Seed Potatoes Case / Note on the judgment

Marval, O´Farrell & Mairal and Dougall Abogados working together have recently obtained a welcome victory for one of their clients, the United Kingdom Government, before the Argentine Civil and Commercial Federal Court of Appeal of Buenos Aires. The Court of Appeal set aside on 23 October 2001 a sentence of approximately US$ 200 million against the UK Government declaring the nullity of the proceedings based on the preeminince of the law of nations over local procedural rules, even in the case where a sentence has been issued and has become final.

The claim was based on the alleged damages suffered by Argentine importers as a consequence of a disease which they claimed had affected a cargo of seed potatoes sold to them by two UK companies, and where the quality of the potatoes had been certified by inspectors of the relevant Government Department acting pursuant to obligations under an international treaty to which both Argentina and UK are signatories.

The importers brought a claim against the exporters and the UK Government in an Argentine first instance court and attempted to notify the claim on the UK Embassy by means of the normal notification process utilised in Argentine civil proceedings. The Embassy made use of its right not to accept such a notification since it had not been made in the proper manner through the Argentine Foreign Ministry, and thus did not intervene in the first instance proceedings. The court nevertheless resolved that the case should proceed in the UK Government’s default.

The case was therefore not defended and the first instance court found for the plaintiffs on the substance of the dispute. When the first instance court subsequently required the UK Government, by notification to the Embassy through the Argentine Ministry of Foreign Affairs, to comply with the court’s judgement, the UK Embassy filed a motion to have all the proceedings annulled. This petition was rejected by the lower court as being out of time and the judgement was considered final.

At that point the UK Government retained the services of Marval, O´Farrell & Mairal, in addition to Dougall Abogados, and appealed to the Civil and Commercial Federal Court of Appeal against the lower court’s rejection of the petition by the UK Embassy. The Court of Appeal on 23 October 2001 annulled the judgement and most of the procedural acts which had taken place before the first instance court.

The Federal Court of Appeal found that the British Embassy does indeed have the right to reject a notification that is not properly effected through the Argentine Ministry of Foreign Affairs. The first instance court’s decision to pursue the case in the UK Government’s default was not considered valid, in as much as it had been based on an invalid notification of the claim. Consequently, the notification of that decision on the UK Embassy was also null.

The Court of Appeal resolved that all procedural acts which took place from the moment the first instance judge decided to pursue the matter in the UK Government’s default onwards (including the final judgment) were null. It furthermore ordered that the court file should be sent back to another first instance judge so that the Embassy could be correctly notified and thus enter a proper legal defence.