JUNE 7.] THE NEW ZEALAND GAZETTE 1918

(c.) The sums due to the nationals of one of the High Contracting Parties by the
nationals of an Opposing State will be debited to the Clearing Office of
the country of the debtor, and paid to the creditor by the Clearing Office
of the country of the creditor.

(d.) Debts shall be paid or credited in the currency of such one of the Allied and
Associated Powers, their colonies or protectorates, or the British Dominions
or India, as may be concerned. If the debts are payable in some other
currency they shall be paid or credited in the currency of the country
concerned, whether an Allied or Associated Power, colony, protectorate,
British Dominion, or India, at the pre-war rate of exchange.

For the purpose of this provision the pre-war rate of exchange shall
be defined as the average cable transfer rate prevailing in the Allied or
Associated country concerned during the month immediately preceding
the outbreak of war between the said country concerned and Germany.

If a contract provides for a fixed rate of exchange governing the con-
version of the currency in which the debt is stated into the currency of
the Allied or Associated country concerned, then the above provisions
concerning the rate of exchange shall not apply.

In the case of new States the currency in which and the rate of
exchange at which debts shall be paid or credited shall be determined by
the Reparation Commission provided for in Part VIII (Reparation).

(e.) The provisions of this article and of the Annex hereto shall not apply as
between Germany on the one hand and any one of the Allied and
Associated Powers, their colonies or protectorates, or any one of the
British Dominions or India, on the other hand, unless within a period of
one month from the deposit of the ratifications of the present Treaty by
the Power in question, or of the ratification on behalf of such Dominion
or of India, notice to that effect is given to Germany by the Government
of such Allied or Associated Power, or of such Dominion or of India, as
the case may be.

(f.) The Allied and Associated Powers who have adopted this article and the
Annex hereto may agree between themselves to apply them to their
respective nationals established in their territory so far as regards matters
between their nationals and German nationals. In this case the pay-
ments made by application of this provision will be subject to arrange-
ments between the Allied and Associated Clearing Offices concerned.

ANNEX.

1. Each of the High Contracting Parties will, within three months from the
   notification provided for in Article 296, paragraph (e), establish a Clearing Office
   for the collection and payment of enemy debts.

Local Clearing Offices may be established for any particular portion of the
territories of the High Contracting Parties. Such Local Clearing Offices may perform
all the functions of a Central Clearing Office in their respective districts, except that
all transactions with the Clearing Office in the Opposing State must be effected
through the Central Clearing Office.

2. In this Annex the pecuniary obligations referred to in the first paragraph of
   Article 296 are described as “enemy debts,” the persons from whom the same are
   due as “enemy debtors,” the persons to whom they are due as “enemy creditors,”
   the Clearing Office in the country of the creditor is called the “Creditor Clearing
   Office,” and the Clearing Office in the country of the debtor is called the “Debtor
   Clearing Office.”

3. The High Contracting Parties will subject contraventions of paragraph (a) of
   Article 296 to the same penalties as are at present provided by their legislation for
   trading with the enemy. They will similarly prohibit within their territory all legal
   process relating to payment of enemy debts, except in accordance with the provisions
   of this Annex.

4. The Government guarantee specified in paragraph (b) of Article 296 shall
   take effect whenever for any reason a debt shall not be recoverable, except in a case
   where at the date of the outbreak of war the debt was barred by the laws of
   prescription in force in the country of the debtor, or where the debtor was at
   that time in a state of bankruptcy or failure, or had given formal indication of
   insolvency, or where the debt was due by a company whose business had been
   liquidated under emergency legislation during the war. In such case the procedure
   specified by this Annex shall apply to payment of the dividends.

The terms “bankruptcy” and “failure” refer to the application of legislation
providing for such juridical conditions. The expression “formal indication of
insolvency” bears the same meaning as it has in English law.

5. Creditors shall give notice to the Creditor Clearing Office within six months
   of its establishment of debts due to them, and shall furnish the Clearing Office with
   any documents and information required of them.

The High Contracting Parties will take all suitable measures to trace and
punish collusion between enemy creditors and debtors. The Clearing Offices will