
protect its nationals. It is this difference of opinion between the two
Governments and not the dispute between the Serb-Croat-Slovene-Government
and the French holders of the loans, which is submitted by the Special
Agreement to the Court. The case therefore is admissible not merely from the
point of view of form: it also relates to a dispute between Parties of the
category contemplated by Article 14 of the Covenant and Article 34 of the
Statute. It thus only remains to consider whether the actual subject of the
dispute referred to the [p19] Court which relates only to questions of fact
and of municipal law, prevents the Court from dealing with it.
 From a general point of view, it must be admitted that the true
function of the Court is to decide disputes between States or Members of the
League of Nations on the basis of international law: Article 38 of the
Statute contains a clear indication to this effect.
 But it would be scarcely accurate to say that only questions of
international law may form the subject of a decision of the Court. It should
be recalled in this respect that paragraph 2 of Article 36 of the Statute
provides that States may recognize as compulsory the jurisdiction of the
Court in legal disputes concerning "the existence of any fact which, if
established, would constitute a breach of an international obligation". And
Article 13 of the Covenant includes disputes of the sort above mentioned
among those which are generally suitable for submission to arbitration or
judicial settlement". Clearly, amongst others, disputes concerning pure
matters of fact are contemplated, for the States concerned may agree that
the fact to be established would constitute a breach of an international
obligation; it is unnecessary to add that the facts the existence of which
the Court has to establish may be of any kind.
 Is the case altered if the point at issue between two States is a
question which must be decided by application of the municipal law of a
particular country? There are cases as the Court has already had occasion
to observe in Judgment No. 8 in which an action cannot be brought before
an international tribunal when there are legal remedies still open to the
individuals concerned. But, apart from cases of this kind, and when the two
States have agreed to have recourse to the Court, the latter's duty to
exercise its jurisdiction cannot be affected, in the absence of a clause in
the Statute on the subject, by the circumstance that the dispute relates to
a question of municipal law rather than to a pure matter of fact. The very
wide wording of the first paragraph of Article 36, which refers especially
to cases which like the present proceedings are brought before the Court
by Special Agreement, supports this conclusion. [p20]
 Article 38 of the Statute cannot be regarded as excluding the
possibility of the Court's dealing with disputes which do not require the
application of international law, seeing that the Statute itself expressly
provides for this possibility. All that can be said is that cases in which
the Court must apply international law will, no doubt, be the more frequent,
for it is international law which governs relations between those who may be
subject to the Court's jurisdiction.
 On the one hand, the dispute submitted to the Court is, as has been
explained, a controversy between France and the Serb-Croat-Slovene State,
while on the other hand, it relates exclusively to a nexus of municipal law
between the Serb-Croat-Slovene State as borrower and the holders of certain
Serbian loans. In these circumstances, the question arises whether facts of
a character which would determine the relations under international law
between the two States may also have an effect upon the relations under the
municipal law upon which the Court, at the request of these States, has to
give judgment in this case. Thus the Government of the Serb-Croat-Slovene
State has sought to rely upon certains acts of the French Government with
regard to the service of the Serbian loans. The Court cannot base its
decision on facts which are outside the scope of the relations existing
between the borrowing State and the bondholders, for the question submitted
to it is definitely restricted to these relations; it is even expressly
submitted in the form of a statement contrasting the contention of the
Serb-Croat-Slovene Government on the one hand and that of the bondholders on
the other. The Court therefore can and must deal only with the particular
aspect of the problem raised by the intervention of the French Government on
behalf of the bondholders. This would be no less true even if the Special
Agreement did not in its second article provide for a second possible phase
of the proceedings, in which considerations of equity and necessity may come
into account, considerations which have nothing to do with the relations at
municipal law existing between borrower and lender. [p21]
 The bonds. The terms of the bonds of the various issues, in so far as
they are pertinent to the questions before the Court, are as follows:
"4 % redeemable Loan
created by the law of 8th/20th July, 1895, represented by
710,584 bonds constituting a nominal capital of frs. 355,292,000
= R.M. 287,786,520 = Austrian gold florins 142,116,800,
repayable in gold at par in 72 years,
secured by the revenues appropriated by the law to the
Autonomous Administration of Monopolies.
OF FIVE HUNDRED FRANCS
= R.M. 405 = Austrian gold florins 200."
"The bonds of this loan yield 4 % per annum upon their nominal value and the
interest thereon will be paid half-yearly on the 1st/13th July of each year
on presentation of the coupons.
Repayment of this loan will be effected in accordance with the sinking fund
plan annexed to the bonds within 72 years by means of half-yearly drawings
held on 1st/13th April and 1st/13th October of each year.
Drawn bonds will be repaid at their nominal value in gold when the first
coupon subsequent to the drawing reaches maturity.
Bonds and coupons of this loan are free of all existing or future taxes,
duties or deductions in Serbia.
Payment of matured coupons and bonds drawn will be effected, at the choice
at the rate of 10
francs in gold for each coupon and 500 francs in gold for each bond
of 500 francs nominal,
at the rate of R.M.
8.10 in gold for each coupon and R.M. 405 for each bond of R.M. 405
at the rate of 4
Austrian gold florins for each coupon, and 200 Austrian gold florins
for each bond of 200 florins nominal,
at any of the establishments and banking houses to be appointed by the
Minister of Finance to the Kingdom of Serbia."
The French text of the bonds shall be authoritative.
Coupons not presented for payment shall be barred by prescription after five
years and bonds drawn for redemption thirty years after maturity.
Belgrade, August 1st/13th, 1895."
[Signed by the Serbian Minister of Finance.]
 The following is the form of coupon:
"4 % redeemable Loan.
payable in gold on ....
at Belgrade and Paris at the rate of frs. 10
Berlin at the rate of R.M. 8.10 and
Vienna at the rate of 4 Austrian gold florins."
"5 % Bonds of the Monopolies
created by the law of July 26th/August 8th, 1902,
reproduced in extract on the back,
for a total of 60 million gold francs
120,000 Bonds of 500 gold francs
redeemable by purchase below par, if the case arise, or otherwise
by six-monthly drawings at par,
by means of a special provision of ½ % of the
nominal total of the loan.
Maximum period for repayment: 50 years.
Annual sum allocated for interest and redemption
of the loan: 3,300,000 gold francs.
This loan is guaranteed both by the Royal Serbian Government
and by the Autonomous Administration of Monopolies
and is payable out of the surplus of net revenue available
after providing for the service
of the loans referred to in the law of July 8th/20th, 1895.
An annual sum of 3,300,000 gold francs shall be allocated
for the purpose and shall be paid in monthly instalments by
the Autonomous Administration of Monopolies.
[p23] The loan is further guaranteed by the revenue from the railways
with a first charge upon the lines at present in working,
the whole always subject to the provisions of the Law of
July 26th/August 8th, 1902 (Art. IV), and of the General
Bond delivered to the contracting Parties
(whereof extracts are reproduced on the back).
5 % BOND TO BEARER
OF 500 FRANCS
The present loan is issued exclusively
for uniform denominations.
The Bonds of this loan carry an annual interest of 5 % on their nominal
capital. Interest is payable each three months, on February 2nd/15th, May
2nd/15th, August 2nd/15th, and November 2nd/15th of each year on
presentation of the corresponding coupons.
Should redemption not be possible by repurchase below par, drawings shall
take place at Belgrade on March 2nd/15th and September 2nd/15th of each
year, and the bonds drawn will be repaid in gold at par two months after,
namely, on May 2nd/15th and November 2nd/15th respectively. The Government
reserve the right to redeem the whole loan at par, together with interest
due, after the year 1908.
Bonds and coupons of the present loan are free of all Serbian taxes, duties
or deductions, present or future.
Payment of coupons due shall be made in gold at the choice of holders and by
the firms that shall be thereto appointed.
For each Bond of 500 francs.
at the rate of
of each year
Frs. 25. per annum on
presentation of coupons bearing the dates in
On the same dates
in the currency of
these towns respectively
at the rate of exchange
at sight on Paris.
The French text of the Bonds shall be authoritative.
Belgrade, August 23rd/September 5th, 1902.
The Minister of Finance
of the Kingdom of Serbia."
 The coupon is as follows:
"5 % Bonds of the Monopolies
Coupon payable in gold on ....
at Belgrade, Paris, Brussels and Geneva at the rate of Frs. 6.25;
at Berlin, Vienna and Amsterdam at the rate of exchange at
sight on Paris."
"4½ % Gold Loan 1906
Issued under the Law of December I4th/27th, 1906, whereof an
extract is reproduced on the back
For a total of 95 million gold francs
190,000 Bonds of 500 gold francs.
Redeemable by repurchase below par, if the case arise, or
otherwise by six-monthly drawings at par, by means of a
special provision referred to below.
Maximum period for repayment: 50 years.
Annual sum allocated for interest and redemption of the
This loan is guaranteed both by the Royal Serbian Government and by the
Autonomous Administration of Monopolies and is payable out of the surplus of
net revenue available after providing for the service of the loans referred
to in the Law of July 8th/20th, 1895, and July 26th/August 8th, 1902, in
accordance with the Law of December 14th/27th, 1906.
BOND OF 500 FRANCS 4½ %
The Bonds of this loan carry an annual interest of 4½ % on their nominal
capital. Interest is paid half-yearly on [p25] April 2nd/15th and October
2nd/15th of each year on presentation of the corresponding coupons.
Should redemption not be possible by repurchase below par, drawings shall
take place at Belgrade on February 2nd/15th and August 2nd/15th of each
year, and the bonds drawn will be repaid at par after two months, namely, on
April 2nd/i5th and October 2nd/15th respectively.
The bonds and coupons of the present loan are for all time exempt from all
present or future taxes and duties in Serbia.
The payment of matured coupons and bonds drawn shall be effected at the
choice of holders by the firms that shall be thereto appointed:
For each Bond of 500 francs.
Frs. 11.25 on April
of each year
,, 11.25 on Oct.
per annum on
presentation of coupons bearing the date in question;
on the same dates in
the currency of these towns respectively at the rate of exchange at
sight on Paris.
The French text of the bonds shall be authoritative.
Belgrade, December 14th/27th, 1906.
The Minister of Finance
of the Kingdom of Serbia."
 The coupon is as follows:
"4½ % Gold Loan 1906
Coupon payable on ....
at Belgrade, Paris, Brussels and Geneva, at the rate of frs. 11.25
at Berlin, Vienna, Amsterdam, at the rate of exchange at
sight on Paris. [p26]
"4½ % Gold Loan 1909
Issued under the law of December 15th/28th, 1909,
whereof an extract is given on the back,
For a total of
150 million gold francs
300,000 Bonds of 500 gold francs
Redeemable by repurchase below par
or by six-monthly drawings if the price is at or above par
by means of a special provision referred to below.
Maximum period for repayment: 50 years.
Annual sum allocated for interest and redemption of the
present loan: 7,500,000 francs.
This loan has as a special guarantee the net receipts of the Autonomous
Administration of the Monopolies as available after the service of the loans
referred to by the laws of July 8th/20th, 1895, July 26th/August 8th, 1902,
and December 14th/27th, 1906, in accordance with the law of December
15th/28th, 1909. If these receipts should be insufficient to cover annual
payments under the present loan, the service as a whole will be effected by
the general revenue from the State budget.
4½ % BOND OF 500 FRANCS
The Bonds of this loan carry 4½ % interest per annum on their nominal
capital. Interest is payable half-yearly on May 19th/June 1st and November
18th/December 1st of each year, on presentation of the corresponding
The half-yearly coupons are payable:
at frs. 11.25;
At Berlin, Frankfort-on-Main, Hamburg, St. Petersburg, Vienna and Amsterdam
in the currency of those towns respectively [p27] at the rate of exchange at
sight on Paris, by the firms which shall be appointed to effect the service
of the loan.
Should redemption not be possible by repurchase below par, drawings shall
take place at Belgrade on March 19th/April 1st and September 18th/October
1st of each year, and the bonds drawn will be repaid at par two months
afterwards, namely, on May 19th/June 1st and November 18th/December 1st.
Bonds and coupons of the present loan are free of all Serbian taxes and
duties present or future.
The French text of the bonds shall be authoritative.
Belgrade, December 15th/28th, 1909.
The Minister of Finance
of the Kingdom of Serbia."
 The coupon is as follows:
"4½ % Gold Loan 1909
at Belgrade, Paris, Brussels and Geneva,
at the rate of frs. 11.25; at Berlin, Frankfort-on-Main,
Hamburg, St. Petersburg, Vienna and Amsterdam
at the rate of exchange at sight on Paris."
"5 % Gold Loan 1913
of a nominal total of
Two hundred and fifty million francs
Issued under the law of October 18th/31st, 1913,
whereof an extract is reproduced on the back.
This loan is represented by 500,000 bonds of
500 gold francs
Carrying an annual interest of 25 francs
Repayable at par by half-yearly drawings or by purchase
on the Exchange below par.
Maximum period for repayment: Fifty years.
Annual sum allocated for interest and redemption of the loan:
Apart from the direct obligation of the Royal Serbian Government, this loan
is specially guaranteed by the net receipts of the Autonomous Administration
of Monopolies so far as available after the service of the loans referred to
in the laws of July 8th/20th, 1895, July 26th/August 8th, 1902, December
14th/27th, 1906, and December 15th/28th, 1909, in conformity with the law of
October 18th/31st, 1913. The loan is further specially guaranteed by a first
charge on the net profits of the Monopoly, on Alcohol established under the
law of August 3rd/15th, 1893, and administered by the Autonomous
Administration of Monopolies.
Bonds and coupons of the present loan are exempt from all Serbian taxes,
duties or deductions present or future.
5 % BONDS OF 5OO FRANCS
The bonds of this loan carry an annual interest of 5 % on their nominal
capital. Interest is payable half-yearly on February 16th/March 1st and
August 19th/September 1st of each year on production of the corresponding
Should redemption not be possible by purchase below par, drawings shall take
place at Belgrade on December 19th/ January 1st and June 18th/July 1st of
each year, and bonds drawn shall be redeemed at par two months afterwards,
that is to say, on February 16th/March 1st and August 19th/September 1st
Payment of coupons due shall be made at the choice of holders by the firms
that shall be appointed for the purpose:
at the rate of
on Febr. 16th/March
on Aug. 19th/Sept. 1st.
per annum, on
presentation of coupons bearing the date in question.
On the same dates in
the currency of those towns respectively, at the rate of exchange at
sight on Paris. [p29]
The French text of the bonds shall be authoritative.
Belgrade, October 18th/31st, 1913.
The Minister of Finance
of the Kingdom of Serbia."
 The coupon is as follows:
"5 % Gold Loan 1913
Coupon payable on . . . .
At Belgrade, Paris, Brussels and Geneva, at the rate of 12 frs. 50.
At Berlin and Vienna, at the rate of exchange at sight on Paris."
 Interpretation of the provisions relating to payment. The first
question presented is with respect to the interpretation of the loan
contracts, that is, whether gold francs or merely French francs were
promised, and, if the former, the significance of the expression "gold
 The bonds are payable to bearer and they set forth the terms of the
payment to which each holder is entitled. An examination of the bonds shows
that in each case there was a promise of payment in gold or gold francs.
Thus the bonds of the issue of 1895 explicitly provide:
"repayable in gold at par in 72 years".
at the rate of 10
francs in gold for each coupon and 500 francs in gold for each bond
of 500 francs nominal;
at the rate of R.M.
8.10 in gold for each coupon and R.M. 405 for each bond of 405
at the rate of 4
Austrian gold florins for each coupon and 200 Sudtrian gold florins
for each bond of 200 florins nominal.
 The coupon contains the statement "payable in gold".[p30]
 In the bonds of the issue of 1902, the obligations are described as
being for "a total of 60 million gold francs represented by 120,000 bonds of
500 gold francs". The bonds drawn for payment are to be paid "in gold", and
the payment of coupons is to be made "in gold". The bonds of 1906 are
entitled "4½ % gold loan" for "a total of 95 million gold francs represented
by 190,000 bonds of 500 gold francs". Similarly, the bonds of 1909 are set
forth as a "4½ % gold loan" for "a total of 150 million gold francs
represented by 300,000 bonds of 500 gold francs". The description in the
bonds of 1913 is that of a "5 % gold loan" with the addition: "This loan is
represented by 500,000 bonds of 500 gold francs."
 The coupons in each of these issues either provide for payment in gold,
as in those of the loan of 1902, or carry the words "....% Gold loan", as in
those of the loans of 1906, 1909 and 1913.
 It is argued that there is ambiguity because in other parts of the
bonds, respectively, and in the documents preceding the several issues,
mention is made of francs without specification of gold. As to this, it is
sufficient to say that the mention of francs generally cannot be considered
as detracting from the force of the specific provision for gold francs. The
special words, according to elementary principles of interpretation, control
the general expressions. The bond must be taken as a whole, and it cannot be
so taken if the stipulation as to gold francs is disregarded.
 As the bonds themselves are not ambiguous, there is no occasion for
reference to the preliminary documents. But if these are examined, it will
appear that they tend to confirm the agreement for gold payments.
 The loan of 1895 was the subject of an agreement at Carlsbad, between
representatives of the Serbian Government and the banks, which contained the
following provisions: "The payment of matured coupons and bonds drawn shall
be in gold"; and the Serbian law of July 8th/20th, 1895, which authorized
the issue, provided:
"The payment of matured coupons and bonds drawn for redemption shall be in
gold at the places appointed therefor, at the holder's option and in the
gold currency of the respective countries." [p31]
 In view of the clear terms of the bonds of this issue, it is not
necessary to resort to inferences from the fact that this was a conversion
loan to take the place of outstanding obligations, or to base any
conclusions on the terms of the two notices which the Court has had before
it and the authenticity of one of which has been drawn in question. There is
nothing, moreover, in any of the attending circumstances or preliminary
documents, which can be regarded as contradicting or impairing the gold
clauses of the bonds. Nor is it necessary to follow the argument that the
issue of bonds in London, in pounds sterling, was a part of the authorized
issue of 1895. The issue in London an issue which was made in a currency
par excellence, a gold standard currency, and which would rather denote an
intention to contract a "gold loan" certainly affords no opposing
inferences, but it may be considered as a separate issue in fact, and the
French holders of bonds of 1895 may be held to the terms of their own bonds,
without in any manner invalidating the conclusion that these terms
constituted a definite promise of gold francs.
 In the case of the loan of 1902, the Serbian law of authorization (July
26th/August 8th, 1902) provides for an issue "of sixty million gold francs".
The contract between the Serbian Government and the bankers also stipulates
an issue amounting to 60 millions of gold francs and that the payments of
interest will be made in gold francs at Belgrade, Paris, Brussels and
Geneva. The prospectus offering the bonds states that there will be "120,000
bonds of 500 gold francs".
 The Serbian law authorizing the issue of 1906 (December 14th/27th,
1906) describes it as one of "95,000,000 francs in gold". The contract with
the bankers states that the Serbian Government is to issue bonds to the
amount of 95 millions of gold francs, and that interest will be paid in gold
francs at Belgrade, Paris, Brussels and Geneva. The prospectus also speaks
of the issue as "190,000 bonds of 500 gold francs".
 The documents preceding the loans of 1909 and 1913 contain similar
provisions. Thus, while the language of the [p32] several issues varies
somewhat, it must be concluded that the promise in each case is for the
payment of gold francs.
 Significance of the term "gold francs". It is urged that the promise
to pay gold francs or what is called the "gold clause" is without legal
significance. It is said that there was no international gold franc; that
the reference was to money and not to gold as merchandise; that the
reference must be taken to be to French money; and that the French monetary
unit was silver and that there was no "gold franc" as a monetary unit. Hence
it is insisted that, despite the terms of the engagement, the promise must
be construed as one to pay in French currency.
 As it is fundamental that the terms of a contract qualifying the
promise are not to be rejected as superfluous, and as the definitive use of
the word "gold" cannot be ignored, the question is: What must be deemed to
be the significance of that expression? It is conceded that it was the
intention of the Parties to guard against the fluctuations of the Serbian
dinar, and that, in order to procure the loans, it was necessary to contract
for repayment in foreign money. But, in so contracting, the Parties were not
content to use simply the word "franc", or to contract for payment in French
francs, but stipulated for "gold francs". It is quite unreasonable to
suppose that they were intent on providing for the giving in payment of mere
gold specie, or gold coins, without reference to a standard of value. The
treatment of the gold clause as indicating a mere modality of payment,
without reference to a gold standard of value, would be, not to construe but
to destroy it.
 Moreover, the terms of the bonds make such an appreciation impossible.
Thus, the bonds of 1895 call for the payment of principal and interest, at
the option of the bondholders, not only at Paris in gold francs, but in
Berlin at the rate of R.M. 8.10 in gold for each coupon and of R.M. 405 for
each bond. There were no gold coins of the denomination required for such
payments. The bonds of [p33] 1902 provide for payment of the quarterly
interest of francs 6.25; the bonds of 1906 and 1909 for semi-annual interest
of frs. 11.25; and those of 1913 for semi-annual interest of frs. 12.50.
These were to be gold payments, but there were no gold coins for such
amounts. It is manifest that the Parties, in providing for gold payments,
were referring, not to payment in gold coins, but to gold as standard of
value. It would be in this way, naturally, that they would seek to avoid, as
was admittedly their intention, the consequences of a fluctuation in the
 The question, then, is whether there was a standard of value which was
properly denoted by the term "gold franc". The payments in gold francs were
to be made, in the case of the bonds of 1895, at Belgrade and Paris; and in
those of 1902, 1906, 1909 and 1913, at Belgrade, Paris, Brussels and Geneva.
Both at Brussels and Geneva, as well as at Paris, the monetary unit was the
franc. While there was no international gold franc, as the franc in each
case was established by the respective countries, the conception of the
franc, and of the gold franc, had nevertheless achieved an international
character as three countries had established a similar monetary unit, with
the same definition of the gold piece of 20 francs in weight and fineness,
and this unit had been made the subject of the Convention of the Latin
Union. The "gold franc" thus constituted a well-known standard of value to
which reference could appropriately be made in loan contracts when it was
desired to establish a sound and stable basis for repayment.
 But, while the "gold franc" was thus an internationally accepted
standard of value, its definition was to be found in national laws. The
French, and the initial definition of the "gold franc", which was later
adopted by Belgium and Switzerland, and by the Convention of the Latin
Union, was found in the law of the 17th Germinal, Year Eleven. This law
provided as follows:
"Five grams of silver, nine-tenths fine, shall constitute the monetary unit,
which retains the name of franc. [p34]
Head I. The minting of money.
Article 6. Gold pieces of twenty and forty francs shall be minted.
Article 7. The standard of these pieces is fixed at nine-tenths fine with
one tenth of alloy.
Article 8. The standard weight of the pieces of 20 francs shall be one
hundred and forty-five to the kilogram and that of the 40 francs pieces 77½
to the kilogram."
 According to this definition, adopted and recognized by other countries
as above stated, the gold franc, at the time of the bond issues in question,
was the twentieth part of a piece of gold weighing 6.45161 grammes with a
fineness of nine-tenths. It is this gold franc, with the weight and fineness
thus enacted by law, which is stipulated particularly in Article 262 of the
Treaty of Versailles, in Article 214 of the Treaty of St. Germain, and in
Article 197 of the Treaty of Trianon.
 It is concluded that this was the gold standard of value to which the
loan contracts referred.
 As this standard of value was adopted by the Parties, it is not
admissible to assert that the standard should not govern the payments
because the depreciation in French currency was not foreseen, or, as it is
insisted, could not be foreseen at the time the contracts were made. The
question is not what the Parties actually foresaw, or could foresee, but
what means they selected for their protection. To safeguard the repayment of
the loans, they provided for payment in gold value having reference to a
recognized standard, as above stated.
 The provisions for payment in certain places at the rate of the sight
exchange on Paris. The bonds of the issues of 1902, 1906, 1909 and 1913,
not only provide for the payment of interest in gold francs at Belgrade,
Paris, Brussels and Geneva, but also for payment in other designated places,
in the money of such places respectively, ''at the sight rate of exchange on
Paris". In the bonds of 1902 and 1906, the [p35] provision relates to
Berlin, Vienna and Amsterdam; in those of 1909, to Berlin,
Frankfort-on-the-Main, Hamburg, St. Petersburg, Vienna and Amsterdam; and in
those of 1913, to Berlin and Vienna. It is argued that these provisions
indicate that the engagement was for the payment of the number of francs
stated at the rate of sight exchange on Paris on the date the payment fell
due, and hence that the payment was to be made on the basis of French
francs, or French paper francs, of whatever value they might be at that
time. But the provision is for the payment in gold, which, as has been said,
must be taken to be gold value, with reference to the gold standard of value
at the time of the loans. The mere provision for payment in the places named
at the rate of exchange on Paris cannot affect the amount due: it must in
fact be construed in the light of the principal stipulation which is for
payment at gold value. That provision is plainly, not for the purpose of
altering the amount agreed to be paid, but for the placing of the equivalent
of that amount according to banking practice at the command of the
bondholder in the foreign money in the designated cities. When it is
ascertained what was the amount agreed to be paid, it is then simply a
matter of calculation to determine the equivalent amount in the foreign
currency of these places. The question, then, comes back to the terms of the
agreement. This agreement was not simply for the payment of the stipulated
amount in French francs, or in paper francs, but in gold francs, and as this
referred to a well-known gold standard of value, it is according to that
standard that the francs to be paid are to be computed.
 It was evidently contemplated that the bondholder would receive the
same amount whether he was paid in Belgrade, Paris, Brussels or Geneva. This
was the intended result of providing for gold francs, which referred to the
same standard of gold value as then existing at these places. It was this
amount, and not a different amount, that the bondholder was to receive in
the other cities, which did not have the franc, and the provision for the
calculation at the rate of exchange on Paris was a matter of convenience but
was clearly not intended to give the bondholder more or less than he would
be entitled to receive at Brussels or Geneva. As the gold [p36] franc
referred to a uniform standard, the calculation at the rate of exchange on
Paris would give the desired amount, with very slight, if any, differences
as compared with Brussels and Geneva.
 The conclusion at which the Court has thus arrived is not affected by
the fact that, for more or less extended periods gold specie in francs or a
franc at gold parity was not quoted on the money market, as was the case at
the time when the loans were issued; for the value can always be fixed
either by comparison with the exchange rates of currency of a country in
which gold coin is actually in circulation, or, should this not be possible,
by comparison with the price of gold bullion. Once the gold value is fixed,
it is its equivalent in money in circulation which constitutes the amount
which is payable at Belgrade, Paris, Brussels and Geneva and at the other
places enumerated in the bonds, in the local currency at the sight rate of
exchange on Paris.
 Payments at Geneva. It is also to be observed with respect to
provisions for payment in the bonds of the issues of 1902, 1906, 1909 and
1913, that the French bondholders, as well as others, are entitled to
receive payment of the interest on these bonds at Geneva on the basis of the
value of the gold franc. No distinction is made by reason of the nationality
of the bondholder. At Geneva, the value of the gold franc has been
maintained and no question has arisen between the Parties by reason of any
Swiss legislation subsequent to the Serbian loan contracts.
 The bondholders' option under the bonds of the issue of 1895. In the
light of the interpretation of the provisions for gold payment, no question
of difficulty is presented in relation to the special stipulations of the
bonds of 1895 giving to the holders an option of payment in Belgrade, Paris,
Berlin and Vienna. The bondholders, whatever their nationality, are entitled
to be paid their coupons as they fall due, and the bonds drawn for
redemption, according to the terms of the contract which is free from
ambiguity. In each place named, the amount to which the bondholder is
entitled is distinctly specified. In Belgrade and Paris, the amount is ten
francs in [p37] gold for each coupon as it becomes due, and 500 gold francs
for each bond of 500 francs drawn for redemption; in Berlin, at the rate of
8.10 Reichmarks in gold for each coupon, and 405 Reichsmarks for each bond
of 405 Reichsmarks; and in Vienna, four Austrian gold florins for each
coupon and 200 Austrian gold florins for each bond of 200 florins. As the
Parties have not discussed whether the changes which have been made in the
currency legislation of Germany and Austria have had any effect, and if so,
what effect, upon the payments to be made in gold marks and gold florins,
the Court need not concern itself with this point.
 No part of the bonds of the 1895 loan provides for payment at Geneva.
Moreover, the bonds of the issue which formed the subject of the contract of
1897 and which were issued in London, bear a special clause to the effect
that they are also payable in London and in pounds sterling. Only holders of
bonds of this issue, which must be regarded for the present purpose as a
special issue, are entitled to benefit by the clause in question, which does
not appear in the bonds not belonging to this issue.
 The execution of the loan contracts. It appears that before the war,
payment in Paris of the coupons of all these bonds, and of the principal of
the bonds drawn for redemption, was made in the ordinary manner, that is, in
bank-notes against deposits by the Serbian Government in the designated
banks. During this period, the parity of French currency with gold was
maintained and the manner of payment was not inconsistent with the right of
the bondholders to receive payment on the basis of gold francs. During the
war, the same practice continued as to payments made in Paris, but this fact
has little significance, as during that period and until about 1919, there
appears to have been only a slight difference in the value of French
currency as compared with a gold basis, taking the gold dollar as a
criterion; but in the subsequent period there was a great depreciation in
French currency, in relation to the former gold value, until finally by the
law of June 25th, 1928, the French franc was stabilized on a gold basis at
approximately one-fifth of the value of the gold franc [p38] as it stood
prior to the war. During this period of depreciation, payments on the
Serbian loans in question continued to be made in French paper francs.
 This conduct of the Parties, that is, the acceptance by the bondholders
of depreciated paper francs, is invoked upon two distinct grounds. The first
is that this method of executing the contract should be deemed to be
controlling in determining the intention of the Parties, in accordance with
the familiar principle applicable to ambiguous agreements. On this principle
it is argued that the Parties did not intend by the loan contracts to
provide for payment in gold francs. But the loan, contracts are not
ambiguous on this point. They are clear and definite. The fact that gold
francs were not paid cannot be admitted to show that gold francs were not
promised. If the subsequent conduct of the Parties is to be considered, it
must be not to ascertain the terms of the loans, but whether the Parties by
their conduct have altered or impaired their rights.
 In the latter view, the principle known in Anglo-Saxon law as estoppel
is sought to be applied. The argument developed by the Serb-Croat-Slovene
Government in this connection leads the Court to consider the circumstances.
The Special Agreement for the submission to the Court was signed in April
1928, but it seems that for a considerable time previously the question had
been the subject of diplomatic negotiations between the two Governments, and
the period which, may have significance with respect to the conduct of the
French bondholders is during the years from about 1919 to about 1925. On
behalf of the bondholders, it is urged that there were large numbers of
them; that it required time for them to arrange for concerted action; that
it was necessary for them to interest the French Government in their case;
that the French Government had to consider the matter and determine whether
it would proceed to diplomatic negotiations on behalf of the bondholders;
and that the delay, considering the incidents of governmental activity, is
not extraordinary [p39] and should not lead to a denial of rights otherwise
established. This position is not an unreasonable one, and when the
requirements of the principle of estoppel to establish a loss of right are
considered, it is quite clear that no sufficient basis has been shown for
applying the principle in this case. There has been no clear and unequivocal
representation by the bondholders upon which the debtor State was entitled
to rely and has relied. There has been no change in position on the part of
the debtor State. The Serbian debt remains as it was originally incurred;
the only action taken by the debtor State has been to pay less than the
amount owing under the terms of the loan contracts. It does not even appear
that the bondholders could have effectively asserted their rights earlier
than they did, much less that there is any ground for concluding that they
deliberately surrendered them. It may also be observed that the contract
between borrower and lender finds its expression in bearer bonds, which
entitle the bearer to claim, simply because he is a bearer, all the rights
accruing under the bond.
 It is also argued that, during the period of depreciated currency, the
French and British Governments advanced to the debtor State amounts needed
to meet the accruing payments on the bonds and that these amounts payable in
Paris were calculated in depreciated paper francs. But it is manifest that
this action could not be regarded as affecting the rights of the
bondholders. It is also stated, apparently as a moral consideration, that
there has been speculation in these bonds, and that the original subscribers
have already taken their losses. How far this is true is not shown, but it
is a matter with which the Court cannot concern itself in dealing, as
provided in the Special Agreement, with the question of legal right. The
French Government, as it was entitled to do, has taken up the cause of its
nationals, and the legal questions submitted by the Special Agreement of the
two States for determination by the Court do not turn on such market
 Force majeure. It cannot be maintained that the war itself, despite
its grave economic consequences, affected the legal [p40] obligations of the
contracts between the Serbian Government and the French bondholders. The
economic dislocations caused by the war did not release the debtor State,
although they may present equities which doubtless will receive appropriate
consideration in the negotiations and if resorted to the arbitral
determination for which Article II of the Special Agreement provides.
 It is contended that under the operation of the forced currency regime
of France, pursuant to the law of August 5th, 1914, payment in gold francs,
that is, in specie, became impossible. But if the loan contracts be deemed
to refer to the gold franc as a standard of value, payments of the
equivalent amount of francs, calculated on that basis, could still be made.
Thus, when the Treaty of Versailles became effective, it might be said that
"gold francs", as stipulated in Article 262, of the weight and fineneness as
denned by law on January 1st, 1914, were no longer obtainable, and have not
since been obtainable as gold coins in specie. But it could hardly be said
that for this reason the obligation of the Treaty was discharged in this
respect on the ground of impossibility of performance. That is the case of a
treaty between States, and this is a case of loan contracts between a State
and private persons or lenders. But, viewing the question, not as one of the
source or basis of the original obligation, but as one of impossibility of
performance, it appears to be quite as impossible to obtain "gold francs" of
the sort stipulated in Article 262 of the Treaty of Versailles as it is to
obtain gold francs of the sort deemed to be required by the Serbian loan
 The law applicable. Having thus established the meaning which, on a
reasonable construction, is to be attached to the terms of the bonds, the
Court will now proceed to consider the subsidiary contentions of the
Serb-Croat-Slovene Government to the effect that the obligations entered
into are subject to French law which it is alleged renders a clause for
payment in gold or at gold value null and void, at all events in so far as
payment is to be effected in French money and in France. [p41]
 As regards the question whether it is French law which governs the
contractual obligations in this case, the Court makes the following
 Any contract which is not a contract between States in their capacity
as subjects of international law is based on the municipal law of some
country. The question as to which this law is forms the subject of that
branch of law which is at the present day usually described as private
international law or the doctrine of the conflict of laws. The rules thereof
may be common to several States and may even be established by international
conventions or customs, and in the latter case may possess the character of
true international law governing the relations between States. But apart
from this, it has to be considered that these rules form part of municipal
 The Court, which has before it a dispute involving the question as to
the law which governs the contractual obligations at issue, can determine
what this law is only by reference to the actual nature of these obligations
and to the circumstances attendant upon their creation, though it may also
take into, account the expressed or presumed intention of the Parties.
Moreover, this would seem to be in accord with the practice of municipal
courts in the absence of rules of municipal law concerning the settlement of
conflicts of law.
 Before proceeding to determine which this law is, it should however be
observed that it may happen that the law which may be held by the Court to
be applicable to the obligations in the case, may in a particular territory
be rendered inoperative by a municipal law of this territory that is to
say, by legislation enacting a public policy the application of which is
unavoidable even though the contract has been concluded under the auspices
of some foreign law.
 Again it should be observed that even apart from rules of public
policy, it is quite possible that the same law may not govern all aspects of
the obligation. The distinction which seems indicated for the purposes of
this case is more particularly that between the substance of the debt and
certain methods for the payment thereof. [p42]
 In the first place, the law governing the obligations at the time at
which they were entered into must be determined. In the Court's opinion,
this law is Serbian law and not French law, at all events in so far as
concerns the substance of the debt and the validity of the clause defining
 The loans in question are loans contracted by the State of Serbia under
special laws which lay down the conditions relating to them. These laws are
cited in the bonds; and it appears that the validity of the obligations set
out in the said bonds is indisputable in Serbian law. The bonds are bearer
bonds signed at Belgrade by representatives of the Serbian Government. It
follows from the very nature of bearer bonds that, in respect of all
holders, the substance of the debt is necessarily the same, and that the
identity of the holder and the place where he obtained it are without
relevancy. Only the individuality of the borrower is fixed: in this case it
is a sovereign State which cannot be presumed to have made the substance of
its debt and the validity of the obligations accepted by it in respect
thereof, subject to any law other than its own.
 Nevertheless, Serbia might have desired to make its loans subject to
some other law, either generally, or in certain respects: if that were
proved, there would seem to be nothing to prevent it. In this case, however,
there is no express provision to this effect. The question therefore is
whether, from the contents of the bond or other circumstances which are
binding on the bondholders, the conclusion can be drawn that the State of
Serbia intended that the loans in question should be, either generally
speaking, or in certain respects, subject to French law which is,
according to the arguments, the only law in question.
 The Serbian Government has in this connection cited various
circumstances which, however, upon examination, do not support the
conclusion which it deduces from them and in any case appear not to be
binding on the bondholders. This is the case with regard to the various
provisions contained in the contracts with the banks, for instance, that
concerning the quotation of bonds on the Paris Exchange as a possible ground
for the rescission of the contract, the explanation of this provision being
the importance attached to quotation [p43] at Paris with a view to placing
the bonds; moreover, provision is also made for the quotation of bonds on
the Exchanges of other countries. The same also applies with respect to the
provisions as to the deposit with a bank at Paris of the sums necessary for
the payment of interest and redemption, and these provisions moreover only
relate to the 1902, 1906 and 1913 loans, while in the case of the 1895 loan,
funds for the service of this loan were also to be transmitted to Berlin and
Vienna and, in the case of the 1909 loan, also to a bank at Berlin. Lastly,
the same applies in regard to the provision contained in one of the
contracts to the effect that Serbia, for the purpose of the notices to be
issued respecting the contract, gives as its official address the Serbian
Legation at Paris. It is clear that all these stipulations contain nothing
with respect to the applicability of French law to the loans to which they
refer. In so far as concerns the places where the contracts with the banks
were concluded a circumstance on which however it does not seem to be the
intention of the Serb-Croat-Slovene Government to rely, these are, for the
1895 loan, Carlsbad and Paris; for the 1902 and 1909 loans, Paris; for the
1906 loan, Geneva, and for the 1913 loan, Belgrade. And the banks were not
all French banks. In the Carlsbad agreement in June 1895, in addition to
some French banks, Berlin and Vienna banks took part; in the Paris contract
in April 1896, a Vienna bank; in the Paris contract in June 1897, English
banks took part; in the Paris contract in September 1902, banks of Berlin
and Vienna; in the Geneva contract in November 1906, a Franco-Swiss bank,
and in the Paris contract in November 1909, banks of Berlin and Frankfurt.
 Nor were the loans issued exclusively in France, judging from the
prospectuses which have been produced. The prospectus of the 1906 loan
indicates that subscription would also take place in Switzerland; as regards
the 1909 loan, two prospectuses have been produced, one of which states that
subscriptions would also be received at Geneva, and the other, written in
German, that subscriptions would take place in various towns in Germany; the
prospectus of the 1913 loan also indicates Geneva and Belgrade as places
where subscriptions would be received, in addition to Paris and French
provincial towns. [p44] As regards the 1902 loan, the prospectus produced
does not indicate the places where subscription was to take place; in regard
to the 1895 loan, the Court has only the one (in English) relating to the
special issue made in London, and "notices" of 1896 and J902 which do not
mention the places for subscription. But this loan being a loan for the
conversion of previous loans, it may be presumed that the issue took place
in the countries where these previous loans had been issued and also at
Berlin and Vienna, amongst other places.
 All things considered, the Court finds that, in regard to the Serbian
loans in question, there are no circumstances which make it possible to
establish that, either generally speaking or as regards the substance of the
debt and the validity of the provisions relating thereto, the obligations
entered into were, in the intention of the borrowing State, or in a manner
binding upon the bondholders, made subject to French law.
 But the establishment of the fact that the obligations entered into do
not provide for voluntary subjection to French law as regards the substance
of the debt, does not prevent the currency in which payment must or may be
made in France from being governed by French law. It is indeed a generally
accepted principle that a State is entitled to regulate its own currency.
The application of the laws of such State involves no difficulty so long as
it does not affect the substance of the debt to be paid and does not
conflict with the law governing such debt. In the present case this
situation need not be envisaged, for the contention of the Serbian
Government to the effect that French law prevents the carrying out of the
gold stipulation, as construed above, does not appear to be made out.
 In support of its contention, the Serb-Croat-Slovene Government cites
amongst others the following French laws:
The law of Germinal of the Year XI, already mentioned above.
 Article 1895 of the Civil Code, which is as follows:
"The obligation resulting from a loan in money is always simply for the
amount in figures indicated in the contract.
If there has been an increase or diminution of specie before the time of
payment, the debtor must return the [p45] amount in figures lent and must
return this amount only in the specie in currency at the time of payment."
 Article 475, paragraph 11, of the Penal Code, which is as follows:
"The following shall be punished by a fine of from 6 to 10 francs....
11. Those who have refused to receive the national coin, and currency, being
neither counterfeit nor debased .... at the value for which they are in
 The law of August 12th, 1870:
"Article 1. As from the date of promulgation of this law, the notes of the
Bank of France shall be accepted as legal tender by public offices and
 The law of August 5th, 1914:
"Article 3. Until otherwise provided by law, the Bank of France and the
Bank of Algeria are released from the obligation to give specie in exchange
for their notes."
 The law of February 12th, 1916:
"Single Article. In war time, any person convicted of having bought, sold
or parted with, of having attempted or proposed to buy, sell or part with
national specie or currency, at a price exceeding their legal value, or for
any consideration whatsoever, shall be sentenced to a penalty of from six
days to six months imprisonment and to a fine of from one hundred to five
thousand francs or to one of these two penalties only.
Sentence of confiscation of such national currency and specie shall ipso
facto be passed against the delinquents and the currency or specie shall be
devoted to the fund for relief of the poor.
Article 463 of the Penal Code shall apply as regards the offence dealt with
by the present law; the law of suspension of execution of the sentence is
only applicable in so far as concerns imprisonment."
 In addition to these legislative provisions, the Serb-Croat-Slovene
Government has cited a large number of opinions expressed by French writers
and also certain judicial decisions which, in its contention, show that,
upon a correct judicial [p46] construction, the legal currency of bank-notes
taken in conjunction with the release from the obligation to exchange notes
for specie (forced currency) compels every creditor to accept as due payment
of a debt in French francs, inconvertible bank-notes, at their face value,
and renders inoperative or null and void, at all events in France, any
provision involving a distinction between these notes and metal currency.
 For its part, the French Government has sought to show that this
construction is not sound and that it is contrary to the law as stated by
the Court of Cassation and other French courts since 1920. This Government
also has cited a number of publicists and judicial decisions and has
submitted that it is now definitely established by these decisions that
although a gold stipulation is null and void when it relates to a domestic
transaction, this does not hold good in the case of international contracts,
even when payment is to be effected in France. And it has represented that
if the law which must be applied is French law, it must be applied as
construed by the courts.
 The Court, having in these circumstances to decide as to the meaning
and scope of a municipal law, makes the following observations: For the
Court itself to undertake its own construction of municipal law, leaving on
one side existing judicial decisions, with the ensuing danger of
contradicting the construction which has been placed on such law by the
highest national tribunal and which, in its results, seems to the Court
reasonable, would not be in conformity with the task for which the Court has
been established and would not be compatible with the principles governing
the selection of its members. It would be a most delicate matter to do so,
especially in cases concerning public policy a conception the definition
of which in any particular country is largely dependent on the opinion
prevailing at any given time in such country itself and in cases where no
relevant provisions directly relate to the question at issue. It is French
legislation, as applied in France, which really constitutes French law, and
if that law does not prevent the fulfilment of the obligations in France in
accordance with the stipulations made in the [p47] contract, the fact that
the terms of legislative provisions are capable of a different construction
 In these circumstances, the Court will confine itself to observing
that, according to the information furnished by the Parties, the doctrine of
French courts, after some oscillation, has now been established in the
manner indicated by the French Government, and that consequently there is
nothing to prevent the creditor from claiming in France, in the present
case, the gold value stipulated for.
 It should, however, be added that, since the conclusion of the Special
Agreement in March 1928, a new currency law has been promulgated in France,
on June 25th, 1928, which, by its first article, abrogates Article 3 of the
law of August 5th, 1914, regarding forced currency, and which contains the
following provision in its second article:
"The French monetary unit, the franc, is constituted by 65.5 milligrams of
gold, nine hundred thousandths fine.
This definition shall not apply to international payments which, prior to
the promulgation of the present law, may have been validly stipulated in
 For the future, this law replaces previous legislation; the forced
currency regime having been abrogated, no obstacle resulting from this
regime will any longer exist, and the reduction of the metallic value of the
franc, as newly denned, to about one-fifth of its original value, will not
affect the payments involved by the Serbian loans at issue which are
undoubtedly international payments.
 In formulating, in the operative part of the judgment, the result
arrived at by it in regard to the question referred to it, the Court has
held that it must keep as closely as possible to the terms used by the
Parties themselves in the Special Agreement. The reason why the Court has
omitted the formula which, in Article I, paragraph (b), of the Special
Agreement sets out in general terms the contention of the French
bondholders, is that the submissions of the French Case and Counter-Case do
not repeat this formula; moreover, it does not appear to contain [p48]
anything which is not subsequently expressed with greater clearness in
paragraphs 1 and 2 of the same article and which is not reproduced in the
French Government's submissions.
 Again, the Court considers that it should be clearly stated that, if
payment is to be made in gold francs, this is to be understood in accordance
with the interpretation given above, that is to say that if the franc which
is legal tender at the place fixed for payment does not possess the value of
the gold franc as denned by this judgment, payment must be effected by the
remittance of a number of francs, the value of which corresponds to the
value of the gold francs due.
 FOR THESE REASONS,
having heard both Parties,
by nine votes to three,
gives judgment to the following effect:
(1) That, in regard to the Serbian 4 % loan of 1895, the holders of bonds of
this loan are entitled, whatever their nationality may be, to obtain, at
their free choice, payment of the nominal amount of their coupons due for
payment but not paid and of those subsequently falling due, as also of their
bonds drawn for redemption but not refunded and of those subsequently drawn,
at Paris, Berlin, Vienna and Belgrade, in the currency in circulation at one
of these places;
(2) That, in regard to the 4 % 1895, 5 % 1902, 4½ % 1906, 4½ % 1909 and 5 %
1913 Serbian loans, the holders of these bonds are entitled to obtain
payment of the nominal amount of their coupons due for payment but not paid
and of those subsequently falling due, as also of their bonds drawn for
redemption but not refunded and those subsequently drawn, in gold francs, in
the case of the 1895 loan, at Belgrade and Paris, and, in the case of the
1902, 1906, 1909 and 1913 loans, at Belgrade, Paris, Brussels and Geneva, or
at the equivalent value of the said amount at the exchange rate of the day
in the local currency at Berlin and Vienna, in the case of the 1913 loan,
and at Berlin, Vienna and Amsterdam, in the case of the 1902, 1906 and 1909
(3) That the value of the gold franc shall be fixed between the Parties, for
the above-mentioned payments, as equivalent to that of a weight of gold
corresponding to the twentieth part of a piece of gold weighing 6 grammes
45161, 900/1000 fine.
 Done in French and English, the French text being authoritative, at
the Peace Palace, The Hague, this twelfth day of July, nineteen hundred and
twenty-nine, in three copies, one of which is to be placed in the archives
of the Court and the others to be forwarded to the Agents of the Government
of the French Republic and the Government of the Kingdom of the Serbs,
Croats and Slovenes respectively.
(Signed) D. Anzilotti,
(Signed) A. Hammarskjold,
 MM. de Bustamante and Pessoa, Judges, and M. Novacovitch, Judge ad
hoc, declaring that they are unable to concur in the judgment given by the
Court and availing themselves of the right conferred on them by Article 57
of the Statute, have delivered the separate opinions which follow hereafter.
(Initialled) D. A.
(Initialled) A. H.
[p50] Dissenting Opinion by M. De Bustamante.
 According to Article I of the Special Agreement, there are two
opposing contentions, that of the Serbian Government which claims the right
to effectuate the service of its 4 % 1895, 5 % 1902, 4½ % 1906, 4½ % 1909
and 5 % 1913 loans in French paper francs, and that of the French
Government, which puts two questions:
(a) As regards the Serbian 4 % loan of 1895, whether holders are entitled to
obtain at their free choice payment of the amount of their coupons and of
their bonds drawn for redemption and those to be so drawn, in Paris, London,
Berlin, Vienna, Geneva and Belgrade.
(b) With regard to the 5 % 1902, 4½ % 1906, 4½ % 1909, 5 % 1913 loans, and
subsidiarily with regard to the 4 % 1895 loan, whether holders are entitled
to obtain payment of their coupons and of their bonds in gold francs at
Belgrade, Paris, Brussels and Geneva, or in the equivalent value of the said
amount at the exchange rate of the day in the local currencies at Berlin,
Vienna and Amsterdam, in so far as concerns the 1902, 1906 and 1909 loans.
(c) Lastly, how the value of the gold franc is to be determined as between
the Parties for the above-mentioned payments.
 If the Serbian Government's arguments were accepted, all the other
questions would at once fall to the ground, and it would be useless to
consider them in detail. We must therefore first refer to the Serbian
argument, which is based on two different points of view, the one which
asserts that payment in gold was not stipulated for by the contracting
Parties, and the other that, if it had been stipulated for, the law
applicable to such a stipulation permits the Serbian Government to make
payment in French francs.
 Being always guided by a desire not to complicate problems needlessly,
I think it preferable to begin my opinion by considering the latter
question. If, in spite of the provision for payment in gold, the Serbian
Government had the right to pay its debt in paper francs or in present-day
gold francs, [p51] it would be quite useless to consider whether that
Government is or is not expressly bound to make payment in gold, and how the
value of the gold franc shall be determined as between the Parties.
 Two facts which, in substance, lead to the same result as regards the
holders of bonds or coupons of the Serbian 1895 loan, must first be made
clear. Can payment of this 4 % 1895 loan be demanded at London and Geneva?
 To begin with London: in Article 1 of the Serbian law of July
8th/20th, 1895, on the conversion of a public debt by the issue of a new
loan, the pound sterling is mentioned at the same time as other foreign
currencies in regard to the total of bonds and coupons. In execution of this
law, a contract was signed at Paris on April 3rd/15th, 1896, between the
Serbian Government and certain banks; Article 1 clearly separates the
different blocks of the loan by stating the amount of the bonds quoted and
negotiable at Paris and Berlin and that of the bonds to be subsequently
given a quotation on the Paris, Berlin, London and Brussels markets. The
bonds placed in circulation for France do not mention London as place of
payment of coupons or of the principal sum due.
 By a Protocol concluded at Paris on June 27th/July 9th, 1897, an issue
was made in London of a block of £1,000,000 sterling. These bonds only, and
not the others, contain a special statement to the effect that principal and
coupons of each of the bonds of this block shall be paid in London by Parr's
 It therefore seems clear that the contracting Parties were agreed on
the fact that only a part of the bonds of the loan should be paid in
England; and holders whose bonds do not mention London or pounds sterling
can never have thought of being paid in England. More than thirty years
afterwards, it is somewhat difficult to change this state of things. [p52]
 It is still clearer that Geneva is not amongst the places where these
payments of the 1895 loan were to be made. The mention of Geneva as place of
payment does not occur in the law or on the bonds or coupons, but only in a
prospectus dated six years after the issue and as regards which no proof has
been furnished that it was approved by Serbia. The quotation of the bonds on
the Geneva Exchange, as in any other country, does not in any way lead to
suppose that the payment of coupons and redeemable bonds is to be made at
 We must therefore now enter upon the consideration and the decision of
the principal problem which dominates all others:
 How, as regards currency, are payments of all these loans to be made?
 To answer this question, it is above all important to determine in
advance what rules of law are applicable to the problem. We have to do with
public loans of the Serbian State, which were issued abroad through
negotiations with banks and foreign bankers, and the holders of which, or
some holders, are French citizens. The French Government undertakes the
representation and defence of the holders, but it has no other interest. It
could bring forward no argument that could not have been raised by the
holders and rely on no rights save those of the said holders.
 The manner in which a State can act in regard to the recovery of the
public debts of another State has been a subject of the doctrine and rules
of International Public Law. It suffices to mention the doctrine of M. Drago
and the treaty drafted at the Second Hague Peace Conference in 1907. But as
regards the relations between the debtor State and foreign bankers or
holders, there are not, and could not be, any rules or doctrine in
international public law. [p53]
 The question is one of a loan, i.e., a civil or, in some
circumstances, commercial contract, the purely private legal nature of which
cannot be changed between the contracting Parties owing to the fact that the
debtor or borrower happens to be a State. For all difficulties of a legal
nature that may arise between these contracting Parties, there must be rules
of private law which, drawn from a particular legislation, fix the limits in
space of each national law, if there is a possibility that two or several
laws may be rendered applicable.
 In contracts, both as regards their provisions and their execution,
two different laws, or better, two different rules, may be invoked or
applied. On the one hand, the sovereign will of the Parties who adopt a
particular law or freely determine their wishes as to each detail of their
affair. These wishes, from the point of view of the selection of the law
applicable, may be express, or tacit, or presumed, and the law of the place
of contract, of the place of execution, and the others which are often
spoken of in treatises on these questions, amongst which must be mentioned
as most important the law of the borrower, since we have here a contract of
adhesion, come within the sphere of legal presumptions.
 On the other hand, there are matters which are outside the will of the
Parties and which require the application of imperative and territorial
legal provisions. Amongst these matters, according to the almost unanimous
opinion of authors and the decisions of the courts in the countries to which
the dispute before us relates, are classed the form, the currency and the
method of payment.
 The Code of International Private Law, to which the Agents of the
Parties refer in their argument, lays down in Article 166 the following
"Those obligations arising from contracts have force of law as between the
contracting Parties and should be discharged in accordance with the terms
thereof with the exception of the limitations established by this Code."
 Article 169 says:
"The nature and effect of the various classes of obligations, as well as the
extinction thereof, are governed by the law of the obligation in question."
 But Article 170 is careful to add:
"Notwithstanding the provisions of the preceding article, the local law
regulates the conditions of payment and the money in which payment shall be
 In the case before us, we must therefore begin by considering the
legislation of the country in which payment was to be made, in this case
especially French legislation, and must abide by any binding rule laid down
on this subject at the time when the loan contract began to produce its
effects. The law must govern the contract from the first moment of its
existence, and therefore must be the same as if the case had been decided by
a competent municipal court.
 As regards France, the law in force is quite clear and does not
require interpretation. Article 1895 of the Civil Code runs as follows:
"The obligation resulting from a loan in money is always simply for 'the
amount in figures indicated in the contract, and if there has been an
increase or diminution of specie before the time of payment, the debtor must
return the amount in figures lent, and must return only this amount, in the
specie in currency at the time of payment."
 The Belgian Civil Code is the same Code Napoleon and therefore
contains the same article 1895.
 As regards Switzerland, in the two Federal Codes concerning the law of
Obligations dated January 1st, 1912, and June 14th, 1881, we find, with
slight modifications that are without importance as regards our case, an
article numbered 84 in the former Code, and 97 in the latter; the 1912 text
is here reproduced:
"The payment of a debt which consists of a sum of money shall be made in the
currency of the country. If the contract specifies a currency which is not
legal tender at the place of payment, the debt may be paid in the currency
of the country at the rate of exchange on the date it falls due, unless the
literal execution of the contract has been provided for by means of the
words 'actual value' or by some similar expression." [p55]
 There is no doubt for us as regards the international character of
 Owing to the motives of a general economic nature on which they are
based and for other not less important reasons, authors and jurisprudence in
the countries concerned have always given them the character of territorial
rules or, using a synonymous expression, relating to international public
 In this connection, mention was made during the arguments of our
eminent and regretted colleague, M. Andre Weiss, who also refers to several
 There is another point to be noted.
 At the time when the Serbian loans were issued, Article 1895 of the
French Civil Code was in force. This article gave to the borrower the right,
and imposed on him the duty, as regards payments to be made in France, of
assuming, at the moment of each payment, the consequences arising from the
increase or diminution of the value of the currency, in the one case to his
own advantage, in the other to the advantage of his creditors.
 This situation in law was an acquired right for the borrower and for
the holders of bonds and coupons, and could not be changed by subsequent
legislation which had no retroactive effect as regards these loans. The law
of the holders could not change its provisions by specifying at the moment
when the currency was modified that this change would not be applicable to
the borrower, or as a general rule to the cases in which he was included.
Subsequent rules modifying his established situation cannot be invoked
 Since a claim by the French Government and the rights of French
holders are concerned, we must note that at the time when the loans were
issued, from 1895 to 1913, the French franc was absolutely stable and its
gold value could not be questioned. In France there were bank-notes, and
they were legal tender; but as these notes must be repaid at par by the Bank
[p56] of France and as there existed no important differences between the
gold rate and silver rate, the question of payments in gold or notes that
were legal tender was without practical importance.
 During the world war a new French law of August 5th, 1914, had freed
the Bank of France and the Bank of Algeria from the obligation to return
specie for their notes. France certainly had the right to take such a step,
and no one thought of opposing this change in the legal tender, which thus
became forced currency.
 But this new monetary situation had to be adopted with all its
consequences, and contracts in force had to be interpreted in conformity
with Article 1895 of the Civil Code which was in force.
 Article 1895 of the Code was framed precisely for these cases. Whether
that rule be good or bad in doctrine or in theory, it was the law: Dura lex,
 Since ignorance of the law cannot be pleaded, all the holders of bonds
or coupons of Serbian loans must be taken as knowing that, according to the
law in France, the obligation resulting from a loan in money is always
simply for the amount in figures indicated in the contract, and if there has
been an increase or diminution of specie before the time of payment, the
debtor must return the amount in figures lent, and must return only this
amount, in the specie in currency at the time of payment.
 What I have written here is merely a literal copy of Article 1895 of
the French Civil Code.
 The French courts, having regard to national rather than adopting an
international point of view, hesitated as to the solution to be given in the
case of obligations entered into abroad but to be executed in France, and
finally drew a series of distinctions on this point; but it does not appear
that the doctrine of acquired rights as regards contracts in which payment
is provided for subject to the provisions of Article 1895, has ever been
questioned or even discussed by the Parties or by the judgments. No one
seems to have claimed before the French courts in the cases in question that
[p57] their contracts were signed at a moment when all must have thought or
could have thought that the money in which payment was to be made in France
would be the currency legally placed in circulation by the French
Government, and that the debtor was only bound to repay that sum in the
currency current at the time of payment.
 The French law of June 25th, 1928, decided that the French monetary
unit, the franc, should be constituted by 65.5 milligrams of gold, nine
hundred thousandths fine:
"This definition", it added, "shall not apply to international payments
which, prior to the promulgation of the present law, may have been validly
stipulated in gold francs."
 Why did the law of June 25th, 1928, make this declaration?
 It cannot be understood without admitting that it is French law which
must determine the method of payment. If we suppose that the will of the
Parties, in speaking simply of gold francs, ensures that payment shall be in
gold of the weight and fineness then in force, whatever be the provisions of
Article 1895 of the French Civil Code, the rule laid down by the law of June
25th, 1928, which I have just quoted, is useless and incomprehensible.
 This new law, then, is, from the point of view of the application of
French legislation on methods of payment to these loans, undoubtedly a very
 It therefore seems evident that the said law had the purpose of
implicitly derogating from Article 1895 of the French Civil Code, to the
prejudice of debtors who entered into contracts when that article was in
force. But there is another thing equally important. The Special Agreement
concerning the Serbian loans was signed at Paris on April 19th, 1928, and it
cannot be admitted that one of the Parties should, two months later, have
the right to decide in its favour by a provision of municipal law the
question submitted to the Court or to put forward that law, which is its own
work, [p58] accomplished after the Special Agreement, as a favourable
 The question of gold currency and its mention in the laws, contracts,
and bonds referring to these loans loses all its importance once we adopt
the legal position that we have developed.
 If payment is subject to the law of the place where it is made, as
concerns the currency in which the debtor must pay, the Serbian State can
only be obliged to deliver gold in the cases where gold currency is legal
tender at the date of each payment, at the place where payment is made.
 I would, however, beg to add a few words as to the expression GOLD
FRANC of which much has been said. In my opinion, since the bonds and
coupons were to be paid in several countries, and many of these, for
instance Belgium, France, Switzerland and even Serbia (under the
denomination dinar) had that currency, the gold franc without any
qualification is referred to in order to indicate the currency of these four
countries and of each of them.
 That is the meaning to be given to:
(a) paragraph 4 of Article 1 of the law of July 8th/20th, 1895: "The payment
of matured coupons and bonds drawn for payment shall be in gold at the
places appointed therefor at the holders' option and in the gold currency of
(b) paragraph 4 of Article 1 of the contract of August 23rd/September 15th,
1902: "All payments shall be in gold francs at Belgrade, Brussels, Paris and
(c) the same paragraph in the other contracts;
(d) the coupons and bonds of the loans.
 It must be added that when places at which payment is only to be made
in the lawful currency are referred to, inter alia, Berlin, Vienna and
Amsterdam, it is never said that payment shall be in the currency of the
country at the rate of exchange of the gold franc, but only at the rate of
exchange on Paris. This is the completest possible proof of the intention of
the Parties when they refer to the gold [p59] franc, for it cannot be
supposed that, AT THE TIME OF ISSUE OF A LOAN, EVIDENT DIFFERENCES AS TO
PAYMENT OF COUPONS IN DIFFERENT PLACES CAN HAVE BEEN ACCEPTED.
 And precisely the fact that, as regards payment at Berlin, Vienna,
etc., reference is to be made to the rate of exchange on Paris, leads to
suppose that the rate of exchange on Paris is excluded as regards places
where that rate is not mentioned. In other words, the argument as to the
French franc for payments at Brussels, Belgrade, etc., cannot be admitted.
 On the other hand, when the State itself is a contracting Party, as in
the Treaty of Versailles or the Universal Postal Union, it may very well
establish for its own use these differences between the gold franc and the
national currency, which differences are outside the power of other States
and individuals who purchase the bonds.
 It might be objected that, as bearers have the choice of the place in
which they receive payment of coupons and bonds due, they might profit by
this right and receive it to-day, for instance, at Geneva as regards most of
the loans, or at Berlin as regards one of them, and thus practically receive
the gold francs in question. That is true, but it also demonstrates to what
extent we are concerned with law and justice and not with actual results.
If, in accordance with a clear and precise rule, any particular result is
arrived at, this has nothing to do with the question put.
 To sum up: in accordance with what I have said, the questions in the
Special Agreement should, in my opinion, be answered as follows:
(a) The Government of the Kingdom of the Serbs, Croats and Slovenes must
effect payment of the 4 % 1895, 5 % 1902, 4½ % 1906, 5 % 1913 loans in
accordance with the local law as regards method of payment in the currency
in circulation, [p60] legal tender or forced tender, at the time of such
payment in each of the places in question.
(b) Holders of bonds of the Serbian 4 % 1895 loan issued in England dated
London, October 1897, and containing the special passage, alone have the
right to demand and obtain payment at London in the money there current.
(c) Holders of bonds of the Serbian 4 % 1895 loan have not the right to
demand payment of these bonds at Geneva.
(d) Holders of bonds of this Serbian 4 % 1895 loan, subject to what has been
said as regards the English portion, have the right to receive payment of
the nominal amount of their coupons due for payment but not paid and of
those subsequently falling due, as also of their bonds drawn for redemption
but not refunded and of those subsequently drawn at their choice at Paris,
Belgrade, Berlin and Vienna, in the currency that is legal or forced tender
at the time of payment at the place where payment is made, in accordance
with the local law in force as to the methods of payment at the time when
each loan was issued.
(e) Holders of the Serbian 5 % 1902 and 4½ % 1906 loans have the right to
obtain the payment mentioned in paragraph (d) at their choice at Paris,
Belgrade, Brussels and Geneva in the currency that is legal or forced tender
at the time of payment at the place where payment is made, or at Berlin,
Vienna and Amsterdam in the respective currencies of these towns at the rate
of exchange on Paris.
(f) Holders of bonds and coupons of the Serbian 4½ % 1909 loan have the same
right as holders of bonds of the 5 % 1902 and 4$ % 1906 loans and, further,
the right to be paid at Frankfort-on-the-Main, Hamburg and St. Petersburg at
the rate of exchange at sight on Paris, in accordance with Article 1 of the
contract entered into on October 9th, 1909, between the Royal Serbian
Government and the banks, and also in accordance with the text of the
(g) Holders of bonds and coupons of the Serbian 5 % 1913 loan have the same
rights as holders of bonds of the Serbian 5 % 1902 and 4½ % 1906 loans, with
the exception of the right to payment in Amsterdam.
(h) In view of the arguments contained in the judgment, it is purposeless to
determine how the value of the gold franc shall be arrived at between the
Parties for the purpose of the above payments.
(Signed) A. S. de Bustamante.
[p62] Dissenting Opinion by M. Pessoa.
THE LACK OF JURISDICTION.
 I. The Court can only have jurisdiction under the terms of Articles
13 and 14 of the Covenant, or of the Statute, which form its constitutional
 According to both of these instruments, for the Court to have
jurisdiction it is not enough that the Parties should be States or Members
of the League of Nations (Articles 34 and 36 of the Statute); it is also
essential that the case, in itself, should be "of an international
character" and should be governed by international law (Articles 13 and 14
of the Covenant and 38 of the Statute). The latter condition has already
been recognized and stated by the Court on more than one occasion: Judgments
No. 2, pages 12 and 16; No. 13, pages 27 and 28, etc. In all cases between
two States in which one has taken up the defence of the interests of its
nationals, for instance in the Wimbledon, Mavrommatis, Upper Silesian cases,
etc., the Court, in order to establish its jurisdiction, has always shown
that the subject-matter of the dispute was governed by international law and
that the purpose of the decision was to enforce principles or apply
instruments of international law.
 Now, the judgment itself admits that the Franco-Serbian dispute "is
exclusively concerned with relations between the borrowing State and private
persons, that is to say, relations which are, in themselves, within the
domain of municipal law". (Page 18.)
 It therefore seems to me clear that the Court is not competent to deal
with this dispute.
 Even if an extension of the Court's jurisdiction is desirable, it is
necessary to begin by modifying the texts governing that jurisdiction. [p63]
 2. In order to establish the Court's jurisdiction in this case, the
judgment (page 18) says that the Serbian Government, having "contended that
the service of the loans was being effected by it in full conformity with
the obligations resulting from the contracts. This view .... was not shared
by the Government of the French Republic. As from this point, therefore,
there exists between the two Governments a difference of opinion
.. It is
this difference of opinion between the two Governments and not the dispute
between the Serb-Croat-Slovene Government and the French holders of the
loans, which is submitted by the Special Agreement to the Court."
 There is however no distinction between this difference of opinion and
"the dispute between the Serbian Government and the French bondholders".
 Serbia held that the service of the loans should be effected in paper;
the French holders claimed payment in gold.
 The French Government decided to take up the case on behalf of the
 What is the difference of opinion between the two Governments? The
same, absolutely the same as that existing between Serbia and the
bondholders: the Serbian Government continues to defend payment in paper,
and the French Government, representing the claims of the bondholders,
continues to maintain that payment should be in gold, as the bondholders
contended. There is no difference.
 The fact that the two are identical is so evident that the judgment is
unable to avoid admitting it (page 18): ".... fundamentally", it says, the
difference of opinion between the two Governments is "identical with the
controversy already existing between the Serb-Croat-Slovene Government and
 But, if the difference of opinion between the two Governments is
identical with the controversy existing between the Serbian Government and
its creditors, a dispute which, according to the judgment, "is exclusively
concerned with relations at municipal law" (page 17) and consequently is
outside the Court's jurisdiction, it is not easy to see why and how the
difference of opinion between the two Governments can be within that
 3. The Court now contends that it is not only questions of
international law which may be submitted to it. And in favour of this new
doctrine, it cites paragraph 2 of Article 36 of the Statute, according to
which States may recognize as compulsory the Court's jurisdiction in legal
disputes concerning "the existence of any fact which, if established, would
constitute a breach of an international obligation". In support of this
clause, the Court observes that Article 13 of the Covenant includes the
disputes above mentioned "among those which are generally suitable for
submission to arbitration or judicial settlement".
 In the first place, however, the terms of Article 36, paragraph 2,
only apply in respect of the optional clause regime, a special regime,
differing so widely from the normal regime, that the Statute specifies
separately the cases in which the Court has jurisdiction under the two
regimes (Articles 36 and 38). In the second place, in the Franco-Serbian
case there is no fact which, if established, would constitute a breach of an
international obligation; there are contracts concluded between, on the one
hand, a Government, and on the other, banks, companies or private
individuals, contracts which are governed by the municipal law of the debtor
or of the creditor, as is recognized by the Court itself, and the breach of
which is therefore merely a matter of private law.
 4. Another consideration. A State may take up a case on behalf of
its nationals. It is by application of this principle that France has
assumed the defence of the interests of the French bondholders before the
 But who are in this case the French nationals? Who are the French
 No one knows. No one can know. Having regard to the nature of the
bonds, which are freely transferable, the French bondholders at the time of
the Special Agreement may even no longer be the holders of the bonds. And in
that case, how is the intervention of France to be justified? The French
Government itself does not know who the nationals, whose interests it is
defending, are. In the Mavrommatis, Wimbledon and Upper Silesian cases, it
was well known who the Greek or German nationals concerned were. The
respective [p65] proceedings contained their names. Here it is not so; they
are not known and there is no means of knowing them. In this suit, we have a
State taking up a case on behalf of persons unknown and anonymous.
 It is true that Serbia, in spite of this, has accepted the Special
Agreement; but the Court's jurisdiction cannot be based on the wishes or
sufferance of the Parties. The Court either is competent under its Statute,
or is not competent. If it is not competent, no agreement between the
Parties can give it powers which its constitutional texts withhold from it.
 5. For the reasons set out above, in my opinion the Court should
have declared that it had no jurisdiction and thus left the States free to
have recourse to direct agreement or arbitration.
THE INTERPRETATION OF THE PARTIES.
 6. There is no doubt that the gold clause appears sometimes in the
contracts, sometimes in the bonds and sometimes in the prospectuses of the
Serbian loans. But this circumstance is of no importance for the purpose of
giving judgment in the question. What must be ascertained is whether this
clause really represents the results of a previous considered and deliberate
agreement between the Parties, and whether it represents an intention and
definite undertaking on the part of Serbia to bear the depreciation of
French money. Now the evidence produced in this connection by the Serbian
Government has given rise to doubts in my mind which the arguments of the
judgment have not succeeded in overcoming.
 7. The depreciation of the franc began in 1915. At that time the
pound sterling rose to frs. 27.96 (instead of 25.22) and the dollar to frs.
6.09 (instead of 5.18). In 1916 the extremes were: for the pound, frs. 27.81
to 28.97; for the dollar, frs. 5.86 to 6.50. As from 1919, the fall
increased in alarming proportions, as is shown by the following table of
 In 1925 the depreciation increased still further (£1 = 102.237 frs.;
$1 = 21.17). In 1926, in July, a pound equalled 243 francs ! In the second
half of that year a reaction set in: the franc was reascending in value, and
since 1927 it has represented about 1/5 of its value (£1 = 124.21; $ 1 =
 Now from 1915-1928, or for nearly fourteen years twenty-seven
completed periods of six months the holders of the Serbian loans, in spite
of the enormous depreciation of the franc and the loss of millions which
this depreciation represented for them, quietly accepted, without protest or
claim, payment of the interest on their bonds in paper francs depreciated to
the extent indicated. Is it conceivable that they would have acted in this
way if they had been convinced that the contracts guaranteed them payment in
 This seems to show that, in the eyes of the creditors themselves, the
gold clause attached to the payment of interest and redemption of the loans
had not the significance now attributed to it.
 8. As regards the judgment, "the period which may have significance
with respect to the conduct of the French bondholders is during the years
from about 1919 to about 1925", for before 1919 the difference between the
value of French currency and the gold basis was "slight", and in 1925 "it
thinks" that the diplomatic negotiations between the two Governments began
 The depreciation of the franc began in 1915 and not in 1919, as we
have shown above, and even at the beginning it was not so very slight, since
it exceeded 10 %, which on a total amount of interest exceeding 40 millions,
represents a somewhat considerable sum. As regards the latter part of the
period during which the bondholders received payments [p67] in paper, the
Special Agreement, which is dated April 19th, 1928, and which must hold good
against any information not supported by proof, states in its first article
that these payments had taken place "hitherto" (jusqu'a present), i.e. until
that date. We shall be right therefore in placing this period between 1915
 But let us leave this point and accept the period fixed by the
judgment, that is to say 1919-1925.
 We then find ourselves confronted with the following fact:
The total value of the Serbian loans is 910 million francs. Their annual
interest equals 40,725,000 francs. These figures, according to the judgment,
 In 1919, the depreciation of the French bank-note was 21%. In
receiving in paper their 40,725,000 francs of interest, the bondholders lost
8,552,250 francs. In 1920, the depreciation was 53 % and the loss
21,584,250. In 1921, the depreciation was 52 % and the loss 21,177,000. In
1922, the depreciation 54 % and the loss 21,991,000. In 1923, the
depreciation 67 % and the loss 27,285,750. Finally, in 1924, the
depreciation was 71 % and the loss 28,914,750. We will stop there and omit
the first half of 1925.
 So that from 1919 to 1924 the holders of the Serbian loans including
holders who may be described as permanent holders such as bankers,
companies, possessing from the, date of subscription thousands of shares
received, instead of 244,350,000 francs, less than half, i.e. 114,844,500
francs, thus suffering a loss of 129,505,500 francs!
 Notwithstanding this colossal loss they never addressed a protest or
claim either to the Governments or to the courts or even to the papers!
 9. It will be said that all the bondholders are not French
bondholders, and that the whole of this enormous loss cannot be regarded as
having been borne by the latter who are the only ones represented in this
case. But the great majority consists of French bondholders, the greater
part of the losses falls to their share and their inaction clearly shows
that they also were certain that the debtor was not obliged to pay in gold.
The silence of the creditors of other nationalities shows that this
conviction was unanimous. [p68]
 10. The judgment says to explain the inaction of the creditors that
"there were large numbers of them [French bondholders]; it required time for
them to arrange for concerted action and to interest the French Government
in their case".
 But the French bondholders had no need to organize themselves and
concert measures for the defence of their rights. This defence was organized
from the very beginning of the fall of the franc, for the Association
nationale des Porteurs francais de Valeurs mobilieres, which asked the
French Government to intervene in this case, has existed since 1898 and its
object is precisely "the defence of the interests of French holders of
French and foreign securities issued or negotiated in France", as is
expressly stated by Article 1 of its statutes. Furthermore, the bonds of the
loans are chiefly in the hands of companies, bankers and capitalists, and
these have lawyers at their disposal and very well know how to approach the
governments and the courts.
 11. It is also contended that as bonds transferable from hand to
hand are concerned, there is no way of identifying these holders in order to
compare the individual interpretation of each one of them with the
interpretation which follows from the actual wording of the contracts. The
judgment however regards the French bondholders as perfectly identified,
otherwise it would not have recognized the French Government's capacity to
appear before the Court. For the purposes of our argument, however, this
identification is not necessary, since what we contend is that none of the
bondholders, whatever their name, nationality, capacity or profession may
be, has ever regarded the contracts as being gold contracts. The
transferability of the bonds strengthens our argument. It creates a
presumption that the number of holders during the period of six years fixed
by the judgment must have been really enormous and, in spite of this, there
has been no opposition in any country to the payment of the Serbian loan in
 12. It is therefore an indisputable fact that from 1915, the date of
the beginning of the depreciation of the franc, to [p69] 1928, the date of
the Special Agreement, or, according to the judgment, from 1919, the date
when the depreciation became more marked, to 1925, the date on which "it
would appear" that the diplomatic negotiations began, Serbia always paid in
paper, and the subscribers and holders of bonds always received payment in
paper, thus suffering a loss which, during the period from 1919 to 1924
alone, amounted to 129,505,500 francs out of 244,350,000!
 Such is the interpretation placed upon the contracts by the Parties.
 13. But other facts, of the utmost importance, show that such was
the general belief. The proceedings in the case have indeed enabled it
clearly to be seen that not only the bondholders but also the bankers and,
which is more serious, the French Government itself, did not construe the
 Thus, whenever Serbia asked for payments in gold on account of her
loans, the banks made her pay an additional sum described as a special
 Thus again, in 1921, Serbia not yet having received a portion (14
million francs) of her 1913 loan, this sum was remitted to her in paper
francs which were already much depreciated (£1 = frs. 52.204; $1 = 13.541).
 And again, when, in consequence of difficulties arising out of the
war, France, in agreement with England, undertook to furnish Serbia with the
funds necessary for the payments due to the holders of these same loans, it
was in already depreciated paper francs that she provided the sums asked
for. Counsel for the French Government has stated that the use to which the
sums in question were to be put was not known; but Serbia by means of
various documents has proved the contrary.
 14. It is said that these facts cannot be used in argument against
the bondholders, who were not responsible for them. But they serve to show
how the contracts were interpreted by all those who took part in carrying
them out. Moreover, with regard to the last fact mentioned (the furnishing
of sums in paper money to Serbia by the French Government for the payment of
these same loans), as the Party appearing before [p70] the Court is not the
bondholders but the French Government itself, the fact can perfectly well be
used against the latter.
 15. It is easy to understand why the loans have always been
interpreted in this way.
 At the date of the issue of the loans, the French bank-note had for a
long time had the same value as gold; its credit was solidly placed on
universal confidence and it offered the most complete guarantees of
stability. The expressions paper franc, French franc, or gold franc were
used indifferently; all were francs. Each of these expressions conveyed the
same idea, seeing that the note and gold were exactly equivalent. Whether
one paid in metal currency or in paper currency, it was always payment in
gold. No one imagined that this parity could disappear. The gold clause was
thus merely regarded as a guarantee that the French bondholder would not be
exposed to surprises resulting from the variations of foreign exchange and
would be paid in his national currency, that is to say, francs.
 This has been recognized by the judgment of the Court of Paris of July
26th, 1926, which, in a case to which the Brazilian Government was a Party,
decided that the gold guarantee, undertaken in that case by Brazil, was only
intended to "give to its own currency a certain stability which it did not
possess at the time of the contract". (Clunet, 1927, p. 95.)
 This is admitted by the French Case itself: after recalling that
stipulations regarding payment in gold "were, before 1914, frequently
resorted to by States whose national currency was subject to variation and
who were endeavouring to obtain capital from abroad", it makes this
admission: "It was in these conditions that Brazil was led to insert them in
the greater part of its loans."
 16. It is therefore an indisputable fact that the Parties, for many
years, and in perfect harmony, interpreted and executed the contracts as
paper loans, which they were generally understood to be. Now the rule of law
which is contained in Article 1156 of the French Civil Code and in virtue of
which, in the interpretation of contracts, "the joint intention of the
Parties must be ascertained and it will not suffice to take the literal
meaning of the terms", this rule is accepted by most [p71] legislations.
As we have contended from the beginning, it is not the literal meaning of
the terms of the Serbian contracts to which regard must be had in order to
arrive at a sound decision upon the case, but the intention of the Parties.
It matters little that these terms are not ambiguous: the terms of contracts
however clear are overcome by the intention underlying them if the manner in
which they have been executed by the Parties proves that this intention was
not precisely that resulting from the literal meaning of the words.
 17. Let us admit however that the foregoing reasons are not
juridically sound. In that case it must at all event be recognized that this
is a doubtful case, which, moreover, appears from the very fact that it has
been submitted to the Court and, under such conditions, the principle of law
must be applied according to which, "in case of doubt, the contract is to be
interpreted against the person who has stipulated and in favour of the
person who has contracted the obligation". (French Civil Code, Article
THE FRENCH CIVIL CODE AND OTHER PUBLIC POLICY LEGISLATION.
 18. But let us suppose that the gold clause in the Serbian contracts
really constitutes an undertaking to pay in gold or its equivalent, to
provide against the risks of depreciation in French currency.
 In this case, the gold clause would not be valid and the contracts
could not be executed in France.
 The law which governs the conditions for and the currency of payments
in contracts such as those which form the subject of the present case,
concluded between a State and private subscribers or bondholders of another
State, is the territorial law of the country where payment is made. This
principle is found in numerous books on legal doctrine: it is established by
the decisions of French courts, as we shall see later, and is already
included in a Code of International Private Law, adopted by several nations,
the Bustamante [p72] Code, of which Article 170 provides that "the local
legislation governs the conditions of payment and the currency in which it
is to be made".
 Now Article 1895 of the French Civil Code runs as follows:
"The obligation resulting from a loan in money is always simply for the
amount in figures indicated in the contract.
If there has been an increase or diminution of specie before the time of
payment, the debtor must return the amount in figures lent and must return
this amount only in the specie in currency at the time of payment."
 Nothing could be clearer: the debtor must return the amount in figures
lent and must return this amount only in the specie in currency at the time
 This law was in force at the time when the Serbian loans were
contracted and the subscribers could not be ignorant of it. They therefore
knew that, in paying in paper, which is one of the currencies which is legal
tender (law of August 12th, 1870), a debtor would discharge himself of his
obligation, and a creditor would not be entitled to refuse the payment:
refusal would even constitute an offence which is expressly provided for
under Article 475, § 11, of the Penal Code.
 19. In contracts, it may be said, it is the will of the Parties that
governs, and the Parties in this case may very well have intended to exclude
payment in bank-notes and to provide for payment in gold alone.
 No, that would not be possible: the laws governing legal tender are
laws appertaining to public policy, since they are directly concerned with
the administration of the country and with its social structure and
consequently contracts of a private law character have no force as against
such laws. This is the principle embodied in Article 6 of the French Civil
Code: [Translation.] "Contracts of a private law character cannot derogate
from laws concerning public policy."
 "The rule", Aubry and Rau state, "that payments of sums of money must
be made according to the nominal value of the currency at the time when
these payments were effected, being a rule founded on interests relating to
public policy, it follows that any contract infringing such rule either
directly or indirectly must be considered as void." (Cours de Droit civil,
4th ed., Vol. IV, § 318.) [p73]
 "Notes of the Bank of France", Planiol states, "may be used for
payments in place of gold or silver, and that is so whatever be the sum to
be paid. The creditor is not entitled to refuse payment, and all contracts
to the contrary are void, the law making bank-notes legal tender being one
of public policy." (Traite de Droit civil, Vol. II, 6th ed., p. 144, No.
 But there is no need to have recourse to text-books to prove that
Article 1895 of the French Civil Code is a provision of the nature of public
policy. This nature is recognized by the Criminal Code, which, by Article
475, § 11, as has already been observed, punishes "whosoever refuses coin or
money of the realm not being false or defalsed for their current value".
 20. Besides the Civil Code, other laws relating to public policy,
the law of legal tender (August 12th, 1870) and that of forced currency
(August 5th, 1914) render the gold clause in France illegal.
THE JURISDICTION OF FRENCH COURTS.
 21. The judgment in fact agrees with this conclusion as regards
forced currency but draws a distinction according to which "any gold clause
is void when it relates to a domestic transaction but it is not in the case
of international contracts even if payment is to be made in France".
 And in support of this, the jurisprudence of the French courts is
cited (page 46).
 But the jurisprudence of the French courts in this matter has not as
yet that continuous, uniform and fixed character which is required in order
to make it binding. The pleadings before the Court have clearly shown that
for the purpose of estimating the validity or nullity of the gold clause,
this practice bases itself at times on the nationality of the Parties, at
others on domicile, at others on the locality of payment and at others on
the nature of the contract.
 Judgments exist in support of varying opinions.
 Anyhow, M. Georges Hubrecht, in a book published only about five
months ago, in which he considers at length all the phases of the practice
of the French courts and not merely a few judgments, observes that after a
number of modifications [p74] this practice appears to have become fixed and
may be embodied in the following principle: "It is the place of payment
which is the sole determining factor for deciding whether the gold clause or
the foreign currency clause is valid or not on grounds of forced currency.''
 It is therefore not sufficient that there shall be an international
agreement in order to render the law on forced currency inapplicable;
account must be taken of the place of payment under the agreement; if it is
in France, the French law on forced currency is applicable.
 "In the case of any payments of French francs which are made in
France", M. Savatier states, "the French laws on fiduciary circulation are
obligatorily applicable; paper francs and gold francs as we have defined
them are necessarily considered to be identical.... On the contrary, there
is no authority compelling the application to a foreigner of laws of police
and public safety such as those with which we are concerned.... It is thus
seen how simply and easily the question of the validity of the gold clause
in international relations may be decided; it will be sufficient to look to
the place of payment." (Dalloz, 1926, 2, 107.)
 And M. Niboyet says: "Forced currency is obligatory in international
relations in the same way as in domestic relations, in all cases when that
payment is to be made on French territory." (Revue de Droit international
prive, 1925, pp. 161 et sqq.)
 22. Reference is made to the law of June 25th, 1928 (two months
later in date than the Special Agreement), which abolished the forced
currency set up by the law of August 5th, 1914, and, after defining, the
franc as the French monetary unit, declares (Article 2) that: "This
definition shall not apply to international payments which, prior to the
promulgation of the present law, may have been validly stipulated in gold
 But no argument can be drawn from that provision as regards the
Franco-Serbian affair. An act subsequent to the dispute and emanating
exclusively from one of the Parties cannot be invoked against a right
previously acquired by the other Party.
 23. The considerations set forth in this last chapter serve to show
that, even admitting the obligation to pay in gold, [p75] the conclusions of
the judgment are too absolute: due account should have been taken of the
restrictions by which French public policy legislation the Civil Code, the
laws on legal tender and on forced currency limits the Court's latitude of
choice in the matter.
(Signed) Epitacio Pessoa.
[p76] Dissenting Opinion by M. Novacovitch.
 Being unable to concur in the foregoing judgment, I believe it to be
my duty, both towards the Court and my conscience, to set out the reasons
which prevent me from so doing.
 The case of the Serbian loans is submitted to the Court by a Special
Agreement concluded between the Government of the French Republic and the
Government of the Kingdom of the Serbs, Croats and Slovenes. What is the
dispute thus referred by the two Governments to the Court? A dispute between
the Serb-Croat-Slovene Government and the French holders of the Serbian
loans, that is, a dispute between a State and private individuals of another
nationality. This is clearly stated in the preamble of the Special
Agreement: "In view of the fact that a dispute has arisen between the
Government of the Kingdom of the Serbs, Croats and Slovenes and French
holders....", and again: "The Government of the Kingdom of the Serbs, Croats
and Slovenes, paying and considering.... and the French holders
considering....", and this is repeated in Article I: "The .... Court ....
will be asked for judgment on the following questions: (a) whether, as held
by the Government of the Kingdom of the Serbs, Croats and Slovenes.... (b)
or whether, on the contrary.... as held by the French bondholders...." And
in No. 3 of Article I we read: "how the value of the gold franc is to be
determined as between the Parties for the above-mentioned payments". The
value of the gold franc is to be fixed as between the Yougoslav Government
and the bondholders. By using the expression "the Parties" to cover them
both, the Special Agreement reaffirms that they are the Parties to the
 The same idea is found in Article II: "In the event of the Court's
award recognizing the justice of the claims of the bondholders...." (and not
of the French Government). Can the Court deal with a dispute between a State
and private individuals? [p77]
 According to the Court's Statute, the Court can only deal with
disputes between States; Article 34 expressly says: "Only States or Members
of the League of Nations can be parties in cases before the Court" (and the
French text: "Seuls les Etats.... ont qualite pour se presenter devant la
Cour"). Though Article 36 says that the jurisdiction of the Court comprises
all cases which the Parties refer to it, this in no way affects Article 34:
all cases, certainly, but between States.
 No doubt a dispute between States may originate in a controversy
between a State and individuals the injury by a State of the private
interests of the nationals of another State. This was the case, for
instance, in the case of the S.S. Wimbledon (the Court's Judgment No. 1), in
that of the Mavrommatis Palestine Concessions (Judgments Nos. 2, 5, and 11),
in that of the German interests in Upper Silesia (Judgments Nos. 6, 7, 9,
13). But in the Wimbledon case the question at issue was the interpretation
and application of Article 380 of the Treaty of Versailles; in the
Mavrommatis case it was a question of the application of Protocol No. XII
annexed to the Peace Treaty of Lausanne of 1923 and of the Mandate for
Palestine entrusted to His Britannic Majesty on July 24th, 1922; the case of
the German interests in Upper Silesia concerned the application of the
Treaty of Versailles, the German Government maintaining that Poland had
contravened it by her legislation. In all these cases, therefore, the
dispute related to the application of treaties between States, and what had
to be considered was whether there had been a breach of public international
law. In relation to this controversy of public law, the original dispute
became of secondary importance, and the protection of the interests of
individuals only came in question as a consequence of the application of a
treaty. The State took up the cause of the individual but only because it
contended that there had been a breach of public international law, a breach
which affected not only the rights of individuals but also those of the
State. And it is this injury to the rights of a State, and not to the rights
of an individual, which brought the dispute within the domain of public
international law and gave the Court jurisdiction. [p78]
 The Court has clearly stated in its previous judgments that "by taking
up the case of one of its subjects and by resorting to diplomatic action or
international judicial proceedings on his behalf, a State is in reality
asserting its own right its right to ensure, in the person of its
subjects, respect for the rules of international law". (Judgment No. 2, p.
12.) And again: "....the Court declared itself competent to pass upon the
claim for reparation because it regarded reparation as the corollary of the
violation of the obligations resulting from an engagement between States.
This view of the matter, which is in conformity with the general character
of an international tribunal which, in principle, has cognizance only of
inter-state relations, is indicated with peculiar force in this case...."
(Judgment No. 13, p. 27.)
 In the case of. the Serbian loans, we have on one side the
Serb-Croat-Slovene Government and on the other the French bondholders, who
have caused the French Government to represent them, but to represent them
only and nothing more. Neither in the Special Agreement, nor in the Cases
and Counter-Cases, nor in the oral proceedings, has it ever been contended
that the Serb-Croat-Slovene Government has violated an international treaty,
or that it has disregarded or violated a rule accepted as forming part of
the law of nations. The bondholders have not had recourse to any municipal
court, so that there is no question of a denial of justice on the part of
the Serb-Croat-Slovene State or of a refusal to comply with the decision of
a municipal court, circumstances which would engage the international
responsibility of the Serb-Croat-Slovene State. Further, the fact that, as
in the present case, there is a difference of opinion as to the
interpretation of a private contract between a State and foreign nationals
does not suffice to engage the international responsibility of that State
(difference of opinion as to interpretation only and not even a question of
failure to execute the loan contracts, since the Serb-Croat-Slovene State
has continued and still continues to execute them, but according to an
interpretation differing from that of the bondholders). This difference of
interpretation may injure the private interests of individuals, and these
individuals may contend that there has been a breach of the contract and
have recourse to the national courts in order to establish the [p79] justice
of their claims. But the State whose nationals these individuals are, cannot
at this stage be a Party to the case, and since its own rights have not been
violated, it cannot assert its own rights. No engagement between France and
the Serb-Croat-Slovene State, an engagement the obligations of which are
alleged to have been violated, has been cited before the Court. The
Serb-Croat-Slovene State therefore has incurred no international
responsibility, and it is precisely the absence of such responsibility which
makes it impossible to regard the present controversy as a dispute between
 It has, however, been argued that negotiations have taken place
between the French Government and the Serb-Croat-Slovene Government, that
these negotiations have failed and that it is this disagreement between the
two Governments which is submitted to the Court. But how far is it possible
to have regard to these negotiations? No precise statement has been made
either as to the extent or substance of these negotiations, and the Special
Agreement does not even allude to them. On the contrary, the Special
Agreement refers only to the controversy between the Serb-Croat-Slovene
State and the bondholders. In these circumstances, it is difficult to take
these negotiations into account.
 Another difficulty arises from the fact that this is not a dispute
between States but a controversy between a State and private individuals.
This is the question what rules are to be applied. The Parties have only
invoked contracts and laws. But a loan contract or a bearer bond is subject
to municipal law, so that only municipal legislation must be applied to
them. And yet the Court, whose mission it is to enforce international law
and which has been created to apply such law, must apply this law (Article
38 of the Statute). Hitherto it has done so, and though sometimes it may
have applied municipal law, this has only been in a subsidiary manner. In
the present case it is however obliged to apply municipal law and nothing
but municipal law. In regard to national systems of law, the Court has
already had occasion to state in previous cases that it could not undertake
to pass upon questions of municipal law but must simply take such law and
the relevant doctrine as it found it. [p80]
 It must however be considered that the Court has been made cognizant
of this case not by unilateral application but by a Special Agreement. The
two Sates signing the Special Agreement approach the Court as they would an
arbitrator and they ask it to decide as they might ask legal experts
upon a question of the interpretation of contracts in regard to which they
disagree. They ask the Court for an opinion not an advisory opinion ,
since such an opinion, under the terms of the Covenant and Article 72 of the
Rules of Court, can only be given upon a written request signed by the
President of the Assembly or Council or by the Secretary-General of the
League of Nations but an opinion which is to constitute the basis for
direct negotiations between the Serb-Croat-Slovene State and the
bondholders, or failing agreement, for a second arbitration.
 In asking the Court for this opinion, the two States signing the
Special Agreement have certainly been actuated by the best intentions, but
involuntarily they have placed the Court in a difficult position, because it
is bound by the Statute and because according to that instrument it is not,
in my opinion, competent to decide the question. The Court may assume the
mission of arbitrator, and in so doing it may even depart from a strict
application of the rules which it is otherwise bound to apply, since the
last paragraph of Article 38 of the Statute authorizes it to give judgment
ex equo et bono if the Parties are agreed, but the Parties must have agreed
thereto, and this must have been stated in the Special Agreement. Otherwise
it is impossible to apply the last paragraph of Article 38. An
incompatibility exists between the Statute and the Special Agreement as
drafted, and the only way of remedying this incompatibility would have been
for the two States signing the Special Agreement to agree to extend the
powers of the arbitrator by authorizing him to consider the question in all
its aspects and pass judgment upon the whole of it ex equo et bono. Since
there has been no such extension of powers, the last paragraph of Article 38
is inapplicable, and the Court cannot undertake the arbitration, its powers
being too limited by the Special Agreement. [p81]
 If we arrive at the conclusion that the Court is not competent, this
renders it unnecessary to consider the case on its merits. But being also in
disagreement on the merits, I feel called upon to make certain observations
which only tend to confirm that it is impossible for the Court to pass upon
 Several pages of the judgment are devoted to the question whether the
gold clause can be regarded as rendered inoperative by the public policy
legislation existing in countries where payments are to be made. And after
setting out the opposite views submitted by the Parties in their exposition
of the case, the Court states that the doctrine of the French courts is
established in this sense, that a distinction is to be made between domestic
and international payments, and that in the case of the latter the gold
clause is not rendered inoperative by the public policy legislation. The
Court cannot pass upon the question whether this doctrine is sound or the
reverse, more especially seeing that the reasons on which this doctrine is
based are not of a juridical nature, but reasons of national concern, which
the Court, being an international body, cannot consider. As stated in the
judgment, for the Court itself to undertake its own construction of
municipal law would not be in conformity with the task for which it has been
established, and would not be compatible with the principles governing the
selection of its members. This is certainly out of the question, and the
Court should have confined itself to this statement without even entering
upon the question as to the position in regard to the doctrine of the French
courts, especially seeing that the Special Agreement does not mention the
point. But if it left this question aside, the Court would only be able to
give an incomplete decision, so that it was confronted with a dilemma: it
must either only give an incomplete decision or else enter upon a domain
which does not belong to it but to municipal courts. The only way out of
this difficult position was to say that it had no jurisdiction. [p82]
 The questions submitted to the Court should have been dealt with and
decided from a concrete standpoint, from the standpoint adopted by the
Parties in their Cases, Counter-Cases and oral statements. If this point of
view had been adopted, the Serb-Croat-Slovene State on the one side would
have been confronted with the French Government and the group of French
bondholders on the other. But if this standpoint had been taken, it would
have been necessary to have regard to all the objections taken against the
French Government and to the group of French bondholders. The
Serb-Croat-Slovene Government put forward these objections in its oral
exposition of the case, it cited documents with a view to proving that the
execution of the contracts for a number of years in succession had been
accepted without reservation by the bondholders, notwithstanding that the
loan-service was effected in French francs which had already depreciated.
The two Parties argued at length in regard to the execution of the
contracts, and the Serb-Croat-Slovene Government sought to show, relying
more especially on this execution of the contracts, that the intention of
the Parties had not been that the contracts should be executed in gold
francs but in the French legal currency. It is to be noted that certain
arguments invoked by the Serb-Croat-Slovene Government have not been refuted
by the other side. The Serb-Croat-Slovene Government has argued, relying on
the text of the prospectuses, that the subscriptions to the loans were paid
in French francs in France and at the sight rate of exchange on Paris at
other places; that Serbia did not receive gold from her creditors, but that
the yield of the loans was credited to the Serbian Government in the books
of the banks in French francs; that when, as an exception, Serbia asked for
actual gold, she had to pay an additional premium to obtain this gold and
the operation was entered in the bank books as a sale of gold; that the
balance of the 1913 loan was paid by the banks to the Serb-Croat-Slovene
State after the war in French francs, although these francs were already
well below gold parity; that the French bondholders, until 1925, accepted
payment in French francs without any protest or reservation, and that they
thus agreed with the Serb-Croat-Slovene Government that there was no
question of payment in gold value; that all these facts show [p83] that
notwithstanding the gold clause, the Parties had in mind the French franc.
And though the other side has argued that this was not the intention of the
Parties, it has submitted no proofs refuting all the facts advanced by the
Serb-Croat-Slovene Government. Further, adopting this same concrete
standpoint, the conclusion should have been reached that the intention of
the Parties was to make the execution of the contracts subject to French law
and not to Serbian law, since it was at Paris that Serbia made its annual
payment, wherever the bondholders might be, and since Paris is the place
where payment is to be made and the contract executed. If French law is
applied it must be so in its entirety. Lastly, the question should have been
considered whether the French Government could take up the case on behalf of
the bondholders and claim for them payment at gold value; whether it was
established, as contended in the course of the proceedings, that that
Government considered itself as validly released from a debt by payment in
French francs; and that its courts held French citizens as released from
their obligations towards foreign creditors under the same conditions. To
clear up all these points further oral proceedings and report by experts
ought to have been arranged.
 The Court had rejected the concrete side of the question and has only
regarded the abstract side, holding that the question concerned bearer
bonds, that is to say bonds the holders of which are not personally known.
In regard to the obligation based on a bearer bond, the identity of only one
person is determined, namely, the debtor. The creditor is anonymous and
variable; he may change from one moment to another. This is quite true, but
all the consequences following from the conception should be taken into
account, and the conclusion should be that the question cannot concern
French bondholders, but simply bondholders, of whatever nationality.
 If the abstract aspect of the question be alone considered, all the
objections based on the execution of the contracts fall to the ground, since
the bondholder for the time being is not bound by the acts of preceding
holders. But, from another point of view, the result of keeping to the
abstract aspect is that, as opposed to the debtor, the Serb-Croat-Slovene
State, there is merely an anonymous, impersonal creditor, and in that [p84]
case the French bondholders disappear and consequently there is no one for
the French State to protect. In these conditions, can the Court deal with
 Such are the reasons which have led me to conclude that the Court
cannot be competent and which prevent me from concurring in the judgment.
(Signed) M. Novacovitch.
[p85] Annex to Judgment No. 14.
DOCUMENTS SUBMITTED TO THE COURT BY THE PARTIES IN THE COURSE OF THE
I.Documents submitted by the agent to the French government:
A. Annexes to the Case:
Minutes of the Conference held at Carlsbad on June 20th, 1895.
Law of July 8th/20th, 1895, as to the conversion of the public debt by the
issue of a new loan (4% 1895).
Prospectus of the 1895 loan.
Bond of the 1895 loan.
Special passages in the 1895 loan bond issued in England.
Law of July 26th/August 8th, 1902, authorizing the 1902 loan.
Contract of August 23rd/September 5th, 1902, between the Serbian Government
and various banking houses.
Prospectus of the 1902 loan.
Bond of the 1902 loan.
Contract of November 12th, 1906, between the Royal Serbian Government and
Law of December 14th/27th, 1906.
Prospectus of the 1906 loan.
Bond of the 1906 loan.
Contract of October 9th, 1909, between the Royal Serbian Government and the
Law of December 15th/28th, 1909, authorizing the 1909 loan.
Prospectus of the 1909 loan.
Bond of the 1909 loan.
Contract of August 26th/September 18th, 1913, between the Royal Serbian
Government and the Banks.
Law of October 18th/31st, 1913, authorizing the 1913 loan.
Prospectus of the 1913 loan.
Bond of the 1913 loan.
Extract from the law of 17th Germinal, Year XI (March 28th, 1803).
,, August 5th, 1914.
,, ,, February 12th, 1916.
,, ,, monetary law of June 25th, 1928.
a judgment of the Court of Cassation, May 17th, 1927.
,, ,, ,, ,, ,, ,, ,, ,, Appeal of Paris, April 16th, 1926.
Extract from a judgment of the Court of Appeal of Nimes, January 9th, 1928.
Extract from a judgment of the Court of Cassation, January 23rd, 1924. [p86]
B. Annex to the Counter-Case.
Judgment of the Court of Appeal of Paris (First Chamber), February 15th,
СDocuments filed during the hearings.
Letter from the Banque franco-serbe to the Association nationale des
Porteurs de Valeurs mobilieres in Paris (November 6th, 1928).
Declaration by the Autonomous Administration of Monopolies in Serbia
(December 29th, 1913/January 11th, 1914).
Letter from the Minister of Finance of the Kingdom of Serbia to the Banque
franco-serbe in Paris (December 28th, 1913/January 10th, 1914).
Prospectus of the Serbian 1895 loan (July 23rd, 1897).
Association of Stockbrokers in Paris. Decision and opinion of the Chambre
syndicale (May 28th, 1901).
Letter from M. Vouitch, Serbian Minister in France, to M. Delcasse, French
Foreign Minister (November 16th, 1902).
Letter from M. Spalaikovitch, Minister of the Serb-Croat-Slovene Kingdom in
Paris, to M. Briand, French Foreign Minister (October 23rd, 1927).
Convention between France and the Serb-Croat-Slovene Kingdom concerning
consuls and domicile (Paris, January 30th, 1929extract).
Official quotations of the Belgrade Exchange (October 29th, 1928).
Letter from the delegate of the holders of Serbian loans to the French
Foreign Minister (June 25th, 1918).
Letter from M. A. Naville, President of the Societe financiere dOrient, to
Professor Basdevant (May 19th, 1929).
Note from M. Poincare to M. Spalaikovitch (February 7th, 1927).
List of judicial decisions establishing the law in France giving validity to
the gold clause as regards international transactions, etc.
Extracts from the Gazette du Palais:
I. Court of Appeal of Paris (First Chamber), February 22nd, 1924;
Dumas v. Grenouilleau.
II. Court of Appeal of Paris (First Chamber), February 15th, 1924;
Compagnie havraise peninsulaire v. Compagnie du Canal de Suez.
III. Civil Tribunal of the Seine (First Chamber), October 29th, 1925;
Association nationale des Porteurs de Valeurs mobilieres v. State of Minas-Geraes.
Idem, November 4th, 1925; Regard, and others v. Compagnie hellenique
IV. Civil Tribunal of the Seine (First Chamber), February 24th, 1926;
Thirion and others v. Societe du Port du Rosario.
V. Court of Cassation (Civil Chamber), May 17th, 1927; Pelissier du
Besset and wife v. The Algiers Land and Warehouse Co. Ltd.
VI. Judgment of the Court of Appeal of Nimes (audience solennelle),
January 9th, 1928; Pelissier du Besset and wife v. The Algiers Land
and Warehouse Co. Ltd.
VII. Civil Tribunal of the Seine (First Chamber), March 25th, 1925.
Conclusions of M. le substitut Fremicourt in Compagnie universelle du
Canal maritime de Suez v. Marquise de Vaucouleurs.
Circular from the Comptoir national d'Escompte de Paris (August 28th, 1895).
Balance Sheet and Profit and Loss Account with final accounts of the Finance
Ministry for 1926-
1927, etc. [p87]
II.Documents submitted by the agent to the serb-croat-slovene government.
A. Annexes to the Case.
Protocol of the Conference at Carlsbad, June 20th, 1895.
Contract made at Paris, April 3rd/15th, 1896.
Protocol of issue in London of £1,000,000 sterling (25,000,000 dinars) of
the 4% loan of 70,460,000 dinars, issued in Paris on June 27th/July 9th,
Contract concluded at Paris, August 23rd/September 5th, 1902.
Contract concluded at Geneva, November 12th, 1906, between the Banks and the
Royal Serbian Government.
Contract concluded at Paris on November 9th, 1909, between the Banks and the
Royal Serbian Government.
Contract concluded at Belgrade on August 26th/September 8th, 1913.
Law of July 8th/20th, 1895, on the conversion of the public debt.
Law of July 26th/August 8th, 1902, on the State loan.
Law of December 14th, 1906, in regard to the loan for the construction of
railways and the
purchase of military stores.
Law of December 15th, 1909, on the 4½ % loan of 150,000,000 francs for the
railways and the completion of military equipment.
Law of October 18th, 1913, on the 5% loan of 250,000,000 gold francs for the
payment of urgent
expenditure undertaken during the war, and for urgent State purposes.
B. Annexes to the Reply.
First notice circulated in France in May 1896, concerning the 1895 loan.
List of coupons for payment and receipt relating thereto, for 1895 loan.
Statement of Account of the Serbian Government with the Ottoman Bank,
relating to the 1895
loan payments due on July 1st, 1911, and January 1st, 1912.
Statement of Account rendered by the Ottoman Bank, showing the sums paid in
on different dates by the Serbian State for the service of the 1895 loan.
Statements of Account rendered by the Societe financiere d'Orient, giving in
detail for the different dates the sums paid in by the Serbian State for the
service of the 1902, 1906 and 1913 loans.
Statement of Account rendered by the Ottoman Bank, giving the sums paid in
by the Serbian State on various dates for the service of the 1909 loan.
Correspondence relating to the service of the loans during the war.
Texts of laws relating to legal tender and forced currency (law of August
12th, 1870, and law of August 5th, 1914).
Judgment of the Court of Appeal of Paris, April 16th, 1926; de Neufville v.
Office des Biens et Interets prives (Societe Mumm).
German text of the Protocol of Carlsbad (1895). [p88]
C.Documents filed during the hearings.
Telegram from M. Bouniols to the Serbian Legation in London (June 14th,
Telegram from M. Bouniols to M. Levitch, London (September 8th, 1916).
Idem (August 31st, 1916).
Idem (August 31st, 1916).
Idem (August 4th, 1916).
Note from M. Briand to M. Vesnitch, Serbian Minister in Paris (July 24th
Prospectus of the 1913 loan.
German prospectus for 1909.
German application form for 1909.
Extract from works of R. J. Pothier (Vol. III, Part I, p. 138).
Note from M. Bouniols to M. Levitch (undated).
Extract from Matter (Revue de Droit bancaire, 1925, p. 269).
Extract from judgment of the Tribunal of Commerce of the Seine, July 21st,
Extract from judgment of the Civil Tribunal of the Seine (First Chamber),
April 1st, 1925.
Extract from Repertoire pratique francais Dalloz; Monnaie, No. 49.
Extract from provision relating to the Latin Union.
Extract from the French law of July I4th/27th, 1866 (Art. 9).
Extract from English judgment: Chesterman's Trust, 19232Chancery Division,
466, 1923, July 31.
Extract from declaration by the Berliner Handelsgesellschaft, July 16th
Extract from judgment of the French Court of Cassation of August 2nd, 1926
(Gazette du Palais, 1926, II, p. 650).
Extract from lecture by M. Bartin, pp. 536 et sqq.
Extract from lectures by M. Bartin, p. 517.
Extract from: Francois Geny, Methode d'interpretation et sources, Vol. II,
Extract from judgment of Civil Tribunal of the Seine (First Chamber) of
April 6th, 1927.
Extract from: Henri Capitant, Introduction a l'etude du Droit civil (4th
edition, Paris, 1923, p. 54).
Extract from judgment of Civil Tribunal of the Seine (First Chamber) of
December 11th, 1922.
Extract from: Antoine Pillet, Traite pratique de Droit international prive.
Vol. II, 1924.
Extract from: Dionisio Anzilotti, Cours de Droit international prive, Vol.
I, pp. 53. 54, 55, 341 and 342 (French ed.).
Letter from M. Briand to M. Poincare (June 18th, 1928).
Extract from: F. Surville, Cours de Droit international prive (7th ed.,
Extract from: Antoine Pillet, Traite pratique de Droit international prive.
Vol. I, p. 343. [p89]
Extract from: «La clause payable en or», by B. Nogaro, Revue trimestrielle
de Droit civil, 1925, pp. 5 et sqq.
Extract from: Aubry et Rau, Cours de Droit civil, Vol. IV, 5th ed. (318).
Extract from: M. Planiol, Traite elementaire de Droit civil, Vol. II, ed.
1912, p. 145.
Notice concerning the Serbian 4% unified rente, 1895.
Extract from: Works of R.-J. Pothier, edited by Dupin Aine; Brussels, 1830,
Vol. II, pp. 198 and 199.
Note from the Bank of England (July 17th, 1916).
Idem (August 1st, 1916).
Idem (October 3rd, 1916).
Note from M. Cambon (August 19th, 1916).
Telegram from M. Bouniols to the Serbian Minister in London (September 25th,
Idem (September 12th, 1916).
Idem (October 15th, 1916).
Notice signed by M. Bouniols with a table concerning service of the Serbian
Extract from contract and Serbian loan agreement of 1922.
Translation of Article 28 of the Serbian law of April 24th, 1920 (Serbian
Serbian law of April 24th, 1920 (Serbian edition).
Extract from judgment of the Civil Tribunal of the Seine, November 13th,
1926 (Gazette du Palais, November 28th, 1926.Revue de Droit bancaire, 1927,
Tables showing rate of discount of Serbian bills on the Paris Market after
the great war.
Note from the British Treasury (September 20th, 1916).
Work relating to the Law of Estoppel: Venire contra factum proprium, by
Erwin Riezlet, Leipzig, 1912.
State budget for financial year 1928-1929.
Photograph of contract between the Serbian State and Parr's Bank, concerning
the issue in London of a section of the 1895 loan (certified true copy).
Photograph of prospectus of above issue.
Photograph of application form.
Extract from the Traite de Droit international prive, by Andre Weiss, 2nd
ed., Vol. IV, p. 397.