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The "Euro" has arrived.

The Legal Framework for its Introduction and Effect Under Florida Law

"Money speaks sense in a language all nations understand."

Aphra Behn, The Rover

A monetary union for Europe? Plato could only dream of such. Caesar, Charlemagne, and Charles V tried to impose their versions of a "monetary union" by force. On January 1, 1999, the European Union (EU) realized by consensus this long gestating supranational project in giving birth to the "euro"--the new single currency for 11 of the 15 EU nations. As designated by the Council of the European Union on May 3, 1998, the countries of Austria, Belgium, Finland, France, Germany, Ireland, Italy, Luxembourg, Netherlands, Portugal, and Spain constitute the 11 nations of the new "euro zone" (also referred to unofficially as "Euroland"). Only the United Kingdom, Sweden, Denmark, and Greece have not selected--or have failed to qualify for--participation in the single currency. Between now and January 1, 2002, referred to as the "transitional period," these euro zone nations will be busy implementing the legal rules devised by the EU concerning the changeover from their national currencies to the new euro.

Not only are these legal rules of vital necessity to the countries concerned for the smooth transition from their national currencies to the euro, but also these rules will be of utmost importance to the international business community and, of course, international law practitioners. For example, what is the result of this transition to the euro for Florida lawyers facing outstanding contracts denominated in Deutsche marks or French francs, or securities earning interest governed by the now disappeared Paris Interbank Offered Rate (PIBOR)? Will parties to such legal instruments be entitled to cease performance thereunder based upon the defenses of "impossibility," "frustration of purpose," or "commercial impracticability" under Florida law? Accordingly, this article will introduce the Florida lawyer to the historical background leading to the adoption of the euro. This article will then analyze the principal legal rules established by the EU for the transition from the participating national currencies to the euro itself, namely: the "continuity of contracts principle"; the rule of "no compulsion-no prohibition"; and the "conversion and rounding" procedures. Finally, the conflict of laws issue concerning the ultimate application of these EU rules within the Florida law context will be considered, especially in light of the lex monetae principle or "state theory of money" imposed upon states by federal law.

Historical Background and Legal Foundation

In what must be considered as one of the greatest transfers of sovereignty in modern history, an expanding number of Western European nations have, over the past half-century, moved forward from a mere integration of their coal and steel industries and establishment of a "common market" to the creation of today's EU.(1) This supranational entity has now succeeded in adding to its well-developed single internal market a single European currency--a move which should, over the long term, greatly assist the EU in its stated goal of providing for the freedom of movement of goods, services, people, and capital.(2) With its Treaty on European Union agreed to at Maastricht, the Netherlands, in 1992, the EU established the general legal framework and timetable for the realization of an "Economic and Monetary Union" (EMU) and its single currency by the year 1999.(3) The Maastricht Treaty adopted a three-phase EMU process(4)--a process which was later refined during the Madrid meeting of the European Council in 1995.(5) The first phase (which had previously been implemented pursuant to decisions reached during the 1989 European Council meeting in Madrid), was to last from July 1, 1990, to December 31, 1993, and would require the coordination of monetary policy and the freeing up of capital movements within the EU.(6) The second phase, to last from January 1, 1994, to December 31, 1998, called for the establishment of the European Monetary Institute and its successor organization, the European Central Bank, and the selection of the euro-zone nations according to well-defined economic criteria.(7) The final, third phase was scheduled to begin January 1, 1999 (at the latest), with the introduction of the euro within the qualifying nations and the transit to the euro as the sole legal tender for these designated nations as of January 1, 2002.(8)

While the Maastricht Treaty outlined in general form the EMU process and timetable, the tasks of selecting the participants and establishing the detailed legal framework for the implementation of the euro within those nations were left to the council--acting upon the proposals of the commission and the opinions of the Parliament.(9) The council, which consists of one political representative from each of the 15 member states (sitting either as "ministers" or "heads of state/government"), is empowered by the Treaty Establishing the European Community ("EC Treaty") to make final decisions for the EU member states on matters which those states have by treaty transferred to the EU.(10)

The commission consists of 20 commissioners nominated by the member states and appointed by the council for five-year terms. The nations of France, Germany, Italy, Spain, and the United Kingdom are granted the right to nominate two commissioners each while the other 10 member states are only entitled to nominate one commissioner each. The commission is charged with ensuring that all EU laws are applied throughout the EU and is authorized to propose EU laws to the council for final adoption.(11) There are then 23 directorates-general, or administrative departments, attached to the commission and organized according to subject matter. These directorates-general ("DGs") are involved in the preparation and drafting of proposed EU laws and thus lay the groundwork for EU legislation.(12)

The 626 members of the European Parliament are elected directly and the Parliament enjoys, in some circumstances, what is referred to as "co-decision authority" over proposed EU legislation.(13) Beyond the EU treaties themselves, EU law consists of regulations, directives, and decisions.(14) And, as first announced in the landmark Case 6/64, Costa v. ENEL, 1964 E.C.R. 585, [1964] C.M.L.R. 425 (1964),(15) decided by the European Court of Justice in 1964, it is a well-established legal principle that EU laws are considered as supreme over conflicting national laws of the EU member states.(16)

Pursuant to these legal powers and the mandates of the Maastricht Treaty, the council adopted Council Regulation No. 974/98 of 3 May 1998 On the Introduction of the Euro ("council regulation no. 974/98"), thereby confirming the beginning of the third phase of EMU for January 1, 1999, with the introduction as of that date of the euro within the designated 11 nations.(17) But, well before the adoption of council regulation no. 974/98, the council was busy devising a legal framework for the conversion from national currencies to the euro during the transitional period and, of course, the withdrawal of national currencies and mandatory use of the euro beginning January 1, 2002. Such a legal framework was established with the adoption of Council Regulation No. 1103/97 of 17 June 1997 on Certain Provisions Relating to the Introduction of the Euro ("council regulation no. 1103/97").(18) These two EU regulations (taken together and herein referred to as the "euro rules") establish three well reasoned legal concepts which now constitute part of the monetary law of the euro-zone nations, namely: the "continuity of contracts" principle; the rule of "no compulsion-no prohibition"; and the "conversion and rounding" procedures.

The Continuity of Contracts Principle

As mandated by part II of council regulation no. 974/98, the currency unit of the participating nations as from January 1, 1999, shall be one euro. The euro is then divided into 100 cents. It is also provided that the euro shall be substituted for the currency of each participating nation's currency at the "conversion rate."(19) Concerning the transitional period, part III of council regulation no. 974/ 98 then provides that the euro shall also be divided into the national currency units according to the conversion rates. Thus, the national currencies will be mere subdivisions of the euro until January 1, 2002, and it is specifically provided that any reference made in any legal instrument to one of the national currencies "shall be as valid as if reference were made to the euro unit according to the conversion rates."(20) In addition, article 2 of council regulation no. 1103/97 provides that, effective January 1, 1999, every reference in a legal instrument to the European Currency Unit (ECU), as officially defined, shall be replaced by a reference to the euro at a rate of one euro to one ECU.(21)

With these euro rules in mind, the question then becomes: Does this substitution of the euro for the affected national currencies and/or ECU then alter the provisions of any existing legal instrument--especially to the degree of constituting a fundamental change of circumstances permitting the discharging or excusing of performance under the instrument? Article 3 of council regulation no. 1103/97 answers this question (at least within the 15 EU nations) by implementing the "continuity of contracts" principle, with due deference to the freedom of contract rule, in the following clear terms:

The introduction of the euro shall not have the effect of altering any legal term of a legal instrument or of discharging or excusing performance under any legal instrument, nor give a party the right unilaterally to alter or terminate such an instrument. This provision is subject to anything which parties may have agreed.(22)

In paragraph 7 of the preamble to council regulation no. 1103/97, it is provided that the "continuity of contracts" principle would then imply "that in the case of fixed interest rate instruments the introduction of the euro does not alter the nominal interest payable by the debtor."(23)

Not specifically addressed by these euro rules is the issue of the effect of the euro substitution on outstanding legal instruments incorporating a variable (or floating) interest rate provision tied to affected national currencies (such as the PIBOR concerning French franc interest rates quoted by leading French banks), which has, as of January 1, 1999, effectively disappeared. As stated by officials of the European Commission's Directorate General II (DG II), which is concerned with economic and financial matters, it is expected that parties to such contracts and courts interpreting such would, pursuant to the "continuity of contracts" principle, merely substitute the new European Interbank Offered Rate (EURIBOR) for the now defunct floating interest rates.(24)

This "continuity of contracts" principle as put forth by the EU reflects the fact that the euro and affected national currencies exist simultaneously side by side as legal tender during the transitional period. In addition, it leaves open the possibility of redenominating the legal instrument into euros should the parties so choose. Thus, such a provision leads directly to the "no compulsion-no prohibition" rule.

The No Compulsion-No Prohibition Rule

Pursuant to article 8 of council regulation no. 974/98, parties are given the freedom of choice concerning the use of the euro or participating national currencies during the transitional period with the following guidelines:

1. Acts to be performed under legal instruments stipulating the use of or denominated in a national currency unit shall be performed in that national currency unit. Acts to be performed under legal instruments stipulating the use of or denominated in the euro unit shall be performed in that unit.

2. The provisions of paragraph I are subject to anything which parties may have agreed.

3. Notwithstanding the provisions of paragraph 1, any amount denominated either in the euro unit or in the national currency unit of a given participating Member State and payable within that Member State by crediting an account of the creditor, can be paid by the debtor either in the euro or in that national currency unit. The amount shall be credited to the account of the creditor in the denomination of his account, with any conversion being effected at the conversion rates.(25)

Cash transactions will, of course, be limited to the national currency units until the January 1, 2002, introduction of euro bills and coins. For noncash transactions, however, paragraph 3 of the above-cited article provides the debtor with a choice of making payment (and in effect discharging his or her debt) in either the euro or applicable national currency--where such debt is payable within that participating state by crediting the account of the creditor. In line with the "no-compulsion-no prohibition" rule, this credit then must be effectuated in the established denomination of the creditor's account. Banks within the euro zone nations have begun, as of January 1,1999, implementing euro accounting systems in response to this EU law provision.

Nations of the euro zone are given, as the continuation of article 8 indicates below, the choice concerning the unilateral redenomination of outstanding government debt from national currency units to the euro unit, with this choice then determining the rights of other debt issuers to likewise unilaterally undertake such redenomination:

4. Notwithstanding the provisions of paragraph 1, each participating Member State may take measures which may be necessary in order to: redenominate in the euro unit outstanding debt issued by that Member State's general government ... denominated in its national currency unit and issued under its own law. If the Member State has taken such a measure, issuers may redenominate in the euro unit debt denominated in that Member State's national currency unit unless redenomination is expressly excluded by the terms of the contract; this provision shall apply to debt issued by the general government of a Member State as well as to bonds and other forms of securitised debt negotiable in the capital markets, and to money market instruments, issued by other debtors(.)(26)

Issuers of such debt instruments redenominating their debt into euro pursuant to the above-cited provisions would then be entitled to effectuate payment for such by crediting the account of the creditor in the euro currency unit where the conditions of the above-cited paragraph 3 of article 8 are satisfied.

Conversion and Rounding Procedures

Council regulation no. 1103/97 sets forth the "conversion and rounding" procedures as follows: Article 4

1. The conversion rates shall be adopted as one euro expressed in terms of each of the national currencies of the participating Member States. They shall be adopted with six significant figures.

2. The conversion rates shall not be rounded or truncated when making conversions.

3. The conversion rates shall be used for conversions either way between the euro unit and the national currency units. Inverse rates derived from the conversion rates shall not be used.

4. Monetary amounts to be converted from one national currency unit into another shall first be converted into a monetary amount expressed in the euro unit, which amount may be rounded to not less than three decimals and shall then be converted into the other national currency unit. No alternative method of calculation may be used unless it produces the same results.

Article 5

Monetary amounts to be paid or accounted for when a rounding takes place after a conversion into the euro unit pursuant to Article 4 shall be rounded up or down to the nearest cent. Monetary amounts to be paid or accounted for which are converted into a national currency unit shall be rounded up or down to the nearest sub-unit or in the absence of a sub-unit to the nearest unit, or according to national law or practice to a multiple or fraction of the sub-unit or unit of the national currency unit. If the application of the conversion rate gives a result which is exactly half-way, the sum shall be rounded up.(27)

The council has established, as of January 1, 1999, the following irrevocable conversion rates for the euro zone's 11 currencies:
Value of One Euro

40.3399 Belgian Franc
1.95583 German Deutsche Mark
166.386 Spanish Peseta
6.55957 French Franc
.787564 Irish Punt
1936.27 Italian Lira
40.3399 Luxembourg Franc
2.20371 Netherlands Guilder
13.7603 Austrian Schilling
200.482 Portuguese Escudo
5.94573 Finnish Markka(28)


Application of these irrevocable conversion rates to the rules as enunciated in articles 4 and 5 cited above would result in the following examples:
Conversion of 100,000
French Francs to Euros
100,000 FFr/6.55957 =
15,244.90 Euros
(rounded to nearest euro cent)

Conversion of 100,000 Deutsche Marks
to French Francs
(so-called "Triangulation Process")

Step 1--100,000 DM / 1.95583 =
51,129.188 Euros
(rounded to minimum three decimals)

Step 2--51,129.188 Euros X 6.55957 =
335,385.49 FFr
(rounded to nearest French
franc sub-unit)


Although the application of the EU "conversion and rounding" rules under Florida law will be discussed in detail infra, it is appropriate at this point to mention the guidance of the European Commission's DG II concerning the question of how conversions between third currencies and euro zone national currency units should be made:

As it is unlikely that quotations between the national currency units and third currencies will still be available after the entry into the third stage, conversions between national currency units and third currencies will have to be carried out by means of the conversion rate between the national currency unit and the euro unit and the exchange rate between the euro unit and the third currency. For the implied conversion between the national currency unit and the euro unit, the provisions of Articles 4 and 5 of the Council Regulation (EC) No 1103/97 would have to be applied.(29)

January 1, 2002--Imposition of the Euro

As imposed by part V of council regulation no. 974/98, references to participating national currency units in legal instruments in effect as of January 1, 2002, "shall be read as references to the euro unit according to the respective conversion rates" with the application of the above-cited rounding pules.(30) Part V of council regulation no. 974/98 also provides that banknotes and coins denominated in the participating national currencies shall remain legal tender within their territorial limits until six months after the end of the transitional period at the latest. However, this period may be shortened by national law.(31) Thus, once the participating national currencies have been legally withdrawn from circulation shortly following the January 1, 2002, date, all monetary transactions--whether the crediting of accounts or direct cash payments--will be carried out solely in the single legal tender available: the euro.

Introduction of Euro Under Florida Law

The above-described euro rules provide the 15 EU member states with a very high degree of legal certainty concerning the introduction of the euro. A question remains, however, concerning the effect of these EU monetary law provisions upon legal instruments and transactions interpreted under the laws of third countries. In other words, will the courts of third countries apply the EU's "continuity of contracts," "no compulsion-no prohibition," and "conversion and rounding" rules in cases being decided within their jurisdictions? Such an issue was, of course, of utmost concern to the EU's commission and council when devising the legal framework for the introduction of the euro. The council, in the preamble to regulation no. 1103/97, addressed this issue as follows:

Whereas the introduction of the euro constitutes a change in the monetary law of each participating Member State; whereas the recognition of the monetary law of a State is a universally accepted principle; whereas the explicit confirmation of the principle of continuity should lead to the recognition of continuity of contracts and other legal instruments in the jurisdictions of third countries(.)(32)

While acknowledging that courts, in the final instance, are responsible for deciding disputes over the application and interpretation of legal rules, the commission has attempted to elaborate upon the most important provisions of the EU's euro rules. In response to the question concerning the "continuity of contracts" principle and legal instruments governed by the laws of third countries, the staff of DG II stated the following:

The application of the principle of "lex monetae" or the "state theory of money," which is a universally accepted principle of law, should ensure the continuity of existing contracts also in third countries' jurisdictions. As set out by F.A. Mann ("The Legal Aspect of Money", 5th ed.), it is the law of the currency ("lex monetae") that determines how in case of a currency alteration, sums expressed in the former currency are to be converted into the new one. The underlying assumption is that money as a legal construction is subject to the power of the State. It is held that each State exercises its sovereign power over its own currency, and that no State can legislate to affect another country's currency. From this it follows that it must be the law of the currency which determines what is money and what nominal value is attributed to it. Applied to the introduction of the euro this means that in non-EU jurisdictions which respect the principle of "lex monetae," references in contracts set up in the currency of a participating Member State will be interpreted with reference to European law, which is directly applicable in each of the participating Member States.... European Commission contacts with third countries' governments and market participants have shown that the principle of "lex monetae" ... is indeed followed in the main financial centres of the world.(33)

Indeed, the U.S. Supreme Court has followed the principle of lex monetae, or the "state theory of money," since its 1870 decision in the Legal Tender Cases(34) concerning the power of Congress during the American Civil War to issue paper currency or "greenbacks" in lieu of U.S. gold dollars. The Court stated:

It was not a duty to pay gold or silver, or the kind of money recognized by law at the time the contract was made, nor was it a duty to pay money of equal intrinsic value in the market.... [T]he obligation of a contract to pay money is to pay that which the law shall recognize as money when the payment is to be made .... Every contract for the payment of money, simply, is necessarily subject to the constitutional power of the government over the currency, whatever that power may be, and the obligation of the parties is, therefore, assumed with reference to that power. (Emphasis added.(35)

And, in a long line of decisions building upon the Legal Tender Cases, federal courts have supported a broad application in the U.S. of the lex monetae principle with the acceptation--based upon the rule of comity and customary international law obligations--of other nations' sovereign rights to control and change their monetary laws and legal obligations directly linked thereto.(36) Thus, it has been argued that the lex monetae principle requiring foreign courts to respect and follow the "state theory of money" is part of the federal common law and a requirement to which states must adhere so as not to violate the division of authority between the federal and state governments and "Supremacy Clause" under the U.S. Constitution.(37) As evidence of the federal government's recognition of the lex monetae principle, it may be noted that the Federal Reserve Board has recently issued a "supervision and regulation" letter to U.S. banks imposing the use of the EU's "triangulation methodology" in converting from one participating nation's currency to another participating nation's currency during the transition period.(38)

The states of New York, Illinois, and California, in order to provide a high degree of legal certainty to their respective major international financial centers, have adopted statutes dealing with the introduction of the euro and its effect upon legal instruments within their respective jurisdictions. These state statutes apply the "continuity of contracts" principle to legal instruments which refer to the ECU or participating national currencies as the subject or medium of payment, by providing that the euro shall constitute a "commercially reasonable substitute" for such. These laws then provide that the tendering or use of the euro shall be effected by using the conversion rates specified in, and otherwise calculated in accordance with, the regulations adopted by the council. Finally, these states' laws concerning the introduction of the euro also have specifically provided that the reference to any interest rate or other basis that has been substituted or replaced due to the introduction of the euro and that is a commercially reasonable substitute and substantial equivalent (i.e., EURIBOR for PIBOR), shall neither have the effect of discharging or excusing performance under any legal instrument, nor give any party the right unilaterally to alter or terminate any such legal instrument.(39)

As of the writing of this article, the Florida Legislature has not adopted any Florida law provisions similar to those of New York, Illinois, or California. Absent such a clear statutory mandate, however, the Florida international law practitioner faced with euro transition questions may reasonably conclude that Florida courts would in fact respect the "universally accepted" lex monetae principle (in line with the federal common law obligations), and thus impose the EU's euro rules. The imposition by Florida courts of the euro rules, with their requirement of "continuity of contracts," should then effectively thwart any attempt by parties to cease performance under concerned contracts due to any claimed legal excuse for nonperformance.

Under Florida's common law doctrine of impossibility of performance, an excuse for nonperformance of contract should not be available to parties involved in euro conversion situations since payment is legally and practically possible in the new substitute money, the euro.(40) Furthermore, in order to enjoy the legal excuse of frustration of purpose as laid down in Florida's common law of contracts, one must establish that the essential purpose and value of the contract have been frustrated by some unforeseen event.(41) And, far from establishing a situation giving rise to the defenses of impossibility of performance or frustration of purpose, the introduction of the euro has been recognized, at least by the above-listed American states, as involving a "commercially reasonable substitute and substantial equivalent" of the concerned national currencies and ECU.(42)

This interpretation conforms with [sections] 672.614 of Florida's Uniform Commercial Code (UCC), which provides in Paragraph 2 the following rules concerning "substituted performance" in sales of goods contracts covered by Article II of the UCC:

If the agreed means or manner of payment fails because of ... foreign government regulation, the seller may withhold or stop delivery unless the buyer provides a means or manner of payment which is commercially a substantial equivalent. If delivery has already been taken, payment by the means or in the manner provided by the regulation discharges the buyer's obligation unless the regulation is discriminatory, oppressive, or predatory. (Emphasis added.)(43)

Furthermore, the UCC's doctrine of commercial impracticability excuses performance only if performance as agreed has been made "impracticable" by the occurrence of a contingency the nonoccurrence of which was a basic assumption on which the contract was made.(44) However, this legal excuse from performance provided by the UCC is expressly made subject to the preceding section on "substituted performance"--thus defeating any claim of "impracticability" of performance in light of the reasonable commercial substitute provided by the new euro. Concerning the "impracticability" of performance, it has been made clear by the drafters of the UCC that "increased cost alone does not excuse performance unless the rise in cost is due to some unforeseen contingency which alters the essential nature of the performance."(45) Additionally, it can be reasonably argued that the act of currency replacement in general, and the adoption of the euro in particular, would both be highly foreseeable contingencies.(46) Finally, it is also important to note that [sections] 671.201(24) of Florida's UCC defines "money" as "a medium of exchange authorized or adopted by a domestic or foreign government...." (emphasis added); a definition applying the "state theory of money."(47)

It is, therefore, reasonable to assume that Florida courts, even without clear legislative mandate, would be in full agreement with the following declaration of the state legislature of California upon adopting that state's euro introduction rules:

On January 1, 1999, the euro, the proposed currency of the European Union, is scheduled to become the currency of the member nations and their individual currencies will cease to exist. International contracts that are expressed in terms of existing national currencies must not become unenforceable or their enforcement delayed because of an assertion of a defense that the designated currencies no longer exist. (Emphasis added.)(48)

Conclusion

The EU's legal framework for the introduction of the new euro--with its "continuity of contracts," "no compulsion-no prohibition," and "conversion and rounding" rules--provides a clear guideline to the international business and legal communities concerning legal instruments which involve the participating member nations' currencies or ECU. According to the universally accepted lex monetae principle, or "state theory of money," third nations should accept and apply these euro rules to legal instruments falling within their legal jurisdictions. The lex monetae principle has long been applied within the United States as a matter of federal common law. Currently, the states of New York, Illinois, and California have adopted statutes concerning legal instruments within their respective jurisdictions and the euro transition--all with the imposition of the lex monetae principle and application of the euro rules. Although the Florida Legislature has not yet acted on this issue, it is reasonable to conclude that Florida courts would adhere to the lex monetae principle and thus apply the euro rules to legal instruments affected by the euro transition--appropriately rejecting any right to excused performance under the doctrines of impossibility, frustration of purpose, or commercial impracticability.

(1) For a discussion of the historical development of the EU, stemming from the 1952 European Coal and Steel Community (ECSC), 1957 European Atomic Energy Community (EURATOM), and 1957 European Economic Community (EEC), see the European Union's official website located at <http:// europa.eu.int>. For purposes of clarity, references to the EU will represent a reference to all the Communities and their unified institutions.

(2) One of the primary goals of the EU, the freedom of movement of goods, services, people, and capital, was originally outlined in the 1957 Treaty of Rome establishing the EEC. This goal was further realized with the creation of the 1992 Single Internal Market Program as provided for in the 1986 Single European Act.

(3) Treaty on European Union, Feb. 7, 1992, 1992 O.J. (C 191) 1. The Treaty on European Union amended the Treaty of Rome (1957)--as previously amended by the Single European Act (1986)--by renaming it the Treaty Establishing the European Community. Treaty Establishing the European Community, Feb. 7, 1992, 1992 O.J. (C 224) 1, [1992] 1 C.M.L.R. 573 (1992) (hereinafter EC Treaty).

(4) EC Treaty, arts. 3a, 102a-109m, supra note 3.

(5) See European Council Madrid Presidency Conclusions, The Scenario for the Changeover to the Single Currency (Dec. 1995).

(6) European Council Madrid Presidency Conclusions, paras. 1-4 (June 1989).

(7) EC Treaty, arts. 109e-109i, supra note 3.

(8) EC Treaty, arts. 109j-109m, supra note 3.

(9) EC Treaty, art. 109j (selection of participating nations); EC Treaty art. 1091(4) (granting the council the power to take measures to implement the single currency), supra note 3.

(10) Concerning the powers, membership, and voting of the council, see EC Treaty, arts. 145-153, supra note 3.

(11) Concerning the powers, membership, and voting of the commission, see EC Treaty, arts. 154-163, supra note 3.

(12) For a description of the work of the Directorates-General, see CHRISTOPHER VINCENZI, LAW OF THE EUROPEAN COMMUNITY 16-17 (1996).

(13) Concerning the powers, membership, and voting of the Parliament, see EC Treaty, arts. 137-144, supra note 3.

(14) According to article 189 of the EC Treaty, regulations are binding in their entirety and directly applicable in all member states; directives are binding upon the result to be achieved in those member states to which they are addressed, leaving to the national authorities the choice of form and methods; and decisions are binding in their entirety upon those to whom they are addressed. EC Treaty, art. 189, supra note 3.

(15) Concerning the jurisdiction, membership, and voting of the European Court of Justice, see EC Treaty, arts. 164-188, supra note 3.

(16) See, e.g., Case 48/71, Commission v. Italy, 1971 E.C.R. 527, [1972] C.M.L.R. 699 (1972); Case C-213/89, The Queen v. Secretary of State for Transport ex parte Factortame Ltd., 1990 E.C.R. 1-2433, [1990] 3 C.M.L.R. 1 (1990).

(17) Council Regulation No. 974/98 of 3 May 1998 on the Introduction of the Euro, 1998 O.J. (L 139) 1 (hereinafter Council Regulation No. 974/98).

(18) Council Regulation No. 1103/97 of 17 June 1997 on Certain Provisions Relating to the Introduction of the Euro, 1997 O.J. (L 162) 1 [hereinafter Council Regulation No. 1103/97].

(19) Council Regulation No. 974/98, supra note 17, at 4.

(20) Id. at 4-5.

(21) Council Regulation No. 1103/97, supra note 18, at 3. If the legal instrument in question does not specifically define the ECU obligation in terms of the ECU "as officially defined" (i.e., "as referred to in Article 109g of the Treaty and as defined in Regulation (EC) No. 3320/ 94"), then such references shall be presumed to be references to the officially defined ECU and thus replaced by the euro at a one-to-one rate. Such a presumption is made rebuttable, however, based upon the intentions of the parties to such an ECU denominated instrument.

(22) Id. at 3.

(23) Id. at 2.

(24) See European Commission, Directorate General II, Economic and Financial Affairs, The Legal Framework for the Use of the Euro--Questions and Answers on the Euro Regulations (II/487/97) (1997) at 10 [hereinafter Euro Questions]. Alongside the EURIBOR, which establishes the one to 12 month interbank euro interest rates, the European Central Bank has created the EONIA (Euro OverNight Index Average) as the effective overnight rate for the euro. See Association for the Monetary Union of Europe, EONIA to Become Effective Overnight Reference Rate for the Euro, AMUE Newsletter No. 34 (1998).

(25) Council Regulation No. 974/98, supra note 17, at 5.

(26) Id.

(27) Council Regulation No. 1103/97, supra note 18, at 3-4.

(28) Council Regulation No. 2866/98 of 31 December 1998 On the Conversion Rates Between the Euro and the Currencies of the Member States Adopting the Euro, 1998 O.J. (L 359) 1.

(29) Euro Questions, supra note 24, at 7.

(30) Council Regulation No. 974/98, supra note 17, at 6.

(31) Id. France's national committee on the euro has recommended a much shorter transition period, with the withdrawal of the franc and replacement by the new euro notes and coins six to 10 weeks following the January 1, 2002, date. See Association for the Monetary Union of Europe, France in Favour of Earlier Withdrawal of National Currencies, AMUE Newsletter No. 34 (1998).

(32) Council Regulation No. 1103/97, supra note 18, preamble (8), at 2.

(33) Euro Questions, supra note 24, at 9-10.

(34) 79 U.S. (12 Wall.) 457 (1870).

(35) Legal Tender Cases, 79 U.S. (12 Wall.) at 548-49 (1870).

(36) See, e.g., Steingut v. Guaranty Trust Co. of N.Y., 58 F. Supp. 623 (S.D.N.Y. 1944) (citations omitted), aff'd as modified 161 F.2d 571 (2d Cir. 1947); Callejo v. Bancomer, S.A., 764 F. 2d 1101 (5th Cir. 1985); Grass v. Credito Mexicano, S.A., 797 F.2d 220 (5th Cir. 1986). See also Niall Lenihan, The Legal Implications of the European Monetary Union Under U.S. and N.Y. Law (1998) at 31-80 (and cases cited therein).

(37) See Lenihan, supra note 36, at 215-221.

(38) Board of Governors of the Federal Reserve System, Division of Banking, Supervision and Regulation, SR 98-16 (SUP) June 12, 1998, Banking Organizations' Preparedness for Economic and Monetary Union in Europe at 5-6.

(39) See N.Y. GEN. OBLIG. LAW [subsections] 5-1601-1604 (McKinney 1997); 815 ILL. COMP. STAT. 617/1-30 (West 1997); and CAL. CIV. CODE [sections] 1663 (West 1998) (hereinafter Euro Conversion Statutes).

(40) See generally Moon v. Wilson, 130 So. 25 (Fla. 1930)(confirming the requirement that a party must satisfy his contractual promises unless his performance is rendered actually impossible by an act of God, the law, or another party).

(41) See, e.g., Equitrac Corp. v. Kenny, Nachwalter & Seymour, P.A., 493 So. 2d 548 (Fla. 3d D.C.A. 1986); see also RE. STATEMENT (SECOND) OF CONTRACTS [sections] 265 (1981).

(42) See Euro Conversion Statutes, supra note 39.

(43) FLA. STAT. [sections] 672.614(2) (1998).

(44) See FLA. STAT. [sections] 672.615 (1998).

(45) U.C.C. [sections] 2-615, off. cmt. 4, 1B U.L.A. 195-96 (1989); see also Bernina Distribs., Inc. v. Bernina Sewing Mach., 646 F.2d 434 (10th Cir. 1981).

(46) See Lenihan, supra note 36, at 107-109. See also Eastern Air Lines v. Gulf Oil Corp., 415 F. Supp. 429 (S.D. Fla. 1975) (concerning the requirement that the supervening event be "unforeseeable" in order to enjoy the defense of commercial impracticability).

(47) FLA. STAT. [sections] 671.201(24) (1998).

(48) Cal. Assem. 185, 1997/98 Seas. [sections] 2 (1998).

Lawrence H. Eaker, Jr., is an international law practitioner in Paris, where he has served as a legal consultant to the OECD, chair of the Department of International Business Administration at the American University of Paris, and director of International Graduate Programs for Boston University in France and Spain. He currently is director of graduate programs in international business law for the French business school ESSEC and adjunct professor within the Cornell University-ESSEC hospitality management MBA program. He earned his J.D. from the University of Florida College of Law, LL.M. in ocean and coastal law from the University of Miami, and studied international law at Oxford University.3
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Title Annotation:includes discussion of interaction with Florida law
Author:Eaker, Lawrence H., Jr.
Publication:Florida Bar Journal
Geographic Code:4EU
Date:Oct 1, 1999
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