1 No. 38
   Indosuez International Finance B.V.,
   Respondent,
   v.
   National Reserve Bank,
   Appellant.
     _________________________________________________________________

   2002 NY Int. 55

   May 7, 2002

   This opinion is uncorrected and subject to revision before publication
   in the New York Reports.

   Jeffrey Barist, for appellant.
   A. Grant McCrea, for respondent.
     _________________________________________________________________

   SMITH, J.:

   The primary issue on this appeal is whether New York law or Russian
   law should govern the forward currency exchange transactions entered
   into between plaintiff Indosuez International Finance B.V. (IIF) and
   defendant National Reserve Bank (NRB). We hold that New York law
   applies.

   Between 1997 and July 1998, IIF, a Netherlands corporation, and NRB, a
   Russian bank, entered into 14 non- deliverable forward currency
   exchange transactions with specified trade dates, settlement
   dates(1) and forward rates. A forward exchange transaction is an
   obligation to purchase or sell a specific currency on a future date
   (settlement date) for a fixed price set on the date of the contract
   (trade date).(2) The value of the exchange transactions to IIF and
   NRB depended on the appreciation or the depreciation of the ruble in
   relation to the dollar. In the present case, the forward rate is the
   market- determined exchange rate for exchanging Russian rubles for
   United States dollars on the settlement date. If on the settlement
   date, the then-prevailing exchange rate is greater than the forward
   rate, i.e., if the ruble has depreciated against the dollar, the ruble
   buyer (NRB) must pay the seller (IIF) in dollars. If, on the other
   hand, the then-prevailing exchange is less than the forward rate,
   i.e., the ruble has appreciated, the reverse is true and IIF must pay
   NRB in dollars.

   Seven of the 14 transactions involved payment by IIF to NRB of an