In brief
The Supreme Court of Justice of Argentina (the “Court”), in the case “Cencosud S.A. c/ Estado Nacional - Ministerio de Economía - Secretaría de Industria y Desarrollo Productivo s/ lealtad comercial - ley 22.802 - art. 22.”, declared unconstitutional Article 53 of Decree of Necessity and Urgency No. 274/2019 (the “DNU”), which had vested the National Court of Appeals in Federal Civil and Commercial Matters with jurisdiction to review sanctions imposed under Law No. 22,802 on Fair Trade (the “Fair Trade Act”).
The Court held that determining the jurisdiction of federal courts is a power reserved exclusively to the Congress, and that the Executive Branch had failed to justify the existence of exceptional circumstances that would permit such a modification through a DNU. As a result, judicial appeals against sanctions imposed for violations of the fair trade regime must be heard by the Federal Administrative Litigation Courts, in accordance with the framework originally set forth by Law No. 22,802.
In focus
The Case
The dispute arose from a direct appeal filed by Cencosud S.A. against a decision issued by the Undersecretariat for Consumer Protection Actions, which imposed a fine after it was found that a product had been billed at a price higher than the one displayed on the shelf.
Upon receiving the appeal, Chamber I of the National Court of Appeals in Federal Civil and Commercial Matters declared itself lacking jurisdiction to decide the case, and declared unconstitutional Article 53 of the Executive Order (DNU), which had granted it jurisdiction to hear appeals against sanctioning resolutions for violations. The Chamber ordered that the case be transferred to the Federal Administrative Litigation Courts to be heard pursuant to Article 22 of the Fair Trade Act. In turn, Chamber IV of the National Court of Appeals in Federal Administrative Litigation Matters also declined jurisdiction, relying on the wording of Article 53 of the DNU.
Faced with this conflict of jurisdiction, the Supreme Court examined the constitutional validity of Article 53 of the DNU, which had modified the judicial jurisdiction for reviewing this type of sanction from that established in the Fair Trade Act.
The Court observed that regulating the jurisdiction of federal courts is a matter that the Argentine Constitution assigns exclusively to Congress, and that the Executive Branch may legislate on such matters only in exceptional circumstances that justify the issuance of a Decree of Necessity and Urgency (DNU). In this case, the Court concluded that the DNU contained no specific justification explaining the necessity or urgency of modifying the existing judicial jurisdiction framework. Accordingly, it declared Article 53 of the DNU unconstitutional.
What Does This Supreme Court Decision Mean for Companies?
- Change of jurisdiction for the review of sanctions: Direct appeals against sanctioning resolutions issued under the fair trade framework must now be heard by the National Court of Appeals in Federal Administrative Litigation Matters, rather than by the National Court of Appeals in Federal Civil and Commercial Matters.
- Impact on ongoing proceedings: Companies currently involved in appeals or litigation relating to fair trade sanctions may face jurisdictional challenges or gradual reallocations of jurisdiction in light of this recent Supreme Court ruling.
- Greater certainty regarding the applicable procedural framework: The decision resolves the dispute among federal courts regarding which tribunal has jurisdiction to review decisions issued by the enforcement authority, thereby reducing legal uncertainty and establishing a clear precedent on the matter.
- Reaffirmation of constitutional limits on DNUs: Beyond the jurisdictional issue, the ruling reinforces the Supreme Court’s already well-established and restrictive approach regarding the limits and requirements governing the issuance of Decrees of Necessity and Urgency by the Executive Branch.
Magalí Muryan, Paralegal, has contributed to this legal update.
Download the Spanish version of Argentina: Fair Trade — Supreme Court Rules that DNU 274/2019 Jurisdictional Changes Are Unconstitutional.