Add a bookmark to get started

26 October 20205 minute read

Argentina: The year in review

The last year has been a time of significant change in Argentina, including for international arbitration. The government imposed a series of measures to mitigate the impact of the coronavirus disease 2019 (COVID-19) pandemic, many of which suspended judicial and arbitral proceedings in the country. As explained below, although these measures have largely been lifted, the effects of the disruption continue to be felt. Additionally, before the COVID-19 pandemic, the Argentine courts continued to consider challenging questions related to arbitration and, in one case from the past year, established an important precedent related to the enforcement of arbitration awards.

Judicial and arbitral proceedings in the time of COVID-19

On March 20, 2020, the Argentinean government issued Executive Decree No. 297/2020 in an effort to stem the spread of COVID-19. The Decree imposed a mandatory quarantine and suspended all but essential activities. In conjunction with the Decree, the Argentinean Supreme Court of Justice (the “Supreme Court”) issued Agreement No. 6/2020, declaring an extraordinary recess for all courts within the national judiciary. Pursuant to the Agreement, judges and lower court officials and employees were only permitted to undertake urgent procedural acts to avoid irreparable harm to litigants.

Although these measures have been partially lifted, the mandatory quarantine seriously impacted judicial and arbitral proceedings. These measures have since been lifted and the courts, as well as arbitral tribunals, have gradually resumed their cases, some of which experienced serious delays.

The impact of the suspension on Argentinian courts was exacerbated by the continued reliance on hard copy or paper pleadings. However, the Supreme Court implemented many innovative – some overdue – reforms to facilitate and reconcile domestic proceedings, including permitting judges and lower court officials to use electronic signatures and permitting electronic filings in appellate courts in some circumstances. In this regard, the COVID-19 pandemic may have accelerated these useful reforms.

As for international arbitral proceedings, unlike domestic courts, most arbitral institutions continued to administer cases largely as the result of already having adopted new technologies prior to the COVID-19 pandemic.[1]

Supreme Court of Argentina recognizes Argentinean public order as an impediment to the execution of foreign judgments

On September 24, 2019, in Deutsche Rückversicherung AG v. Caja Nacional de Ahorro y Seguro (enforcement proceeding), the Supreme Court responded to a request for the enforcement of an arbitral award, which had previously been issued and confirmed in New York City. The award required the respondent (an Argentinian state-owned enterprise) to pay compensation plus interest accrued due to the alleged breach of a contractual relationship.

In its decision, the Supreme Court affirmed the holding of the National Court of Appeals on Civil and Commercial Matters (Court of Appeals), which had ordered the award’s enforcement provided that its execution be carried out in a manner conforming with the Argentinean principles of “public order” (a notion roughly similar to public policy) contained in Argentina’s Debt Consolidation Regime. The Debt Consolidation Regime deals with the restructuring of the State’s debts and is regulated by Laws No. 23.982 and No. 25.565.  

In affirming the decision, the Supreme Court agreed with the lower court that ordering the award’s enforcement would violate the public order, as it would run afoul of Argentina’s Debt Consolidation Regime. First, the award contravened exceptional norms associated with Argentina’s national financial crisis. Second, execution of the award would have implied granting the claimant rights to collect against the State that would be superior to those deriving from a domestic judgment, thereby violating Argentina’s constitutional principle of equality. However, the Supreme Court concluded that it would not prevent the partial recognition of the award, which could be modified so as to avoid these conflicts. 

Applying Article III of the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the New York Convention), the Supreme Court reasoned that the judge of the exequatur may not impose more exacting conditions than those applicable to the recognition or enforcement of national arbitral awards. However, like a national arbitral award, the execution of the foreign award must be carried out in accordance with the provisions of public order under the Debt Consolidation Regime.

Citing Article VII of the New York Convention, the Supreme Court further held that if there is more favorable, domestic law which permits the enforcement of an award—and the party seeking enforcement wishes to rely on that law—a court located in the place of enforcement has no discretion to determine whether that more favorable provision should apply. Thus, the Supreme Court granted the claimant’s request to seek partial enforcement of the award in conformity with Argentinean law.

This decision highlights the importance that Argentinean courts assign to principles of public order. Unfortunately, this propensity has in the past served as a barrier to the complete recognition and enforcement of foreign arbitration awards. Instead, it has allowed judges to inappropriately modify such awards so that they conform with domestic policy.

Read this article in Spanish.

[1] The main exception seemed to be the arbitral tribunal of the Buenos Aires Stock Exchange that suspended all arbitral proceedings and did not register new arbitral claims until quarantine was lifted.