Punitive Damages and Executive Judgment: Wedded or Divorced?

Early in 2024, Organizacion de Servicios Empresariales SA filed an executive lawsuit due to the breach of a mediation agreement entered into with Volkswagen SA de Ahorro para Fines Determinados, who had failed to comply with the obligation to pay ARS 2,013,487 for delaying the delivery of a vehicle. The plaintiff requested the court to order the defendant to pay the agreed amount plus compensatory and punitive interests, and punitive damages. It also requested the court to apply the fine in Law 26589, article 26 in fine.

As grounds for its claim regarding the punitive damages, the plaintiff first argued that it had a consumer relation with the defendant, since it had acquired the vehicle to transport its personnel. The plaintiff also argued that the defendant had premeditatedly and deliberately breached the contract, and that this was part of “a business plan aimed at capturing public savings.” To illustrate its position, it showed that during the first months of 2024, there had been 119 lawsuits filed against the defendant, 58 of which were related to non-compliance with mediation agreements.

In replying to the claim, the defendant denied the plaintiff 's status as consumer, rejected the application of punitive damages and the fine, and offered to pay the sum in the mediation agreement plus the interests.

On March 12, 2025, the National Commercial Court of Appeals (Chamber C) confirmed the first instance ruling that ordered the defendant to pay the agreed amount plus compensatory interests, upheld the imposition of the fine provided for in article 26 of Law 26589 and article 45 of the National Civil and Commercial Procedural Code (which was set at ARS 1,006,743.50, representing 50% of the principal owed), and upheld the imposition of punitive damages (art. 52 bis, Consumer Protection Law 24240), although reduced from ARS 15,000,000 to ARS 1,500,000. In deciding so, the Court of Appeals held that executive proceedings are not incompatible with ordering punitive damages.

In its reasoning, Chamber C considered that:

1. articles 8 bis and 52 bis of the Consumer Law do not establish a specific procedure to apply them, and that the interested party’s request suffices to analyze it,

2. article 52 bis authorizes applying punitive damages “independently of other compensation,” which means it can coexist with the fine expressly provided for in the Mediation Law for cases of non-compliance with the agreement.

Chamber C also stated that a “repeated” breach can arise from the records of the file without requiring complex evidence, and that this breach can be assessed as circumstantial evidence of the subjective reproach required in article 52 bis of the Consumer Law.

Accordingly, Chamber C considered that:

• The defendant acknowledged its delay in complying with the mediation agreement, without providing reasonable justification for it.

• The breach was classified as unlawful and contrary to the principles of good faith and legitimate expectations.
• The conduct was assessed as repeated, considering similar antecedents against the same company.

The decision of Chamber C joins a growing set of precedents, especially in the City of Buenos Aires (Commercial, Administrative, and Tax jurisdictions of the City of Buenos Aires) that admit punitive damages in executive proceedings, especially for breaches of mediation agreements.

However, this criterion is not unanimous in all precedents, as there are others that have ruled otherwise. Among them is "Credil SRL v. Tornini, Guillermo Abel s/ cobro ejecutivo" (CCiv. and Com. Azul, Chamber I, 22/5/2014), where the court rejected imposing punitive damages in an executive proceeding, concluding that it was not the appropriate procedural route to prove the necessary subjective requirements.

The autonomous or accessory nature of punitive damages, their compatibility with enforcement proceedings, and the limits to the defendant’s right of defense will continue to be central issues in the evolution of case law on the matter.