The Guide to Corporate Crisis Management - First Edition

Dealing with a Hostile Administrative State: The Argentine Case

A hostile administrative state can be described as a state in which, although basic constitutional freedoms are formally respected and the market economy continues to operate, the government uses its executive powers, either based on specific statutes or on general administrative law, to curtail important economic freedoms and force private companies to conduct their businesses in support of official policies – even when this is to the detriment of their own interests. Normally, hostile administrative states reflect populist ideologies, which prevail when the government and the majority of the population distrust the free market and believe that it can only operate for the true benefit of the people when subject to strict state controls.

There is no binary distinction between hostile and 'friendly' administrative states, since states can exhibit features of hostile administrative legal regimes to varying degrees. Further, the degree of hostility in a given country changes over time, as controls often start timidly but soon grow in scope and severity. Just as a dam built only halfway across a river would fail to effectively block the flow of the water, partial controls are easy to evade, and so new ones must be added. Soon, the whole economy is riddled with regulations that distort the price system and force artificial investment decisions.

Recent political developments in Latin America have made a number of its economies trend towards hostile administrative states and, as this trend may continue in certain economies, it is increasingly important for businesses across the region to consider how to deal with this development most effectively. This chapter seeks, therefore, to provide practical advice on how to conduct business in such an environment.

From its financial crisis at the end of 20012 until the change of administration in December 2015, Argentina became an increasingly hostile administrative state. First, we will describe the three prongs that formed the legal basis of the hostile administrative state in Argentina: a declaration of emergency extended over time; old laws that empowered the government to regulate the private sector and thus, effectively, oppress it; and the new laws that provided the government with additional tools to control the economy.

Then we will explore the challenges faced by businesses and lawyers in Argentina during these years, followed by examples of legal defences that were successful in protecting clients and the defences that were not, while highlighting the importance of bilateral investment treaties in this respect.

Finally, we will provide the reasons why we believe companies continue operating in a hostile administrative environment, and demonstrate how, given the improvement of the business climate under the current administration, there may be a light at the end of the tunnel for companies that remained in Argentina.

The legal basis for a hostile administrative state

In its heyday (i.e., during the last four years of the previous administration),3 the main legal basis for the business environment in which the Argentine economy functioned were the following.

A never-ending emergency

An overriding declaration of 'social, economic and administrative emergency' was introduced by law in the first days of 2002 (the 2002 Emergency Law) and extended several times under the previous administration, with the last extension occurring on 31 December 2017.4 This state of emergency was finally allowed to lapse by the ­current administration.

Since the repeated extension of the 2002 Emergency Law contradicted the official story of the excellent state of the Argentine economy, voiced by the previous administration after a few years in power, the last extensions were explained as necessary to allow the executive to react swiftly should an international crisis ever affect Argentina. Another curious incident happened in December 2005 when the annual extension of the emergency was about to expire. The executive sent a bill to Congress to extend the term to renegotiate the government's utility contracts for yet another year, but without extending the declaration of emergency. Shortly after, the Argentine press published a memorandum prepared by New York counsel to the government that explained the detrimental consequences that the non-extension of the emergency could provoke for Argentina in its ongoing litigation with its creditors.5 The executive immediately sent another bill to Congress, extending all the rules of the 2002 Emergency Law, which Congress finally enacted into law.6

In Argentina, even if an emergency is declared, the Constitution still applies as there are no constitutional provisions that expand the powers of Congress in such a case. The doctrine of emergency powers is thus a creation of the jurisprudence. In this respect, Argentine courts have relied on US precedents and, in particular, have paid lip service to the opinion of Chief Justice Hughes in Home Building & Loan Association v. Blaisdell, which provides, '[W]hile emergency does not create power, emergency may furnish the occasion for the exercise of power'.7 However, Argentine courts seldom cite the words of the US Chief Justice in that same case precluding 'a construction which would permit the state to adopt as its policy the repudiation of debts or the destruction of contracts or the denial of means to enforce them'.

Such judicial tolerance of emergency declarations has regularly encouraged the Argentine government to resort to them: each administration that took office since the return of democracy in 1983 (except the current one) declared one or more emergencies.8

The 2002 declaration of emergency ended up being the main legal basis for the oppression of the public utilities sector. The Emergency Law of 2002 revoked the promise of dollar rates that had been granted in the 1990s to the utilities by the rules that carried out their privatisation, and converted those rates into pesos at the 1:1 rate that prevailed before the 2001–2002 crisis that led to the local currency losing two-thirds of its value. The new rates remained frozen at that level during the entire time that the previous administration was in power (i.e., for 14 years), in spite of accumulated inflation and devaluation rates of nearly 1,000 per cent during those years.9

Old laws on the books

Many controls were applied by the government without the need to seek Congressional approval, simply by means of exercising powers granted by old laws that had remained on the books (and still do so at present).

Of these laws, the following are worth mentioning:

  • the Price Control Law, dating from 1974, which allowed the government to fix prices for all goods and services and that had remained in force since that time.10 This law made it a crime, inter alia, to reprice existing stocks (i.e., increase their prices) and to interpose 'unnecessary' links in the flow of goods from producer to consumer; and
  • a decree dating from 1964 and a penal law enacted in 1971 that were the main (albeit not too clear) basis for the reintroduction of exchange controls in 2001,11 before the Emergency Law of 2002 granted to the executive an outright delegation to regulate foreign exchanges.12

Another statute granting the executive wide powers is the Customs Code, dating from 1981. Pursuant to the many delegations of powers granted by this law, the executive may restrict exports as well as imports quantitatively and also by requiring import licences. It can also impose and increase import duties and impose export taxes.13

Additionally, the government was able to rely on powers granted by long-standing administrative law statutes, such as the Administrative Procedure Act of 1972 and the Expropriations Law of 1977. For example, the former law recognises the power of the government to revoke any of its prior decisions (e.g., the grant of a TV licence) for reasons of public interest or convenience, a decision that – according to many authors whose opinion was finally enacted into law – does not give rise to a claim for loss of profits.14 Pursuant to the expropriations law, compensation for loss of profits is not allowed and only the 'objective' value of the expropriated asset is compensated.15 This means that, in the case of a listed company, the stock market price of the shares should be ignored in favour of the liquidation value of the physical assets (intangibles such as government licences have not been computed in recent cases given the power of the government to revoke them).

New laws

Given the laws just described, only a few new laws needed to be passed by Congress to control the economy. The main ones were the following:

  • the SIPA Law of 2008, which nationalised private pension funds and, thus, put all the blocks of shares in private companies held by said funds at the time of nationalisation under government control (through the Social Security Agency).16 Using the voting rights thus obtained, the government was able to appoint directors in several important local companies;17 and
  • the Capital Markets Law, enacted in 2012, which granted to the National Securities Commission the power (not subject to judicial review, according to that law) to remove the boards of directors of listed companies and to veto their decisions when it considered that the right of minority shareholders (e.g., the Social Security Agency) had been violated.18

The mere existence of these powers to intervene in private companies, even if sparingly used, was enough to reaffirm a political environment that was already hostile to business and to further dampen the flow of investments into the country.

The challenges for business in a hostile administrative state

Most aspects of the economy were controlled by the state, but no general plan existed. As one of the officials of the previous administration once recognised: 'We arrive every morning at Government House and try to solve the problems of the day.'

Price controls were rigid but partial. Provided that the specific product computed for the official inflation index did not change its price beyond what the authorities accepted, prices of other products of the same company could be freely set.

The granting of import licences was similarly arbitrary and haphazard. Pursuant to a policy to encourage exports, importers were required to show that they were also exporting in order to obtain a licence. It became a current practice for importers to insert themselves between a local exporter and its foreign buyer to be able to claim such exports and thus obtain the necessary import licence. In this way, an importer of luxury cars became a wine 'exporter'.

This micromanagement of the economy, with individual decisions (no matter how well intentioned) taking the place of general rules, made business unpredictable and created a fertile ground for corruption.

Another means of controlling private businesses was the establishing of registries. While innocuous at first glance, when registration is made a condition for the conduct of a business, the suspension or revocation of a registration can stop a company from operating legally. The mere revocation of a tax registration number (of which there were several cases) can put a company out of business.

Red tape, combined with petty corruption, became a major problem. Companies that did not wish to 'cut corners' found that simple proceedings required a long time to be completed. Setting up a company could take several months and even more if foreign shareholders intervened. A company that had to obtain quick customs clearance of its goods for seasonal reasons closed down as it found that operating legally was not possible. Shipping companies whose home laws forbade them from making 'facilitating payments' of tens of thousands of dollars had to abandon some traffics.

Artificial rules pervaded the utilities sector. Cumbersome mechanisms were introduced to finance new works needed to expand the utilities networks as their operators were practically insolvent and could not pay for them. Thus, the government added special surcharges onto the rates so that the operator kept only the frozen part of the rate, while the surcharge went to a trust fund, run de facto by government officers, that contracted for the new investments. As electricity distributors could not pay for the energy received, they were kept afloat by government subsidies that allowed them to pay their employees' salaries. The electricity generators ended up receiving semi-official IOUs without maturity. Some companies that were privatised during the 1990s were renationalised by means of expropriation (e.g., the national airline) or through the termination of their concessions alleging improper performance (e.g., several water utilities).

Apart from the general price, exchange and import controls, and the utilities rate freeze, there were isolated cases of outright oppression of several companies. The main media group was repeatedly attacked, its shareholders meetings interrupted and its licences threatened. For reasons publicly unknown, a major oil multinational fell at odds with the government, which encouraged a boycott of the multinational's products and applied to it 80 maximum fines under the Price Control Law for not having available a product then scarce, despite the same scarcity being shown by others with even higher market shares, and filed more than 50 criminal charges against its CEO. Economic think tanks and consulting firms that published statistics on inflation that conflicted with the rigged official figures (which led The Economist to suspend publication of Argentine figures) were fined for allegedly infringing the Fair Trade Law, a statute that clearly addressed conducts other than the publication of economic statistics.

According to the Constitution, expropriation requires a declaration of public interest and prior compensation. Yet the largest company in Argentina, at the time under foreign control, was 'occupied' by virtue of an executive decree issued pursuant to a rule of the Expropriations Law that allows the government to seize assets needed for an urgent purpose.19 No court intervened: 13 decisions refusing to hear different challenges on the basis of lack of jurisdiction ensued. The expropriation statute was passed one month after the 'occupation', and compensation was finally paid two years later,20 in spite of the prior compensation rule.

Private businesses had to operate in a state of legal uncertainty due, mainly, to two factors: an often confusing legal scenario and the retroactive change of interpretation of rules. Legal confusion resulted from the palimpsestic character of Argentine administrative laws and regulations, with old rules not clearly repealed but suspended, superseded, amended or simply disapplied. Thus, for more than 10 years, the legal force of the 1974 Price Control Law was doubtful, as it had been suspended in 1991,21 only to be reinstated in 1999 to deal with an emergency.22 It was later declared to have been again suspended by the mere lapsing of that emergency by the Treasury's Attorney General in 2002,23 an opinion that was reversed by his successor in office in 2007,24 and finally reinstated in 2014 with amendments that rendered the law even harsher in some aspects.25

An example of the retroactive changes of interpretation was set by the Central Bank of Argentina during the time when dividend and other foreign currency remittances were not formally prohibited but were subject to the prior authorisation of the Central Bank, which was never given. Private parties who needed to remit funds started resorting to a method that had been traditionally used in prior exchange control regimes: buying, with Argentine pesos, dollar-denominated government bonds that could be legally exported and selling them abroad for dollars. In this way, the Central Bank was not required to sell its scarce dollars, while remitters effectively had to pay a premium over the official exchange rate to obtain their dollars abroad. But the practice also meant that those who wanted to bring in dollars into Argentina and obtain a better rate than the official one resorted to the reverse transaction, so the flow of dollars into government coffers was even more depleted. It was estimated that, at one point, about 25 per cent of all exchange transactions were made through bond sales. Central Bank officers, when consulted about the possibility of a bank remittance, often verbally recommended using a bond transaction instead.

One day, this attitude changed, and the Central Bank started isolated prosecutions for exchange control violations against banks that had engaged in this type of transaction. Since the practice had been widespread, it was never explained why some banks had been singled out for prosecution. It took several years until the courts declared that the practice was not illegal.

Professional life in a hostile administrative state

In Argentina, law practice under the previous administration was peaceful but a bit stressful – although there were a few isolated cases of veiled threats of physical violence. Lawyers who defended their clients against administrative oppression were not harassed, but official advice to change counsel occasionally existed. Bar associations, some of whom were very critical of government policies, could voice their criticisms openly, but individuals who did so were often subject to intimidating measures, such as tax investigations. The general view of the legal profession was that courts were not fully independent.26 However, government attempts to effectively control the local media were thwarted by the courts. Even if some major newspapers that opposed the government were officially disparaged and subject to discrimination in the award of official advertisements, a free press continued to exist.

Legal defences in general

The main advice provided at the time to foreign investors by their embassies was 'low profile and full compliance'. Criticising the official story (i.e., saying publicly that inflation was a problem) was enough to put even a locally controlled company on the government's blacklist. Full compliance meant something more than merely operating in accordance with the law, which is to be expected from all serious multinational companies. It meant also operating using only 'plain vanilla' transactions (i.e., avoiding aggressive structures created for tax or exchange control purposes). Locally controlled companies could sometimes afford them (and some did) but, typically, not foreign companies.

Taking advantage of business opportunities created by the government's mismanagement of the economy, even if perfectly legal, could end up in subsequent persecution through the application of retroactive legislation.

As it happened in previous times of administrative hostility, intercompany dealings were particularly controlled. Transfer prices, thin capitalisation achieved by virtue of parent company guarantees, and technology agreements between affiliates were all practices closely scrutinised and often challenged by the tax authorities.

The protection afforded by the courts varied. Generally, challenges of government policies went unheeded while demands for protection against specific grievances were occasionally successful.

Thus, it appears that during the previous administration no federal court declared, at the behest of a foreign controlled company, that an emergency lasting for more than 10 years was unconstitutional. In 2006, the Supreme Court wrote dicta suggesting that an emergency could not last forever27 but never ruled that the repeated extension of the 2002 Emergency Law violated the Constitution.

Likewise, no federal court provided an effective remedy to the utilities whose rates remained effectively frozen for 14 years.28 One of such utilities that, probably owing to diplomatic efforts, obtained an executive decree authorising a rate increase, was still not able to put it into effect owing to the procrastination of the regulatory agency, a procrastination tolerated by the courts.

The contrast between general policies and specific grievances became obvious in the two cases previously mentioned, that of the oil multinational and the consulting firms.

In the oil multinational case, none of the 80 fines ultimately had to be paid and its CEO was never convicted in spite of the more than 50 criminal charges filed against him. Since, at the time, the law granted staying effects to the judicial appeal if security for payment of the fine was offered,29 in the five days granted by law to file the appeal and express the grounds thereof, 80 unilateral promises of mortgages over different assets of the company had to be presented, with the security to be perfected by the mere acceptance of the government. During the administrative procedure that resulted in the imposition of fines, the government had refused to allow the production of evidence showing the reasons for the shortage, so the courts subsequently found it easy to void the fines for a violation of due process without having to rule on the constitutionality or continued effect of the Price Control Law.

However, the request for an injunction to stop the government from applying fines, showing that the constitutional violation occurred owing to the discrimination against the defendant (who, with a 13 per cent market share, had been the subject of almost 500 controls, while its competitors had received only a few visits) was rejected by the court, even if describing such contrast as 'remarkable'.

A similar situation arose with the consulting firms that published inflation statistics that contradicted government figures. All their fines were voided by the courts on the grounds that their conduct was not in violation of the Fair Trade Law. However, a request for an injunction to stop the imposition of further fines was rejected. The net effect of these judicial decisions was the interruption of the publication of private statistics, which was the goal sought by the government. No consulting firm had the necessary funds to pay multiple fines, a risk that remained present during the years before the favourable court decisions were issued and finally confirmed by the Supreme Court.

In another case, an important multinational had invested hundreds of millions of dollars building a facility for exporting its products. Once finished, this facility had to be approved by an executive decree. Although all technical reports were favourable, the approval was not issued for several years without reasons given for such delay. During this time the company operated the facility pursuant to interim approvals granted by Customs. At one point, Customs began to issue approvals that were valid for only 30 days. Given the delays involved in obtaining renewals, this practice created the risk for the company of operating for some time without a valid approval, a situation that would have been considered, technically, akin to smuggling and thus subject to heavy fines, possible debarment as an exporter, and even to personal sanctions for the members of the board of directors. For several years, court injunctions had, therefore, to be obtained monthly to avoid this risk and keep the facility operating without interruption. A federal court granted such injunctions but for years delayed a ruling to keep the facility operating until (if ever) the executive would issue a decision refusing approval to the facility. Only with the change of administration at the end of 2015 was this problem finally solved.

A similar pattern can be found in all of these cases: faced with an obviously arbitrary administrative decision, the courts granted the minimum degree of protection that they could afford without incurring a denial of justice, but always shied away from confronting what could have been construed as an official policy.

Bilateral investment treaties

Current critics of bilateral investment treaties (BITs) should consider the Argentine case before proposing to discard the system or amending it substantially.30 In many situations, BITs have provided the only effective relief for foreign investors, so much so that, at some point during the period discussed in this paper, Argentina, until more recently replaced by Venezuela, was the country with the highest number of ongoing arbitrations that invoked the protection of BITs.

Although criticised by Argentine officials during this time, BITs were never denounced, and, in the final years of the previous administration, the government started paying – albeit using bonds and imposing a haircut – some of the awards that had become final.

In general, the arbitral awards showed that investors who based their claims on contracts with the government (e.g., concessions) fared better than those who alleged the defeat of their expectations arising from the change of a general legal regime. The main grounds on which claims succeeded were the lack of fair and equitable treatment. Expropriation and discrimination were more difficult to prove and were seldom found. The defence of necessity, although initially accepted in a few cases, grew thin with the passing of the years.31

Those who propose that foreign investors should only be able to claim under a BIT when discriminated with respect to purely local companies, but not when granted the same treatment than nationals, should reconsider this proposal in the light of the Argentine experience. A country with a long history of mismanagement of the economy, with instances of forced conversion into local currency of private dollar deposits, nationalisation of private pensions, arbitrary freezes of utility rates, and other breaches or termination of government contracts, may find it difficult to attract foreign investors if the best that the foreign investors can expect is to be as ill-treated as local investors have been over the years but not more unfavourably.

Discrimination is also difficult to prove. When large sectors of the economy are controlled by foreign investors, as was the case with the major public utilities that had been privatised in the 1990s, a law applying generally to all utilities may be defended as non-discriminatory although in practice it affects mostly foreign investors. As the US Supreme Court has acknowledged, even when having an identified target, '[l]egislation can almost always be written in a formally general way.'32

Why remain in such an environment?

At this point, a reader may well query why a foreign investor would wish to remain in such a hostile business environment. Four different reasons may be advanced to answer that query.

First, some businesses are already accustomed to operate in very aggressive, and even dangerous, environments. For them, a hostile administrative state is just a soft version of the harsher realities they have to cope with in other regions.

Second, Argentina is cyclical. If restarting its business from scratch would take a long time, a company may prefer to weather the storm while hoping for better days to arrive.

Third, savvy investors follow Rothschild's advice: 'buy when there's blood in the streets.' For example, some private funds that came in immediately after the 2001–2002 crisis have seen the dollar value of their investments in agricultural assets grow tenfold.

And, finally, a paradox: in some cases, companies make more money in a hostile administrative state than when business is back to normal. A hostile environment often means a closed economy that keeps new players away so there is less competition for the incumbent companies. This happened in Venezuela, at least during the Chávez regime, and also happened in Argentina during the previous administration. Some private players are now beginning to complain about the opening of the economy and the ensuing 'savage' and 'unfair' competition.

A new chapter

The current administration, which took office in December of 2015, brought in a significant change of policies. Hostility towards business has generally disappeared, and parts of the administrative state have been dismantled (e.g., exchange controls have been eliminated, price controls have been relaxed, and import licences are no longer required). A strong effort is being made to clean up the bureaucracy, and red tape and unnecessary registries have been significantly reduced. The new Law 27,440 has recently amended the Capital Markets Law, replacing the more aggressive rules introduced in 2012.

However, it proves more difficult to eliminate the statutes that grant to the executive the powers that traditionally have been used to oppress private companies. For example, the Price Control Law has not been repealed. The 1971 penal law that gave legal support to the reintroduction of exchange controls in 2001 continues in effect. Further, the Administrative Procedure Act, the Expropriations Law and the Customs Code remain without amendments.

This means, in effect, that most of the tools to oppress private business still remain on the books. Only a change of policies has taken place. It is to be hoped that, once the new administration settles in, important issues, and not only urgent ones, will be addressed, and the legal landscape will then change, making it more difficult for future governments to revert to the hostile administrative state by mere executive fiat.

A change of culture will be needed for this. Government lawyers are reluctant to discard the means they have available to impose the will of the state on the private sector and to protect it from subsequent legal challenges. New administrations take office with a strong wish to introduce legal improvements. Gradually, as they see their own programmes thwarted and delayed by court actions brought by those who benefited from the previous status quo, they begin to value their existing prerogatives more and become reluctantly convinced that the enormous panoply of legal weapons that the current system grants to the state is essential to be successful in their efforts.

To change this attitude, many legal seminars and international conferences, with the participation of Argentine government officials, will have to be held, and many papers and books will have to be written. Also, should Argentina be allowed to join the OECD, the rules of that organisation may impose certain constraints on the government's ability to engage in oppressive administrative practices in the future.


Footnotes

1 Héctor A Mairal is a partner at Marval, O'Farrell & Mairal and was legal counsel for clients involved in several of the cases described herein. Although all these cases are publicly known, no names of companies are provided for reasons of confidentiality and because some of the legal issues described herein are still being litigated. The author wishes to thank Juan Baistrocchi and Joshua Sorensen for their assistance in the preparation of this paper.

2 A description of the 2001–2002 crisis and an evaluation of its causes can be found in 'Argentina's Economic Crisis: Causes and Cures', Joint Economic Committee, US Congress, June 2003.

3 For those not acquainted with the vagaries of Argentine politics, the following calendar may be useful: the currency board that kept the peso pegged to the dollar at a 1:1 rate, introduced by President Carlos Menem in 1991, lapsed at the end of 2001 when then President Fernando De la Rua, from the Radical party, resigned. The Emergency Law, enacted in January 2002, allowed the exchange rate to fluctuate and, by the end of 2002, it was about 3 pesos per dollar. After the interim presidency of Eduardo Duhalde, appointed by Congress, the next presidential election was won in early 2003 by Nestor Kirchner who, in 2007, at the end of his four-year term, was followed by his wife Cristina Fernandez de Kirchner. The couple's plan to alternate in power, and thus avoid the constitutional rule that bans more than two successive reelections, was interrupted by Nestor Kirchner's sudden death in 2011. In that same year, Cristina Kirchner was reelected. Both Kirchners, as well as Duhalde and Menem, belonged to the Peronist party. The 14 years of the four Peronist presidencies since 2002 are referred to in this paper as 'the previous administration'. In December 2015, a new president, Mauricio Macri, from a non-Peronist coalition, took office. His administration is referred to in this paper as the 'current administration'.

4 Law 25,561, which was extended by Laws 25,972; 26,077; 26,204; 26,339; 26,456; 26,563; 26,729; 26,896; and 27,200.

5 M Kannenguiser, 'Advierten que debe prorrogarse la ley de emergencia económica', in La Nación, 19 December 2005.

6 Law 26,077.

7 Home Building & Loan Association v. Blaisdell 290 US 398 (1934). For Argentina cases, see Fallos 172:21 (1934); concurring opinion of Supreme Court Justices Fayt and Barra in 313:1638 (1990); 313:1513 (1990); concurring opinion of Supreme Court Justice Fayt in 326:417 (2003); 327:4495 (2004); 330:855 (2007); and 332:2468 (2009).

8 e.g., Decrees No. 1096/85 and 2196/86; Laws No. 23,696, 23,697 (1989), and 23,982 (1990); Decree No. 36/90; and Law No. 25,344 (2000).

9 The government was very clever in shifting most of the effects of the crisis on to the banks and public utilities. Freezing the latter's rates left consumers with more money for other uses, so there was a boom in consumption. With commodity prices at record highs, export taxes were tolerated by the agricultural sector, and the government was awash with money, more so given that the default of the sovereign debt allowed it to save by not servicing it. But after a few years, when commodity prices dropped, foreign investments were significantly reduced and foreign financing disappeared; there was a growing scarcity of dollars, and tough exchange controls were introduced.

10 Law 20,680.

11 Decree 2581/64 and Law 19,359.

12 Law 25,561, Section 2.

13 It has been said that export taxes are the Argentine equivalent of an agrarian reform: it is not necessary to expropriate the land when the government may take away the main profits produced by it. To this day, the export tax for soy beans remains at 35 per cent. Another exorbitant export tax was the one imposed on oil, which forced exporters, at a time when its price reached US$100 per barrel, to transfer to the government all the proceeds received in excess of US$45 per barrel. As predicted by many energy experts, the policies reflected in that export tax rate and other parallel decisions turned Argentina from an energy exporter into a net energy importer.

14 Law 19,549, Article 18. Non-recognition of loss of profits was expressly provided for by Law 26,944 of 2014.

15 Law 21,499, Article 10.

16 Law 26,425 (SIPA is the Spanish acronym for 'Integrated Argentine Welfare System').

17 Emergency Decree No. 441/11 allowed the government to exercise in full its voting rights by removing the restrictions that, at the time of the nationalisation of private pension funds, had been introduced to quell fears of government presence on the boards of private companies.

18 Law 26,831, Section 20(a).

19 Emergency Decree No. 530/12. The general rule that arguably allowed this decision was Section 57 of Law 21,499.

20 Law 26,741.

21 Decree 2284/91.

22 Decree 722/99.

23 Opinion No. 104/02.

24 Opinion No. 288/07.

25 Law 26,991.

26 A 2005 survey conducted among lawyers by Centro de Estudios Nueva Mayoría showed that 87.4 per cent of them agreed with this view.

27 Concurring vote of Supreme Court Justices Lorenzetti and Zaffaroni in Asociación Bancaria v. Estado Nacional, Fallos 329:5044 (2006).

28 See HA Mairal, 'The Silence of the Argentine Courts', available at https://www.iilj.org/wp-content/uploads/2017/06/HectorMairal.ThesilenceoftheArgentinecourts.pdf.

29 This staying effect was eliminated in 2014.

30 A good example of BIT protection against administrative oppression in another Latin American country can be found in Judd L Kessler, 'Investment Arbitration, Legitimacy and National Law in Latin America: an Arbitrator's Perspective', The American Review of International Arbitration, Center for International Commercial and Investment Arbitration, Columbia Law School, 2016, Vol. 27, No. 3.

31 See JE Alvarez and K Khamsi, 'The Argentine crisis and foreign investors: A glimpse into the heart of the investment regime', in KP Sauvant, ed., Yearbook on international law and policy, 2008–2009 (New York: Oxford University Press, 2009); JE Alvarez and T Brink, 'Revisiting the Necessity Defense: Continental Casualty v. Argentina', in Y.B. Int'l Investment L & Pol 2010-2011 (K Sauvant, ed., 2011).

32 United States v. Winstar Corp. et al, 518 U.S. 839, at 902/03 (1996).

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