Argentina
Despite the economic downturn we have noticed continued growth across the energy and mining sectors alongside increased activity amongst the corporate and investor-led communities. Employment related disputes, bankruptcy and dispute resolution remain active areas for both local and international clients driven by the economic headwinds and GDP contraction over the last 12 months.
With the growth of technological advances, and the standardization and computerization of proceedings in Argentina, we are seeing an increase in many in-house counsel teams internally managing non-complex and administrative proceedings and then choosing to retain outside counsel for strategic and complex litigation such as antitrust and climate litigation which continues to be an area of development and growth.
1. Is third party funding permissible for disputes?
Yes, third-party funding is permissible for disputes in Argentina. However, the litigation funding market is relatively new and is subject to ongoing development.
The main providers of third party funding in the Argentinian sector are medium to large law firms. In the last few years smaller start-ups have emerged and this has enhanced the market offering.
Whilst there is currently no specific regulation of regarding third-party funding in Argentina by way of court case precedent, the General Arbitration Tribunal of the Buenos Aires Stock Exchange has included a special provision regarding litigation funding in its new Regulations which came into force on 1 March 2024. These Regulations impose on the parties a duty to reveal to the arbitration tribunal the participation of third parties financing the costs of the arbitration such that the tribunal can assure the independence of the arbitrators. The Arbitration Tribunal of the Buenos Aires Stock Exchange is widely used in commercial cases.
2. Are lawyers able to work on a contingent basis in the jurisdiction and are there any restrictions?
Yes. In Argentina lawyers can either collect the fees allocated to them by the corresponding court pursuant to the local tariff law or execute a legal fee agreement with their clients.
The legal fee agreement can stipulate that the lawyers work on a contingency basis (“Pacto de Cuota Litis”). In such cases, the lawyer will be entitled to collect: (i) from its client, the agreed success fee; and (ii) from the counterparty, the legal fees fixed by the court and imposed on the counterparty.
However, there are limits to the percentage of success fee that can be agreed depending on the jurisdiction and type of proceedings involved. For example, in national and federal proceedings, the success fee cannot be higher than 30% of the result, except when the lawyer has agreed to bear all the costs of the defense and has agreed to assume the obligation of its client to pay the cost of the litigation – in which case it could be increased to 40% (Law 27,423).
In proceedings before the Courts of the Province of Buenos Aires, the success cannot be higher than 1/3 of the result, except when the lawyer has agreed to bear all the costs of the defense and assume the obligation of its client to pay the costs of the litigation – in which case it could be increased to 50% (Provincial Law 14,967). In labor proceedings the agreed success fee cannot be higher than 20% (Law 20,744).
3. Can the court or tribunal order one party to pay the other’s legal costs?
In Argentina, the rules regarding legal costs and who pays them are as follows:
- Cost allocation: Generally, the unsuccessful party in a legal proceeding is required to bear the costs of the litigation. This includes court tax (generally 3%), attorneys’ fees, and other related expenses such as experts’ fees.
However, the court can exempt in whole or in part the unsuccessful party’s obligation to bear the costs of the litigation when the court understands that the unsuccessful party’s allegation had enough merits (i.e. when the unsuccessful party had solid grounds to believe that its claim could had been successful).
If the result of the lawsuit is partially favourable to both parties, the costs of the litigation will be distributed by the court among the parties in proportion to the success obtained by each of them.
- Early resolution incentive: The court will not award costs to a successful party if the unsuccessful party has timely acknowledged the adversary’s right in the claim or if the amount of the ruling granted to the successful party was acknowledged by the counterparty during settlement discussions. This rule encourages early dispute resolution.
- Other cases: If the case finalizes with a settlement agreement, the parties will agree on who and on what proportion the legal fees will be borne. If the case is withdrawn by the plaintiff or if the plaintiff loses the claim because of the statute of limitations or because the elapse of the proceedings because of a fault of the plaintiff, the court fees will be borne by the plaintiff.
- Benefit of litigation without expenses: In defence of the guarantee of access to justice, in Argentina there is a mechanism that allows that any person who can prove that it does not have sufficient funds to pay the court fees to request an exemption. The exemption will remain in place until the proceeding has finalized, and the court fees shall be paid in such instance as determined by the court.
4. Is insurance available to protect against adverse outcomes for funded litigation?
Yes, insurance is available in Argentina to protect against an adverse litigation outcome.
The most common use of insurance is in the context of injunctions, where the requesting party has the legal burden of guaranteeing the damages that could be caused to the counterparty if the court ultimately decides that the injunction was unwarranted.
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