Argentina looks to advantages of reform

ARGENTINA is undergoing a period of transition. After a decade of Peronism under the presidency of Dr Carlos S Menem, the Alianza opposition party won the recent elections with 54 per cent of the votes. Alianza leader Dr Fernando De la Rua previously headed the Radical party (historically the opposition to Peronism) which merged with Frepaso (the new Socialistic Party) to create a united platform against Menem.

In an act noted for its symbolism, Dr Fernando De la Rua received the "staff of command" from Dr Menem's hands on December 10, 1999 at the Casa Rosada. Menem was reluctant to leave the Casa Rosada, and has already announced that he will be ready to stand again at the next presidential elections in 2003.

Looking back over the last ten years, many important and positive changes have taken place in Argentina. But there are crucial matters that have been left in the hands of the new president for improvement.

As far as the maritime industries are concerned, the main areas to focus on are:

  • Port privatization
  • Mediation
  • Multimodal law

Port privatization

Before 1991, the Argentine government had a significant involvement in a wide range of industries. This involvement produced a direct deficit on national finances, and Menem decided to put an end to this by initiating a process of privatisation. The industries affected included public services, communications, electricity, water, energy, and - more recently - the National Petroleum Company (YPF).

Privatisation of the ports - which includes pilot services and channeling and buoying of the rivers - has had a marked effect on the maritime sector. The port of Buenos Aires has been divided into five port terminals, each one managed by international interests and joint ventures with Argentine companies. This has resulted in competitively operated ports. Shipping companies using the ports now have a greater range of choice , depending on the services they require, at cost-effective prices.

The Parana river is the most important route for Argentina's international commerce. Grain, minerals and all goods produced from inland provinces move to the port terminals along the river. Not surprisingly, the river has historically been a source of maritime accidents . The Parana requires permanent and regular maintenance, something that traditionally has been done less than efficiently.

Looking back over the last ten years, many important and positive changes have taken place in Argentina. But there are crucial matters that have been left in the hands of the new president for improvement.

Dredging and bouying are now in the hands of two private enterprise concessions - Hidrovía (on the Parana) and Riovia (on the Uruguay river). Capesize vessels can now transit the Parana and reach important ports enroute with almost no risk at all.

It is obligatory to use pilot services on the Parana, and these can now hired directly from the different private agencies, always under port authority supervision.

Mediation

Mediation law has been introduced into some aspects of Argentina's old procedural code which were applicable in the federal courts, which is where judges pronounce their findings in maritime cases. In this way, Argentina is following the international tendency towards alternative methods of dispute resolution.

Mediation proceedings are compulsory before going to the court in Buenos Aires, although not yet in the rest of the provinces. The parties involved try to resolve conflicts themselves, helped and directed by a mediator, who offers impartial and neutral advice and who is qualified to lead the proceedings.

There are two alternatives in the mediation process. The first is that the courts assign a mediator from the official registry. The second - and most preferred - alternative is to choose an independent mediator to lead the proceedings.

There are some risks attached to requesting a mediator from the official registry. You don't know when the case will be heard or whether the person appointed will have the relevant experience and skills.

When opting for an independent mediator, it is compulsory to provide a shortlist of eight other mediators, from which one must be eventually chosen. The opposition can agree to the mediator proposed ,or else has the chance to appoint another mediator from the list. The deadline for appointment is three days after the notification being placed. If the original choice is not questioned, the mediator proposed in the first instance will handle the mediation process.

Mediators are lawyers. They must been seen to be neutral in terms of the dispute, and impartial so far as the parties are concerned. The proceedings are confidential by law. The main benefit is that the agreement the parties reach, if duly signed by the mediator, has the impact and effect of a judicial decision. If a breach of agreement takes place, it is executable as a final decision in court, avoiding lengthy court proceedings.

In the Buenos Aires maritime community, some lawyers are still reluctant to attend mediation proceedings. Traditionally, mediation has been used by parties prior to the initiation of court proceedings, and some lawyers still do not consider mediation a useful tool.

Statistics, meanwhile, show that cases settled through arbitration in Argentina have risen from thirty to forty per cent in recent years.

Multimodal law

In January 1998, Argentina enacted Multimodal Law No 24.921. This important instrument has been the subject of much public criticism, not least because fundamental issues are still unclear and have been open to ambiguous interpretations from the start.

The matters under discussion are of special relevance for shipping in that they determine:

  1. the responsibility of the multimodal operator
  2. the burden of proof on some issues
  3. the manner in which demurrage has to be agreed with the multimodal operator
  4. the "applicable law", when damages are established
  5. exoneration from liability, when different from that set out under the multimodal law

Treatment of limitation of liability is also not clear at this stage. It is apparent, then, that there are a number of issues arising from the multimodal law which are still to be solved by or which need clarifying by regulatory decree.

The multimodal law also has important implications for the Latin American common market, Mercosur. A special commission is working on this as it is a crucial issue in maintaining the commercial relationship among the countries involved - Brazil, Argentina, Paraguay, Uruguay, Bolivia and Chile.

Overall, it is hoped that recent political developments will help Argentina regain the status in the international maritime community that it once enjoyed.