Following the Emergency Decree: Can Pending Obligations in USD Be Paid in ARS?

Article 765 of the Civil and Commercial Code (CCC), in force until the Emergency Decree 70/2023 was issued, established that if the obligation was payable in foreign currency, the debtor could settle it with the equivalent in legal tender. This rule allowed debtors to settle debts in USD by paying the equivalent in ARS.

This provision was one of the most criticized of the CCC, and legal authors and courts almost unanimously considered it a default rule. Therefore, the rule that allowed paying obligations in USD with their equivalent in ARS was applied only if the parties had not agreed otherwise. If the parties had agreed that the obligation had to be in effect paid in USD, the debtor could not be cleared by paying in ARS.

The Emergency Decree replaced article 765 of the CCC, which now provides that if the obligation is to pay in a foreign currency, the debtor is only cleared if they pay the agreed amounts in the agreed currency. Likewise, it adds that judges cannot modify the form of payment or the currency agreed the parties agreed upon. The Emergency Decree  reintroduces the rule that was in force during the times of convertibility but in a context of exchange controls and disparity in contributions.

This modification of the CCC came into force on December 29, 2023, and the question is whether outstanding invoices issued before that date and obligations payable in USD under contracts entered into before the Emergency Decree became enforceable can be paid in ARS, or if the debtor must pay them in USD.

The answer is in article 7 of the CCC, which regulates the effect of new laws on contracts already in force. This article establishes that new default rules do not apply to contracts already entered into, except for those more favorable to consumers. This rule makes sense since it reflects the will of the parties who, when entering into the contract, decided not to replace the existing default rules, although they could have done so.

Therefore, for contracts entered into after December 29, 2023, in which there are obligations agreed in foreign currency, debtors must pay in that currency unless otherwise agreed. On the other hand, for those contracts entered into before December 29, 2023, the rule is the opposite: debtors may settle their debts in foreign currency by paying the equivalent in ARS, unless payment in actual USD has been agreed. This rule applies even if the delivery of the goods, the issuance of the invoice, or the payment of the price occur after December 29, 2023.