Post by conflict on Nov 3, 2015 6:49:28 GMT 4
On August 28, 2015, Division “F” of the National Court of Appeals in
Civil Matters (the “Court”) hold that, pursuant to Section 765 of the
Civil and Commercial Code (“CCC”), foreign currency obligations in
Argentina do not involve public order rules. As set forth in Section 766
of the CCC, the parties may agree to allow the debtor to deliver the
pertinent amount of the kind designated by them. The decision was made
by the Court in an attempt to make the judicial consignment effective in
order to pay off a debt in US dollars. This happened in “Fau, Marta
Renée vs Abecian, Carlos Alberto and others in re: Consignment” where
the parties entered into a Mortgage Loan Agreement by which plaintiff
received a USD$37,900 loan, payable in equal monthly payments over
36-month terms of USD$1,536 plus 16% annual interest.
The first payments were cancelled in the agreed currency, but when
Mrs. Marta Fau (the “plaintiff”) was about to make the sixth payment,
she asked one of her creditors, Mr. Juan Jose Abecian, that in view of
the restriction to dollar access imposed by the Argentine Government,
she could not make the future payments. Therefore, she requested that
her obligations with Argentine pesos be cancelled due to the force
majeure situation. By means of a registered letter, plaintiff requested
defendants to agree –in a ten-day term- on how future payments not due
would be collected. Otherwise, creditors would collect each monthly
payment in their equivalent in pesos at the official rate of the day
before the due date. Finally, the registered letter abovementioned
established that in a specified date and place and in the presence of a
civil law notary public and two witnesses the plaintiff will make the
agreed payment, reserving the right to bring civil proceedings for
refusal.
The creditor answered to the registered letter and denied the fact
that the “dollar clamp” involved force majeure. In addition, he stated
that the only way to cancel the obligations in Argentine pesos is
through the use of transactions known as “Blue-Chip Swap Transactions”,
because otherwise, he cannot acquire on his own the same amount of
dollars that Mrs. Fau has a duty to pay. Therefore, when Mrs. Fau
attempted to make the seventh payment, her transaction was rejected, and
the pertinent process of judicial consignment was initiated for the
amount due.
The complaint filed by Mrs. Fau was dismissed since plaintiff could
not prove the impossibility of obtaining dollars due to the “dollar
clamp” (in fact, she could have obtained dollars by other authorized
means such as “blue chip swap transactions”). In addition, in accordance
with the Civil Code in force at the moment of the Court decision (i.e.
November 3, 2014), plaintiff could only comply with her obligation by
delivering the designated foreign currency, since the obligation
involved an obligation to deliver sums of money and it was not possible
for plaintiff to pay its equivalent in the legal tender (Section 2252,
617 and 619 of the former Civil Code). Therefore, plaintiff filed an
appeal to dismiss the decision of the First Instance Court, based upon
the fact that the economic context was not taken into account,
reaffirming that the “dollar clamp” constituted force majeure resulting
from a governmental act.
The Appellate Court not only confirmed the decision of the First
Instance Court, stating that there was no impossibility of payment to
give rise to consignation, but also analyzed the obligations to deliver
sums of money set forth in the new Argentine Civil and Commercial Code.
Firstly, the Court mentioned the general principle by which legal
provisions regarding contracts have supplementary application instead of
the parties ‘will, and exceptionally they are considered public order
rules. In this sense, it should be noted that the Court interpreted that
the fact that the obligations to deliver sums of money in foreign
currency are considered obligations to deliver amount of goods – in
which case the debtor could comply with his obligations paying in
national currency (Section 765, CCC)- does not constitute an imperative
norm. Therefore, in accordance with Section 766, the parties may agree
on the terms of payment – in a designated currency- at the moment the
debt is due.
Moreover, the Court established that in accordance with Section 7 of
the new legislation, the supplementary rules are not applicable to
ongoing contracts, in which case, the legislation in force at the moment
the contract was made shall be applied. The Court ruled that the
abovementioned case must be governed by the rules included in the former
Civil Code, stating that Mrs. Fau´s obligation to deliver involved an
obligation to deliver sums of money, thus plaintiff must comply with her
obligation in the agreed kind. Therefore, on August 25, 2015, Division
“F” of the National Court of Appeals in Civil Matters confirmed the
decision of the First Instance Court.
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