New draft of the Class Actions Bill

By Matías Ferrari

After a year and a half of work from the drafting committee (the “Committee”), the draft of the Class Actions Bill (the “Bill”) was published in the website of the Justicia 2020 program of the Ministry of Justice and Human Rights.

Since the “Halabi” case, the Supreme Court of Justice has been urging the Congress to pass a law to regulate class actions. The Bill’s main purpose is to set clear guidelines for those proceedings and, therefore, to comply with the Supreme Court’s request.

The Bill covers general rules which are common to two types of class actions: i) those in which the goal is to protect individual, homogeneous, divisible or differentiated rights; and ii) those in which the objective is to protect collective and indivisible rights. Moreover, the rights that can be claimed by a class action are not limited, that is to say that any type of right could be claimed in this kind of processes.

Furthermore, the Bill establishes the following requirements in order for the class actions to proceed: i) the existence of a case; ii) the impossibility or serious difficulty of joint litigation; iii) that common issues predominate over individual ones.

In addition, the Bill introduces the judge’s control over the adequate representativeness of the party demanding on behalf of the group and its lawyers. Consequently, this party shall prove its suitability to represent the class in the process. Also, that control shall be held at the beginning and during the mentioned process. In light of this, it is worth stressing that, due to the characteristics of the class action, it is necessary to ensure that the party who is representing the interests of the group does it in an appropriate and efficient manner.

The Bill also stipulates that the judge shall issue a provisional certification order before the defendant responds the complaint, identifying the composition of the class, the object of the claim, the identification of the defendants of the case and ruling over the accreditation of the adequate representativeness. Furthermore, the judge shall order the registration of the class action in the National Registration of Class Actions (“Registro Nacional de Procesos Colectivos”).

Once the defendant has responded the complaint, the judge shall ratify or modify the provisional certification order. Nevertheless, the rectification or modification of the certification order after the defendant has filed its defense, may compromise its right of defense during the process, since it could mean the extension of the scope of the class and the complaint. As a consequence, the resolution by which the judge decides the definitive certification of the class is subject to appeal.

Regarding the publicity of the certification order, the Bill adopts a criterion of lowest costs and widest dissemination for an effective communication to the class members. For that reason, the Bill refers particularly to the use of technological instruments which are suitable for that purpose. The publication costs shall be borne by the plaintiff, unless there is an impediment to do so. In this case, the judge may order to use public media for publicity. Additionally, the defendant might be obliged to cooperate by identifying the class members and communicating them of the process.

Finally, regarding legal fees, the Bill refers to the regulation of Law 27,423 that establishes: i) in class actions, the legal fees shall be a 25% lower than the general fee. To be more precise, from 9% to 11,25% for most of the class actions. In the enforcement of the final judgment, the legal fee shall be 50% of the aforementioned fee; iii) in non-property collective actions, the legal fee shall be of AR$15.600, subject to the corresponding updates of the fee stablished by the Law 27.423.

To conclude, it is clear that the Bill brings more certainty to the litigants in the proceeding. However, we consider there are some aspects that are still lacking clarity and certainty (such as jurisdiction issues and the supervision of class actions in the whole country, considering our federal organizational system). Nevertheless, it is good news that Argentina has given an important step towards fulfilling the Court’s request, amending the absence of an adequate legislation regarding class actions.

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