Supreme Court of Justice, Appeal on points of fact, Pinturas y revestimientos aplicados S.A. v. bankruptcy proceedings, 26 March 2014

Constitution of the Nation of Argentina

Article 31

This Constitution, the laws of the Nation enacted by Congress in pursuance thereof, and treaties with foreign powers, are the supreme law of the Nation; and the authorities of each province are bound thereby, notwithstanding any provision to the contrary included in the provincial laws or constitutions, except for the province of Buenos Aires, the treaties ratified after the Pact of November 11, 1859.

Article 75, paragraph 22

(…) Treaties and concordats have a higher hierarchy than laws. The American Declaration of the Rights and Duties of Man; the Universal Declaration of Human Rights; the American Convention on Human Rights; the International Pact on Economic, Social and Cultural Rights; the International Pact on Civil and Political Rights and its empowering Protocol; the Convention on the Prevention and Punishment of Genocide; the International Convention on the Elimination of all Forms of Racial Discrimination; the Convention on the Elimination of all Forms of Discrimination against Woman; the Convention against Torture and other Cruel, Inhuman or Degrading Treatments or Punishments; the Convention on the Rights of the Child; in the full force of their provisions, they have constitutional hierarchy, do no repeal any section of the First Part of this Constitution and are to be understood as complementing the rights and guarantees recognized herein. (…)

Protection of wages , Occupational safety and health
Role of International Law:
Direct resolution of a dispute on the basis of international law
Type of instruments used:

 Ratified treaty;1 Non-ratified treaty;2 Instrument not subject to ratification3 

Occupational accident/ Occupational disease/ Employer insolvency/ Bankruptcy/ Wage claims/ Direct resolution of a dispute on the basis of international law

In this case, Argentina’s Supreme Court of Justice resolved an appeal on points of fact lodged by José Silvio Díaz, the employee and creditor appealing against the sentence handed down by the Chamber E of the National Commercial Appeals Court confirming the decision of the first instance, which had dismissed the claimant’s case. Mr Díaz had lodged a complaint in the first instance against the distribution of proceeds proposed by the Auditing Office which had allocated his claim the same range as the claims of the Federal Administration of Public Revenues (Administración Federal de Ingresos Públicos, AFIP), which were limited to 50 per cent of the amount owing. The origin of the claim of the claimant was an occupational accident suffered by the employee in 1991.

The claimant argued that the sentence under appeal breached his federal rights, since it gave priority to national standards above ILO Convention No. 173, which has supra-legal status. The claimant also argued that the decision breached the guarantee afforded to workers by article 14 of the National Constitution, as well as ILO Recommendation No. 180. The lower court had considered that ILO Convention No. 173 was not applicable to the bankruptcy proceedings in question, since the Convention had not been incorporated into national legislation.

The Supreme Court considered that the argument of the Commercial Appeals Court constituted a breach of the legal precedent it had established in the sense that international instruments ratified by law form part of the treaties conferred a status superior to national law by paragraph 22 of article 75 of the National Constitution, without the need for internal measures to be adopted. Thus, since ILO Convention No. 173 was ratified by Law 24.285,4 that Convention was applicable in its entirety without the need for any other legislative measure to be implemented, taking precedence over any legislation that opposed or was not in line with the Convention. The Court stated as follows:

“ILO Convention No. 173 ... ratified by Law 24.285 (article 1) establishes that wages owed to workers must a) be protected by privilege so that they are paid out against the insolvent employer’s assets before non-privileged creditors can claim their debts (article 5) and b) have a higher rank of privilege over the majority of other privileged creditors, in particular the State and Social Security System (article 8).”

Having first highlighted the non-binding nature of ILO Recommendations, the Court referred to ILO Recommendation No. 180, stating that:

“ILO Recommendation No. 180, which complements the provisions of the Convention, sets out that this privilege must also cover ‘compensation payable directly by the employer in respect of occupational accidents and diseases’ (point II, 3.1.f).”

Finally, the Court underlined that the Republic of Argentina had also ratified ILO Convention No. 17, which was also applicable in this case. In this respect, the Court found that:

“In this regard, the standard (ILO Convention No. 17) sets out that ‘national laws or regulations shall make such provision as, having regard to national circumstances, is deemed most suitable for ensuring in all circumstances, in the event of the insolvency of the employer or insurer, the payment of compensation to workmen who suffer personal injury due to industrial accidents, or, in case of death, to their dependants’”.

Based on the provisions of ILO Conventions Nos. 17 and 183 and ILO Recommendation No. 180, the Supreme Court ruled in favour of the extraordinary appeal on points of fact and ordered that the case be heard again in the first instance, in order for a new decision to be handed down.

The formal ratification of this Convention hasn’t been communicated to the ILO for registration. Therefore, it doesn’t result among the Conventions ratified by Argentina. See http://www.ilo.org/normlex

Full text of the decision