Argentina: A Legal Toolbox for an Unprecedented Crisis

Argentina presents multiple crisis scenarios. These include the highest inflation rates in the world (with the ever-present risk of hyperinflation), a brutal impact on economic activity resulting from the pandemic and the lockdown measures adopted by the government – which might lead to the worst economic contraction in its history – and, finally, a significant part of the population crossing the line into poverty. A great number of companies, if not a large majority, may have already entered ‘survival’ mode. Many others are in the process of failing and putting an abrupt end to their activities, not all in an orderly fashion. Government aid for those who can procure it may ultimately prove insufficient.

In view of the foregoing, this chapter lays down the key legal procedures available to companies in financial distress, and the tools at hand in the labour and private contracting realm with which to navigate the turbulent nature of corporate life in Argentina.

Managing financial distress

Restructuring and insolvency proceedings provide tools to facilitate the restructuring of corporate liabilities. Based on the statutory principle of freedom to contract,[2] a creditor and debtor can privately negotiate in good faith a restructuring agreement setting new conditions within the general limits of the law, public order and moral principles. Upon failure to agree on a restructuring, a debtor may resort to the different types of restructuring and insolvency proceedings offered by the Bankruptcy Act,[3] applicable to both individuals and legal entities, with the exception of certain types of regulated businesses:[4]

  • a judicial reorganisation;
  • an extrajudicial reorganisation;
  • a cramdown – applicable to corporate entities only; and
  • bankruptcy.

Judicial reorganisation proceedings

A judicial reorganisation proceeding is launched by the debtor, before which all creditors, whose claims are previously admitted by the court, are summoned to agree on a debt restructuring based on the principle of equal treatment – except for certain preferences established by law – under the supervision of a court-appointed receiver, who must ensure that the actions of the debtor do not alter the par condition. The main triggering effects resulting from the filing of the petition are:

  • the debtor retains the administration of the assets under the supervision of the receiver and a creditors’ committee;
  • prior authorisation from the court is required to take any action that exceeds the ordinary course of business;[5]
  • non-controversial labour credits[6] are protected and have the right to be paid promptly;
  • accrual of interest related to unsecured credits incurred prior to filing is suspended;
  • judicial proceedings against the debtor with cause or title prior to the petition are suspended;
  • any existing bankruptcy petitions are dismissed;
  • in general, precautionary measures (attachments) against the debtor will not proceed;
  • precautionary measures affecting essential assets of the business are lifted;
  • the auctioning or foreclosure of essential assets is suspended for a legal period;
  • contracts with pending reciprocal obligations can be discharged; and
  • privileged creditors – secured by pledge, mortgage or other collateral – are paid in their entirety up to the amount of the sale of the respective secured assets.

Once the petition is approved by the court, unpaid creditors (existing prior to filing) must present evidence of their claims to the receiver and be admitted by the court. The debtor must submit a proposal by which it groups and classifies creditors into categories, specifying their privileged or unsecured nature or any other element that may reasonably define their essence (e.g., commercial or labour claims), to be able to offer differentiated proposals for a debt restructuring agreement.

Proposals may consist of, inter alia:

  • a reduction of the debt, payment term extensions, or both;
  • payment in kind;
  • incorporation of a company with unsecured creditors, in which they may become partners in the management of certain assets;
  • reorganisation of the debtor company;
  • administration of all or part of the assets in the interest of creditors;
  • placement of financial instruments like negotiable obligations, debentures and bonds convertible into shares;
  • payment in shares of other companies; and
  • capitalisation of debts – including labour creditors – in shares or in a joint ownership programme, or on any other agreement that is approved with sufficient majority within each category, and in relation to the total number of creditors to whom the proposal will be presented.

If the special majority of the admitted unsecured creditors[7] is obtained, the proposal will then require the approval of the court. Once approved, the debt restructuring agreement will be binding even for creditors who did not accept it – to the extent that they are creditors with cause or title prior to the filing of the petition – and will replace all obligations with origin or cause prior to the filing with the new obligations arising from the agreement approved by the court.[8] Failure of the debtor to obtain the unsecured creditors’ majorities required to approve the debt restructuring or to comply with the same will lead to a bankruptcy decision by the court, unless the special cramdown proceeding described below applies.

This proceeding crystallises the debtor’s economic and financial situation at the date of the petition, provides a time frame to reorganise liabilities with legal protection, shortens ordinary statutes of limitation periods and opens up specific payment plans by tax authorities.

Cramdown proceedings

Whenever a corporate debtor fails to obtain creditors’ majorities required to approve a restructuring agreement, and to avoid bankruptcy, the court will open a register for creditors and other third parties interested in presenting a proposal for the acquisition of the shares or quotas of the corporate entity. If interested parties appear, the judge appoints an appraiser[9] to determine the fair market value of the stock or quotas. All interested parties, including the debtor,[10] are granted time to obtain the necessary approvals to the proposals from creditors. If no party or creditor is interested, no agreement is reached or the agreement is not judicially approved, the court will enter a bankruptcy decision.

Extrajudicial preventive agreements

An extrajudicial proceeding is a voluntary out–of-court proceeding, where the debtor in payment default or experiencing economic or financial difficulties may privately enter into an agreement with its unsecured creditors and thereafter seek judicial approval to make it enforceable against all unsecured creditors. It tends to be less onerous for the debtor and attempts to be less time-demanding than the judicial reorganisation proceeding. Once approved, it produces similar effects to those of such proceedings on unsecured creditors. Its main features are:

  • parties are free to agree on the terms of the agreement;
  • approval of the agreement requires the same majorities required for the judicial reorganisation proceedings;
  • it becomes public, once the agreement is filed with the court;
  • legal proceedings against the debtor are suspended;
  • a period for creditors’ oppositions can be granted only in the case of omissions or overstatement of assets or liabilities, or the absence of the required majority for approval; and
  • if court approval fails, the agreement is still binding between the signing parties unless the court’s approval was a condition precedent to enter into the agreement. The debtor retains the right to resort to the judicial reorganisation or bankruptcy proceedings.

Bankruptcy

Bankruptcy entails a liquidation process aimed at selling the assets of an insolvent debtor to satisfy the claims of its admitted creditors, by distributing the proceeds among them based on the order of creditors’ preference established by law. It can be useful as a mechanism to stop the increase of liabilities and to dissolve and liquidate the business in an orderly manner. Bankruptcy petitions may be filed by the debtor or by a creditor providing evidence that the debtor is unable to regularly fulfil its payment obligations, whatever their nature and cause (payment ceasing status). The court may also declare the bankruptcy upon the debtor’s failure to obtain creditors’ acceptance to, or the debtor’s payment default under, the debt restructuring agreement in the judicial reorganisation or cramdown proceedings, and if the debt restructuring agreement is declared null and void. A bankruptcy judgment entails the following main consequences:

  • seizure of the debtor’s assets, except for property that cannot be lawfully seized;
  • a court-appointed receiver is responsible for the management and disposition of debtor’s property and assets (for liquidation as soon as possible);
  • the debtor is banned from trading for one year – this restriction is also imposed on the members of the board or managers in charge from the ceasing of payments date;[11]
  • all unpaid capital contributions made by the company’s shareholders must be paid in full;
  • all creditors with title prior to the bankruptcy declaration and their guarantors must request to the receiver the acceptance of their claims;
  • all pending obligations owed by the debtor become due, and all interest accrual is stopped, both as of the bankruptcy declaration (other than secured claims); and
  • certain acts of disposal[12] carried out by the debtor within the look-back period –between the date that is determined as the beginning of the ‘payment ceasing’ and the bankruptcy judgment date – are null.

The declaration of bankruptcy (including its effects) may be extended to any individual or legal entity who has carried out acts in their personal interest and disposed of the assets as if they were their own, in fraud of creditors; any controlling person, if it has unduly diverted the corporate interest of the controlled company for its own benefit; and any person whose assets may be inextricably mingled with that of the debtor, preventing a clear separation of all or most of their assets and liabilities.

The insolvency proceeding will be closed upon request of the debtor with the consent of all creditors; payment of all claims; the final distribution of proceeds; or a lack of sufficient assets to be liquidated.[13]

Managing employment disruptions

Employee reductions may be necessary in times of crisis. This section deals with employment termination and suspension for all common situations, in addition to the covid-19 crisis.

Employee’s rights, recognised by the Constitution, are mainly regulated by the Employment Contract Act[14] (ECA), and employment relationships may generally be terminated in the following cases:

  • resignation by the employee;
  • mutual agreement of the parties;
  • dismissal for cause;
  • dismissal without cause;[15]
  • indirect dismissal by the employee;[16]
  • expiration of the contract term;
  • on account of bankruptcy, insolvency or liquidation of the employer; or
  • motives beyond the parties’ control (no fault attributed to either party).[17]

During times of crisis, employers may consider the following termination scenarios.

Employee’s misconduct

There must be a serious, sufficiently proved, breach by the employee preventing the continuation of employment. Case law has established that the period between the misbehaviour and the dismissal must be short, just the time necessary to be aware of the misconduct or breach, make a proper assessment and proceed accordingly. The dismissal for cause decided by the employer as well as the indirect dismissal decided by the employee must be notified in writing and have a sufficiently clear explanation of their basis. In the dismissal for cause, no severance pay is due.

Force majeure, lack or reduction of work

The ECA entitles the employer to terminate, with prior notice, the employment contract due to force majeure or lack or reduction of work not attributable to the employer and that can be properly justified. The employee is entitled to receive a severance payment equal to half of the compensation owed in the event of dismissal without cause. The following conditions must be met:

  • evidence of the reasons invoked for dismissal must be provided;
  • the event that justifies the dismissal must be significant and contemporaneous with it;
  • the event must arise from circumstances beyond the employer’s acceptable business risk, and neither ordinary nor foreseeable;
  • whenever possible, the employer must act diligently, adopting the necessary measures to avoid adverse circumstances;
  • the alleged cause must have persisted over time; and
  • the order of seniority in employment has been respected by terminating those less senior first.

Prior to the communication of dismissals or suspensions due to force majeure, or economic or technological reasons that affect a certain quantity of employees,[18] a preventive crisis procedure must be substantiated.[19] It can be launched by the employer or a union and entails a negotiation process between the employer, the administrative labour authority and the union to agree on the dismissals and suspensions plan for subsequent approval by such authority. Regardless of whether the parties reach an agreement, the process enables the employer to move forward with the measures, but the affected employees are entitled to file a labour claim with the courts where the employer must provide evidence on how it is affected by the crisis, its magnitude and the reasonableness of the measures adopted.

Bankruptcy or insolvency proceedings

Termination of the employment contract may also be triggered by the insolvency of the employer, to the extent that the reasons for it are not attributable to the employer and the employment contract is terminated as a result of a bankruptcy resolution. The employee is entitled to receive a severance payment equal to half of the compensation payable in the event of dismissal without cause.[20] Neither the employer’s reorganisation nor bankruptcy proceedings will immediately result in the termination of the employment relationship. The court decided bankruptcy produces a suspension of all the employment contracts for a period of 60 calendar days. Within this period, the bankruptcy court must decide whether the business can continue. Should it continue, the court must define which employment contracts will continue. If it is decided that the business or certain employees should not continue, the employment contracts of those affected will be deemed terminated. In this case, they are entitled to the above-mentioned severance payment.

Suspension of the employment contract[21]

Employers can suspend employment, but to be considered valid it must be based on justified reasons (e.g., due to the lack or shortage of work not attributable to the employer, disciplinary reasons or duly proven force majeure); have a fixed term;[22] and be notified in writing to the employee.

Any suspensions exceeding permissible periods or that in the aggregate, and whatever the reason, exceed a period of 90 days in one year – with the period counted from the first suspension – and are not accepted by the employees, will give them the right to consider themselves dismissed.

Suspensions for disciplinary reasons

Subject to proportionality in its duration, the suspension must be reasonably contemporary to the breach. No more than one disciplinary sanction can be applied for the same breach.

Suspension due to economic reasons

In addition to the general requirements mentioned above, the preventive crisis procedure must be observed prior to a suspension for reasons of force majeure or due to economic or technological reasons, or both, that affects a certain quantity of employees. In the case of suspensions based on the lack or reduction of work not attributable to the employer, or force majeure, agreed individually or collectively and approved by the enforcement authority, the monetary allowances paid as compensation for such suspensions of work are not considered to be part of the employee’s salary (except for the contribution to the healthcare and medical insurance providers).

Preventive suspension

If the employer has a reasonable basis to suspect that a crime has been committed by an employee and decides to file a criminal complaint, it may preventively suspend the employee until the criminal proceeding is finished or a final judgment is made. The employer must analyse on a case-by-case basis whether the suspension should be for the entire period of the criminal proceeding (which may take several years) or only part of it, taking into consideration the different possible outcomes of the criminal investigation. Should the employee be acquitted, the employer may be required to rehire the employee and pay all salaries accrued during the suspension period. The employee could also consider himself or herself morally injured due to the criminal complaint and claim compensation for damage. Labour laws do not provide guidance as to which illegal conduct may justify an employee’s suspension or dismissal. As a rule, dismissal would appear suitable in cases of acts or omissions resulting in actual or potential damage to the employer’s interests. It will then depend on a case-by-case evaluation based on the seriousness of the facts and the potential damage to the company’s reputation.

Precautionary suspension

During an internal or judicial investigation, the employer is entitled to suspend a suspected employee to protect the integrity of evidence or for the proper discharge of the tasks assigned to the person. There is some debate as to the permitted length of the suspension. While some argue that it may last for the entire investigation, others consider that only a maximum term of 30 days is reasonable without the consent of the employee (this limitation does not apply when a criminal complaint is filed, the case considered in the preceding paragraph). Most scholars and case law consider that an employee retains the right to receive his or her monthly salary during the precautionary suspension period.

Temporary restrictions during the covid-19 emergency.

Two weeks after imposing a harsh unprecedented lockdown,[23] the Argentine government passed an emergency decree[24] prohibiting for a 60-day period: dismissals without cause, or based on the lack or reduction in work or force majeure; and suspensions based on force majeure or the lack or reduction of work.[25] At the time of this publication, the dismissal and suspension freeze has been extended to 25 November 2020.[26]

However, the decree allows companies to enter into suspension agreements (both individually and collectively) based on the lack or reduction of work or force majeure subject to the approval by the administrative labour authority. The payment of a monetary allowance to the employee may be agreed during the suspension period.

The dismissal and suspension limitations appear not to have been challenged in court. However, the freeze appears de facto to be a restriction not complied with by all. Employers facing survival challenges or in need of urgent cost reductions appear to have dismissed employees assuming the risk of potential reinstatements.

In the same direction, terminations of employment at will until 31 December 2020 require the payment of double the compensation that would have otherwise been required.[27]

Managing contractual disruptions

Argentine civil law is based on two main principles, the parties’ freedom to contract and pacta sunt servanda. Parties are free to enter into contracts and determine their content, within the limits imposed by law,[28] public order,[29] moral correctness and usual and customary practices.[30] The pacta sunt servanda principle establishes that the parties are bound by the terms of the contract with the force of the law. However, there are some legal exceptions to these principles that may excuse or suspend contractual performance, entitle one party to suspend or terminate the contract, or request an equitable adjustment of the contract terms on a fact-specific analysis.

Force majeure

Force majeure may excuse a party’s non-performance without liability if such an event occurs and absolutely prevents the party from performing. For an event to qualify as force majeure, it must be:

  • supervening and unforeseeable, the affected party could not reasonably be expected to have taken the impediment and its effects upon its ability to perform into account at the time it entered the agreement;
  • unavoidable, the affected party could not reasonably have avoided or overcome the event, or at least its effects;
  • absolutely impossible to overcome; and
  • not attributable to, and out of the control of, the affected party.[31]

The affected party’s impossibility to perform must be assessed on a case-by-case basis in light of the particular circumstances of the alleged event, taking into account the implied covenant of good faith. For example, the spread of covid-19, and the measures against it imposed by the local government, do not necessarily mean that a force majeure exception can be automatically enforced. Parties will need to consider the specific impact of the pandemic and government measures on the performance of contract obligations. In addition, the party seeking to assert the force majeure defence has the burden of proving its appropriateness to the case,[32] and therefore prompt notice to the counterparty – including comprehensive evidence of the force majeure event – is necessary, informing as well any mitigation steps taken by the affected party.

Fulfilling the obligation according to the agreed terms must be physically impossible. Unless otherwise contractually agreed, force majeure events rarely hinder or prevent obligations consisting of payment of money.

The force majeure event may be temporary or permanent and excuses performance for as long as it lasts. The supervening, objective, definitive and absolute impossibility of fulfilling obligations due to force majeure discharges the affected party’s obligation without liability. If the impossibility to comply is temporary, the force majeure event relieves the affected party only if the term for performance is essential, or when the duration of the force majeure event irreversibly frustrates the non-affected party’s reasonable expectations. To the contrary, if these conditions are not met, the affected party’s obligation is suspended until the impossibility to perform ceases.

Force majeure releases the affected party unless:

  • it has assumed the force majeure risk;
  • it arises from a legal provision that it is not released due to force majeure;
  • it is already delayed in performing its obligations;
  • the event is attributable to the invoking party’s fault;
  • the event and, where appropriate, the inability to comply constitutes a contingency inherent to the risk of the business; and
  • it is obliged to make restitution as a result of an illegal act.

Special care must be taken when the parties wish to preserve the force majeure defence for a contract being agreed during a crisis. Parties, in general, should not rely on the general force majeure rules as the solution for a future lack of performance due to similar circumstances.

Hardship[33]

When performance by a party of its contractual obligations[34] becomes excessively onerous due to an extraordinary alteration of circumstances, the affected party may request the total or partial termination of the contract or an equitable adjustment of its terms. It is an exception that excuses performance to the extent the following conditions are met: the existence of an extraordinary (radical and notorious) change in the circumstances under which the parties contracted, that renders performance of the contract excessively onerous for a party who had not accepted to assume the risk of such a change; and the new circumstances are beyond the control of the parties and the risk assumed by the affected party. As opposed to force majeure, in the case of hardship, the unforeseeable event does not need to make it impossible for the party to perform the obligation but make it extremely and disproportionally burdensome.

Parties are free to enter into a good faith renegotiation of the terms of the agreement. During the time of the renegotiation, the affected party must continue to perform its obligations. Failure to agree on an equitable adjustment allows the affected party to request a court of law terminate the contract or an equitable adjustment of its terms. Regardless of whether the affected party acting as plaintiff requests the termination to the court or responds to an action for specific performance by the counterparty, or any of the parties, or both, agree to request a court determination of the adjustment, the contract will remain in force in the meantime. The time legal proceedings may take could make a request for a court mandated adjustment impractical.

Frustration of purpose

A party may terminate a contract when, even if performance by the other party would be objectively possible, an extraordinary alteration of circumstances not attributable to or assumed by the terminating party has the effect of definitively frustrating the terminating party’s purpose in entering into such a contract.[35] The termination is immediate upon notice by the terminating party. If the frustration of purpose is temporary, the right to terminate is only available when timely performance is essential. The contract can only be terminated when the frustrated purpose is common to both parties and their frustration is caused by events beyond the control of the same parties. There are no meaningful precedents regarding this remedy under Argentine law. Although tenants enjoy a similar specific right when unable to use leased property.[36]

Duty to share (extraordinary) burdens

This duty and its ensuing remedy originated during the 2002 Argentine economic crisis, specifically under the Public Emergency Law and Exchange Rate Reform Law.[37] A mechanism was established whereby the parties to a contract in foreign currency that had been compulsory converted to Argentine currency could equitably readjust their contract terms. At the time of the 2002 crisis, this ‘doctrine’ was applied by local courts to balance the harmful consequences of the crisis. Consistent with the implied covenant of good faith and fair dealing, each party is required to deal with the other fairly and in good faith so as to not deprive the other party from its right to receive the benefits of the contract. Parties are also required to engage in good faith discussions as promptly as practicable to try and find ways to overcome the effects of the crisis in a fair and equitable manner, sharing the burden of the adverse effects of the crisis while minimising losses and damage. 

This duty is also reflected in the Argentine Civil and Commercial Code,[38] which provides that, in the case of long-term contracts – where time is essential for the achievement of the purpose or benefits of the contract – parties must exercise their rights fulfilling a duty of cooperation, respecting the reciprocity of the obligations of the contract, considered in relation to its whole duration. The party that decides to terminate the contract must give the other a reasonable opportunity to renegotiate in good faith, without incurring an abusive exercise of rights.

Suspension for non-compliance[39]

Suspension for non-compliance entitles a non-defaulting party to suspend performance of its obligations until the counterparty complies with the same or offers to comply. The other party cannot demand specific performance from its counterparty if it cannot prove that it has complied or offered to comply with its own obligations.

Preventive protection

Preventive protection[40] entitles a party to suspend performance of its obligations if there is a serious threat of damage[41] to its rights as a result of a significant impairment, either in the counterparty’s ability to comply (e.g., when temporarily prevented from performing due to a force majeure event); or on the solvency of the counterparty. This remedy is particularly important when a party has to fulfil its obligations prior to that of its counterparty who is suspected of being unable to do its part, thus remaining exposed to the insolvency or credit risk of the same.

A final word on compliance

This chapter summarised the legal tools available to tackle some of the critical scenarios in the changing landscape companies are confronting today in Argentina. Directors, managers, statutory auditors and controlling shareholders have the responsibility of certain corporate obligations.

Several legal regimes (environmental protection, antitrust and competition law, anti-corruption, financial entities, labour, insolvency, money laundering, financing of terrorism and insurance, among others) hold directors, statutory auditors and controlling shareholders liable regardless of their involvement in wrongdoings. However, based on the nature (control) of such responsibility and for constitutional reasons, liability can only be attributed on the basis of fault, which consists of, at least, the failure to adopt the measures and control devices that ensure compliance with those duties and obligations.

In times of crisis, attention to compliance with ethical rules and policies, as well as with the regulations cited above, should not decrease or be abandoned. Government authorities will continue to pursue enforcement and, in some cases, risks of corruption.

It is well known that an organisation’s timely response to a crisis will avoid or minimise damage to its business, reputation and ability to operate. Prompt design and implementation of a crisis plan, with an evaluation of the fact-specific situation (one-size-fits-all plans tend to be ineffective), assessment of risks, definition of priorities and activation of a crisis team are fundamental elements of good corporate governance.

In the end, the earlier the preparation and reaction, the better the chances of overcoming the crisis will be.


[1] Mariela I Melhem, Esteban Valansi and Siro P Astolfi are partners at Mitrani Caballero & Ruiz Moreno Abogados.

[2] Civil and Commercial Code, Section 955.

[3] Act 24,522, enacted on 8 August 1995, became effective on 11 November 1995. It was subsequently amended on several occasions, most recently in 2015 by Act 27,170 and in 2011 by Act 26,684. At the time of this publication, due to the current pandemic crisis, there are several bills under discussion at the House of Deputies to reform the Bankruptcy Act.

[4] Financial institutions and insurance companies are subject to specific laws. None of them may submit a petition for reorganisation proceedings or their own bankruptcy. Third parties, as well as the Central Bank of Argentina, may file a petition for bankruptcy once the authorisation to function as a financial entity is revoked by the Central Bank. Insurance companies may follow an ordinary liquidation proceeding carried out by its board or follow a specific judicial liquidation process based on bankruptcy proceedings.

[5] Acts related to recordable assets, the transfer or lease of a going concern, placement of debentures with a special or floating guarantee, placement of negotiable obligations with a special or floating guarantee and creation of liens, and any acts that exceed the ordinary course of business.

[6] The payment of salaries, compensation for work-related injuries, death or occupational diseases, among others.

[7] Fifty per cent plus 1 per cent within each and every one of the categories, representing two-thirds of the computable capital within each category.

[8] This novation does not cause the extinction of the obligations of any guarantor or joint and several co-debtors.

[9] It can be a third-party audit company, investment bank or restructuring advisor, etc.

[10] The debtor is given another opportunity to negotiate with its creditors, although with no preference over the interested parties.

[11] This period may be reduced or rendered ineffective by the court, at the request of the affected party, if, plausibly, the disqualified debtor or individual - at the discretion of the court - has not prima facie incurred a criminal offence.

[12] Dispositions free of charge; advance payment of debts whose expiration according to the title should occur on the day of bankruptcy or later; and granting of a mortgage or pledge or any other preference, regarding an unexpired obligation that originally did not have that guarantee.

[13] Lack of assets brings a presumption of fraud that may require the involvement of a criminal court.

[14] Separate regulations address respectively trade unions, collective bargaining, settlement of collective labour disputes and strikes.

[15] The employee is entitled to receive a severance payment equal to one month’s salary for each year of service or fraction greater than three months, based on the best monthly, normal and usual remuneration earned during the past year or during the time of service, if lesser (Section 245 ECA).

[16] If the employer fails to discharge its obligations, the employee is entitled to payment in lieu of notice, and to a severance payment equal to that payable by the employer in the case of dismissal without cause.

[17] Death of the employer or the employee, total and permanent disability of the employee, the employee’s retirement and the loss of qualification for the job, unless the disqualification originates in the wilful or gross and inexcusable fault of the employee. These events entail liability for indemnification on the part of the employer, except in the case of an employee’s retirement.

[18] More than 15 per cent of the employees in companies with less than 400 employees; more than 10 per cent in companies with between 400 and 1,000 employees; and more than 5 per cent in companies with more than 1,000 employees.

[19] Employment Act 24,013.

[20] If the bankruptcy decision is attributable to the employer, severance payment applicable to dismissal without cause applies.

[21] The ECA provides for different suspension scenarios, including non-work-related accidents and illnesses, military service leave, performance of election charges, holding elected or representative positions in professional associations of workers with trade union representation or in bodies or committees requiring trade union representation.

[22] Suspensions based on disciplinary reasons or due to lack or decrease of work not attributable to the employer may not exceed 30 days in one year, starting from the first suspension; and suspensions due to duly proven force majeure may be extended to a maximum of 75 days within one year, starting from the first suspension, whatever the reason.

[23] Emergency Decree No. 297/2020, of 19 March, 2020, published in the Official Gazette on 20 March 2020.

[24] Emergency Decree No. 329/20, of 31 March 2020, published in the Official Gazette on 31 March 2020.

[25] Dismissals that respond to a legally foreseen cause other than contractual termination (e.g., due to labour injury – disciplinary or other serious reasons – disqualification, retirement, supervening psychophysical incapacity, termination of temporary service or a fixed term agreement, due to a bankruptcy or reorganisation proceeding; resignation by the employee, mutual termination agreement) would be excepted. Suspensions decided by the employer would be excepted, but for a different reason (e.g., preventive suspension, precautionary suspension, disciplinary reasons, temporary disqualification, suspension mutually agreed).

[26] Emergency Decree No. 624/2020, of 28 July 2020, published in the Official Gazette on 29 July 2020.

[27] Emergency Decree No. 528/2020, of 9 June 2020 published in the Official Gazette on 10 June 2020.

[28] Mandatory laws (whether of civil, criminal, administrative source, etc.) that prevail over the interests of the individuals and limit the parties’ contractual freedom in several ways.

[29] Public order laws limit the parties’ freedom to contract, making invalid those contracts that are contrary to public order, thus the parties cannot stipulate a contrary provision in the contract.

[30] Civil and Commercial Code, Section 958.

[31] Civil and Commercial Code, Section 1730. ‘An act of God or force majeure is considered to be an event that could not have been foreseen or that, having been foreseen, could not have been avoided. The act of God or force majeure exempts from liability, unless otherwise provided’. (The code uses ‘force majeure’ and ‘act of God’ as synonyms).

[32] Civil and Commercial Code, Sections 1734 and 1736.

[33] The hardship excuse does not apply to all contracts.

[34] Civil and Commercial Code, Section 1091.

[35] Civil and Commercial Code, Section 1090.

[36] The Civil and Commercial Code provides a specific rule for force majeure events occurring during the term of lease agreements; when the tenant is prevented from using or enjoying the leased property, or it cannot serve the purpose of the agreement, it may request the termination of the contract, or the cessation of payment of the rent price for the time that it cannot use or enjoy the leased property. If the force majeure event does not affect the leased property itself, the tenant’s obligations continue.

[37] Act 25,561 Public Emergency Law and Exchange Rate Reform Act (7 January 2002), Section 11.

[38] Argentine Federal Civil and Commercial Code, Section 1011.

[39] Argentine Federal Civil and Commercial Code, Section 1031.

[40] Argentine Federal Civil and Commercial Code, Section 1032.

[41] The threat is related to potential damage, not to a potential breach of contract as generally accepted by comparative law (anticipatory breach). There may be cases in which there is a threat of non-compliance without being able to prove a threat of harm (e.g., when the obligations are guaranteed by collaterals or other securities), and vice versa, serious threat of damage to rights due to the serious impairment of the solvency of the counterpart (e.g., payments ceasing) without a significant risk of non-compliance (Leonardo F Fernandez, La Ley, ‘Covid and Preventive Protection in contracts’), 22 April 2020).

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