Author: dev_

Through Resolution No. 4118/2019, the National Directorate of Public Procurement (DNCP), regulates the implementation of the Electronic Bidding Form for the acquisition of goods, in any process governed by Law No. 2051 “On Public Procurement”. 

The objective of the implementation of the Electronic Bidding Terms and Conditions is to speed up and improve the efficiency of the purchasing entities, as well as to improve transparency in the bidding processes.  

The implementation will affect, in the first instance, all those entities that were part of the pilot plan; with respect to the other entities, the training and implementation process will be staggered, starting in 2020. 

The IFLR100 directory, the world's leading guide specialized in banking and financial law, has ranked Vouga Abogados as a Tier 1 firm in the areas of Financial and Corporate Law. Likewise, this directory has included our Firm among the 5 firms considered as Active in the area of Project Development. 

Thus, the Corporate Law Department obtained the best rating in the three most prestigious directories worldwide: Band 1 in Chambers and Partners; Tier 1 in The Legal 500 and finally, Tier 1 in IFLR1000. In the area of Banking and Finance Law, the Firm obtained the best rating in 2 of the 3 directories mentioned above: Band 1 in Chambers and Partners; Tier 1 in IFLR1000 and Tier 2 in The Legal 500.

For more information about the news, please click on the following link. 

The prestigious publishing house Thompson Reuters (Argentina) has published a special supplement that analyzes the Decree 274/2019 of Commercial Loyalty in Argentina. The compendium makes an extensive analysis on the subject of unfair competition where aspects of both substantive law and procedural aspects are addressed, the link with other subjects and professional disciplines, as well as the impact of the matter in the economic field.

In the section dedicated to the analysis of Comparative Law, Marta makes a detailed analysis of the Paraguayan reality in this area, where she considers aspects related to (i) local regulations, (ii) the study of sources and their problems, (iii) the comparison between the law of unfair competition and the law of unfair competition vis a vis competition law (differences and points in common), (iv) standing to sue, (v) a brief review of the jurisprudential criteria and (vi) his final considerations regarding the desired evolution of the matter in Paraguay.

First, Marta mentions that in Paraguay, unlike other countries with special laws on unfair competition or where the competition authorities hear cases of unfair competition and in the absence of a unified regulatory body, it is the commercial judge who is responsible for assessing the qualification of unfair acts within a dispersed and extremely comprehensive regulatory catalog where the civil and commercial judge is the competent authority in cases of controversy.

Regarding the differences between unfair competition law and competition law, the author mentions that since competition law is a relatively new subject in Paraguay, it tends to be commonly confused with unfair competition law. Regarding the substantive aspect, Marta mentions that, historically, unfair competition deals with settling disputes between private parties within the commercial and professional sphere, while competition law deals with disciplining those competitive facts that may affect a public good, this being the main difference between one discipline and the other.

Finally, Marta considers that the main legal problem lies in the difficult task to be performed by the commercial judge (Civil and Commercial Court) when assessing issues such as: good practices, honest use in industrial or commercial matters and means contrary to the principles of professional ethics that may cause harm to the competitor, being this assessment -beyond the normative dispersion- what makes the legal system of protection against unfair acts in Paraguay vulnerable. In addition, with respect to the relationship between acts of unfair competition and anti-competitive acts, Marta recommends directing national legislation towards: (i) the international trend of understanding unfair acts as those that ultimately threaten the proper functioning of the market, either with the enactment of a special law on unfair competition or (ii) with the incorporation of unfair acts in the current antitrust legislation.

For further details on the subject, please contact Marta Martínez (mmartinez@vouga.com.py) 

On September 24, 2019, the National Congress released the Tax Reform as Law 6380/19, forwarded on such date to the President of the Republic, who, the following day, promulgated it and had it published in Official Gazette 186 of September 25, 2019, as a special and second edition of that date, the only content of which is the Tax Reform Law.

Here you will find the link to Gazette No. 186 from where you can download the text of the Tax Reform Law in PDF format. 

For further information or assistance regarding this or other tax issues, please contact Andrés Vera (avera@vouga.com.py).

On October 21, the President of the Republic, Mario Abdo Benítez, issued the Regulatory Decree establishing a new regime for the production of hemp for industrial purposes. 

The purpose of this Decree is to benefit small farmers who will have up to a maximum of two hectares of crops each. It is estimated that some 25,000 small farmers in the Departments of Paraguarí, San Pedro, Concepción, Central and Chaco will be the first to benefit from this measure.

According to experts, this cannabis variety has a yield of up to two harvests per year, which could generate a profit of up to 10,000,000 guaraníes per hectare per harvest.

The first seeds will be imported from Hungary, France and the United States and the first plantings are expected to begin in March or April 2020. 

This measure complements what has already been established by Law 6007/2017, Decree 9303/2018 and Resolution S.G. 433/2019 which legislate and regulate the production and industrialization of cannabis for research and medicinal purposes.  

We will be attentive to the publication of the Decree in the Official Gazette in order to prepare a detailed analysis on the matter. 

In its Ordinary Session yesterday, Thursday, September 12, the Senate did not gather the necessary votes (23 out of a possible 45) to ratify the version of the Tax Reform Bill it sanctioned in its Extraordinary Session of June 19, 2019 and thus reject the amendments introduced by the Chamber of Deputies in its Extraordinary Session of July 10, 2019.

Of the 24 Senators present when the bill was discussed in said session, only 18 voted to ratify the version approved by the Chamber of Senators; consequently, the version approved by the Chamber of Deputies, which should be sent to the President of the Republic in the next few days for his promulgation and publication as law.

It is uncertain how long it would take for the Senate to send the enacted law to the Executive Power, but, judging by the time it would take from one Chamber to the other, it could be estimated that no more than 2 weeks would be necessary for this to happen. Once the President receives the sanctioned law, he has 20 working days to veto it, since it has more than 20 articles.

Once the aforementioned term has elapsed without the Executive Branch having issued an opinion on the Bill enacted as law by the Congress, the same is automatically enacted, pursuant to Article 205 of the National Constitution.

The Tax Reform approved by the Chamber of Deputies has very little chance of being vetoed by the President, since it presents almost no changes with respect to the text presented by the Executive Branch on May 9, when the legislative process began.

The schedule for the entry into force (total or staggered) of the Tax Reform would be set by Decree of the Executive Power within 90 days following its enactment, as set forth in Article 154 of such regulation, and as confirmed by the experience of the entry into force of the major amendments to the tax regime in force occurred with Laws 2421/04 and 5061/13, provided by Decrees 4306/04, 1012/13 and their complements.

According to comments made by some exponents of the Undersecretariat of State for Taxation, the entry into force of almost all the Tax Reform would be planned for January 1, 2020, except for specific issues whose implementation would require more time, such as the rules on transfer pricing, which could enter into force on July 1, 2020, thus replicating what happened with the entry into force of Law 5061/13, which was enacted in October of one year while its tax amendments and the price adjustment entered into force on January 1 and July 1 of the following year, respectively.

Here you can download the text of the Tax Reform Law passed by the National Congress in DOC format.

For further information or assistance regarding this or other tax issues, please contact Andrés Vera (avera@vouga.com.py).

The Labor Court of Appeals of Asunción, Second Chamber, upheld the claim for lost profits of the heirs of a worker who died while working.

In its decision, the Court decided to grant the compensation to the heirs based on the fact that the task entrusted and performed by the worker was of a risky nature, since the employer sent two workers without taking the corresponding safety measures for the transportation of valuables, and one of them died while performing such task.

In this sense, the Court considered that the employer did not comply with its obligation to protect the physical, functional and psychological integrity of its employee, as provided by labor law. In addition, it considered that the same labor legislation enables the heirs of the deceased to file a lawsuit with the sole accreditation of the relationship to claim the legal benefits, even when the worker had died after having been dismissed without cause.

However, the majority vote limited the indemnity to the last outstanding monthly salary, the proportional Christmas bonus and a 20% indemnity, giving a total of G. 5,399,999. On the other hand, the minority vote considered that the indemnity should be G. 38,399,999, mainly due to the inclusion of an indemnity according to life expectancy.

In any case, the ruling is relevant considering the figure of compensation for loss of earnings in the labor jurisdiction and claimed by the heirs of a worker who died while working as a result of the employer's non-compliance (by not having taken the safety measures), the Court having understood that they were fully entitled to such effect.

It should be noted that Vouga Abogado has not had any participation in the aforementioned process.

For more information about safety and health in the workplace, please do not hesitate to contact Perla Alderete (palderete@vouga.com.py) or Marcela Dos Santos (madosantos@vouga.com.py).

Since August 1, the National Public Procurement Directorate (DNCP) began a restructuring process and implemented the use of digital signatures and standardization of documentation to issue resolutions in order to avoid the use of paper and increase the transparency of the process.

With these measures, the institution seeks to facilitate the drafting of documents, as well as their comprehension by DNCP users. In addition, the digital signature guarantees the integrity of the document itself through the encryption of its contents. In the case of modifications made after the digital signature, the document issues a warning.

It is also possible to verify the authenticity of digitally signed resolutions by logging on to https://bit.ly/2Yk6vow to access the guides provided by eFirma, the certifying entity. 

This first stage includes resolutions of summary proceedings, settlements, investigations, reconsiderations and protests. There are plans to extend this restructuring to regulatory resolutions and circulars, among others.

In a previous article we have made an introduction to Compliance. There we mentioned, among the indispensable elements that must be included in an Integrity Program, the “guidelines on how to deal with a conflict of interest”.

In this opportunity, we will go deeper into this topic, which we understand has an enormous relevance in business management, if the objective is to strengthen the culture of compliance within the organization.

When is there a conflict of interest?

Considering the scope of responsibility and tasks performed by certain officers within an organization, it is common for them to face situations in which a conflict of interest may arise on a day-to-day basis.

This is the one that originates in the tension between the “personal interests” of the officer - which can be either an employee, or a supplier or strategic partner representing the company in a given business situation - and the “business interests” of the employer and/or the entity represented.

Now, let us define what is meant by “conflict of interest”. This would occur when a person loses objectivity in making a business decision, affecting or potentially affecting the interests of the company he/she is representing. The last part of the definition is important, since the conflict of interest exists anyway, regardless of whether or not the interests of the company are affected. In other words, it is not necessary the existence of a detriment to the organization for the assumption defined here to be configured.

This is so, since we must remember that the basis of this issue lies in the culture of compliance that exists within the company. It is a question of transparency in making business decisions, which should not be tainted by personal interests, or that may give rise to any questioning - by the company or by third parties - even when there is no concrete damage. Let us remember that one of the bastions that the Integrity Program seeks to protect is the “reputation of the company”. This could be affected if a case of conflict of interest becomes public. That is why companies work hard to raise awareness among their employees to prevent this from happening - without any validation or verification by the company.

What tools can be implemented for early detection?

Since it is an impossible task to list all the potential “conflict of interest” situations that company representatives may face, the most commonly used mechanism for the early detection of these situations is usually “prior consultation”. This consists of generating the custom of officials to raise for consideration by the company how to resolve a potential conflict of interest. However, this mechanism depends on the willingness of the person doing the consultation in order to be initiated. Without this impulse, which may not be generated due to lack of knowledge of the tool, lack of training, or a conscious desire to avoid the response, this mechanism loses its effectiveness.

That is why, additionally, and linking this topic to another tool that is usually included in Integrity Programs - such as integrity checks (also called - depending on whether employees or third parties are involved, as “...”) - the integrity check is an important tool in the Integrity Program.Know your Employee” or  “Third Party Due Dilligence” ) - it is common that at certain times (either at the beginning of the relationship that binds them or on an annual basis, for example) there are instances of preventive verification of potential conflicts of interest. These are proactively promoted by the organization, and must be answered by the employees consulted, and will eventually serve as a concrete background to be able to either analyze the consequences in the event that a conflict has indeed arisen, or to be able to account for the fact that the company has adequate prevention mechanisms, which were violated in a particular case.

In this regard, it is common that at the beginning of the employment relationship the employer formally asks - through a form created for such purpose - if the new employee has any relationship with public officials - in areas with which the company interacts -, or any type of relationship with clients or suppliers, shareholdings in companies that may be competitors of the employer, etc. It is important to mention that, in the hypothesis where a conflict of interest may exist, this does not imply - if the procedures established by the business organization are followed - a breach. That is why it is essential to train, raise awareness and implement preventive actions, precisely so that all those measures tending to “disarticulate” the conflict of interest can be taken.

Let's take an example: an officer of the organization must hire a supplier. According to the company's procedure for moving forward with his choice, this officer has the final say in the decision. However, in one of the three companies that have offered their quotations, a brother of this officer works. The latter, fully aware of the policies in force, but also aware that the company where his brother works is a strong candidate to be awarded the contract, has brought this information to the attention of the organization, as it could represent a conflict of interest. Consequently, the company decides to take as valid the quotation of the supplier in question, but - in order to avoid that the decision falls on a family member and that objectivity is altered - delegates to another officer the final decision of who to hire. In this way, applying the current procedure of prior consultation, and generating a mechanism ad hoc which modifies - in the specific case - the company's authorization matrix, any conflict of interest in the decision-making process is avoided, regardless of the outcome of the award. If, on the other hand, the official in question had not made the prior consultation, nor obtained the company's validation, and the supplier chosen had been where his brother works - even if this was the best supplier for the service required by the company - the decision-making process could be qualified as a breach of the “conflict of interest” policy.

What procedure should be followed when a conflict of interest is detected?

In this case, an internal investigation should be initiated in order to gather all related information that will allow a decision to be made. The assumption is that, upon detecting a case of conflict of interest, the officer involved failed to comply with the prior consultation mechanism - obviously to the extent it exists -. In other words, it is based on a serious misconduct on the part of the official, which could merit the application of a sanction. In order to determine the level of the sanction, it is necessary to consider whether or not there was any damage to the company, be it economic or damage to corporate reputation.

As in all cases where prevention tools related to Integrity Programs are analyzed, their success will depend on the degree of maturity of the company's compliance culture, the frequency and strength of training, communication and awareness-raising activities, and the creation of working and discussion spaces with the employees to whom the policies are applied, in order to achieve the best effectiveness.

For further information or assistance on compliance-related issues, please contact Rodolfo G. Vouga (rgvouga@vouga.com.py), Marta Martínez (mmartinez@vouga.com.py) or Rodrigo Fernández (rfernandez@vouga.com.py).

Last August 7, the National Chamber of Commerce and Services of Paraguay (CNCSP) and Vouga Abogados held a talk about Law No. 6339/2019 which regulates part-time employment. This law was enacted last July with the aim of formalizing both workers and employers.

In this sense, the talk focused on providing detailed information to partners, professionals, students and the general public on the details of this law, i.e., what it is about, the benefits it provides, who it affects, how the remuneration is calculated, etc. The meeting was conducted by attorneys Walter David Vera, Silvia Benítez and Eusebio Olindo López, all of them belonging to the law firm Vouga Abogados.

The talk was not only very informative, but also helped to clear up specific doubts from the audience. In addition, an important debate was generated among those present, which greatly enriched the event.

If you would like to know more about our labor practice, please do not hesitate to contact Perla Alderete (palderete@vouga.com.py) and Walter David Vera (wvera@vouga.com.py).