Argentina: Enforceability Of The Deductible Against The Injured Third Party - Status Of Case Law Of National Court Of Appeals In Civil Matters And Of The Supreme Court Of Justice Of The Nation

Last Updated: 18 November 2011
Article by Pablo Cereijido and Mariano A. Bernardi

If deductibles agreed in liability insurance contracts for public transportation vehicles may be enforced against the injured third parties is a highly debated issue in Argentine scholars' opinions and case law. This article intends to reflect the status of the case law of the National Court of Appeals in Civil Matters (the "Civil Court of Appeals") and the Argentine Supreme Court of Justice (the "CSJN" after its Spanish acronym).

The Issue

The majority position in the Civil Court of Appeals is that in public transportation liability insurance contracts, deductibles cannot be asserted against the injured third party. In contrast, the CSJN holds that it can.

Most of the Civil Court of Appeals' divisions hold that the deductible may not be enforced against the third party victim, among other things, because the amount of the deductible is found to be excessive (i.e., AR$ 40,000, equivalent to approximately USD 9,500), and also because they consider that the function of this type of liability insurance is to protect the victims of traffic accidents.

The CSJN, on the other hand, holds that the insurance contract governs the relationship between the parties to the contract, while the victim should be deemed a third party in respect of such contract who does not participate in its creation. Thus, if a victim intends to invoke the insurance contract, he should abide to its terms and conditions.

Deductible set forth by the Argentine Superintendence of Insurance - Resolution No 25,429/97

In the context of Decree 260/97 of the Executive Branch, that declared the emergency of the public transportation insurance activity, the Argentine Superintendence of Insurance ("SSN" after its Spanish acronym) issued in 1997 Resolution No 25,429. Among other things, this resolution approved a policy model for the basic liability coverage for public transportation vehicles. This policy model sets forth a mandatory deductible of AR$ 40,000 (equivalent to approximately USD 9,500) in charge of the insured.

The Plenary Judgment of the Civil Court of Appeals

In October 2006 all the divisions of the Civil Court of Appeals convened to issue a "plenary judgment" to rule on two cases where the issue of the enforceability of the deductible against the victim of a traffic accident was at stake: in re "Gauna" and in re "Obarrio". A "plenary judgment" is a judgment issued by all the divisions of an appellate court and is binding on the lower courts and on each of the divisions of the relevant appellate court. In "Gauna", the plenary judgment was called as a result of an "inapplicability appeal" granted by Division B of the Civil Court of Appeals against a ruling of Division K which held that the deductible could not be enforced against the injured third party. In "Obarrio", Division F called a plenary judgment before rendering its judgment.

On December 13, 2006, by a broad majority (29 votes to 6), the Civil Court of Appeals held in a plenary judgment that the mandatory deductible set forth by the Resolution No 25,429/97 of the SSN may not be enforced against the injured third party.

In "Obarrio", Division F issued a judgment applying the legal doctrine established in the plenary judgment, while in "Gauna", the plenary judgment itself served as the appellate judgment in the case.

Constitutional Appeals to the CSJN

Constitutional appeals to the CSJN were filed in each case. In "Obarrio", against the judgment of Division F which applied the legal doctrine set forth in the plenary judgment of the Civil Court of Appeals, while in "Gauna", the constitutional appeal was filed against the plenary judgment itself.

In both cases, appellants petitioned to the CSJN to also rule on the merits of each case (article 16 of the Law No 48, second part).

On March 4, 2008, the CSJN decided on the cases, holding the enforceability of the deductible against the insured third party, given that the insurer is only obliged in the extent set forth in the insurance contract. Now, in "Obarrio", the CSJN revoked the ruling rendered by Division F, whereas in "Gauna" the CSJN revoked the plenary judgment itself. The question remains, however, if the CSJN's ruling rendered effect only in respect to the parties to the "Gauna" case or if it revoked the legal doctrine set forth erga omnes by the plenary of the Civil Court of Appeals.

Status of the case law of the Civil Court of Appeals and the CSJN

Some scholars and case law hold that, by revoking the plenary judgment in "Gauna", the CSJN revoked the binding legal doctrine established by the Civil Court of Appeals. Others, based on the wording of article 303 of the Argentine Civil and Commercial Procedural Code (which refers to plenary judgments by appellate courts), argue that a plenary judgment may only be revoked by a new plenary judgment issued by the same appellate court which rendered it.

What criteria should the justices of the Civil Court of Appeals follow: the one established in the plenary judgment? Or the one set forth by the CSJN, which revoked the plenary judgment? Are the divisions of the Civil Court of Appeals compelled to follow the CSJN's criteria?

In practice, the great majority of the divisions of the Civil Court of Appeals continue to apply the plenary judgment, understanding that, as there is not a new plenary, they must apply the parameter set by article 303 of the Argentine Civil and Commercial Procedural Code. Nowadays only Divisions E and G apply the CSJN's criteria. The other divisions –A, B, C, D, F, H, I, J, K, L and M– continue to apply the opinion set forth in the plenary judgment (Divisions D and I, with one dissenting judge).

After the CSJN ruling, several divisions of the Civil Court of Appeals justified not following the CSJN criteria, on the basis that they may do so as long as they introduce new arguments not taken into account by the CSJN upon rendering its judgment. These divisions state that, after the ruling of the CSJN, the Consumer Protection Law was amended in such way that it would set a solution in accordance to what was resolved in the plenary judgment. The CSJN has not rendered any new decision on this matter yet.

It is to be noted that the rulings of the Court of Appeals that apply the plenary judgment, when appealed, are revoked by the CSJN.

Conclusion

A new resolution on the matter is to be expected, to avoid further complications and delays. For the time being, most of the Court of Appeals' divisions still apply the ruling of the plenary judgment of December 13, 2006, in judgments that are subsequently revoked by the CSJN.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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