(Euro Papers. 15. January 1998.
Brussels. Tab. Ann. Free.)
In May 1995 the European Commission's Green Paper on the Practical Arrangements for the Introduction of the Single European Currency predicted that under the laws of non-EU jurisdictions the proposed single currency would be recognized as the successor to existing EU national currencies at the fixed conversion rates at which the single currency will substitute EU national currencies. The Commission's Green Paper thus concluded that under the laws of non-EU jurisdictions the continuity of monetary obligations and other terms of a contract such as interest rates and other ancillary obligations could be expected.
This paper will address the issues raised by the Commission's Green Paper. This paper reaches the following conclusions regarding the legal implications of EMU for transactions governed by the laws of U.S. jurisdictions, regardless of whether legislation ensuring the continuity of contracts is passed in particular American jurisdictions and regardless of whether such legislation applies prospectively or retroactively.
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The introduction of the single European currency presents few uncertainties for the continuity of contracts governed by New York law and the laws of other U.S. jurisdictions. In accordance with the State theory of money, all such contractual obligations must be discharged in accordance with the applicable provisions of the EU Council regulations on the introduction of the euro.
The legislation enacted in New York and Illinois confirming the continuity of contracts after EMU is broadly consistent with the EU Council regulations. Possible discrepancies between the state legislation and the EU Council regulations can be overcome by interpreting the state legislation so as to harmonize it with the EU Council regulations. In any case, in the event of a conflict between the EU Council regulations and the New York or Illinois legislation, the provisions of the EU Council regulations shall prevail by virtue of the State theory of money.
Contractual obligations denominated in the official ECU and governed by the laws of most U.S. jurisdictions (but not New York) shall be automatically discharged in accordance with the provisions of the EU Council regulations. ECU obligations governed by New York law shall be discharged either pursuant to the EU Council regulations or in accordance with the substantially identical provisions of the New York legislation confirming the continuity of contracts after EMU.
Because the state legislation confirms the continuity of contracts in a manner that is broadly consistent with the applicable EU legislation, it will not retroactively impair the obligation of contracts contrary to the provisions of the United States Constitution. Nor will the state legislation infringe the U.S. Federal Government's authority over international monetary relations. This is because the state legislation generally defers to the monetary sovereignty of the European Union over the currencies of EU member states.