Civil Liability Regime in the new Argentine Civil and Commercial Code

Law No. 26,994, published in the Official Gazette on October 8, 2014, approved the definite text of the Argentine Civil and Commercial Code, which will come into force on January 1, 2016.
 
As commented via this newsletter when we analyzed the Bill, the new Code introduces several important amendments to the current civil liability regime on the basis of a new methodology and with the main aim of unifying rules and solutions.
 
Firstly, the Code fuses civil and commercial legislation and consequently unifies the aspects of the liability that derive from both the breach of civil and commercial law or contracts, which up until now were differentiated.  Secondly, liability deriving from contractual breach and liability that arises from violation of the law are also dealt with jointly, which will have a direct impact on several aspects that up until the moment had different solutions, including attribution factors, the extent of compensation, and the statute of limitations.  
 
Along the same lines, the new Code incorporates certain regulations regarding obligations towards consumers, which will have an impact on the liability regime applicable to them. By this means, civil liability in consumer cases will be regulated –in general terms– by the Consumer Protection Law and the new Code.
 
Additionally, other innovations have been added regarding the general law principles, such as the emphasis of the good faith principle, the strengthening of regulation regarding abusive exercise of rights, the supremacy of general interest over individual interest, and the establishment of the principle of damages prevention.
 
On the other hand, although the Bill proposed the incorporation of a “monetary sanction,” with a dissuasive function, to the general civil liability regime, this concept has not been added to the approved Code. Thus, the civil fine included in the Consumer Protection Law will continue to be the only legal reception of punitive damages in Argentina.
 
The new Code maintains the four traditional civil liability requirements in force, but with some new features.
 
Illicit activity continues to be a necessary requirement for there to be civil liability, although the new legislation has included the legal scholars’ stance that states that the violation of the generic duty not to do harm constitutes unlawfulness per se.
 
The attribution factor requirement has also been kept, and it is expressly stated that, in the event of absence of an express rule, the attribution factor will always be subjective. At the same time, the new Code proposes a broader list of exceptions to this principle, i.e., situations that will be ruled by strict liability.
The theory of adequate cause is definitively incorporated to the analysis of civil liability.
 
Regarding damages, the traditional classification of damages –divided in material damages and pain and suffering– is kept, and the loss of chance is incorporated, which up until now was not addressed by Argentine legislation. In addition, the list of those with standing to claim for compensation for damages has been broadened; judges are expressly authorized to presume the existence of damages in certain cases, and it is established that in cases of injuries or incapacity, damages will consist of a capital contribution that guarantees an income over time to compensate the loss.
 
Although the traditional principle of the burden of proof is largely maintained, (the one who alleges a fact must prove it), the incorporation into the Code of judges’ powers to distribute the burden of proof among the parties of a lawsuit and to make so known  beforehand at an early stage of the trial is interesting.
 
The Code establishes a sole three-year statute of limitations term, applicable to all the hypothesis of damages claims. For that purpose, the specific rule that exists in the Consumer Protection Law has been deleted.
 
The statute of limitations term starts running on the day that the obligation is due, in other words, when the lawsuit can be validly filed. It will be suspended for six months as a consequence of formal out-of-court demand (currently this is an annual term), and shall be interrupted by any petition filed in court that demonstrates the intention of maintaining the legal action alive (not only a complaint in itself).
 
Lastly, the new Code regulates, in a differentiated and detailed manner, diverse situations that will be expressly governed by strict liability rules (liability for risky activity, for breach of an obligation of result, for damages caused in group form, etc.), and incorporates private international law rules on jurisdiction and applicable law for the cases of civil liability.