The Sunday Mail
Hon Ziyambi Ziyambi
Min of Justice, Legal and Parliamentary affairs
Much debate has been generated after the promulgation of SI 142 of 2019 by the Minister of Finance.
Some commentators particularly Veritas have come out accusing the government of not observing the rule of law and usurping the law making powers of parliament. This article will try to unpack the relevant legal principles as well as some historical facts that motivated amendments to the Finance Act no. 2 of 2009.
Parliament has the sovereign authority to legislate in any appropriate way within the confines of the power laid down in the constitution. In a democracy Parliament affords the Executive the tools to enable it to act speedily in the national economic interest.
A case in point is that of 2009 when Parliament chose to legislate in the way it did in section 17 Finance ( No. 2) Act, 2009 because, although it delegated to the Minister of Finance the power to legislate the legal tender of foreign currencies, it did not, at the particular time when the country was undergoing hyper inflationary crisis, want the inevitable delay or hiatus that would occur between the bestowal of that power and its exercise by the Minister.
So it deemed the Minister to have issued the necessary regulation by prescribing the foreign currencies in question as legal tender in section 17 of the Finance Act itself.
Four points are worth noting in this regard.
The deemed prescription was not done by way of an amendment to the inserted section 44A of the Reserve bank Act but by way of a statutory provision ( section 17(2) extraneous to section 44A.
The power of the Minister to prescribe legal tender in the future is unambiguously legislated by section 44A: the Minister can exercise it or revoke it at any time in the future by regulation. Reference is made to provisions of the Interpretation Act section 21(1)(a) which states that …” when an enactment confers the power to make a statutory instrument… the same power shall be construed as including power, executable in the like manner and subject to the like consent and conditions, if any to amend or repeal such statutory instrument and to make another instrument in place thereof’.
It is simple not true that parliament cannot authorise the amendment of an Act of parliament, including the repeal of any of its provisions, by way of a statutory instrument. For instance the Law reviser has this power in relation to every act of Parliament by virtue of the Statute Laws Compilation and Revision Act. As long as the limits of such an amendment are strictly circumscribed ( as is the case with section 44A). However the Minister has not amended section 44A by means of SI 142 of 2019 as alluded to above.
- Section 17(2) of the Finance Act ( which was promulgated on the 30th September 2009) backdated the declaration of the multi currency system to the 1st February 2009, something which is within Parliament’s powers to do so. The Constitution only forbids retrospective legislation if it has the effect of criminalising past conduct. In this case Parliament did the exact opposite; it amnestied conduct ( dealing in foreign exchange) which would have been criminal but for its intervention. It did this in compelling circumstances of the time.
On the question of the illegality of use of foreign currency the true facts are that sanctions, whether criminal or non criminal, may be applied for violations of section 44A, if they are prescribed elsewhere: they do not need to be prescribed in section 44A itself if another law of general application applies to its contravention. It is worthy noting that the legal tender of any state is fundamental to its functioning as a viable entity, for it cannot function if it cannot facilitate smooth operation of economic relations between citizens and subjects. What law applies to the contravention of section 44A? The Governor of RBZ was correct in that section 10A of the Bank Use Promotion Act apply as well as the common law.
The common law recognises that tender of current money is a discharge for all obligations sounding in money. Consequently, a contract denominated in a foreign currency for payment of goods, services, debts etc even if legal at the time it was contracted, must not be applied in a manner contrary to the law respecting legal tender, if the law supervened after the contract was concluded.
If l tender for payment at the inter market rate, that is the discharge of my obligations, notwithstanding any prior agreement to pay in foreign currency. Illegal contracts are not enforceable under our law. If the payee refuses the legal tender, the payer is entitled to the benefit of the services or the retention of the goods on the principle of in pari delicto melior est conditio possidentis.
Section 10A of the Bank use and Promotion Act provides that a ‘designated payee’ cannot refuse the tender of payment for goods using any electronic means at the interbank rate of exchange of the USD ( or any currency) for the Zimbabwe Dollar.
Although section 10A was introduced during the multi currency regime, it is now premised on the use of the Zimbabwe dollar as the sole means of legal tender without any further amendment to it being required. (statutes as every lawyer should know are “always speaking” notwithstanding changes of circumstances in which they apply by the passage of time: see section 11 of the interpretation Act). The sanction for breaching section 10A is not automatic, but is applied on a case by case basis. Section 19(aI) of the Bank use Promotion Act empowers officers of the Financial Intelligence Unit of RBZ to serve a “ compliance order” compelling defaulting designated payees to comply ( albeit indirectly) with the legal tender law. Thus if someone encounters any refusal by a designated payer to accept legal tender for goods and services, an appropriate report may be made and the appropriate compliance order will be issued, the breach of which is a criminal offense hence the comments by the police that they will indeed enforce the law.
Admittedly section 10A does not cover every case: three instances may be mentioned in this regard. Firstly, if a payer is compelled to pay for goods and services in a foreign currency, a compliance order issued after the fact will not help the payer, because compliance orders are not retroactive, but prospective.
Secondly, certain persons are not “designated payees” within the statutory definition. Thirdly, it is arguable that strict private treaty arrangements, in which the payer exercised no compulsion as to the means of payment to be used, maybe lawful provided for payment in foreign currency.
In conclusion under our system of separation of powers, the execution of fiscal and monetary policy is within the sole competence of the executive branch of government, not parliament or the judiciary.
Parliament furnishes the Executive with the enabling legislative instruments to executive economic policy within the often broad limits prescribed, the judiciary judges whether the executive has acted within the scope of that authority. It is not only unwise but unconstitutional, to invite Parliament or the Judiciary to do fiscal and monitory policy on behalf of the Executive.
While not disclaiming the oversight role for Parliament over actions of the Executive, it is especially inept for anyone to ask Courts to adjudicate on economic policy issues. Courts do not and cannot lay claim to any expertise on matters of state or government policy generally ( whether exercised collectively by the Executive branch or by one of its departments, organs or agencies) ( Agricultural Labode Bureau et al v Zimbabwe Agro- Industry Workers Union 97-SC -126).
An especially sensitive area of policy making is economic policy, in which so many conflicting and competing interests are involved, requiring the state to rise above the fray. The Supreme Court in Law Society & Mollat v Minister of Finance (AG intervening) 99-SC-092 stressed “ the proper reluctance of the courts to determine the manner in which fiscal policy should be implemented” more generally “ that the economic policy of any given country is the prerogative of that Government’s executive branch of government and not the courts” Bakkaris v Kattavenos.