Supreme Court Ruling Sets New Limit

SUMMARY

On August 13, 2024, in “Lacuadra, Jonathan D. v. Directv Argentina SA et al.”, Argentina’s Supreme Court set aside a ruling that adjusted a labor claim using the CER index plus 6% annual interest, compounded upon service of the complaint. The Court found it arbitrary because it produced a clearly disproportionate result. This is another check on the adjustment methods applied by the National Labor Court of Appeals.

In September 2022, the Court of Appeals on Labor Matters in the City of Buenos Aires promoted an update method based on the annual compounding of interest. However, in March 2024, the Supreme Court disqualified it. 

In December 2023, the Government decreed a cap to the updated based on the index of evolution of prices +3% interest per year. Yet, in January 2024, the Labor Court of Appeals in the City of Buenos Aires disqualified it. 

Starting in March 2024, Court of Appeals on Labor Matters promoted a new update method using the CER mechanism +6% annual interest, compounding interest once at the time of serving the complaint. However, yesterday the Argentine Supreme Court described it as arbitrary, since it found the result to be clearly disproportionate.

Further resolutions and news are expected in the upcoming days.

Frequently Asked Questions

What did the Supreme Court decide?
The CER plus 6% annual interest method with compounding was arbitrary.

Why did it reject the method?
Because it produced a clearly disproportionate result.

Is this the first time the Court has rejected an adjustment method?
No. In March 2024, it had already rejected the annual interest compounding applied by the Labor Court of Appeals.