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Section II

LIQUIDATION OF THE UNION

8. Upon the termination of the present Agreement under Article 36 thereof, the Union shall be liquidated in accordance with the following provisions.

9. (a) Subject to the provisions of paragraph (g) of Article 10 of the present Agreement and of sub-paragraphs (b) and (c) of the present paragraph, any amount in respect of an initial credit or debit. balance allotted to a Contracting Party and not used under the present Agreement, shall be treated as if it were an accounting surplus or deficit, as the case may be, of that Contracting Party arising in the accounting period ending on the date of termination.

(b) The preceding sub-paragraph shall apply as regards any amount in respect of an initial debit balance only to the extent that an equivalent amount of conditional aid is already firmly allotted to the Contracting Party concerned.

(c) Any amount in respect of the initial debit balance allotted to the United Kingdom not used under the present Agreement shall be cancelled.

10. Amounts of credit used in accordance with Article 12 of the present Agreement shall, upon the termination of the present Agreement, be treated as credits granted or received, as the case may be, by virtue of Article 11 thereof, and the bilateral credits shall be cancelled.

11. The Organisation may determine limits within and conditions under which any Contracting Party may be permitted to exclude from the liquidation reasonable working balances in the currencies of other Contracting Parties.

12. The convertible assets of the fund shall be used to reimburse the Contracting Parties which have granted credits to the Union by virtue of Articles 11 and 13 of the present Agreement, in proportion to the net amounts of these credits. However, in so far as the amount of convertible assets does not exceed the amount referred to in paragraph (b), (i), of Article 23 of the present Agreement, they shall only be used under the present paragraph if the Government of the United States of America has not objected to the liquidation.

13. The convertible assets of the fund referred to in paragraph 12 of the present Annex shall be the amounts of gold, United States dollars and convertible currencies of countries other than Contracting Parties, which form part of the fund on the termination of the present Agreement.

14. The residue of the credits granted by the Contracting Parties and not repaid by virtue of paragraph 12 of the present Annex shall be liquidated in accordance with the provisions of paragraph 15, or paragraphs 16 to 18, of the present Annex, as the case may be.

15. Should the Organisation decide that the liquidation provided for in paragraph 14 of the present Annex shall be carried out by the

Union, the Contracting Parties which have received credits from the Union by virtue of Articles 11 and 13 of the present Agreement shall repay to the Union, in proportion to the net amounts of their credits and on conditions to be determined by the Organisation, the amounts required to enable the Union to carry out the said liquidation.

16. In the absence of such a decision by the Organisation, the balance outstanding of the credits granted to the Union, referred to in paragraph 14 of the present Annex, and the part of the credits granted by the Union which would otherwise be repayable in accordance with paragraph 15 of this Annex, shall be cancelled and replaced by bilateral credits calculated in accordance with the provisions of paragraph 17 of this Annex.

17. (a) Each Contracting Party shall receive from each of the Contracting Parties which has granted a net amount of credit to the Union, a credit equivalent to that fraction of the outstanding balance of the credit granted by the latter Contracting Party which is equal to the fraction which the quota of the first Contracting Party represents of the sum of the quotas of all the Contracting Parties. (b) Each Contracting Party which has received a net amount of credit from the Union shall receive from each of the Contracting Parties an amount of credit equivalent to that fraction of the part, referred to in paragraph 16 of the present Annex, of the credit granted by the Union and received by the former Contracting Party, which is equal to the fraction which the quota of the latter Contracting Party represents of the sum of the quotas of all the Contracting Parties.

18. The bilateral credits granted in accordance with the provisions of paragraphs 16 and 17 of this Annex shall be expressed and repaid in the currency of the Contracting Party which grants the credit, unless there is agreement to the contrary between the said Contracting Party and the Contracting Party which receives the credit. The terms of these credits shall be fixed by agreement between the two Contracting Parties, or, in the absence of such agreement, by decision of the Organisation. If the Organisation is unable to take such a decision, the credits concerned shall bear interest at two and threequarters per cent. per annum; they shall be repayable in three years and shall, unless the two Contracting Parties agree otherwise, be repaid by equal monthly instalments.

19. Any assets of the fund not used in accordance with the provisions of paragraphs 12 to 18 of the present Annex shall be distributed, subject to the provisions of paragraph 23, among the Signatories of the present Agreement in the proportions fixed in Table V. Nevertheless, if any Contracting Party fails to fulfil any of its obligations under Articles 11 or 13 of the present Agreement or of paragraphs 4, 15, or 16 to 18 of the present Annex, it shall not participate in the distribution provided for in the present paragraph, unless the Organisation decides otherwise.

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20. To the extent to which they are not repaid in accordance with the provisions of paragraphs 14 to 18 of the present Annex, credits granted to the Contracting Parties by virtue of Articles 11 and 13 of the present Agreement shall be offset against claims allotted to them by virtue of paragraph 19 of the present Annex.

21. The settlement of claims allotted by virtue of paragraph 19 of the present Annex, to the extent to which they are not settled in accordance with paragraph 20, shall be carried out by the Contracting Parties whose credits from the Union have not been entirely repaid. To this end, each of those Contracting Parties shall receive from each of the Contracting Parties which by virtue of paragraph 19 have a claim on the Union, a credit equivalent to that fraction of the claim which is equal to the fraction which the outstanding balance of the credit received by the first Contracting Party represents of the sum of the outstanding credits.

22. Unless the two Contracting Parties concerned agree otherwise, any credit arising under paragraph 21 of the present Annex shall be settled as follows:

(i) it shall be expressed in the currency of the Contracting Party which grants the credit;

(ii) it shall be consolidated for a period of fifteen years as from the termination of the present Agreement;

(iii) it shall bear interest at the rate of three per cent. per annum during this period;

(iv) it shall be amortised as from the beginning of the third year following the termination of the present Agreement.

23. The application of the provisions of paragraphs 19 to 22 of the present Annex shall be subject to the agreement of the Government of the United States of America which, in consultation with the Organisation, may decide to earmark the whole or part of the residuary assets of the fund for the benefit of the Contracting Parties, either individually or as a group. However, a Contracting Party need not repay the

credits granted by virtue of Articles 11 and 13 of the present Agreement within a period less than that provided for in paragraph 22 of the present Annex, unless the repayment is to be carried out in the currency of that Contracting Party, for use within its territory or monetary

area.

24. Any assets of the fund which are distributed pursuant to paragraphs 19 to 22 or paragraph 23 of the present Annex shall be used to facilitate the maintenance of transferability of European currencies or to promote the liberalisation of trade by the Contracting Parties with one another or with other countries, to promote industrial and agricultural production and to further the maintenance of internal financial stability.

IN WITNESS WHEREOF, the undersigned Plenipotentiaries, duly empowered, have appended their signatures to the present Agreement. DONE in Paris this nineteenth day of September, Nineteen Hundred and Fifty, in the English and French languages, both texts being equally authentic, in a single copy which shall remain deposited with the Secretary-General of the Organisation for European Economic Co-operation by whom certified copies shall be communicated to all the Signatories.

11. PROTOCOL OF PROVISIONAL APPLICATION OF THE AGREEMENT, SEPTEMBER 19, 1950 1

1

The Signatories of the Agreement for the Establishment of a European Payments Union (hereinafter referred to as the "Agreement") signed this day;

CONSIDERING the Resolution of the Council of the Organisation for European Economic Co-operation of 29th June, 1950, with regard to the Measures to be taken concerning Intra-European Payments pending the establishment of a European Payments Union;

DESIROUS of avoiding an interruption as between the operation of the Agreement for Intra-European Payments and Compensations for 1949-1950, signed on 7th September, 1949, and that of the Agreement signed to-day;

HAVE AGREED as follows:

1. Subject to the provisions of paragraph 3, the Parties to the present Protocol shall apply the Agreement provisionally as if the Agreement had been effective as from 1st July, 1950.

2. Subject to the provisions of paragraph 3, the present Protocol shall come into force on this day's date and shall continue in force until the Agreement comes into force; provided that Articles 34, 35 and 36 of the Agreement shall apply in relation to the present Protocol as they apply to the Agreement.

1 British Misc. No. 14 (1950), Cmd. 8064.

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3. If at the time of its signature a Party to the present Protocol declares that the Agreement can, as far as that Party is concerned, be applied subject only to the condition that it be ratified in accordance with its constitutional processes,

(i) the present Protocol shall come into force, in so far as the said Party is concerned, on the date when its instrument of ratification is deposited in accordance with the provisions of Article 31 of the Agreement; and

(ii) the Agreement shall then be applied provisionally, in so far as the said Party is concerned, as if it had become effective on 1st July, 1950, or, if that Party when depositing its instrument of ratification notifies the Organisation for European Economic Co-operation (hereinafter referred to as the "Organisation") that this is not possible, then at the beginning of the accounting period in the course of which the instrument of ratification is deposited.

4. Any Member of the Organisation which accedes to the Agreement, in accordance with the provisions of Article 32 thereof, before its coming into force may accede to the present Protocol on such conditions and with effect from such date as the Organisation shall decide.

5. (a) Any Party to the present Protocol may withdraw therefrom by giving notice in writing of its intention to withdraw to the SecretaryGeneral of the Organisation (hereinafter referred to as the "SecretaryGeneral") in the event that such Party is unable to ratify the Agreement and has notified the Organisation in accordance with paragraph (d) of Article 31 of the Agreement.

(b) At the end of the first accounting period following the date on which such notice is given, or at such later date as may be specified in the notice, the Party giving it shall cease to be a Party to the present Protocol.

(c) The Secretary-General will immediately inform all Parties to the present Protocol and the Agent within the meaning of Article 18 of the Agreement, of any notice given under the present paragraph.

6. Unless the Organisation decides otherwise, the present Protocol shall terminate if the quotas of the Parties should amount in aggregate to less than 50 per cent. of the total amount of the quotas initially fixed by Article 11 of the Agreement.

7. If the provisions of paragraphs 5 or 6 of the present Protocol are applied,

(i) the operations relating to the accounting period at the end of which the present Protocol terminates in respect of a Party or in respect of the Parties generally, shall nevertheless be carried out; and

(ii) the rights and obligations of the Party or Parties concerned shall be determined in accordance with the provisions of Section I or Section II, as the case may be, of Annex B to the Agreement. IN WITNESS WHEREOF, the undersigned Plenipotentiaries, duly empowered, have appended their signatures to the present Protocol.

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