Hilary Muza 
WHEN litigants go to court seeking orders sounding in money, it is with the intention of securing maximum value. So, when the question of whether to claim for foreign currency as opposed to local currency arises, it goes without saying in which direction clients tend to lean.
As legal practitioners, it has grown ever more important to advise clients on not only when it is prudent to litigate, but also on what currency is claimable through litigation. This aspect of legal practice is made even more difficult by the plethora of statutory instruments one has to navigate to make sense of it all.
In this article, I will clarify what the law says about the currency regime in Zimbabwe and highlight instances where one ought to claim either foreign currency or local currency.
Historically, the courts have always contemplated that court orders can be granted in foreign currency. The Supreme Court in Makwindi Oil Procurement (Pvt) Ltd v National Oil Company of Zimbabwe (Pvt) Ltd said, “Our courts are at liberty to give judgments in foreign currency”. The reasoning for this was that it is lawful for parties to enter into a contract sounding in foreign currency even if it was not legal tender in Zimbabwe.
The raft of exchange control statutory instruments gazetted by government from February 2019 to date have caused a lot of confusion. Some litigants may be confused about what currency they are entitled to claim. The result is a lot of judicial officers have to deal with not only the substantive dispute between the parties but also the currency in which an award should be given. The relevant legal instruments that guide such decisions ought to be outlined.
SI 33 of 2019
Statutory instrument 33 of 2019 (SI 33) signalled the departure from the multi-currency system that had been in use prior to February 22, 2019 when it came into effect. It provides that all assets and liabilities that were denominated in United States dollars were converted to RTGS balances at a rate of 1:1. The Supreme Court in Zambezi Gas Zimbabwe (Private) Limited v N.R. Barber (Private) Limited & Anor SC 3/20 ruled that an RTGS payment satisfies a debt that was previously denominated in United States dollars as at February 22, 2019. The correctness of this judgment is a matter for another day, but that is the law as it stands.
SI 142 of 2019 (SI 142)
This SI, gazetted on June 24, 2019, declared the Zimbabwe dollar to be the sole legal tender in Zimbabwe. In other words, one can only use the Zimbabwe dollar in exchange for goods and services within the country. SI 142 did not however, change the position that parties can contract in a currency of their choice. For example, local NGOs could still pay their employees in foreign currency. Those employees would however, have to convert their earnings into local currency in order to transact locally.
The period February 22-June 24, 2019
Litigants who have causes of action arising within this period can make a case for recovery of debts in foreign currency. In this period, the legal position that parties can transact in the currency of their choice had not been altered.
It follows that parties are entitled to claim the currency they transacted in. SI 142’s provisions together with those of SI 33 were incorporated into the Finance (No.2) Act of 2019. Since SI 142 is still in place, a court must be wary of granting judgment in a currency that is no longer legal tender in Zimbabwe. A simple way around this is to grant orders in foreign currency, albeit with the caveat that the amount due be payable at the interbank rate.
SI 212 of 2019
This SI provides that the Zimbabwe dollar is the exclusive currency to be used in domestic transactions. In terms of the SI no person shall settle any obligation, display or advertise or charge for any goods or services in any currency other than the Zimbabwe dollar. It purports to alter the position that one can transact in the currency of their choice. SI 85 of 2020 amended SI 212 of 2019 in a climbdown that allows parties to transact in foreign currency using free funds (foreign currency that is legally acquired and available to the holder to spend).
SI 212 nevertheless does not apply retrospectively and so the point can be made that causes of action arising before it came into effect on September 27, 2019 are not subject to it. Reading all the relevant SIs together, the latitude for claiming foreign currency in court is limited to very specific circumstances. A litigant can only claim foreign currency if they have express authority to do so as was the case in Zimbabwe Leaf Tobacco Company (Pvt) Ltd v Mushayakarara HH 220/20. It was decided in that case that the applicant was entitled to payment of a debt in US$ because it had sourced the funds offshore and in addition, had authorisation to recover the funds in US$ by operation of SI 64 of 2001. This SI specifically entitles tobacco companies to recover funds loaned to tobacco growers in US$. Litigants can also argue exceptions to the general rule, which include showing that the funds in question were accessed offshore. Other than that, litigants are better of claiming local currency especially when claiming damages.
Does SI 85 apply to judgment debts?
On one hand it can be argued that claims that would ordinarily be made in local currency can be made in foreign currency in terms of SI 85. The basis for such a claim would be that once the judgment debtor is ordered to pay foreign currency, they have the election to pay the debt in local currency at the interbank rate. On the other hand, a strict reading of SI 85 shows that its effect does not extend to judgment debts. This point is ultimately for the courts to decide but one must exercise caution in trying to use SI 85 to justify a foreign currency claim, because that argument will have to pass a number of thresholds such as whether the other party has consented to paying in foreign currency. By Hillary Muza
Muza is a lawyer practising under the firm, Muza & Nyapadi Legal Practitioners. He writes in his personal capacity. He is reachable at muzahilary@gmail.com or 0773 042 628
