Settlement agreements in foreign currency
A new leading case
Marval O’Farrell Mairal’s goal is to provide high value solutions to our clients, build trust, and offer exceptional service.
Our partners and professionals base their work on the specific needs of our clients, without losing sight of that commitment. This case study is just one of a range of examples that highlight our strong desire to make a difference with an interdisciplinary, innovative, and disruptive approach.
Marval O’Farrell Mairal’s labor department is renowned for handling the market’s most complex, sensitive, and strategic matters, including high profile litigation. We are the first port of call for numerous international clients thanks to our strong international practice. Our labor department has an outstanding non-contentious practice, advising clients on a complete range of matters, from general labor and social security, planning and strategy to restructuring, collective bargaining and negotiations with unions and government.
The challenge
In a labor claim, the former regional CEO of one of our clients, a leading multinational oil company, agreed to a $ 2.2 million dollar settlement plus legal fees and costs.
When bringing the settlement agreement to the court, the trial court rejected the settlement on the grounds that the agreement was settled in foreign currency and was thus inconsistent with current regulations barring and restricting access to the exchange market.
Those regulations included Communique “A” 6770 of the Argentine Central Bank, Section 124 of the Law on Employment Contracts, Article 3 of ILO Convention 95, and Laws No. 23928 and 25561
The solution
Marval O’Farrell Mairal's strategy sought to provide a more legally balanced interpretation of foreign exchange restrictions.
Thus, the Labor Law team overseeing the case worked in conjunction with the Banking and Finance team and their specialists in exchange regulations to gain further understanding of these restrictions.
On appeal, Marval O'Farrell Mairal contended that these restrictions did not preclude operations in foreign currency altogether and instead merely restricted access to the exchange market for the acquisition and/or transfer of foreign currency.
The result
The Argentine National Labor Court of Appeals ruled for the appellant and upheld the agreement in dollars, allowing settlement in that currency.
This is now a leading case on the settlement of labor lawsuits in foreign currency since the issuance of current exchange restrictions and established a position that was later reiterated by other courts.
This insight is a brief comment on legal news in Argentina; it does not purport to be an exhaustive analysis or to provide legal advice.