High Court Says USD Debts Must Be Paid In USD
In a potentially far-reaching judgment, the High Court has declared INVALID the RBZ Exchange Control Directive No. R120/2018. The directive which created FCA “nostro” accounts (as distinct from “RTGS” accounts) was declared unconstitutional on the grounds that it’s irrational to change the currency of a bank account by simply renaming it. This means that USD debts have to be paid in USD.
This comes after Penelope Douglas Stone from The Stone/Beattie Studio represented by Tendai Biti took CABS, RBZ and ministry of finance to court over a US$142 000 deposit
The court ordered CABS, the applicants’ bankers, to pay The Stone/Beattie Studio US$142,000 which is the amount that they held in their account in 2016 or transfer it into a “nostro” account nominated by the applicants within 7 days.
Tendai Biti whilst arguing the matter, simply stated: “you cannot give me goats when I gave you cows.”
Below is the High Court order,
PENELOPE DOUGLAS STONE
RICHARD HAROLD STUART BEATTIE Trading as THE STONE/BEATTIE STUDIO
CENTRAL AFRICAN BUILDING SOCIETY
RESERVE BANK OF ZIMBABWE
MINISTER OF FINANCE AND ECONOMIC DEVELOPMENT
HIGH COURT OF ZIMBABWE
HARARE, 7 May 2019 & 14 May 2020
T. Biti for the applicant
G. M. Nyangwa for the first respondent
L. Uriri for the second respondent
Ms P. Macheka for the third respondent
ZHOU J: This is an application for an order that the first respondent pays a sum of US$142 000.00 together with interest thereon at the rate of five percent per annum from 28 November 2016 to the date of payment within seven days from the date of this order. In the alternative, the applicant asks that the first and second respondents be ordered to pay the said sum of money jointly and severally the one paying the other to be absolved. The further alternative relief is for the Exchange Control Directive No. R120/2018 to be declared a nullity or, in the further alternative, that s 44B(3) and (4) of the Reserve Bank of Zimbabwe Act [Chapter 22:15] be declared unconstitutional. Costs of suit are in the main sought against the first respondent and, in the alternative, against all the respondents jointly and severally the one paying the others to be absolved. The application is opposed by all the respondents.
The applicants have succeeded in obtaining the relief which they sought before this court. There are no special reason warranting departure from the usual conclusion that costs should follow the result. The applicants are therefore entitled to recover their costs of suit.
In the result, IT IS ORDERED THAT:
1. Exchange Control Directive No. R120/2018 issued by the first respondent through its Governor on 4 October 2018 be and is hereby declared to be invalid, and is accordingly set aside.
2. The first respondent shall pay to the applicant the sum of US$142 000.00 in the currency of the United States of America or transfer that amount into a Nostro Foreign Currency Account as may be directed by the applicants within seven days from the date of this order together with interest thereon at the prescribed rate of 5 percent per annum from the 17th October 2018, being the date of the letter of demand, to the date of full payment or transfer into the Nostro Foreign Currency Account as directed herein.
3. The respondents shall pay the costs jointly and severally the one paying the others to be absolved.
Tendai Biti Law, applicants’ legal practitioners
Mawere Sibanda, first respondent’s legal practitioners
GN Mlotshwa & Company, second respondent’s legal practitioners
Civil Division of the Attorney-General’s Office, third respondent’s legal practitioners
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