Indexation Of Peso Debts Due To Monetary Depreciation

Author:Mr Juan Diehl Moreno and Maria del Rocio Beccar Varela
Profession:Marval O'Farrell & Mairal

Once again a ruling issued by the Argentine Supreme Court upheld the constitutional validity of the prohibition to adjust peso-denominated amounts through monetary update, indexation of prices, variation of costs or by other means of adjusting debts.

On November 8, 2016, the Argentine Supreme Court of Justice (hereinafter, the "Supreme Court"), adhering to the grounds of the opinion of the Deputy Prosecutor Attorney ("Opinion"), partially admitted the complaint and the extraordinary appeal filed by the defendant in the proceedings "De facto appeal filed by the respondent in the case of Puente Olivera, Mariano v. Tizado Patagonia Bienes Raíces del Sur SRL in re dismissal", revoking the appealed ruling.

The lower court judge had rejected the lawsuit, in which the plaintiff claimed compensation for a dismissal without cause and the payment owed for sale commissions.

Tribunal III of the Labor Court of Appeals ("Court of Appeals") overturned the decision and ordered the payment of AR$ 25,953 for dismissal without cause, plus US$ 73,687 for sale commissions, to be converted into Argentine pesos at the official exchange rate as of the payment date and applying the lending interest rate of the Banco de la Nación Argentina ("BNA"). In addition, the Court of Appeals declared the unconstitutionality of article 4 of Law No. 25,561, and resolved the monetary indexation according to the variation of values of the total basic food basket of the National Institute of Statistics and Censuses.

Article 4 of the Law on Public Emergency and Reform of the Exchange Regime No. 25,561 dated January 6, 2002 (hereinafter the "Emergency Law") amended articles 7 and 10 of the Law on Convertibility of Local Currency No. 23,928 dated March 27, 1991 (the "Convertibility Law"). After the amendment, the prohibition of monetary update, indexation of prices, variation of costs or any other form of means adjusting of debts, taxes, prices, or tariffs of the goods, works or services was maintained.

In view of the Court of Appeals' ruling, the defendant filed a federal extraordinary appeal which was denied. The defendant then filed a complaint that was partially admitted.

The Supreme Court admitted the argument of arbitrariness of the judgment of the Court of Appeals as to the determination of the right of the plaintiff to charge commissions for sales of real estate. It considered that such determination was contradictory and lacking of grounds, so the ruling was disqualified as...

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