Class/collective actions in Argentina: overview
A Q&A guide to class/collective actions in Argentina.
The Q&A gives a high level overview of class/collective actions, including current trends; the regulatory framework; limitation periods; standing and the procedural framework for bringing an action; funding and costs; disclosure; damages and relief; settlement; appeals; alternative dispute resolution and proposals for reform.
To compare answers across multiple jurisdictions, visit the Class Actions Country Q&A Tool.
This Q&A is part of the Class Actions Global Guide.
Overview of class/collective actions and current trends
Definition of class/collective actions
Although Argentina has not yet passed a comprehensive regulatory framework applicable to class actions, collective actions have been recognised by the courts. The recognition of such actions has increased since the constitutional reform of 1994, which suggested that consumer associations and the protection of their collective rights was needed. The 1994 reform also indicated that collective representation could be used to request judicial relief by way of expedited "amparo" actions (that is constitutional challenges or human rights claims).
Currently, collective actions are partially regulated by specific rules such as the Consumer Protection Act, while the new Civil and Commercial Code which will come into force on 1 August 2015 will expressly recognise the existence of collective rights. Consequently, collective rights will be formally recognised in law, and the courts will also recognise the validity of actions aimed at protecting these rights.
Within this framework collective actions can be defined as administrative proceedings or judicial action filed by an individual or an entity entitled to represent a group and their collective rights.
Use of class/collective actions
Collective actions are essentially available for settling disputes related to collective rights. However, it can be difficult to determine whether there are collective rights involved in a certain dispute. To that end, the Supreme Court of Justice has issued guidance as to what is necessary for a collective action.
In the case of Halabi Ernesto v Poder Ejecutivo Nacional (PEN) Ley 25873 s/ Amparo Ley 16986 in 2009 the Supreme Court determined the existence of three different categories of claims:
Collective claims which are intended to safeguard collective goods (for example, environmental claims).
Collective claims concerning a group of individuals who act in order to defend their common interest in connection with individual rights (such as a group of consumers requesting judicial relief in the case of burdensome obligations imposed by the supplier in consumer contracts).
Following on from this, the Padec v Swiss Medical S.A. s/ nulidad de cláusulas contractuales case in 2013 involved a dispute about whether a consumer association (Padec) was entitled, under the terms of Articles 42 and 43 of the Constitution, to request a court declaration of ineffectiveness of a contract provision authorising unilateral prices increases by the medical provider. The Supreme Court rejected the Padec claim by stating that collective actions require:
The existence of a common factual situation and result (which was absent in this case, since consumers may be differently impacted by price increases).
The protection of collective rights which cannot be sufficiently protected by individual actions.
In Mercosur' s Consumer Association v Loma Negra Cia. Industrial Argentina y otros in 2015, and following the Halabi case five years previously, the Supreme Court considered that it was reasonable to request that those who initiated collective actions must submit:
Objective evidence to verify that the "class" exists.
That such a class can be clearly determined within the initial stage of the claim.
That there are reasons to argue that the protection of the collective rights would be compromised if the action is not admitted.
When the new Civil and Commercial Code comes into force on 1 August 2015, the law regulating collective actions will be reinforced. Article 14 of the Code not only recognises the existence of collective actions but also states that the law will not allow the exercise of acts which can negatively affect the environment and collective rights in general. Therefore, the current trend in Argentina is to further implement government policies in order to protect collective rights and claims.
Principal sources of law
Argentina has not yet implemented a comprehensive legal and procedural framework applicable to collective actions. However, some procedural rules applicable to collective actions are contained in sector-specific legislation, such as the Consumer Protection Act. In addition, the courts have played an important role in the development of class actions, since judges have outlined the main features of collective actions (see Question 1).
To protect collective rights, a party can initiate either a court action or an administrative proceeding. Some departments of the Federal Government, as well as some local governments, have jurisdiction to decide on collective rights in matters related to consumer protection, utilities, the financial market and some social security aspects. In addition, the Federal Ombudsman (Defensor del Pueblo) has legal standing to instigate collective actions in matters related to the protection of human rights and other constitutional rights.
Any decision adopted by an administrative authority is subject to further judicial review. In most cases, judicial review covers two levels of appeal until a final decision is adopted by the Supreme Court in its capacity of final interpreter of the Constitution (see Question 22).
Collective actions can be brought before the competent courts or administrative authorities by:
Any legal entity with authority to represent collective rights, such as consumer associations, NGOs, chambers or other similar associations.
An individual entitled to protect collective rights, such as a proxy or anyone having obtained proper authorisation to represent a class.
The Ombudsman for the defence of constitutional rights.
The Public Prosecutor Office in cases of judicial review to control the legitimacy of administrative acts.
Collective actions are permitted in all areas of law provided that there is a collective interest involved in the claim. Therefore, collective actions are commonly used in connection with environmental claims and consumer protection rights, such as product liability, increases in utility rates, financial services, unilateral changes of contractual provisions and data privacy.
However, collective actions cannot be used when a number of individuals are affected by the same situation but in a different manner. In other words, collective actions require a collective interest and, to that end, the "class" must be part of a common factual situation and result.
Other areas of law/policy
As discussed, courts admit collective actions mainly in cases concerning consumer protection, data privacy and the environment.
Collective actions are subject to the time limits provided in the Civil and Commercial Code or in specific legislation depending on the type of action to be brought.
In general, limitation periods range between five and three years. The statute of limitation is five years for a breach of contract and tort. The time runs from the date of the contractual breach or from the date when the damage was suffered in tort. Claims made under the Consumer Protection Act have a limitation period of three years.
Standing and procedural framework for bringing an action
Definition of class
The class for collective actions must have a common grievance and seek the same relief beneficial to all. In addition, the Supreme Court has held that the defendants' conduct should have had the same consequences for all the class members. In other words, courts require a uniform grievance for the entire group which allows the possibility of solving the claim through a single decision.
As Argentina has not passed a comprehensive legal regime for collective actions, defining and identifying potential claimants for class actions can be complicated. Some guidelines can be found in case law, although similar situations do not always receive the same treatment. For example, there is no agreement as to whether public officials, such as mayors or deputies, have legal standing to bring collective actions. In some cases, courts have recognised the legal standing of public officials to seek protection of consumers' rights, while in others courts have been reluctant to recognise the standing of deputies intending to apply for a judicial review of government measures affecting collective rights.
If a claim is brought by an individual or entity claiming to represent a group or class, this representation should be evidenced through an appropriate document (such as a power of attorney or similar instrument) proving that the representative is entitled to act on behalf of the stakeholders.
On environmental matters it is possible for a single individual, or a reduced group, to have legal standing to represent a whole community allegedly affected by pollution or some other environmental issue. However, there is no consistency in these cases. Collective representation in environmental matters has been allowed when there is a claim against a polluter or in circumstances which may affect or may damage the environment. Conversely, collective representation has also not been accepted for claims involving individual damage caused by pollution or other environmental causes.
However, expanding standing to represent collective rights does not solve the following problems regarding the scope of the ruling and whether it should be applicable to:
Those who are included in a class even if they had no participation in connection with the claim.
Only those who are represented in the action.
Those who have a substantial legal relationship with the object of the process (that is, parties who have an interest and will benefit from the outcome of the claim, even if they did not take part in the lawsuit).
The last option seems to be the most accepted by case law, although courts have not been uniform in this.
Claimants outside the jurisdiction
Generally claims cannot be brought on behalf of individuals from other jurisdictions. The rules for determining the court's jurisdiction are regulated in the applicable Procedural Codes, which means there can be no opportunity for forum shopping.
There are no legal provisions relating to professional commercial claimants buying consumers' claims. This is also not a common practice in Argentina.
Qualification, joinder and test cases
There are no rules in place to regulate the certification of, or qualification for, class or collective actions. Therefore, in the absence of specific rules, judges examine the appropriateness of the action on a case-by-case basis, and verify that whoever initiates the lawsuit has standing to do so.
However, determining the existence of a class is a difficult task and as a result there is large number of court decisions addressing this issue. In general terms, judges must consider, for the purposes of determining whether a claimant has standing to represent a class, whether the claim is based on collective rights. This implies that the claim must be focused on common purposes and not on individual petitions (Halabi) (see Question 1). Alternatively, for claims involving homogenous individual interests, the scope of the claim will need to be based on the collective aspects related to those individual homogenous rights. These sorts of collective claims typically arise in relation to environmental, health or consumption issues, or in issues involving certain protected groups of people.
Minimum/maximum number of claimants
There is no minimum number of claimants required. A single claimant may be able to initiate a collective action as long as he or she can demonstrate that a collective interest is involved. In fact, one of the first rulings in this area was in a class action brought by an individual invoking his capacity as a "neighbour" of a certain village.
In the case of Schroeder, Juan y otros v National Government Ministry of Natural Resources/ amparo (1994), the first instance judge held, in accordance with Articles 41 and 43 of the Constitution, that a citizen has standing, as a neighbour of a town, to apply for a judicial review and annulment of a public tender for the installation and operation of a treatment plant for hazardous waste. This decision was later confirmed by the National Chamber of Appeals, noting that the action could be filed by any affected individual seeking protection for the environment.
Joining other claimants
Due to the lack of procedural rules applicable in collective actions, there are no specific rules for initiating collective actions, and the Supreme Court has held that once standing has been recognised for the representation of collective rights there is no need to accept other individual claimants to join in the lawsuit. However, in a recent case a court considered that TV advertising was needed in order to inform all possible affected individuals that a collective action had been filed against a telecommunications company (Adecua c. Tarjeta Automática S.A. s/ ordinario, Cámara Nacional de Apelaciones en lo Comercial, sala F, 05/02/2015).
According to the Consumer Protection Act, before a claim is started or if a settlement is agreed, the Public Prosecutor must give an opinion whether the collective action will or will not affect consumer interests. The opinion will also consider whether consumers are easily able to opt out of the claim.
The decision to accept the claim will result in res judicata for the respondent and for all consumers or users who are involved in the claim, except for those who had opted out.
If the lawsuit involves a financial settlement, the court must establish guidelines for financial compensation based on the principle of full compensation. If the claim results in restitution of sums of money, the money will be paid through the same means that they were received from the consumer. Courts will provide guidance on the way compensation should be paid for the benefit of the entire affected group.
Test cases are not used in Argentina. Each case must be resolved according to the facts and applicable law. However, when cases are similar, courts base their decisions on precedents within the jurisdiction, and also under the Federal Supreme Court's jurisprudence.
Since there is no procedural framework for collective actions, the procedural timetable will vary depending on each case and area of law it is dealing with (see Questions 1 to 3). However, since the filing of a collective action before courts can be terminated through an appeal before the Supreme Federal Court, the usual timetable for a case may take three to six years.
Effect of the area of law on the procedural system
The applicable procedural system will vary depending on the statute of limitation, and the type of collective interests being protected by the collective action (see Question 3).
The Argentine Constitution states that amparo actions involving environmental or consumer rights of a collective nature must have a specific and efficient procedural system. See Question 1.
Funding and costs
Lawyers are able to act on a standard fee basis under local laws or permitted success fee agreements. In general, lawyers' fees are estimated by courts at the end of each stage of the case, based on the minimum and maximum fees stated in the local Lawyers' Fees Acts. These laws proportionally estimate lawyers' fees according to their work and their performance during a trial.
In general, most of the Lawyers' Fees Acts accept a success fee agreement of up to 40% of the financial award obtained at the end of the trial. In such cases, lawyers must pay all judicial costs, unless otherwise agreed with their clients.
Under Law #21,839 (applicable only for cases in the federal courts), when lawyers' fees are determined by the courts, the fee structure must comply with the court rules. These fees are fixed at a minimum of 11% up to 20% of the amount claimed by the plaintiff.
The only financial aid available for any litigation in Argentina is known as benficio de litigar sin gastos. This is requested by claimants who cannot afford the procedural costs involved in bringing a claim and starting the judicial process. This can apply to any type of legal action.
Such financial aid acts as a declaration of poverty, based on which, claimants are expressly exempted from their legal obligations to:
Pay the court fees needed to initiate a lawsuit.
Pay the other parties' legal costs in the case of an adverse ruling.
To obtain such a declaration, claimants must prove before the court that their financial situation does not allow them to cover the procedural costs of the claim.
Since this financial aid acts as a declaration of poverty, claimants who have obtained this declaration must remain in need of financial support during the whole judicial process, otherwise the benefit can be revoked.
The rules for costs and fees are the same for all types of litigation.
Most of the costs are managed by local procedural rules and awarded by courts subject to the "loser pays" principle, unless otherwise stated by legislation.
Under this principle, costs are recoverable from the losing party, including the counterparty's lawyers' fees, unless the court orders each party to cover its own costs as generated during the process. This can be the case where the object or right that was the subject of the litigation was novel, or where the claimant had a legitimate belief that he or she had the right to claim against the defendant.
In general, all costs incurred by parties during the proceedings, and approved by the court, are recoverable from the losing party.
If a claimant discontinues the action, all costs must be covered by him or her, except if the decision to discontinue the action was based on a change of legislation or jurisprudence.
In the case of settlement, each party must cover its own costs.
Key effects of the costs/funding regime
Disclosure and privilege
There are no applicable procedures for the disclosure of documents in collective actions in Argentina.
See Question 16.
There are no specific applicable rules in relation to privilege in class/ collective actions. However, as a general rule, parties cannot refuse to disclose litigation documents if such documents are requested by a court order. If a court order has not been issued, parties are not obliged to submit litigation documents or any other documents.
The rules stated both in local and national procedural codes are the same for all actions.
In general all procedural laws provide that in their first appearance before the court, both the claimant and defendant must submit all factual and expert witness evidence to support his or her positions. The claimant must aggregate all the documents to be used as evidence of the facts that support his or her invoked rights, offer witnesses and provide expert witness' evidence. The defendant must carry out the same exercise at the same time.
Pre-trial evidence can be requested if the party requesting it has sufficient grounds to believe that the evidence could not be produced during the trial. Pre-trial evidence can include:
Disclosure of documents.
All documents to be used as evidence must be attached and jointly submitted with the claim and response, respectively. Documents that are not in the party's possession, power or control, must be indicated and submitted by whoever has the documents. This request must be made to the court, who can then order the opposing party or a third party to submit the referred documentation under penalty.
Parties can offer and require as evidence reports issued by public entities, bodies and administrative authorities. The courts can order these authorities to issue the relevant reports.
For evidence from witnesses, there are procedural rules that limit the number of witnesses each party can use to eight. Witnesses must submit their evidence in court in front of all the parties. There are only some exceptions where they can submit their statement in writing. At the hearing, witnesses are generally cross-examined.
In their initial presentations to the court, (the claim and the response), both parties must indicate what their evidence their witnesses are going to provide. Procedural rules forbid parties' direct relatives from being witnesses.
For expert witnesses, parties must offer expert evidence relating to what is being litigated. Courts can appoint a single or joint impartial expert from a list previously approved by the Court of Appeals of each jurisdiction. Parties can offer their own experts to accompany the official expert appointed by court; however, the official court appointed expert's report is the only one valid as expert witness evidence. The official expert's report is notified to each party who can challenge it or require further clarification.
Joining other defendants
Parties can apply to join other possible defendants as long as they can demonstrate that the court decision could affect their interests and/or they have standing to be a defendant. The court can also add a person as a defendant on its own initiative or at the request of one of the parties.
Rights of multiple defendants
All defendants within a judicial process have the same rights and burdens to defend themselves. They can be represented by the same lawyers, so that their representation, defence and evidence are unified. This joint representation can include offering expert witness evidence and submitting expert reports (see Question 16).
Damages and relief
Collective actions are mostly used in relation to consumer rights protection and in cases involving environmental law (see Question 1). The consumer and environmental law regulations provide the amount of damages to be paid out, which in general states that full compensation must be paid out.
In these cases, and upon the evidence submitted by the claimant supporting his/her rights, claimants can recover direct damages, lost profits (if applicable), and any other damage directly caused by the defendant. There is no cap on the amount of damages that can be recovered from a single defendant, or overall. Generally, defendants can be jointly and severally liable, unless a defendant's liability is excluded or the court orders damage apportionment.
The Consumer Protection Act provides for punitive damages that go beyond compensating for the loss suffered. Courts have discretionary powers to calculate such damages according to the damaging conduct, its seriousness and the defendant's behaviour.
Damages between claimants are apportioned according to the amount of loss suffered by each of them.
In case of joint and severable liability, defendants can recover damages from other defendants or other third parties responsible for the conduct complained of, by means of a separate claim or collection action.
Such a claim will lead to a separate and independent judicial process with no relation to the main collective action. The recovery of damages can be covered in an indemnity agreement, and/or through a contribution from the responsible defendant.
Interest on damages
There are no special rules applicable to the payment of interest for damages awarded for collective actions, other than those generally applicable to all tort claims. Federal courts award interest at the National Bank of the Argentine Republic lending rate which is currently set at 25% per annum.
Procedural rules only allow declaratory relief at the end of the judicial process. Declarations are commonly made on the interpretation of laws, administrative regulations, interpretation of clauses in agreements, and also to determine if a regulation or a law are constitutional.
However, injunctions or interim relief are available before the initiation of a trial or at any stage of the proceedings. These injunctions are sought to maintain the status quo or to restore a situation, particularly in environmental claims. They are also required to stop allegedly damaging conduct carried out by the defendant.
All courts are competent to grant injunctions or interim relief.
The procedural rules do not allow interim awards, except for preliminary or preventative injunctions to prevent potential irreparable loss or injuries to the claimant. Such injunctions can be ordered to forbid or restrict the defendant from carrying out certain acts.
There are no specific settlement rules for collective actions. The settlement rules are the same as for ordinary actions.
If a settlement is reached once proceedings have commenced, the court should be informed. In some cases, the settlement will be authorised if the claimant agrees to withdraw his/her claim. Settlement can also be reached before trial. Most of the local procedural codes in Argentina provide for compulsory private mediation between the parties in order to settle the dispute before going to court. However, if the mediation ends without a settlement, the courts can still encourage parties to continue with mediation even during the judicial process.
If one defendant settles with the claimant, the settlement will only be between them, unless other defendants join the settlement with the claimant.
Parties do not have the right to appeal decisions granting or denying certification of a class action. However, if parties consider that the admission or rejection of the collective action is not reasonable and/or affects their interests, they have a right to appeal to the Court of Appeals and ultimately to the Federal Supreme Court. See Questions 1 to 4.
In Argentina, all courts' decisions can be challenged by affected parties by means of an appeal before the competent Court of Appeals of each jurisdiction. The request for an appeal must be submitted in writing before the lower court within five business days. Once the request for an appeal is received by the Court of Appeals, the challenging party must submit his or her grounds for appeal. If the grounds for appeal are not submitted, the appeal will be dismissed.
The Court of Appeals must then confirm or revoke the lower court's decision. Parties can then file an appeal, or extraordinary remedy, against this decision within ten business days, before the Federal Supreme Court who will finally settle the matter.
The whole process can take between three to seven years until a Federal Supreme Court's decision is issued (see Question 7).
Alternative dispute resolution
According to the Consumer Protection Act, claimants can ask national authorities to make the parties attend a mediation hearing where they can settle the matter and come to a solution without having to initiate the judicial process. In such cases, the administrative authority approves the settlement, closing the administrative stage and the claim.
Additionally, most of the procedural rules in Argentina encourage settlement between parties, even stating a compulsory mediation stage prior to filing any claim (whether a collective or ordinary claim) (see Question 20).
Proposals for reform
The new Civil and Commercial Code will come into force on 1 August 2015, and will formally recognise the existence of collective rights and the validity of actions aimed at protecting these rights. See Question 1.
Information Agency of the Judiciary (Centro do Informacion Judicial (CIJ))
Description. The website of the Information Agency for the Judiciary, where court decisions are published. Only available in Spanish.
Argentinian Secretariat of the Environment
Description. The Secretariat of Environment's website, where local and federal legislation is published. Only available in Spanish.
National Supreme Court
Description. The Supreme Court of Argentina's website, with information on current and ongoing class actions. Only available in Spanish.
María Morena Del Río, Partner
Allende & Brea
Professional qualifications. Argentina, Buenos Aires, Universidad de La Plata, Lawyer, 1995; Argentina, Buenos Aires, Universidad Austral, Masters Degree in Administrative Law, 1998
Areas of practice. Public law; administrative law; environmental law; consumer protection law; public procurement regulations; public works.