Class actions: landmark ruling by Supreme Court

On February 24, 2009 the Argentine Supreme Court rendered a decision in the case “Halabi v. Poder Ejecutivo Nacional – Ley 25.873”, confirming the decision of the Federal Court of Appeals in Administrative Matters that, in an action brought by an individual, had declared unconstitutional with erga omnes effects a law authorizing the tapping of telephones and internet communications.

 In its reasoning, the Court classified rights in 3 categories: (a) individual rights, which must be defended with individual actions; (b) rights with a collective impact that concern collective assets; and (c) rights with a collective impact that concern individual but homogeneous assets.

 The first category of rights is protected by means of amparo actions. The second category, instead, are actions that defend rights with a collective impact that concern collective assets that can be brought by the Ombudsman, by NGOs that defend such type of interests and by the affected party. Finally, the last category is constituted by personal or patrimonial rights resulting from conducts that damage the environment or the competition, or the rights of users and consumers and those of discriminated persons, consisting of a single or continuous fact that causes harm to all the members of the group. Thus, a factual and legal equivalence can be identified, turning reasonable the existence of a single trial whose decision shall have expansive effects, excepting in those aspects concerning the evidence of the damages.

 Rights with a collective impact that concern individual homogeneous interests arise from the second paragraph of Section 43 of the Argentine Constitution. Considering the lack a law regulating class actions, the Court considered –in what is construed as a clear message to the National Congress– that the relevant constitutional rights should be considered directly operative and judges must enforce them when fundamental rights are involved.

 The Court went on to identify the requirements that must be met in order to allow class actions. Thus, class actions require the existence of a common factual cause, a claim focused on the collective effects of such cause, and the demonstration that individual actions are not justified. However, even in the presence of typically individual rights, class actions will also be available when there is a strong State interest in their protection, whether this is because of their social relevance or of the special features of the affected parties.

 The “Halabi” case is a landmark ruling since, using arguments included in some decisions of different Courts of Appeals and in minority opinions in previous decisions of the Court, for the first time the Court defines the characteristics of collective actions involving rights with a collective impact that concerns individual but homogeneous assets, identified by the Court itself in a manner analogous with American class actions.