The Labor Court of Appeals, through Minutes CNAT No. 2764, ruled that the interest rates established in Minutes CNAT No. 2601/14, 2630/16 and 2658/17 must be maintained, but interest must be capitalized annually as from the date of service of the complaint.
In practice, this will mean a significant increase in the amount of interest to be paid from the date of service of the complaint, in the event of a court decision.
In practice, this will mean a significant increase in the amount of interest to be paid from the date of service of the complaint, in the event of a court decision. The annual interest capitalization was adopted pursuant to Section 770, subsection b, of the Argentine Civil and Commercial Code. Such regulation prohibits compound interest or anatocism, but exceptionally allows it if the debt is claimed in court. In such case, the accrual of interest and its annual capitalization operates from the date on which the defendant is served notice of the complaint.
Besides, it is suggested in the aforementioned Minutes that annual interest capitalization be applicable also to those claims without a final judgment on the matter. Likewise, it is suggested that it is applied only to those claims that do not have a legal interest regime previously established by law.
The annual capitalization of claims, established by the Labor Court of Appeals, makes a general rule of a concept that the Civil and Commercial Code contemplates as an exception, while establishing its retroactive application to pending processes without a final ruling.
It is to be expected that in the medium term there will be claims seeking its declaration of unconstitutionality.
This report cannot be considered as legal or any other kind of advice by Allende & Brea.
