Argentina: New interest rates applicable in labor claims

The Court of Labor Appeals, through CNAT Act No. 2764, ruled to maintain the interest rates established in CNAT Acts No. 2601/14, 2630/16 and 2658/17, but ordered the annual capitalization of interest from the date of service of notice of the complaint.

In practice, this will mean a significant increase in the amount to be paid as interest as from the date of service of notice of the complaint in the event of an adverse court decision.

The annual capitalization was adopted pursuant to section 770(b) of the Argentine Civil and Commercial Code, which prohibits compound interest or anatocism, but exceptionally allows it if the debt is claimed in court. In such case, interest begins to accrue on the date on which the defendant receives notice of the claim.

Besides, the above-mentioned Act suggests that annual capitalization should also be applicable to cases without a final judgment. It also suggests that it be applied only to claims that do not have a legal interest regime established by law.

The annual capitalization of interest as from the date of service of notice of the complaint turns into a general rule an institute that the Civil and Commercial Code contemplates as an exception, while providing for its retroactive application to proceedings pending a final judgment.

It is to be expected that in the medium term there will be claims seeking a declaration of unconstitutionality.

This report cannot be considered as legal advice or any other type of advice by Allende & Brea.