Liability Insurance. Deductible. Consumer Protection Law

On February 15, 2005, Mr. Saldivar suffered an accident while he was trying to board the subway. He brought an action against Metrovías S.A. (the subway company of the City of Buenos Aires) and its liability insurer, La Meridional Compañía Argentina de Seguros S.A.

On September 8, 2010, Tribunal M of the Civil Court of Appeals confirmed the first instance ruling which had held that Metrovías S.A. and La Meridional Compañía Argentina de Seguros S.A. were to pay to the plaintiff 80% of the sums claimed by him. This ruling had also set forth that the deductible of the liability insurance taken out by Metrovías S.A. could not be asserted against the plaintiff, in spite of several previous rulings of the Supreme Court of Justice to the contrary.

Tribunal M understood that the doctrine of the “Obarrio” case, issued on December 13, 2006 by the Civil Court of Appeals in a plenary session, was to be applied. In “Obarrio” the Court of Appeals had held that the deductible of public transport liability insurance policies could not be asserted against aggrieved third parties.

It is to be noted that the Supreme Court of Justice has repeatedly affirmed –including when it decided on the appeal in the “Obarrio” case– the validity and assertion of this deductible. One of the bases for the Supreme Court’s decisions is that the aggrieved party is not privy to the insurance contract entered into between the insured and the insurer. Thus the “third party” who invokes this insurance contract must confine their rights to the terms and conditions agreed on between the insured and the insurer (Articles 1195 and 1199 of the Argentine Civil Code).

However, Tribunal M understood that in this specific case it was not bound to follow the Supreme Court’s rulings. Although national courts in principle ought to follow the Supreme Court’s doctrine, they can derogate from them if new arguments not taken into account by the Supreme Court should arise. The Tribunal maintained that, after the different Supreme Court’s rulings, the Consumer Protection Law was amended by the Argentine Congress, that the new text of the Law was in line with the ruling in the “Obarrio” case, and that the Supreme Court had not issued any other ruling subsequent to the amendments to the Consumer Protection Law.

According to Tribunal M, these amendments: (i) had widened the concept of “consumer” to those who, without being a party to a consumer relationship, use a service as end consumers and are exposed to a consumer relationship –in this case: the aggrieved party–, and (ii) had extended to them the benefits of the Consumer Protection Law.

Tribunal M understood that a consumer relationship existed in the case and that, therefore, the limited legal effects concept based on privity of contract (i.e., the Supreme Court’s line of reasoning) was not to be applied. It also understood that the provisions of Article 37 of the Consumer Protection Law should be applied, which sets forth that stipulations that distort the nature of the obligations or that limit liability for damage shall be null and void.

Summing up, the Civil Court of Appeals understood that Supreme Court’s rulings that had asserted the validity of deductibles are not an obstacle to the Court of Appeal’s following the doctrine of the “Obarrio” case since: a) significant changes in the legal framework have occurred, which would confirm the doctrine of the plenary judgment, and b) new arguments have been pleaded which have not yet been taken into account by the Supreme Court.