ZIM OUT OF ORDER
A Zimbabwean high court judge’s decision that aspects of the country’s currency policy are unconstitutional is not likely to be upheld by the supreme court
Anew judgment on the debacle around Zimbabwe’s currency has found key elements of the country’s legislative framework unconstitutional. It’s the second time the judge involved, Joseph Mafusire, has issued a decision against the government’s currency policy.
In 2019, architects Penelope Stone and Richard Beattie complained that their $142,000, converted to the realtime gross settlement dollar, or Zimdollar, was now worth just a pitiful fraction of the original amount. On the basis of banker-customer principles of common law, they claimed the original value.
After Mafusire ruled in Stone and Beattie’s favour, the government appealed and the Supreme Court of Zimbabwe overturned his decision.
Now the architects have come back with a different legal attack, claiming that key directives, regulations and even certain sections of the law are unconstitutional.
Mafusire’s first task was to establish that the basis of the present legal action differed from the 2019 case, and that it wasn’t an attempt to re-argue a matter already decided by the supreme court. That done, he toured the background to the situation, the changes in government policy and the fluctuating fortunes of the local currency.
In part, the debate focused on an aspect of the exchange control regulations that compelled authorised dealers to comply with any directions by an exchange control authority related to the terms on which they exchange foreign currency for the currency of Zimbabwe.
Stone and Beattie argued that the “parity ratio” of the Zim dollar to the US dollar “was a fiction” as they weren’t on par, “even on inception”. While key 2018 exchange control directives, along with certain statutes, purported to give the government powers to limit a constitutionally enshrined right this is something no subordinate legislation may do, and the government’s actions amounted to deprivation of the applicants’ right to property.
Mafusire said the government’s power to govern is unquestioned and that, generally, a court cannot interdict the exercise of powers conferred by statute. But “the wide range of powers enjoyed by the executive and legislature is not unchecked”. They could not exercise power arbitrarily. “[The g]overnment cannot, in the name of sovereignty, invade rights guaranteed by the constitution unless the constitution itself permits it.”
Measures adopted by the government in the name of currency reforms were “undoubtedly harmful to the banking public”, and the executive had “expressly admitted as much”.
The government, for example, had not contested Stone and Beattie’s allegation that their deposit of $142,000, converted to Zimdollars, had devalued “more than 130 times”. But the judge pointed out that the architects would receive no compensation: recent government promises to compensate for losses caused by the 2019 “currency changeover” applied only to those with less than $1,000 in their accounts at the time, with plans for compensating only those who had “up to $100,000”.
A pyrrhic victory?
After analysing government actions during this period, the judge concluded that, in its currency reforms, it had breached a central tenet: “A government must not make, let alone implement, arbitrary decisions.”
The government’s currency reforms deprived Stone and Beattie of the value of their deposit, but Mafusire found that none of the reasons given by government for this action was included on the list of constitutionally lawful grounds for deprivation.
Crucial paragraphs in the exchange control directives were impeachable, Mafusire said, because they were the device by which the government “improperly interfered” with the contractual rights and obligations between the applicants and the bank, and caused deprivation of the applicants’ property rights.
Other directives gave the government power it did not have, he added, and in so doing invaded constitutionally protected rights.
Mafusire thus declared key exchange control directives ultra vires and set them aside. He also set aside sections of the Finance Act and held that the conversion of funds in the Stone and Beattie account to Zimdollars violated the constitution.
Mafusire emerges as a thoughtful, independent judge, but his decision will in all likelihood be a pyrrhic victory: the supreme court must confirm any declaration of unconstitutionality, and the chances that it will agree with him must surely be zero.