Extensive Emergency Declaration and Delegation of Legislative Powers to Argentine Executive

The Social Solidarity and Productive Reactivation Law No. 27,541 (the “Law”), published on December 23, 2019 in the Official Gazette, declared a public emergency in economic, financial, fiscal, administrative, pension, tariff, energy, health and social matters.

On the basis of the emergency, and with express mention of article 76 of the Argentine Constitution, the Law delegates important legislative powers to the Argentine Executive (the “PEN” after its Spanish acronym), establishing different deadlines for the exercise of delegated powers.

The Law provides that such powers should be exercised in accordance with the following “bases” of the delegation:

1. Create conditions to ensure the sustainability of public debt, in a manner compatible with the recovery of the productive economy and the improvement of basic social indicators.
2. Regulate the tariff restructuring of the energy system with criteria of distributive equity and productive sustainability and reorder the operation of regulatory entities.
3. Promote productive reactivation, with an emphasis on the generation of targeted incentives and on the implementation of plans to regulate tax and customs debts and social security resources for micro, small and medium enterprises.
4. Create conditions to achieve fiscal sustainability.
5. Strengthen the redistributive and solidary nature of pension funds, to improve the purchasing power of those who receive the lowest income.
6. Procure the supply of essential medicines for patients in conditions of high social vulnerability, grant access to essential medicines and supplies for the prevention and treatment of infectious and chronic non-communicable diseases; attend to the control of diseases preventable by vaccination and ensure access to essential medical benefits to the beneficiaries of the National Institute of Social Services for Retirees and Pensioners and of the National Health Insurance System.
7. Promote the recovery of salaries attending to the most vulnerable sectors and generate mechanisms to facilitate the obtaining of salary agreements.

Additionally, in relation to some delegations of powers in particular, the Law also contemplates some applicable bases in this regard.

When establishing a broad delegation of legislative powers to the PEN within the framework of the emergency declaration, the Law uses instruments similar to those used in 2002 with Law No. 25,561 on Public Emergency and Exchange Regime Reform, which was successively extended until December 31, 2017.

It should be noted that art. 76 of the Argentine Constitution establishes as a principle that the legislative delegation to the PEN is forbidden with the exception of certain matters of administration or public emergency, with a fixed term for its exercise and within the bases of the delegation established by the Argentine Congress.

In interpreting such a provision, the Argentine Supreme Court of Justice has understood that a delegation without bases is unconstitutional, and that, the  greater the indeterminacy in the delegation is, the smaller the scope the PEN will have to validly exercise its jurisdiction (Judgments 331: 2406, "Public Bar Association of the Federal Capital v. National State", 2008).

In view of possible challenges that may be formulated, the constitutional adequacy of the grounds for the delegation provided for in the Law will need to be analyzed in each specific case.