Prepared by Emiliana Garay
By Ruling SC2795-2024 dated November 29, 2024 (SC2795-2024. Rad. No. 11001-31-03-001-2018-00093-01. M.P.: Octavio Augusto Tejeiro Duque), the Colombian Supreme Court of Justice established, by analogy, the applicable interest rate for currency exchange transactions.
In Colombia, the interest rate for domestic transactions -understood as transactions executed between Colombian residents- is primarily regulated by Article 884 of the Commercial Code and Law 45 of 1990, which set forth the limits and conditions for charging interest on agreements denominated in legal tender. According to Article 884 of the aforementioned Colombian Code of Commerce, when a commercial transaction requires the payment of remunerative interest, but no specific interest rate is agreed upon, the applicable interest shall be the current banking interest rate (IBC for its acronym in Spanish), as certified by the Colombian Superintendence of Finance. Regarding default interests, if the parties have not stipulated a specific rate, the applicable interest rate shall be equivalent to 1.5 times the IBC. It is important to note that if interest rates exceeding these limits are agreed upon, this would constitute usury, and the creditor would forfeit the right to collect any interest.
As for the interest rates applicable to domestic transactions agreed in foreign currency, they are regulated by External Regulation 53 of 1992 issued by the Colombian Central Bank, which set the maximum effective annual interest rate for remunerative interest on foreign currency-denominated transactions at 20%. Similarly, External Regulation 53 of 1992 established the maximum effective annual interest rate for default interest on foreign currency transactions at 25%.
Regarding transactions between Colombian residents and non-residents for currency exchange purposes, the Colombian Central Bank has not set maximum remunerative or default interest rates. Furthermore, Article 884 of the Colombian Code of Commerce, which regulates the maximum rates for remunerative and default interest, only applies to domestic transactions denominated in Colombian pesos and, therefore, cannot be applied to currency exchange transactions between a Colombian resident and a non-resident for currency exchange purposes.
Notwithstanding the foregoing, the Colombian Supreme Court of Justice, by Ruling SC2795-2024 dated November 29, 2024, concluded that, although current legal framework does not specify a remunerative or default interest rate for currency exchange transactions, there is no reason for not applying such interest rates to transactions between residents and non-residents. Therefore, in the particular case analyzed in Ruling SC2795-2024, the Court filled this regulatory gap by legal analogy, applying regulations that govern similar situations.
In conclusion, according to the Supreme Court of Justice and in accordance with External Regulation 53 of 1992 issued by the Board of Directors of the Colombian Central Bank, in the absence of an express agreement between the parties, the maximum remunerative and default interest rates applicable to currency exchange transactions between residents and non-residents are 20% and 25% effective annual, respectively. These rates shall in no case exceed the applicable usury rate.