Monthly Archives: June 2015

Regulation of Property Rights under the New Argentinean Civil and Commercial Code

On August 1, 2015, the new Civil and Commercial Code (hereinafter the “new Code”) will enter into force in Argentina. Chapter 4 of this new Code governs property law, maintaining most of the provisions set forth in the previous Civil Code, and also introducing new provisions.
• General theory of property rights.

The new Code establishes a general theory of property rights, introducing common aspects such as its definition, features, subject matter, classification, etc. Previously, the said aspects were dispersed in different parts of the Civil Code, generating unnecessary repetitions and confusion over the said provisions. This is the reason why under this new Code, these aspects will be compacted, and thus, clarifying the said provisions.

Section 1882 of the new Code defines property right as a legal power exercised over property with the exclusive intervention of its owner. This definition proves to be useful in differentiating property rights from personal rights. Personal rights involve the creditor´s capacity to demand performance of an obligation owed by the debtor.

The subject matter of property rights may consist in property either as a whole or as an undivided part. In this sense, property is no longer expressly required to be in the market. Moreover, the new Code, under Section 1883, establishes that the subject matter may also involve property specifically set forth in the law, such as rights over rights such as usufruct, pledge, etc.

With regard to the classification of property rights (Section 1888 to 1891), the new Code provides the following criteria: (i) property rights over property personally owned (e.g. ownership, condominium, etc) and over property owned by another person (e.g. mortgage, usufruct, etc); (ii) property rights over principal obligations (e.g. co-ownership, surface rights) and over accessory obligations (mortgage, pledge, antichresis); (iii)property rights over recorded property (e.g. ownership in real property) and non recorded (e.g. ownership in non recorded property); (iv) property rights exercised over the possession of property and not exercised over the possession (easement and mortgage).

With regard to the creation of property rights, this new Code maintains the provisions set forth in the previous Civil Code, under which it is established that property rights may only be created in accordance with the provisions specifically described in legislation (“numerus clausus”). However, the new Code has eliminated the possibility for a property right not defined in the Code to be considered a personal right, either by means of a contract or will. Therefore, there being no provisions regarding this aspect, the judges may decide whether there is a personal right or not.

The new Code maintains in effect the provisions regarding the following aspects: the preference right (“ius preferendi”)and the right to follow the property into whosoever hands it may be(“ius persequendi”)(Section 1886); the theory of the title and the modes of acquiring property rights (Section 1892); declarative publicity of registration with regard to real property (Section 1892 and 1893); the terms of adverse possession; registration as the basis for acquiring recorded personal property in good faith.

• Codification of property rights.

It should be noted that the new Code introduces new types of property rights, including:

– Real property condos (conjuntos inmobiliarios): Pursuant to Section 2073, real property condos mean country clubs, gated-communities, industrial, corporate or nautical parks. The said enumeration is merely illustrative, since the new Code establishes the possibility of including within this category of property rights “any other urban business venture regardless of whether it was created for a permanent or temporary residential, labor, commercial or business purpose, also including businesses with multiple purposes, in accordance with the provisions set forth in the local administrative regulations”.

The real property condos must comply with the following requirements: (i) closure; (ii) common and exclusive interdependent units, which form an independent unity; (iii) the undivided and perpetual condition of the common units; (iv) bylaws.

The new Code provides the legal framework applicable to real property condos, supplementing the Common Interest Community. All personal and property rights over preexisting real property condos must operate in accordance with the regulation of the real property condominium.

– Private cemeteries: Although private cemeteries have existed for many decades, they were not legally regulated. As a consequence, with the new Code, private cemeteries are codified, providing legal certainty.

It should be noted that the new Code imposes on the owner of a private cemetery the obligation of notarizing the instrument by which the property is submitted to that particular purpose. The instrument is notarized in the Real Property Registry together with the filing of the bylaws of the cemetery. After the filing, the local authority grants the applicable authorization and the private cemetery is entitled to operate as such. From then onwards, the cemetery owner cannot change the cemetery´s purpose nor be submitted to any warranty. (Section 2104).

Surface rights: Surface right involves a temporary property right over real property not personally owned, which allows its holder to use, enjoy and dispose the property subject to the right to plant, afforest or build ( or right over what is planted, afforested or built) in relation to the said realty. (Section 2114).

Previously, the Civil Code prohibited the surface right. Instead, under the principle of accession, the owner of the land owns land, plantation and buildings. However, Law No. 25509 introduced the right of forest surface, permitting land to be owned by one person and the plantation and its proceeds owned by someone else.

The new Code has abrogated the said law and introduced both the right of forest surface, with a maximum legal term of 50 years, and building surface, with a maximum legal term of 70 years.

The right of surface can only be acquired in an inter vivos act through a contract or gift, or upon death. The surface right cannot be acquired through adverse possession unless there is a fair title and good faith.

With regard to the parties subject to this right, there are differences between the landowner and the surface right holder. On the one hand, the surface right holder is entitled to afforest, plant, build, and be the owner of the proceeds. On the other hand, the landowner has the right of ownership provided that he does not intervene on the right of the surface right holder. It should be highlighted the debate surrounding the warranties on the surface property.

The surface right terminates upon completion of the established term (or by operation of law), or by express resignation, occurrence of a condition, consolidation, or upon 5 years from the last use in cases of afforestation and after 10 years in cases of construction. The landowner owns what is planted, afforested or built by the surface right holder and, thus, the landowner must compensate the surface right holder unless otherwise provided by agreement.

Moreover, the new Code codifies certain property rights that, although they were legally regulated, they were included in special laws.

– Condominium right: Law No. 13,512 governed the said right, however, on August 1st; this law will be abrogated by the new Code, updating the provisions regarding condominium. The new Code defines condominium right as an autonomous property right. In addition, the new Code establishes that the homeowners’ association is a legal person (Subsection H, Section 148), and thus, having greater liability. However, the new Code does not set forth any provision regarding the subsidiary responsibility of the manager of the homeowners’ association arising from debts of the association.

It should be noted that the new Code clearly defines the concept of the unit of a condominium (Section 2038), common elements (Section 2040), necessary common elements and unnecessary common elements (Section 2041 and 2042), exclusive elements (Section 2043). Moreover, the new Code introduces the homeowners´ board, which was not regulated under Law No. 13,512. Under the new Code, the said board is entitled to be in charge of the condominium administration upon vacancy or absence of the manager, in which case, the board must call for a meeting within 30 days.

Regarding common and special expenses, the new Code establishes that the debt certificates issued by the manager are enforceable. In addition, the manager of the homeowners´ association may choose to collect payment of the expenses either from the owner of the unit or the tenant.

– Timeshare right: Law No. 26,356 regulated this right. Nowadays, this Law has been abrogated by the new Code, which introduces the timeshare right in a clearer form.

Timeshare is a form of ownership in personal or real property whereby many customers own allotments of usage in the same property for a specified period of each year. Timeshare is used for the purpose of accommodation, commerce, tourism, industry, among others. It should be noted that the new Code sets forth the duties of each of the parties, and also establishes that relationships arising from the timeshare are subject to the provisions regarding consumption.

Finally, the new Code amends certain aspects regarding property rights already set forth in the previous Civil Code.

– Usufruct: The new Code excludes the concept of imperfect usufruct and broadens the term of perfect usufructs (maximum of 50 years).

– Right of cohabitation: the New Code establishes the possibility of creating this right in favor of the surviving partner. Unlike surviving spouses, the partner has more limitations. Section 527 of the new Code provides that: (i) the surviving partner must not own real property; (ii) maximum term of the cohabitation right of 2 years; (iii)the cohabitation right terminates when the partner enters into a new civil partnership or marries.

• Guarantee property rights.

The new Code introduces provisions common to mortgages, pledge and antichresis (Section 2184 to 2204), improving the interpretation of such concepts and avoiding repetitions. It should be noted that the new Code maintains the impossibility of creating judicial guarantee property rights, either implicit or legal, and testamentary. In addition, the code introduces the possibility of including within the amount of the encumbrance, both capital, interests and costs (Section 2193).

With regard to the right of antichresis, it can be created over recorded personal property for a maximum term of 5 years. The maximum term over real property, on the other hand, cannot exceed 10 years.

Section 2232 introduces the pledge of credits. Moreover, Section 3223 and 3224 of the new Code, introduce the validity of the clause that authorizes the creditor to take possession of the property subject to the pledge, after the term for payment finishes. However, if such possession is taken at the time the contract is made, then, it will be invalid. Finally, pursuant to Section 2229, the amount of the pledge must be ascertained by an expert, either designated by the parties by mutual consent or following a pre-established procedure of appointment, or otherwise by court decision upon request of the creditor.

• Possessory and Property actions.

The new Code introduces the action for recovery of ownership (acción reivindicatoria) (Section 2252), quiet title action (Section 2262), action for the recognition and enforcement of an easement (Section 2264) and the action to define boundaries (Section 2266). More particularly, it should be noted that a person who attempts to bring a property action can use possessory actions against any fact or future lawsuits. Finally, current legislation entitles both possessor and holder to bring possessory and property actions.

Bundesgerichtshof Overrules Cancellation of a Colour Trademark

Be they red, yellow or blue, courts are ever more frequently having to rule on whether a colour is capable of benefiting from trademark protection. The BGH overruled the cancellation of a colour trademark with its decision dated July 9 (I ZB 65/13).
The dispute before the Bundesgerichtshof (Federal Court of Justice) concerned the cancellation of a colour trademark used by a cosmetics group for its products. The cosmetics group had had the shade of blue in question registered as a trademark since 2007. The Bundespatentgericht (German Federal Patent Court) had ordered that the colour trademark be cancelled. A competitor had requested that rival firms be allowed to make use of this particular shade of colour.

The First Civil Senate of the Bundesgerichtshof, competent to hear cases pertaining, among other things, to trademark law, later set aside the Bundespatentgericht’s ruling. The Bundespatentgericht must now re-examine the case and determine to what extent consumers associate this shade of colour with a specific manufacturer. The competitor had argued that the colour had only been used “decoratively” as packaging background for the lettering, which was said to be already protected as a word trademark and was not challenged during the course of litigation.

The Bundesgerichtshof stated that abstract colour trademarks are generally not distinctive and therefore also incapable of being registered. It said that colours are in fact typically perceived as decorative elements and not as distinguishing features of products. However, in the instant case, the Court also stated that it is possible that the colour trademark in question might have established itself and thus cannot be cancelled. It held that for a trademark to have established itself as distinctive through use it was sufficient, even in cases involving abstract colour trademarks, for more than 50 per cent of the public to identify the colour as a distinguishing product feature.

The Bundespatentgericht, on the other hand, was considerably stricter regarding the acquisition of distinctiveness through use for a contourless colour trademark. It stated that 75 per cent of consumers had to identify the colour as a distinguishing product feature. The Bundesgerichtshof objected to this standard on the basis that it was too strict.

Trademarks, including colour trademarks, are an important factor for businesses. The level of recognition can be attributed to trademarks. In order to prevent rival companies from sharing in the success of a trademark, it needs to be protected. Claims for damages can be asserted in the event that trademark rights are violated. Companies can turn to lawyers who are competent in the fields of trademark law and competition law to enforce and fend off claims as well as register a trademark.

New Law on Professional Fees in the City of Buenos Aires

On November 27, 2014 Law No. 5,134, which regulates lawyers’ and solicitors’ fees who work in the City of Buenos Aires (hereafter the “Law”), was published in the Official Gazette.
The Law, which was promoted by Jorge Rizzo and Daniel Lipovetsky from the City of Buenos Aires’s Bar Association (“CBABA”), was approved in a special session obtaining thirty-two (32) votes in favour from legislators of the following political parties: PRO, Socialism, ‘Coalición Cívica’ y.’Confianza Pública’. However, legislators from other political sectors as, for example, the governing party issued fourteen (14) votes against the project. There were, at the same time, eight (8) abstentions.

The new legislation has got sixty-three (63) Sections and replaces the application of Law No. 21,839 governing the matter at national jurisdiction. The main features of the recent legislation are the following:

• Concerning the application scope, the Law rules attorneys’ and solicitors’ fees which come from their professional activity developed in the jurisdiction of the City of Buenos Aires. However, professionals that are hired permanently or have a dependency relationship with their clients are excluded from this regulation except in the case of matters unrelated to their contract or relationship as well as when there is a cost’s conviction against the other party or parties unless contrary agreement.

• The Law establishes that the professional activity of lawyers and solicitors is presumed onerous. Moreover, this legislation determines professional fees have alimentary nature. Therefore, they are personal, enjoy special privilege and can only be attached to a twenty percent (20%). If the amounts do not exceed the Minimum Wage they are immune from seizure.

• In order to update professional fees in accordance to inflation rates, the Tariff Unit of Measure (“TUM”) is established. The TUM is the unit used to determine, in certain circumstances, the minimum fee for attorneys’ and solicitors’ professional work. The TUM represents the one point five percent (1.5%) of the total remuneration paid by the First Instance Judge in the City of Buenos Aires. That amount is defined as the sum of all items, including the bonus for five (5) years of practise in the exercise of the profession. The Judicial Council of the City of Buenos Aires must report the value of the TUM monthly.

For example, in relation to non-pecuniary judicial matters TUM is determined as follows:
– Contradictory divorce, adoption and criminal matters: 30 TUM;
– Misconduct issues: 15 TUM;
– Misdemeanours issues: 20 TUM;
– Administrative and / or tax matters that can not be valued in money: 40 TUM.

With regard to extrajudicial matters, we may find these TUM valuations:
– Verbal Inquiries: 0.5 TUM;
– Drafting registered letters: 1 TUM;
– Procedures before the General Inspection of Justice or similar institutions in Buenos Aires
City’s jurisdiction: 5 TUM;
– Customer assistance and advice in performing legal acts: 3 TUM.
– Drafting of contracts: from 2 to 8 TUM
– Drafting of criminal charges without lawyer’s signature: 3 TUM.

It is important to note that although much of professional work is quoted by the TUM the Law stipulates general guidelines for determining fees. For example, for performances developed at the First Instance’s stage to sentencing professional fees are fixed between eleven and twenty-five percent (11% and 25%) of the total trial amount. In turn, in the case there is a joint litigation honoraries shall be regulated in proportion of each co-party interest (however, fee regulations may not go beyond a fifty percent (50%) resulting from the corresponding tariff scale).

• The Law determines that any person, whether natural or legal, must be prevented from using the title “law firm”, “legal clinic”, “legal advice office” or similar. Beyond the criminal penalty, the CBABA may require the office’s closure and may impose a fine based on 30 TUM to Law violators.

Law No. 5.134 was enacted on November 6, 2014 and entered into force on November 27, 2014 by its publication on the Official Gazette.

How to Perform a Contract in China by Contracts Law when Terms and Conditions Are not Clear

When reaching a contract, parties are supposed to making all related terms clear. However in practice, the terms of a contract are not always ready there because of lack of negotiation, short of time, or negligence, etc. This brings out trouble and confusion when performing. Luckily the law provides repair methods.

 

By China Contracts Law, Article 12, the terms and conditions of a contract shall be stipulated by related parties. The terms shall cover the name of parties and their residence, subject matter, amount, quality standard, price/remuneration, performance period, place and method, liquidated damages, and solution to dispute, etc.

Where contracting parties don’t stipulate the terms and conditions clear, Article 61 China Contracts Law applies, saying after a contract takes effect, where terms such as quality, price or remuneration, performance place, etc are not stipulated or not clear, contracting parties may make supplemental agreement; where no supplemental agreement is reached, the terms shall be determined by context of the contract, or trade customs.

Where the terms still can not be determined by application of Article 61, Article 62 China Contract Law may apply as follows:

1.Where the term of quality is not clear, the national and trade standard may apply; where there is no national or trade standard, the ordinary or meet contract purpose standard may apply;

2.Where the term of price or remuneration is not clear, the market price at the performance place when entering into the contract may apply; where the goods is subject to government fixed price or guide price, so government fixed or guide price may apply;

3.Where the term of performance place is not clear, for rendering money the place where the receiver is located is performance place; for delivering real estate the place where the real estate is located is performance place; for other subject matter, the place where performer is located is performance place;

4.Where the term of performance period is not clear, the debtor may perform at any time, and the creditor may require performance at any time with proper notice;

5.Where the term of performance expenses is not clear, the performer shall undertake them.