Attorney Suhendra Leon
~ Says rate to be used is legally regulated ~
PHILIPSBURG--Attorney Suhendra Leon says statements from the Central Bank of Curaçao and St. Maarten (CBCS) regarding the application of the guilder-to-dollar (NAf.-$) exchange rate give the impression that businesses are completely free to choose which exchange rate to use and this is not correct.
Leon indicates that it is legally regulated which rate must be used for payments in St. Maarten if a product or service is priced in US dollars.
CBCS told The Daily Herald last week that businesses can apply exchange rates that differ from the official exchange rates and it is up to the consumer to decide which currency to use to get the best price.
CBCS said also that the official exchange rates published by the CBCS only apply for foreign exchange banks and there are no regulations that prescribe the exchange rates to be used by businesses, and indicated that customers should therefore make their own calculation to determine in which currency they get the best price.
“For example, when a business offers a product for US $1.00 or NAf. 2.00, it is cheaper to pay in dollars (you could buy dollars at the bank for NAf. 1.82, which is cheaper than NAf 2.00). However, when a business offers a product for $1.00 or NAf. 1.76, it is cheaper to pay in NAf.,” CBCS advised.
Leon says this assertion by the CBCS is inaccurate. “There is no legislation that CBCS enforces that prescribes which exchange rate should be used by businesses, but it is certainly stated in the St. Maarten law which exchange rates should be used for payment of a sum of money,” Leon, from the BZSE law firm, said in response to CBCS’ comments on the matter.
“Every time we buy something or purchase a service, we enter into an agreement, even when we go to the supermarket. The agreement consists in that the business must provide a product or service and the buyer (or procurer of a service) must pay for it in money. It is an obligation for the buyer (or procurer of a service) to pay a sum of money. Book 6, title 1 section 11 of the Civil Code regulates obligations to pay a sum of money.”
Leon said Article 6:112 of the Civil Code states: “The currency of the money paid in fulfilment of the obligation must be customary at the time of payment in the country in whose currency the payment is made.”
She said besides the official currency of St. Maarten (NAf.), the US dollar is a common means of payment in the country.
She said Article 6:126 of the Civil Code states: “For the purposes of this section, the exchange rate shall be the exchange rate at which the creditor can obtain the money without delay, taking into account what may arise from the law, custom and content or purport of the obligation.”
In the explanation in literatures of this article, it is explained that the article determines the rate at which any conversion is to take place.
“The rate used is the purchase price for the money applicable to the creditor. On the basis of the law, custom and content and scope of the commitment, it will be necessary to choose between the different commercial rates. If the law prescribes an official rate, it is only relevant insofar as the regulation prevents the creditor from purchasing the money due to him at a different rate. The decisive factor is the rate at the place of payment.”
Leon said in view of this, it is legally regulated what rate must be used for payments in St. Maarten if a product or service is priced in US dollars.
“The rate is equal to what the creditor, i.e. the business, that sells a product or provides a service, has to pay to get US dollars.
“CBCS says that US dollars can be bought from the bank for NAf 1.82 per US dollar.
“The explanation of the articles states that it may be necessary to choose other commercial rates. Commercial rates for the US dollar on the island vary from $1 = NAf. 1.77 (selling) to $1 = NAf. 1.82 (buying). The quotes from CBCS give the impression that businesses are completely free to choose and that the use of a rate of $1 = NAf. 2.00 is in accordance with the law, which is not correct,” Leon asserted.
