New Ruling On USD -Denominated Obligations

Author:Mr Juan Diehl Moreno and Maria del Rocio Beccar Varela
Profession:Marval O'Farrell & Mairal

A new ruling issued by a Court of Appeals established that, since article 765 of the Civil and Commercial Code is not imperative, the debtor should make the payment in US Dollars because this has been agreed on by the contracting parties.

On February 14, 2017, the Court of Appeals in Civil and Commercial Matters of (hereinafter, the "Court of Appeals"), Province of Buenos Aires, confirmed the judgment in re "Di Prinzio, Marcelo Ceferino and other v Chiesa, Carlos Javier re Fulfillment of civil/commercial contracts", file No. 8977/2013.

The lower court judge sentenced the defendant to pay the sum of USD 70,000 under the conditions set out in the bill of sale executed by the parties, applying interest to the lending rate in US dollars of the Bank of the Province of Buenos Aires.

With respect to the currency of payment, the judge held that the respondent could not prove to have requested authorization from the Federal Administration of Public Revenues to acquire US dollars. The judge took into account that the debtor did not demonstrate that, if he had resorted to some valid alternative means to acquire that currency, for example buying Argentine sovereign bonds listed abroad in pesos, this would have caused expectations not to be met in the economic equation terms of the contract. In addition, since the restrictions to acquire foreign currency have been removed, the judge considered that there is no impediment to sentence to pay in the currency agreed on by the parties.

The respondent appealed the decision, aggrieved by the application of the rules of the repealed Civil Code, holding that article 765 of the Civil and Commercial Code ("CCCN") must be applied to the case, which allows the debtor to be released from the obligation by giving the equivalent in legal tender. . He also expressed his grievance against the requirement to prove the impossibility of purchasing foreign currency, since it specifically arises from the rules of the Central Bank of the Republic of Argentina.

The Court of Appeals pointed out, with regard to ongoing contracts at the time of the entry into force of the CCCN, that article 7 provides that new supplementary standards do not apply to them, with the exception referred to consumer relations. Therefore, to determine if article 765 of the CCCN is a supplementary standard, the Court of Appeals took into account that the CCCN contains several rules that allow executing contracts in foreign currency. So they concluded...

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