International Funds Transfers and Private International Law

• Jurisdiction: South Africa
• Pages: 53-65
• Published date: 16 August 2019
• Citation: (2006) 18 SA Merc LJ 53
• Date: 16 August 2019
• Author: S F du Toit

International Funds Transfers and

Private International Law

SF DU TOIT*

University of Johannesburg

1 Introduction1

According to Mann,2

‘[t]he troublesome question, What is money? has so constantly engaged the minds of economists

that a lawyer might hesitate to join in the attempt to solve it. Yet the true answer must, if

possible, be determined. . . . Money is a fundamental notion, not only in the economic life of

mankind, but also in many spheres of law.’3

Even though the concept ‘payment’ may be of more practical importance

today than ‘money’, especially in the sphere of private law,4 examining

electronic payment mechanisms in the fast-changing world of electronic

53

* BA LLB LLD (RAU). Associate Professor, Department of Mercantile Law, University of

Johannesburg.

1 In writing this article I made extensive use of the dissertation by Eesa Allie Fredericks The Conf‌l ict

of Laws in Respect of Documentary Letters of Credit in International Trade Financing (unpublished

LLM dissertation, Rand Afrikaans University 2001). The dissertation was published in amended form:

Eesa A Fredericks & Jan L Neels ‘The Proper Law of a Documentary Letter of Credit — Part 1’ (2003)

15 SA Merc LJ 63; ‘The Proper Law of a Documentary Letter of Credit — Part 2’ (2003) 15 SA Merc LJ

207. In particular, the analysis in part 5 below is loosely based on research originally undertaken by

Fredericks and Neels. For an application of the principles of private international law in the sphere of

banking law, see Raymond M Auerback ‘Governing Law Issues in International Financial Transactions’

(1993) 27 The International Lawyer 303; H Thomas Byron ‘A Conf‌l ict of Laws Model for Foreign

Branch Deposit Cases’ (1991) 58 Univ of Chicago LR 671; Georg Borges ‘The Localisation of Electronic

Banking Transactions. The German Perspective’ in Norbert Horn (ed) Legal Issues in Electronic Banking

(2002) 39ff; Marc Dassesse ‘The Localisation of Electronic Banking Transactions. EU, WTO and Tax

Considerations’ in Horn (ed) op cit at 55ff; Norbert Horn ‘Banking in the Electronic Age. Legal Issues’ in

Horn (ed) 3 at 6–8; Herbert Kronke ‘Applicable Law and Jurisdiction in Electronic Banking Transactions’

in Horn (ed) op cit at 73ff; Mann on the Legal Aspect of Money 6 ed by Charles Proctor (2005) 93–105,

195–205, 331–353 and 409–450; Hal S Scott ‘Where are the Dollars? — Off-Shore Funds Transfers’

(1989) 3 Banking & Finance LR 243; Jacob S Siegel ‘Canadian Perspectives on Banking Transactions

and the Conf‌l ict of Laws’ (1990) 4 Banking & Finance LR 201; Joseph H Sommer ‘A Law of Financial

Accounts: Modern Payment and Securities Transfer Law’ (1998) 53 The Business Lawyer 1181 at 1206–

1209 and 1212-1-214; John M Spender & Gregory Burton ‘Aspects of Conf‌l ict of Laws in Banking

Transactions’ (1987) 61 Australian LJ 65. One would expect that the parties involved in international

f‌i nancial transactions would include a choice of law clause in their contract, ‘though it is surprising to

f‌i nd how often a major transaction fails to include a choice of law clause’ (Siegel op cit at 203). See

further Libyan Arab Foreign Bank v Bankers Trust Co [1988] 1 Lloyd’s Rep 259; Dicey and Morris on

the Conf‌l ict of Laws vol 2 13 ed by Lawrence Collins (gen ed) (2000) 1419–1420, incl 1419n50. For

the purposes of this article I have assumed, especially in part 5 below, the absence of an express or tacit

choice of law.

2 Mann op cit note 1 at 3. Previously the work contained the phrase ‘of all departments of law’ (see

FA Mann The Legal Aspect of Money 5 ed (1992) 1) instead of ‘in many spheres of law’. See also the

text to note 4 below.

3 For a revised and updated version of Mann’s well-known def‌i nition of money, see Mann op cit note

1 at 35–36. The original def‌i nition can be found in the previous edition (Mann op cit note 2 at 8) and the

current edition (Mann op cit note 1 at 15). Section 15(1) of the Reserve Bank Act 90 of 1989 determines

that the monetary unit of South Africa is the rand and cent (‘legal tender’ is def‌i ned in s 17). On legal

tender, see Mann op cit note 1 at 66–68; Joan Wadsley & Graham Penn The Law Relating to Domestic

Banking 2 ed (2000) 364n8.

4 Mann op cit note 1 at 3 and 8–9.

(2006) 18 SA Merc LJ 53

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