The business sector has said it is still looking into the implications of the recent High Court ruling, which declared unconstitutional a Reserve Bank of Zimbabwe (RBZ) exchange control directive ‘mutating’ money held in foreign currency accounts into Zimbabwe dollar-denominated accounts.
The decision ordering CABS to pay an architectural company Stone/Beatie Studio, holder of an account with the financial concern, US$142 000 within seven days, was delivered recently by Justice Happias Zhou.
The Treasury hinted at the weekend that it will approach the Supreme Court this week to contest the High Court decision, which is in conflict with that of the Supreme Court early this year.
The ruling also brings under spotlight the recent Supreme Court ruling on the similar issue, ordering all debts to be settled in local currency in line with the RBZ regulations in a case involving Zambezi Gas Private Ltd and NR Barber.
In an interview, Confederation of Zimbabwe Industries immediate past president Mr Sifelani Jabangwe, said they were still trying to unpack the ruling on the implications it has on businesses.
“We are studying the ruling, as well as to full implications on our members,” he said.
Tiles for Africa managing director, Mr Spencer Madziya, felt the lower court judgment sets the pace on how the Constitutional Court might deal with the interpretation of Statutory Instrument 11/2019, which the Supreme Court dealt with in the Zambezi Gas Zimbabwe case.
“The issue needs to be addressed conclusively because it does not make sense that an obligation expressed in the United States currency should mutate into RTGS simply because an instrument has said so,” said Mr Madziya.
“To me, it matters not whether that result has been done via a central bank directive or an instrument. The net effect is to erode an individual’s proprietary rights.”
Economist Mr Eddie Cross said the ruling came at a time when resources for many businesses and individuals had been eroded to meet their obligations, hence the decision would be appealed.
“The decision will be appealed as no one has the resources to meet the obligations created by the decision,” he said.
Justice Zhou held that the RBZ or the State could not enact laws which apply retrospectively and breaks up foremost principles of the Constitution, in particular the rule of law and right to property.
The ruling followed a lawsuit by business partners — Ms Penelope Douglas Stone and Mr Richard Harold Stuart Beatie, represented by Mr Tendai Biti — claiming US$142 000, which their company had deposited in its business account held at CABS.
They also sued RBZ and the Ministry of Finance and Economic Development.
Justice Zhou granted the application and ordered CABS, the duo’s 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 seven days of the judgment.
He found that the contract between a bank and its client was in United States dollar denomination and the central bank could not unilaterally mutate it into the RTGS currency.
The legal fight between the business partners and their bank spilled into the High Court following RBZ exchange control directive RT120/2018 issued on October 4, 2018.
The directive separated the RTGS Foreign Currency Account from a Nostro Foreign Currency Account based on the source of funds.
Money from the pair’s business could only be paid in bond notes and coins, but not in the United States dollar, which was the currency in which it was denominated.