Five-Year Limitation Period in a Consumer Insurance Contract

In re “Sittner, Nélida Elida c/ La Meridional Compañía Argentina de Seguros S.A. s/ Ordinario”, filed with the Argentine Commercial Courts, the plaintiff claimed against his insurer compensation for damages suffered for the insurer’s breach of a motor vehicle insurance contract.

 

The insurer admitted it had entered into an insurance contract with the plaintiff but raised, among other defenses, that the limitation period for bringing the claim had expired. To base such defense, the insurer argued that the one-year limitation period provided for by article 58 of the Insurance Law 17,418 (“LS”) had entirely run between the date the payment obligation was due and the date the lawsuit was filed. Also the defendant alleged the inapplicability of the three-year limitation period provided for by article 50 of the Consumer Defense Law (“LDC”), on the basis that the LS is a law specific to insurance that must prevail over general consumer protection laws and regulations.

 

The plaintiff answered the insurer’s defense and requested the court to apply the three-year limitation period established in the LDC.

 

The first instance judge admitted the defendant’s defense and applied the one-year period established in article 58 of the LS. To reach this decision, the judge took into account that upon answering the insurer’s defense the plaintiff had not considered the change in the wording of article 50 of the LDC. In this regard, the judge stated that the plaintiff's arguments were based on a provision (Law 26,361) that had been abrogated by Law 26,994. The judge added that since Law No 26,994 entered into force, the limitation period of consumer claims is not subject to article 50 of the LDC. Instead and depending on the nature of the claim, the solution must be sought in either the general rules established by the Argentine Civil and Commercial Code (the “CCC” after its acronym in Spanish) or in specific legislations, such as article 58 of the LS for claims under insurance contracts.

 

The decision was challenged by the plaintiff, who insisted on the application of the three-year term. On March 5, 2020, the Argentine Commercial Court of Appeals admitted the plaintiff’s claim and revoked the first instance decision without, however, applying the three-year period requested by the plaintiff. Instead, the Court of Appeals applied the general five-year period established in article 2560 of the CCC for when no other specific term exists.

 

In this regard, the Court of Appeals considered that the one-year limitation period provided for in the LS is absolutely short and prejudices the insureds’ rights, since it is contrary to the protective principles established in articles 42 and 75.22 of the Argentine Constitution. The Court of Appeals held that consumer rights are a type of Human Rights and that therefore the case must be analyzed under article 75.22 of the Argentine Constitution, which grants constitutional hierarchy to some International Conventions. On that basis, the Court of Appeals justified its decision by stressing that judges are bound to make constitutional controls ex officio.

 

The Court of Appeals also stated that, before the CCC entered into force, the same Tribunal had considered that the limitation period applicable to the consumer insurance contracts was three years, according to the former wording of the LDC. However, if now the courts had to apply a shorter limitation period (that of one year of article of the 58 LS), this would amount to a regression in the level of protection of consumers that would be contrary to pro hominis and pro consumer principles.  

For that matter, the Court held that since the LDC does not have a limitation period for judicial actions, under a comprehensive and reasonable construction of the Argentine Constitution, International Conventions and the CCC, consumer protection rules included in the CCC must be considered the core minimum standards that other special laws cannot derogate from, under penalty of breaking the whole system apart. Because of this, and considering article 1094 CCC, the Court of Appeals affirmed that the minimum three-year period established by the LDC (according to the wording of Law 26,361, abrogated by Law 26,994) had been substituted for the general five-year period of article 2560 of the CCC.

 

Finally, the decision did not ignore that article 2532 of the CCC provides that limitation regulations of the CCC are only applicable in the absence of other specific rules (such as the LS). However, the ruling considered that according to article 1094 of the CCC any specific law must yield to the minimum standards of the CCC. Article 1094 of the CCC states: Construction of laws and preference. The rules that regulate consumer relations must be applied and construed in accordance with the protection of consumers and the access to sustainable consumption principles. In case of doubt about the construction of this Code or of specific laws, that most beneficial for the consumer shall prevail.

 

It must be recalled that in re “Buffoni”, the Argentine Supreme Court had considered that the LS, being a law specific to insurance, prevails over the LDC -even when the LDC was passed after the LS- because the LDC is a statute of a general nature (see https://www.marval.com/publicacion/la-oponibilidad-de-las-exclusiones-de-cobertura-al-tercero-damnificado-en-el-seguro-de-responsabilidad-civil-automotor-11811&lang=en). With respect to this, the Court of Appeals held that the Supreme Court had taken such decision under different circumstances (in a third-party claim, as opposed to a claim by an insured against its own insurer) and that at any rate, the judge may not avoid the constitutionality test to which the applicable rules must be submitted to, in this case, the LS.  

 

As of the date of publication, the term to file the Federal Extraordinary Appeal to have the case decided by the Argentine Supreme Court of Justice is still on, so the Court of Appeals’ judgment is not yet final.