New rules on cooperation and jurisdictional assistance and international jurisdiction in the Mercosur

1.    Amendment to the Protocol on Cooperation and Jurisdictional Assistance in Civil, Commercial, Labor and Administrative Matters among Mercosur Member States (approved by Decision No. 07/02, the "Amendment")

The Amendment modifies articles 1, 3, 4, 5, 10, 14, 19 and 35 of the Las Leñas Protocol on Cooperation and Jurisdictional Assistance in Civil, Commercial, Labor and Administrative Matters (as approved by Decision No. 05/92, the "Las Leñas Protocol"), which has linked the Mercosur Member States (Argentina, Brazil, Paraguay and Uruguay) since March 17, 1996.

In general terms the Las Leñas Protocol establishes that the Member States commit to providing each other with mutual assistance and wide jurisdictional cooperation in civil, commercial, labor and administrative matters.

The protocol is basically used for a) carrying out bureaucratic legal procedures, such as summonses, demands or cautions, setting of legal terms, notifications or other similar items; b) the receipt or obtaining of evidence; and c) the recognition and enforcement of court and arbitration rulings issued within the jurisdiction of the Member States on civil, commercial, labor and administrative matters, and on matters involving repair of damages and restitution of assets ordered in rulings on criminal cases.

The most significant change made by the Amendment is that both bureaucratic legal procedures and evidentiary procedures as well as the recognition and enforcement of court and arbitration rulings may be applied for directly by the interested party. They may also be applied for by means of rogatory letters through the Central Authority or via diplomatic or consular channels. This should make the procedure much shorter.

If transmittal of rogatory letters is carried out via the Central Authority or via diplomatic or consular channels, the requirement for legalization will be waived. However, if transmittal is performed by the interested party, as no other Member State except Argentina is a party to the 1961 Hague Convention eliminating the requirement for legalization of foreign public documents, legalization by the diplomatic or consular authorities of the State enjoined will be required. .

In addition, the Amendment extends the right to equal procedural treatment established in the Las Leñas Protocol for "citizens and permanent residents" to "the nationals, citizens and permanent or habitual residents" in one of the Member States. None of these persons, nor any of the legal persons established, authorized or registered according to the laws of any of the Member States, are obliged to set up bonds.

The Amendment also modifies one of the concluding dispositions of the Las Leñas Protocol establishing that the Protocol will not restrict the terms of conventions that may have been signed on the same matters by Member States in so far as they do not contradict them. The change establishes that such restriction does not exist as long as the dispositions on the same matter are more beneficial for cooperation.

In other words, it establishes the principle of precedence for the rule that most benefits cooperation. Criticism could be raised because of the fact that the rule refers only to "previously signed conventions" and not those that might be signed in future.

Lastly, the Amendment establishes that "jurisdictional assistance on administrative matters shall refer, based on the domestic law of each State, to judicial complaints against administrative actions where recourse can be filed in court" and not "to administrative recourses to be filed in court" as established by the Las Leñas protocol.

2.    Agreement on Cooperation and Jurisdictional Assistance between Mercosur Member States and the Republic of Bolivia and the Republic of Chile (approved by Decision No. 08/02, the "Agreement on Cooperation and Jurisdictional Assistance")

The Agreement on Cooperation and Jurisdictional Assistance reproduces the Las Leñas Protocol, incorporating the amendments mentioned in Point 1.

The Agreement contemplates the possibility of ratification by other States, establishing that in the case of additional signatories it shall come into force thirty days after filing the instrument of ratification.

It should be noted that as neither Chile nor Bolivia are parties to the 1961 Hague Convention that eliminates the requirement for the legalization of foreign public documents, if transmittal is performed by the interested party it will require legalization by the diplomatic or consular authorities of the State being enjoined.

3.    Agreement on Jurisdiction on the matter of International Freight Transportation Contracts among Mercosur Member States (approved by Decision No. 11/02, the "Agreement")

In sanctioning the Agreement, Decision No. 11/02 took into account that the Buenos Aires Protocol on International Jurisdiction on Contractual Matters in force for Mercosur Member States since 1994, excludes transportation contracts from its scope.

Furthermore, there was no convention in force linking all Mercosur Member States, as Brazil is not a Party to the Treaty on International Land Transportation Trade Law signed in Montevideo in 1940.

The Agreement will cover international road and river transportation within the sphere of the Member States when making exclusive or combined use of one of these means of transport.

Among the most significant aspects, the Agreement establishes that the claimant may elect to bring legal action in the courts of the State: a) where the defendant is domiciled; b) where the contract was signed, as long as the defendant were to have in it an establishment, branch or agency through which the contract was signed; c) where loading or unloading has taken place; d) of a transit point where there is a representative of the transporter, if the latter were to be the defendant; e) corresponding to any other place designated to that end in the transportation contract, as long as it is a Member State.

The same Agreement establishes that it is a matter of public order, and that therefore no legal action shall be able to be brought in relation to freight transport based on the Agreement in a place other than those foreseen in the previous paragraph. It also establishes that clauses indicating exclusive jurisdiction are null and void, as are those which attempt to avoid or exclude application of the rules of this Agreement, whether by defining the applicable law in such a way as to infer jurisdiction or by modifying the rules in relation to jurisdiction.

Nevertheless, the Agreement establishes that once the contested facts have taken place, the parts shall be able to agree that the litigation be submitted to a different jurisdiction, whether it be a court or arbitration tribunal.

In addition, the Agreement establishes that as long as the transport vehicle subject to the measure is within a Member State's territory , the tribunals of that State should be able to order and enforce all the measures of preservation or urgency required to guarantee the outcome of pending or potential litigation, whichever be the internationally competent jurisdiction which rules on the underlying litigation,

The Agreement contemplates the possibility of ratification by other States that are not members of Mercosur.

4.    Taking effect of the Decisions of the Common Market Council

In accordance with the Additional Protocol to the Asuncion Treaty on the institutional structure of the Mercosur, otherwise known as the "Ouro Preto Protocol", the Common Market Council ("CMC") is the senior Mercosur body responsible for the political administration of the integration process. It is formed by Foreign Ministers and Economy Ministers, or their equivalents, of the Member States. It rules by means of decisions that are mandatory for the Member States and which are taken by consensus in the presence of all Members.

Although the Decisions of the CMC, such as those described above, are mandatory for the Member States, they are not directly applicable by individuals, as each Member State must incorporate them to their existing legislation.

In this instance the texts of the Amendment and the two Agreements approved by the CMC Decisions mentioned indicate that they will take effect thirty days after the instruments of ratification by the Mercosur Member States have been duly filed, and in the case of the Agreement on cooperation and jurisdictional assistance, when ratified by the Mercosur Member States and Chile and Bolivia.

The Ouro Preto Protocol also establishes the obligation by the Member States to adopt such measures as may be necessary to ensure the compliance with such Decisions within their respective territories.

Therefore, although the regulations approved by the Decisions of the CMC commented on above are not yet in force, the Member states are under the obligation to take such steps as may be necessary for them to come into effect.

In this regard, the ruling by the "ad hoc" Mercosur Arbitration Tribunal set up to rule on the controversy filed by Argentina against Brazil on April 19, 2002 has considered that "that Mercosur rules must be incorporated to the domestic legislation of the Member States and if they are breached this will affect the international responsibility of said Member States".

We hope that these rules will soon come into force, as they favor regional integration and promote the development of trade relations between Member States.