Loan in favour of a Company of the Netherlands Antilles (Defendant) made by an Italian Bank (Claimant) / Dispute over the validity of the agreement / Arbitrator sitting in Paris per arbitration agreement / Italian law to be applied for the interpretation of the loan agreement per contractual provision / Defendant claims that the loan agreement is invalid because it was not approved by the Central Bank / Possibility for the Arbitral Tribunal to apply a non-Italian mandatory law, yes / Rome Convention of June 1980, Art. 7(1)

'Defendant argued in the proceedings that the "approval" of the Central Bank of the Netherlands Antilles had not been given and that therefore Claimant's claim for repayment under the Loan Agreement is contrary to the laws of the Netherlands Antilles and must therefore be dismissed.

In Claimant's submission, Article 14 of the Loan Agreement is drafted exclusively in favour of Claimant and moreover the Central Bank issue is of merely administrative nature.

Even if the Loan Agreement is governed by Italian law, effect may be given-pursuant to Article 7(1) of the EU Convention on the law applicable to contractual obligations-to the mandatory rules of the law of another country with which the situation has a close connection, if and in so far as under the law of the latter country, those rules must be applied whatever the law applicable to the contract. Exchange regulations typically fall within the scope of this convention rule.

In the instant case however, the application of the Netherlands Antilles Ordinance of January 23, 1981, containing regulations concerning foreign exchange traffic is without effect to the issue under discussion since its Article 23.2 provides that: "If a transaction for which a licence or exemption is required, has been effected without a licence or exemption, the interested parties cannot plead absence of the licence or exemption against each other."'