Argentina: US Dollar Denominated Debt: Rejection Of Payment In Argentine Pesos

On April 5, 2016, Division A of the Argentine Court of Appeals in Civil Matters (hereinafter, the “Higher Court”) confirmed the ruling issued by the lower court that dismissed the lawsuit initiated in judicial proceedings “Producción Animal SRL vs B.M.I. in re consignment” (file No. 23,284/2013).

The lawsuit was filed by the acquiring party of a fraction of land in the Province of Buenos Aires, who committed to pay the price in US dollars. The first payment was made upon execution of the public deed transferring ownership on August 31, 2012, committing the debtor to pay the balance of the price in four installments and securing payment with an in-rem guarantee of mortgage.

The agreement reached between the parties expressly stipulated that the payment in US dollar bills was an essential condition of the contract of sale.

The indebted party stated expressly in the contract that they knew the risks involved and irreversibly and irrevocably waived the right to claim or invoke any reason or cause of unpredictability, among others, since they knew the economic situation of the country and had carried out a detailed analysis and evaluation of “all economic and financial and legal variants of the situation and prospects and risks of fluctuations of prices in the US currency in the national and international market, none of which would prevent them from meeting their obligations in the fixed currency and/or claim another form of restitution and/or payment (...)”. In addition, in the contract the parties expressly agreed on alternative mechanisms to acquire the bills needed to cancel the debt in the agreed currency.

Prior to the expiration of the first installment of the balance of the price, the debtor sustained that in February 2013 a formal notice was sent to creditors requesting them to indicate a bank account in local currency, in which they could deposit the amounts due in Argentine pesos. Upon the refusal of the creditors to receive a payment in the terms offered by the debtor, the latter brought a lawsuit to deposit the payment, stressing that the context in which the agreement had been reached had changed considerably and that the theory of unforeseen events was applicable.

Although the plaintiff argued that a measure ordered by the Argentine Government prevented them from accessing the foreign exchange market, the creditors and the lower court pointed out that the referenced provisions of the Argentine Central Bank (“BCRA”) and resolutions of the Argentine tax authority (“AFIP”) were already in force when the loan agreement with mortgage guarantee was executed, which the claimant was already aware of  at the time of committing to pay in foreign currency. Also, emphasis was made that the regulations of the BCRA issued on November 11, 2011 required that prior authorization be requested from the AFIP to acquire foreign currencies and that the plaintiff neither demonstrated having made this request nor filed evidence of the refusal by the authority before such a request.

The first instance ruling rejected the lawsuit and the plaintiff filed an appeal before the Higher Court.

In order to analyze the controversial facts, the Higher Court began by pointing out that the provisions of the new Argentine Civil and Commercial Code approved by law No. 26,994 (“CCCN”) do not apply to the already completed parts of the development of a legal relationship, but rather the law that was in force at the time the legal relationship occurred. Therefore, it moved on to verify if the situations and their consequences were completed or not and if a discretionary or mandatory provision was at stake, taking into account the new exception applicable to consumer relations when a more favorable provision to the consumer is involved.

For this, the Higher Court took into consideration Section 962 of the CCCN that sets forth that the legal provisions relating to contracts are supplementary of the will of the parties, unless from their form of expression, from their content, or from their context, their non-discretional nature is evidenced. It also noted the last paragraph of Section 7 of the CCCN which provides that the new supplementary provisions do not apply to contracts in course of execution, stating that the supplementary regulations in force at the time of the conclusion of the contract should be applied.

With this in mind, the Higher Court continued by analyzing Section 765 of the CCCN which the appellant referenced, clarifying that it is not a rule of public order.

The Higher Court held that as a consequence of the inexistence of provisions establishing the mandatory nature of the last paragraph of Section 765 of the CCCN and of the circumstance of not being able to ascertain that “from its form of expression, from its content, or from its context, results its mandatory nature”, such provision must be considered of a supplementary nature under the general principle established by Section 962 of the CCCN. This statement of the Higher Court shows that a deeper analysis of the regulations of the CCCN has been carried out, also adding that “(...) The form of expression admits a possibility to cancel the debt in favor of the debtor, “the debtor can be released”, is expressed, in a way which is far from being mandatory and which may be of current application when the requisite of equivalence that the same text requires may be fulfilled through the identification between the real value and the exchange rate (...)”.

Since it is not a mandatory provision, the Higher Court considered that there would be no impediment if the parties agree that the debtor must deliver the corresponding amount in the designated currency according to the provisions of Section 766 of the CCCN and in use of the autonomy of will protected by Section 958 of the same code.

Thus, the Higher Court established that the particular provisions of the contract, to which Section 963 of the CCCN gives priority after the mandatory provisions of special laws and of the same CCCN which prevail, are applicable to the case. Taking into account that Section 7 of the CCCN sets forth that the new supplementary laws are not applicable to the contracts in course of execution, with the exception raised by such provision; the supplementary regulations in force at the time of conclusion of the contract are next in the order of precedence. The Higher Court referred to these provisions contained in Sections 617 and 619 of the repealed Civil Code, which establish that if the obligation was stipulated in currency that is not legal tender, this should be considered as of delivering a sum of money, and the debtor of an obligation to deliver a sum of a determined species or quality of currency, fulfills the obligation by giving the designated currency on the day of its expiration.

The Higher Court then continued to analyze the various concurrent circumstances upheld by the previous judge.

It stressed that the possibility of fulfilling the obligation by way of the currency equivalent required a physical or legal impossibility of compliance with the obligation, which would be overriding, objective and absolute. In this sense, the Higher Court emphasized that even if there were legal impediments to “(...) acquire all of the sums required to cancel their obligations directly in a financial institution, it is certain that in its detriment there were mechanisms (...)” as alternative to obtain the committed currency, such “(...) as the acquisition of securities of the public debt and their subsequent liquidation in the stock market (...)”, which although can be “(...) eventually more onerous for the debtors it does not imply that we can speak of impossibility of compliance, insofar as such must always be of an absolute nature (...)” to sustain failure to pay in the agreed currency.

Finally, the Higher Court rejected the deposit and upheld the appealed ruling. By making this in-depth analysis, Division A supports the conclusion that Section 765 is not a rule of public order with new arguments and is therefore discretional for the parties who can agree freely on the currency in which they must fulfill their obligations.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:
  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.
  • Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.
    If you do not want us to provide your name and email address you may opt out by clicking here
    If you do not wish to receive any future announcements of products and services offered by Mondaq you may opt out by clicking here

    Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

    Use of

    You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


    Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

    The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


    Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

    • To allow you to personalize the Mondaq websites you are visiting.
    • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
    • To produce demographic feedback for our information providers who provide information free for your use.

    Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

    Information Collection and Use

    We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

    We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

    Mondaq News Alerts

    In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


    A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

    Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

    Log Files

    We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


    This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

    Surveys & Contests

    From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


    If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


    From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

    *** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


    This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

    Correcting/Updating Personal Information

    If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

    Notification of Changes

    If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

    How to contact Mondaq

    You can contact us with comments or queries at

    If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.

    By clicking Register you state you have read and agree to our Terms and Conditions