The Argentine Congress set forth a new regime for the fines to be imposed and procedures to be followed upon foreign vessels engaging in cabotage trading in breach of the Cabotage Act and its implementing regulations.

The Cabotage Act (Decree-law No. 19,492/1944, ratified by Law No.12,980), provides under article 1 that the navigation, communication and national cabotage trade must be made only by Argentine vessels. Under this regime, "national cabotage" means trade that is made exclusively between Argentine ports (article 55, subsection 10, of the Cabotage Act).

To engage in national cabotage, a foreign-flagged vessel must obtain either:

  1. a waiver or temporary permission provided under article 6 of the Cabotage Act when, due to exceptional circumstances amounting to a force majeure event, it were not possible to supply a coastal area with essential goods or to perform a contract because no Argentine vessels are fit to render the service; or
  2. an authorization provided under the Argentine Merchant Navy Regime established by Decree No. 1010/2004 for foreign vessels bareboat chartered by Argentine shipowners under the conditions, terms and specifications of such regime (for more information on the current Merchant Navy Regime, see "New regime for the Argentine merchant navy - Decree No 1010/2004", Marval News # 31; "Regulatory rules to Decree No 1010/2004 regarding the Argentine merchant navy", Marval News # 38; and "Extension of the New Regime for the Argentine Merchant Navy", Marval News # 54.)

Originally, under article 48 of the Cabotage Act, foreign vessels in breach were subject to a fine of 1,000 pesos moneda nacional per each 100 net tons. As a result of changes in the legal currency and inflation, the amount of the fines has become insignificant.

By means of Law No. 26,778, enacted on October 31, 2012 and published in the Official Gazette on November 27, 2012 the Argentine Congress amended article 48 of the Cabotage Act.

New article 48 also sets forth a fine for vessels engaging in navigation, communication or national cabotage trading, in violation of the Cabotage Act and its implementing regulations. However, instead of determining the fine based on the tonnage of the infringing vessel, the fine will now be determined based on the amount of the freight or service involved.

Under amended article 48, the applicable fine is the equivalent to three times the value of the freight or service involved, the value of which will be determined by the enforcing authority.

The Argentine Coastguard, designated as the surveillance authority, is granted broader enforcement powers. In effect, once an infringement is prima facie established the Coastguard has the authority to detain the vessel. An infringement will be deemed verified if a vessel fails to have the corresponding certificate authorizing the activity in question on board.

New article 48 also provides that the detention shall be notified to the corresponding consul and that it shall be maintained until the amount of the fine is paid or security is provided to the satisfaction of the enforcing authority.

Moreover, a specific regime is set forth for the administrative challenge of a fine imposed as well as for the appeal before the Federal Court of Appeals in Administrative Matters sitting in the City of Buenos Aires.

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.