The High Court has declared unconstitutional, a Reserve Bank of Zimbabwe (RBZ) exchange control directive converting sums in accounts originally designated in US dollars into Zimbabwe dollar-denominated accounts, ordering a bank to pay a particular holder of such an account in foreign currency within seven days.
The ruling is from the lowest level of court that can handle such a matter and the decision may still require confirmation by the Constitutional Court (Concourt) in terms of Section 175 of the Constitution.
The High Court ruling comes after business partners — Ms Penelope Douglas Stone and Mr Richard Harold Stuart Beatie, represented by Mr Tendai Biti — took CABS, RBZ and Ministry of Finance and Economic Development to court over US$142 000 deposited in its business account.
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 State dollar which was the currency in which it was denominated.
The concept of the Nostro Foreign Currency Account came into existence following RBZ’s Monetary Policy Statement of October 1, 2018.
Justice Happias Zhou granted the duo’s application on the grounds that it was legally and morally unjustified for the central bank to change the currency of a bank account by simply renaming it.
He ordered CABS, the duos’ 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 of the judgment.
The impugned exchange control directive, Justice Zhou ruled had retrospective application, in that it arbitrarily converted an existing United States Dollar account balance into something else by arbitrarily imposing an RTGS value on the United States dollar value of the credit balance in the applicants” account.
“Equality of value is not something that can be arbitrarily or capriciously imposed in the manner that the Governor of the first respondent (CABS) sought to do in relation to the balance in the applicants” (Stone/Beatie Studio) account,” he said.
He said it was offensive to any sense of justice that a person who holds money in a bank can wake up on any day to be told that his money means something else different from what it has always been.
“The directive effectively disables any withdrawal of United States dollars from that account. They can only withdraw bond notes,” the judge said.
“That reality cannot be altered by renaming the account as an RTGS FCA. This drastic deprivation of existing rights is not what is contemplated by . . . the Constitution of Zimbabwe as constituting regulation of the monetary system, protecting the currency of Zimbabwe and formulating and implementing monetary policy.”
