Argentina's Three Cs

Author:Mr Lee Bacon
Profession:Clyde & Co

In a surprise to many commentators, on 22 November 2015, the centre-right candidate Mauricio Macri won the second round ballot for the Presidency of Argentina; beating the preferred leftish successor of the incumbent Cristina Fernandez de Kirchner. Mr Macri was elected on a largely pro-business platform with a promise to balance the books and end Argentina's recent sense of isolation. Given the current political turmoil in Brazil fostered by the Petrobras corruption scandal, a shift in Argentina's perspective may have complications for Mercosur region (Brazil, Argentina, Bolivia, Paraguay, Uruguay and Venezuela).

Whatever the wider implications, it seems likely that Argentina will seek to take steps to open its recently closed markets. Significant challenges arise but it may mark the end of recent isolationist and protectionist moves such as making arbitration provisions subject to an automatic right of review by Argentine courts. Immediate changes to the insurance and reinsurance framework seem unlikely, however, given it was only on 1 August 2015 that a new Civil and Commercial Code (CCC) came into effect, introducing key modifications to the Argentine legal system. Although the Insurance Contract Law (ICL) remains in force, the new CCC will certainly influence insurance activities in Argentina, and will be relevant to all insurers, including FI and D&O insurers.

In terms of scope, it is notable that the CCC will apply to existing contractual relationships, and not just those entered into after the CCC is in force. Accordingly, ongoing insurance contracts will therefore be regulated by the CCC, although only in relation to mandatory provisions. Non- mandatory provisions will still be regulated by the previous code.

However, despite this express provision, it remains to be seen how the application of the CCC will be interpreted by the courts. In principle, Argentine laws should not have retrospective effect.

The new CCC introduces some significant changes, as follows:

The CCC recognises both adhesion and consumer-contracts. In adhesion contracts, only one party is in control of the drafting (in the case of insurance contracts this is the insurer). As the Argentine Superintendent of Insurance regulates insurance contracts, they can only be drafted as adhesion contracts. However, they will also be considered consumer contracts under the CCC if the insured procures the cover for his own benefit, or that of his family or social group.


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