New Law Is Passed to Limit Injunctions against the Federal Government

On April 30, 2013, Law No. 26,854 (the “New Law”) was published in the Official Gazette. It regulates the procedure applicable to injunctions that are requested against or by the Federal Government or any of its decentralized entities.

The New Law establishes a specific regulation on this matter that until now was mainly governed by the Civil and Commercial Procedural Code (the “CPCCN”). The New Law also indirectly modifies certain aspects of the amparo actions (a summary procedure aimed at the protection of constitutional rights), regulated by Law No. 16,986.

The draft bill was submitted by the Federal Executive Branch (the “PEN”) on April 9, 2013, together with other initiatives which are part of a package of reforms to the Judiciary named “Democratization of the Judiciary”. In an expedited legislative process, the bill was approved by the Senate on April 18, 2013 and by the House of Representatives on April 24, 2013.

According to the reasons advanced by the PEN in the draft bill, the initiative seeks to partially compensate for the absence, at a federal level, of a procedural code on administrative law matters of the kind of those currently in force in Argentine provinces.

I. Main Provisions

Below is a brief account of the main provisions of the New Law.

1. Scope of Application

The New Law sets forth the rules applicable to injunctions requested:

1. Against the Federal Government or its decentralized entities, and
2. By the Federal Government or its decentralized entities.

The regulation of these injunctions will be included in the same legal body. However, there are important differences depending on whether the injunctions are requested against or by the Federal Government and its decentralized entities.

2. Preliminary Report

Before ruling on injunctions requested against the Federal Government or decentralized entities, judges have to request a report on the relevant matters to the competent administrative agency (the "Preliminary Report"), within five days in ordinary proceedings and three days in abbreviated proceedings and in amparo actions. Also, judges are authorized to request an opinion on the matter to the relevant representative of the General Prosecuting Office.

Injunctions required by individuals from "vulnerable sectors" of society or when a right to dignity, health or a sustenance or environmental right is concerned (the "measures related to a fundamental or environmental right") are exempted from the requirement of Preliminary Report.

3. Interim Measures

Judges are allowed to order interim measures before ruling on the request for the injunction, in the event that "exceptional circumstances, objectively insurmountable" are present. These interim measures are effective until the competent administrative authority has produced the Preliminary Report or until the term for doing so has expired.

4. Term of effectiveness

Injunctions that are ordered against the Federal Government or its decentralized entities must have a "reasonable term of effectiveness".

The maximum term is of six months if the injunction is granted within the framework of an ordinary judicial procedure or of three months if it is an abbreviated proceeding or an amparo action. The injunction may be extended for six months.

If an injunction is granted when the exhaustion of the administrative proceedings is still pending, the injunction will be valid up to ten days after the final administrative decision is rendered. Within that ten-day term, the beneficiary of the injunction should initiate a lawsuit and may request that the court renew the injunction.

Injunctions related to fundamental or environmental rights are not subject to a fixed-term of effectiveness.

Injunctions requested by the Federal Government or its decentralized entities are not subject to a term of effectiveness either.

5. Type of injunctions

The New Law sets forth that injunctions requested against the Federal Government or its decentralized entities may be of three kinds:

1. Order that suspends the effectiveness of Government acts (laws, rules or administrative decisions).
2. Order not to innovate (medida de no innovar), which imposes the administrative agency with the duty of refraining from carrying out a specific action.
3. Positive order (medida innovativa), which imposes the administrative agency with the duty of carrying out a specific action.

In addition, the New Law provides, in a generic way, for the right of the Federal Government or its decentralized entities to request injunctions. The New Law establishes specifically the possibility of requesting injunctions to ensure the provision of public services or activities of public interest, or the protection of goods affected to those services or activities. This provision is not applicable to labor disputes.

6. New requirements

The New Law imposes requirements for the granting of injunctions against the Federal Government or its decentralized entities which, until now, were not expressly included in the applicable legislation. Among other requirements, petitioners will have to show:

1. that the Government action or conduct will produce irreparable harm;
2. that the injunction will not affect the public interest; and
3. that the injunction will not have irreversible material or legal effects.

If an injunction is aimed at suspending the effectiveness of an administrative rule or order, prior to filing a request for injunction, the interested party must petition the suspension of the effectiveness of the relevant rule or order to the competent administrative authority for a five-day term.

Injunctions requested by the Federal Government or its decentralized entities are not subject to the requirements referred to above.

7. Other limitations

The New Law maintains the current rule (set forth in the CPCCN) which prohibits judges from granting injunctions which (i) affect, obstruct compromise, distract from its destination or in any way disrupt the assets or resources of the Federal Government, or (ii) impose on public officials personal monetary charges.

Injunctions requested by the Federal Government or its decentralized entities may only be effective if the interested party posts a bond or another security, except (i) if these are measures related to a fundamental or environmental right, or (ii) if the requesting party is entitled to proceed in forma pauperis.

Injunctions granted to the Federal Government or to its decentralized entities are exempted from the requirement of posting a bond or another security.

8. Appeal

The New Law provides for the suspensive effects of appeals filed against injunctions that suspend the effects of laws or decrees with the same force as a law (i.e. decrees issued on grounds of need and urgency or on the grounds of delegation of legislative powers), except if these are measures related to a fundamental or environmental right.

Since the New Law is silent on the issue and it provides for the supplementary application of the CPCCN, it should be construed that appeals do not have suspensive effect in relation to other kind of injunctions.

II. Preliminary Analysis

The New Law emphasizes the special position of the Federal Government and its decentralized entities before the Courts.

The grounds provided by the PEN in order to advance these reforms make reference to the rules arising from precedents of the federal courts and also to regulations in force in some Argentine provinces or in other countries. However, some of the provisions included in the New Law have a more restrictive character (i.e. in relation to the term of effectiveness of injunctions) or provide for less flexibility in its application (i.e. with regard to the term to produce the Preliminary Report) than the precedents or sources after which the New Law would have been modeled.

It will be important to follow closely how the New Law is applied and construed by the Courts, especially to see whether some of its provisions are held as consistent with the Federal Constitution and with international treaties to which Argentina is a party.