Argentina is a federal republic with 23 provinces; the federal capital is the autonomous city of Buenos Aires.
The Argentine Constitution provides for a political system organized into three independent bodies comprising an executive branch (government) headed by the President, a legislative branch (Congress) and a judiciary.
The federal system adopted by the Argentine Constitution provides for a distribution of powers, depending on the subject matter, between the 23 provinces, the autonomous city of Buenos Aires and the federal government. In principle, all powers are vested in the provinces. However, the provinces have divested power to the federal government in matters of national interest.
The Argentine judicial system is divided into federal courts (those organised by the federal government) and provincial courts (those organised by each province and the autonomous city of Buenos Aires).
The supreme judicial power of Argentina is vested in the Federal Supreme Court of Justice (court of last resort), which currently has four members. The provincial court systems are composed of lower courts, courts of appeal and a Provincial Supreme Court. Provincial courts deal either with cases based on local laws or non-federal laws. Within the territory of each province, there are also federal courts which decide exclusively upon federal matters and non-federal matters mainly when one of the parties is the federal government.
Within the territory of the city of Buenos Aires, there are two types of courts: federal courts and those which are known as ‘national’ courts. Federal courts deal with federal matters while national courts hear in non-federal law disputes. There are also courts in the city of Buenos Aires that deal exclusively with local law matters.
Pursuant to one of the classifications, Argentine laws may be divided into substantive and procedural, depending on the subject matter involved.
Substantive laws determine the general rules of behaviour that must be followed in the Argentine territory. These rules can be classified as follows.
a Local laws: these are the laws enacted by each province, by the autonomous city of Buenos Aires and by the Federal Congress with effect on each local territory or federal territories. They are enforced by provincial courts, in the city of Buenos Aires by local city courts and in federal territories by the federal courts.
b Ordinary or [[non-]federal] laws: these laws are composed of the civil, commercial, criminal, labour and social security laws, which are applicable throughout the country in all territories. This article will refer to the recent enacted Civil and Commercial Code that amends the current Civil and the Commercial Code in force, which new code shall be in effect on August 1, 2015.
[c d International treaties: these are international conventions signed by the federal government and ratified by the Federal Congress with foreign states. International treaties are enforced by federal and by provincial courts.
Procedural laws are those that refer to the organisation and activity of the judicial courts and judicial procedures and are enacted by the legislative power of each province. Procedural rules applicable to the federal and national courts located in the city of Buenos Aires (and federal courts located in the provinces) are enacted by the Federal Congress.
Lastly, the Argentine Constitution grants to non-Argentine citizens the same rights as Argentine citizens, including unlimited access to Argentine courts for the resolution of legal disputes, subject, however, to non-residents having to post a bond, if required.
Argentina has been governed by a Civil and a Commercial Code (and different complimentary laws) since 1871 regarding the Civil Code and 1862 by the Commercial Code which author in both cases was Dalmacio Velez Sarfield. The Civil Code was amended in 1968 and further on by different laws enacted by the Federal Congress. [The Commercial Code was itself never amended but different laws modified and/or replaced certain of its provisions.][ Now in October 2014 by means of the Act 26,994 with effect on August 1, 2015, the Federal Congress repealed both the Civil Code and the Commercial Code, and enacted a unified Civil and Commercial Code (the “New Code”), that will have an important impact in the relations between the State, the individuals and corporations.
The New Code has incorporated new principles in civil matters (family, marriage, the capacity of individuals, heritance, statute of limitation, liability, real estate, etc.) and in commercial matters.
As the commercial matters are the principal scope of this article I shall make a brief reference to the ones scholars consider the most important changes in the legal regime.
a.- Payment of obligations agreed in foreign currency: the rule incorporated in the New Code allows the debtor to pay such obligations in Argentine currency. Argentina has a Single and Free Foreign Exchange Market through which all foreign exchange transactions must be made. The Federal Government has restricted the access to the Single and Free Foreign Exchange Market and is artificially controlling the price of the foreign currency. Therefore, alternative markets for the purchase of foreign currency have developed with higher prices. As consequence, a creditor receiving a certain amount of local currency may not be able to acquire foreign currency at the official exchange rate and, therefore, in the actual amount agreed by the parties. This problem has been solved through the stipulation of a covenant to deliver a certain amount of foreign currency denominated securities which, once sold at a securities market outside Argentina would allow the creditor to receive the agreed amount of foreign currency. Scholars ask themselves if this contract stipulation is still possible under the New Code.
b.- The sole partner corporation: in the Corporate Act[ that was part of the commercial Code], corporations had to be formed at least by two members that could be individuals or holding companies. The main issue of a corporation was (and still is) the limited responsibility of the liabilities incurred during the ordinary business in head of the corporation. That requirement of having more than one partner has now been repealed by the New Code through the creation of the sole partner corporation.
c.- Arbitration: Although arbitration was ruled in different statutes (International Treaties, National Procedural Code, private entities such as de Stock Exchange Market) now the New Code establishes and rules the “Arbitration Agreement” with the aim of reducing conflicts between the contractual parties and avoiding the need of a judicial proceeding, which locally should mean a reduction of costs and time.
d.- Limitation of liability of the board members of corporation. e.- Contracts: the New Code has incorporated rulings of the case law and scholars’ opinion. For example the Distribution Agreement, the Agency Agreement and the Concession Agreement that were not previously regulated by the legislation and were only governed by case law. Also the New Code includes new requirements to the banking contracts in favour of banks’ clients. Another important provision included in the New Code is the right of any of the parties of a contract to review its terms given certain facts with significant negative impact in the parties obligations under the agreement.
f.- Consumers: the New Code includes the “Consumers Agreements” to protect the relations between persons with different bargaining powers. It also partially amends the existing Consumers Law.
g.- International rules: the existing codes did not include extensive rules on international matters including civil and commercial relations. The New Code includes a chapter dedicated to rule the different matters relates to international matters both of civil and commercial relations. In that sense the New Code permits parties to a contract to select the laws that will govern their agreements as long as there exist some connection to the system of law that is chosen. Further, the choice of foreign law will only be valid to the extent that it does not contravene Argentine international public policy. Where Argentine international public policy is deemed applicable or the election has been agreed in fraud of the Argentine Law, an Argentine court will substitute the applicable rule of Argentine law for a foreign rule.
h.- International jurisdiction: Argentine courts currently acknowledge that parties to a contract may choose a jurisdiction other than Argentina for the settlement of any disputes arising under a contract, provided that the dispute relates to pecuniary rights. This right is now incorporated to the New Code. In this respect the New Code includes jurisdictional rules in different relations that are mandatory for the parties in conflict, most of them in family matters but also in consumers’ relations and real estate conflicts, among others.
These are examples of some of the many amendments of the New Code to the existing Civil Code and the Commercial Code, that will most probably raise conflicts in its interpretation that once it becomes into force will require the intervention of courts or arbitrators to build case law in the interpretation of the new rules. In this respect, the New Code establishes the need of a judicial decision reasonably grounded on a series of principles that exceed the own text of the New Code. In this matter the judge must take into account the National Constitution, laws and international treaties. Also the law must be construed taking into account its words, its purpose, the [analogous/like] laws and the legal values in a coherent manner with the rules of the New Code.
i.- Statute of limitation: the New Code has amended many of the terms applicable to the statute of limitation. The general term has been reduced from 10 to five years. In contractual liability the term has also been reduce from ten years to three years. The New Code also prohibits the parties to modify the terms applicable to the statute of limitation.
This means that in the coming future after August 1, 2015 dispute resolutions will most probably increase in the need of interpretation of the amended rules of the New Code. And the first thing to determine will be whether these amended rules are applicable to the existing relations. In addition another important matter in this interpretation is that that case law seems not to constitute express sources of law.