The Buenos Aires Civil Court of Appeal decided by majority vote last April 20th 2009 in re Zamudio vs. Ttes. 270 to apply the active rate of interest (i.e. tasa activa, which is the rate used by Argentina's Bank "Banco Nación" for lending operations) in order to calculate interest on awards. The Court of Appeal moves from passive rate (i.e. "tasa pasiva", which is the rate used by Argentina's Central Bank for deposits) which had been established in re Vazquez vs. Bilbao (1993). This decision not only implies changing to a higher rate of interest but also that such rate shall be applied as from the date when payment was due up to the date when awards are passed in individual cases, unless the application of the active rate produces such an effect that an indemnity award becomes extremely high and produces unfair enrichment of the plaintiffs.
Insurers and reinsurers should expect to see an impact on their reserves created by this decision. For more information please contact Ricardo Cantilo (rcantilo@chiltington.com.ar, +54114312 8600) from our Buenos Aires Office.
