Consumer Protection Law enforcement agencies and Argentine State agencies

The Argentine Supreme Court in a recent and novel ruling ("Banco de la Nación Argentina c/ Programa de Defensa del Consumidor, Comercio y Cooperativas de la Provincia de San Luis" dated July 28, 2005) decreed that the provincial authorities are not qualified to impose sanctions on national agencies of the ArgentineState.

In the lawsuit, the Consumer, Retailing and Cooperative Defense Programme of the Province of San Luis imposed a fine of AR$ 500,000 on the Banco de la Nación Argentina (BNA) for alleged non-compliance with Sections 4 and 19 ofConsumer Defense Law No 24,240 (LDC).

The BNA appealed the provincial government's decision after the 5-day term established for local court proceedings had elapsed, although within the 10 working-day term ruled in Section 45 of the LDC for sanctions imposed by the national enforcement agency.

The local administration which should have allowed the appeal rejected it sustaining that it was out of term and upheld the fine imposed on the BNA. This caused the BNA to file an appeal before the Federal Court of Appeals of Mendoza, which was not upheld, the reasoning being that the local proceeding was in order and that, consequently, the appeal presented by the BNA was out of term according to the provincial procedure regime.

The BNA, not satisfied, then presented an extraordinary federal appeal on the main grounds that the judgement appealed omitted taking into account that in view of Section 27 of the BNA Charter (Law No 21,799), the BNA should only be exposed to the federal jurisdiction and authority.

At the time of the extraordinary appeal filed by the BNA, the Supreme Court with a majority vote and agreeing with the opinion of the Federal State Attorney, declared the extraordinary appeal valid and annulled the judgement, and also ordered that the court originally dealing with the case issue a new decree taking into account the Supreme Court’s reasoning.

In order to reach this conclusion the Supreme Court explained that: (i) the capacity of the provinces to establish a procedure and regulate the performance of local authorities enforcing the LDC is not extensive to agencies under the control of the Federal State; (ii) Section 27 of the BNA Charter subordinates this financial institution only to the federal jurisdiction; and (iii) the Financial Institutions’ Law (Law No 21,526) provides that the Central Bank of the Argentine Republic (BCRA) is the guardian of the institutions which compose it and in the matter under consideration the enforcement agency could be none other than the BCRA itself. Consequently, it considered that the BNA could not be sanctioned by the provincial authority nor tried on the basis of local procedural regulations even when the circumstances which gave rise to the sanctions occur within the territory of a province.

This ruling is novel for the public banking sector because the Supreme Court not only held that the provincial authorities do not have the power to sanction Argentine State agencies but also that, and outside the framework strictly necessary to resolve the matter under review, the enforcement agency for this lawsuit "was none other than the BCRA, which is entrusted to control the services offered by the financial institutions".

Notwithstanding the doctrinal interpretation which may be inferred from the ruling, it should not be forgotten that this case concerned a public financial institution only subject to federal jurisdiction, so that it is an open question whether the Supreme Court would follow the same criterion in similar circumstances in which private banking institutions are involved.