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LAW CREATING TOBACCO OPENING OF TELECOMMUNICATIONS IN COSTA RICA ABSTRACTION OF DOCUMENTARY CREDIT: THE SPANISH CASE
Ruling DGT-06-2010 of the Tax Authority issued last February 15 th and published in The Gazette on March 9TH suspends the effects of the previous rulings that created informative declaration obligations for tax period 2010. The suspension is due to the delays on the development of the systems that support the information declared by tax payers.
On March 1, the new Service of Process Law took effect, this law introduces important innovations to adapt process service to modern electronic communication forms and facilitate it, since until present it has often constituted an obstacle to the principle of prompt and fulfilled justice Here we emphasize the elements that are most relevant to the new law for the information of our clients:
Article 3 of the new law establishes this possibility, and can be modified or revoked at any time by the interested party. It must be understood, of course, that such notification would be valid, if it is practiced before such a revocation.
With no further proceedings the judge will deliver the official court notice form and the copies when the interested party, in writing or verbally, indicates the name of the Notary Public selected in order to carry out the business. The expenses will be the responsibility of the one who request it and cannot be transferred to the counter party.
These means must be specified in the first document and in case of omission in future resolutions, including the sentence they will be automatically served twenty four hours after being dictated. The specification made will be valid for the entire trial, including the second instance and appeal, except for when a courier box is specified or when it is indicated that it will be received in court, when the respective courts have a seat in a different location.
Luis Varela
Employers must inform the Ministry of Labor about the minimum salary amounts agreed upon with employees. Inspectors from the Ministry must confirm the information and report that the inspected employer complies with the official minimum wage regulations.
According to information provided by the National Institute of Information and Development (INDIDE), the value of the Basic products in December 2008 reached C$ 8,817.90 Cordobas (Approx US$ 440). In the beginning of March, an initiative to amend the current Minimum Wage Law was introduced to the National Assembly. It aimed to have the minimum salary revised once every year and not twice, as the labor legislation establishes. The labor movements which formed in the National Workers Front (FNT) and the Sandinista Office of Workers (CST) have opposed this initiative. They have manifested their disagreement, maintaining that what is established in the current law must be complied with. Currently, the Tripartite Commission is summoned (Government, entrepreneurs and union members), in order to initiate the process of determining the minimum salary that will be applied in the first half of this year, as established in Law number 625, the Minimum Salary Law.
MINIMUM WAGE LAW. Law No. 129 from May 24, 1991. Published in La Gaceta No. 114 on June 21, 1991. LAW CREATING TOBACCO - FREE ENVIRONMENTS The Law that creates Tobacco-Free Environments was enacted to establishing tobacco- free environments, in order to preserve good health and protect the non- smoking and non-tobacco consuming population. According to this law, smoking or possessing any type of lit tobacco product is strictly prohibited in the following areas: a. In any closed public space: Closed environment with free public access, including, educational centers, health centers, public transportation, lobby areas, hotel and motel reception areas, restaurants, centers that produce food for retail, market places, shopping malls, theaters and waiting rooms. b. In any work space: The area under the control of the employer, public or private, where labor is carried out by those who were hired, including rest areas, bathrooms, conference rooms, meeting rooms, classrooms, cafeterias or vehicles. c. In any form of public transportation, collective or communal. The Law establishes are NON-prohibited areas the hotel or motel rooms that are destined for guests as smoking areas, as long as they do not exceed 20 percent of the total number of rooms in the hotel. All of the smoking rooms must be on the same floor, and next to one another, and the smoke from these rooms must not infiltrate into other areas where smoking is prohibited. All of the areas that are tobacco- free environments and where smoking is prohibited must be marked with international NO SMOKING signs, which must be clear and placed throughout the entire area, site, business, public establishment or work place, in an area visible form the entrance or access point. The penalties for failure to observe the rules of this law are the following: a. The person who fails to comply with the smoking prohibition in any of the establishments, centers or established areas, will be fined with a penalty equal to ten (10) minimum daily wages for agricultural activities (Q.52.00) The second breach will double the sanction, and for each subsequent breach the amount of previous fine will be doubled. b. The owner or person in charge of any of the establishments, centers or established areas, where the prohibition measures are infringed upon, will be given a penalty fine equivalent to one hundred (100) minimum daily wages for agricultural activities (Q.52.00). The second infraction consisting of the same infringement will be penalized with the closing of the business for a period of three (3) days, and for each infraction that follows, the period from the previous penalty will double. c. For lack of no- smoking signs, a penalty fee equivalent to one hundred and fifty (150) minimum wages for agricultural activities will be imposed (Q.52.00). The second infraction will be penalized with the closing of the business for a period of three (3) days, and for each infraction that follows the period from the previous sanction will double. d. The establishment of smoking areas in a manner different from the provisions of the Law, a penalty fine equal to two hundred (200) minimum daily wages for agricultural activities will be imposed. The second infraction will be penalized with the closing of the business for a period of three (3) days, and for each infraction that follows, the period from the previous penalty will double. This decree expressly derogates part b) of Article 51 of the Code of Health, Decree Number 90-97 of the Congress of the Republic of Guatemala and its amendments, as well as any other regulations that refers to the authorization of smoking areas in commercial or food consumption businesses. The Law is in effect as of February of 2009. Jeannette Arango
AIR TRANSPORT 2009 - COSTA RICA Reproduced with permission from Law Business Research. This article was first published in Getting the Deal Through – Air Transport 2009, (published in August 2008 – contributing editor John Balfour). For further information please visit www.GettingTheDealThrough.com
OPENING OF TELECOMMUNICATIONS IN COSTA RICA The opening of the Telecommunications market in Costa Rica is a direct consequence of the commitments that were accepted by the country upon signing the “Free Trade Agreement Between the Dominican Republic, Central America and the United States” (FTA), which was subscribed by the seven member countries on August 5th, 2004. The new legal framework that will regulate the opening of the telecommunications market is composed by the Law for the Strengthening and Modernization of Public Entities of the Telecommunications Sector and the General Law for Telecommunications. Both laws were approved by the Legislative Assembly, the first one after its first round of discussion, on May 19th of the current year and the second one on May 14th, 2008, after its second round of discussion. The General Law for Telecommunications now only requires ratification by the Executive Power and publication in the official newspaper La Gaceta.
The opening of the Telecommunications market in Costa Rica is a direct consequence of the commitments that were accepted by the country upon signing the “Free Trade Agreement Between the Dominican Republic, Central America and the United States” (TLC), which was subscribed by the seven member countries on August 5th, 2004. The subject is specifically mentioned in Chapter 13 (of the Treaty), which establishes in an Attachment, the specific commitments in the telecommunications area accepted by Costa Rica. I. Objectives of Chapter 1. The Chapter establishes the regulatory framework for the commitments accepted by Costa Rica regarding the provision of telecommunications services, which must be based on principles of gradual adaptation, selectivity and regulation, strictly in agreement with previously established social objectives of universality and solidarity.
1. Structure The Chapter on telecommunications contains various obligations of the Parties, which are not applicable in the case of Costa Rica. The commitments accepted by Costa Rica in the area of telecommunications are limited to one Attachment, which is divided into four sections: preamble, modernization of the Costa Rican Institute of Electricity (ICE), selective and gradual commitments for the opening of the market and regulatory principles. 2. Scope and Content A. Preamble: This section stipulates that the opening of the telecommunications market within the FTA framework is to be based on the Political Constitution, it must be for the benefit of the user population, it must be gradually and selectively implemented and it must be adequately regulated. It is established that the opening process will be carried out in strict compliance with the social objectives of universality and solidarity that are mandatory regarding the provision of telecommunications services. Further, it establishes that the use of the infrastructure owned by ICE will be subject to compensation (by third party users).
Costa Rica accepts to pass new legislation to strengthen ICE, seeking to appropriately modernize it, by no later than December 31st, 2004 (this is the date that was originally established).
i. Consolidation of Access Level to the Market Service providers will be allowed to furnish telecommunications services to the Parties in terms and conditions that will not be less favorable than the ones established by national legislation that was in force on January 27th, 2003.
On a non-discriminatory basis, Costa Rica will permit competition between providers of telecommunications services, with the ultimate purpose that they may provide efficient services in the private networking and Internet fields, no later than January 1st, 2006 and mobile telephony no later than January 1st, 2007.
The following additional regulatory principles are accepted, in order to assure proper regulation of the opening process:
LISTING OF ACQUIRED COMMITMENTS:
B. LAW FOR THE STENGTHENING AND MODERNIZATION OF PUBLIC ENTITIES WITHIN THE TELECOMMUNICATIONS SECTOR This law creates the Telecommunications Sector and clearly separates the three roles of the State in such Sector: directorship role, regulatory role and its role as an operator. Under the equilibrium provided by a separation of functions, this text enacts the regulatory framework of telecommunications, with a vision of convergence. Another objective of the law is to strengthen, modernize and promote development of the functions and attributes of public entities with a role in the telecommunications sector. Likewise, it seeks to make more flexible the legal framework that governs the Costa Rican Institute of Electricity (ICE) and its affiliate companies, in such a way that they may effectively compete with other operators for the provision of telecommunications services, in a market that will be overseen by a regulatory agency. The function of directorship will be the responsibility of the Ministry of Environment, Energy and Telecommunications (MINATE), which will also be held responsible for awarding the required concessions, in accordance with the mandate of article 121 of the Constitution. That is why, in order to be able to technically recommend to the Executive Power the granting of concessions in the radio-electric spectrum, this Law creates the Council for the Telecommunications Sector, which shall be an entity of the MINAET with maximum independence, responsible for designing and evaluating a National Telecommunications Plan. This Council will be formed by the Minister of the Environment and Energy, who will preside over it; by the Ministers of Science and Technology and Planning, and by two additional members designated by the Government Council every two years, supported by a Technical Secretariat. The Super Intendancy of Telecommunications (SUTEL) was also created, as a regulatory agency, to act within the legal framework of the Regulatory Authority for Public Services (ARESEP), with the objective of administering the solidarity and universality Fund, denominated FONATEL, establishing tariffs and exercising controls in the telecommunications market under conditions of liberalization. In general terms, it may be said that the body of the Law seeks to strengthen and modernize ICE and its affiliate companies, by means of new financial regulations that will allow it to increase its indebtedness and by means of more flexible administrative attributions, which enable it to participate more effectively in the national market and to open the possibility for investing internationally. General structure of the Law Articles 1, 2, and 3 of Title I contain the general dispositions and objectives of the Law and its guiding principles. The latter may be summarized as follows:
Title II, beginning with Article 4, defines new attributions for ICE and its companies, it reissues institutional regulations in the field of investment and indebtedness, it establishes a special regime of contractual administration, a savings and guarantee Fund, a pension Fund and it defines the rights of employees, as well as the submission of reports on the use thereof. It is important to note that ICE has now been authorized to enter into strategic alliances within the country or outside its borders, or participate in any other business combination with public or private entities, national or foreign, which operate in the areas of investment, commerce, research and development and other related fields. The mentioned alliances may be in the form of research, development, technology, capital investment or commercial partnerships, all of which must be in compliance with the attributions granted to ICE and its companies and they will be governed by the judicial framework that is in force in the corresponding countries (Article 7). ICE and its companies are also authorized to sell, directly or indirectly, nationally or internationally, their services in the areas of consultancy, training and any other product or service akin to their attributions. Article 35 and those following are displayed in Title II, which relates to the creation of the telecommunications directorship, the preparation and implementation of the National Plan for Telecommunications, the creation of the Council for the Telecommunications Sector, the General Secretariat and the granting of concessions on the part of the Minister in charge of the Directorship. Title IV contains the dispositions that relate to modifications, revocations and transitory measures, including the reform of the ARESEP Law, to include within its structure the Super intendancy of Telecommunications (SUTEL) and to grant it functions akin to the functioning of the new market. Other laws are also reformed in this Title, such as Law No. 449, which refers to the objectives of ICE and the duration of its legal existence and that of its subordinated companies. Finally, the section on transitory measures includes a model procedure for the appointment of the members of the Boards of Directors of ICE, ARESEP and SUTEL, which takes into account the principles of transparency and removal of politics from such appointments. Also included are the required measures to be followed by those institutions in order to adapt themselves to the new functions granted to them by the present law. C. GENERAL LAW OF TELECOMMUNICATIONS The new Law authorizes the opening of the market for telecommunications networking, including transmission of signals through every available type of medium, such as cables, fixed land lines (including Internet), cable television lines and transmission of signals, among others. Specialists consider that this renders it the most advanced legislation in Latin America, where technological convergence has only been regulated by means of decrees, in some of the countries. The object of this Law is to establish the scope and the regulatory mechanisms of the telecommunications industry, including the use and operation of networks and the provision of telecommunications services. All persons, whether physical or legal, public or private, national or foreign, providing networking or telecommunications services originating, ending or passing through the national territory, are subjected to the scope of the present Law and the Costa Rican jurisdiction. The Following is a summarized review of the topics that were considered more relevant, from an operational point of view: C.1 – Administration of the electric spectrum and authorization titles Title I establishes general dispositions, Administration of the Radio electric Spectrum and Authorization Titles. Article 9 classifies the frequency bands of the radio electric spectrum, as follows:
Concessions A concession is defined as an authorization title for the use and operation of frequencies within the radio electric spectrum, as required to effectively use and operate telecommunications networking systems. In the case of public telecommunications networks, a concession will empower its title holder to provide all types of telecommunications services available to the public (article 11). A concession will be granted to cover a specific area of coverage, regional or national, so as to guarantee the efficient usage of the radio electric spectrum. Concessions will be granted by the Executive Power, through a public bidding process, in accordance with the provisions of the Law for administrative contracting and its Regulations. The Office of the Telecommunications Super Intendancy (SUTEL)—which is the regulatory entity that we shall describe further on—will conduct the proceedings, subject to the prior realization of the necessary studies to determine the need and feasibility of each concession request, in accordance with the National plan for development of telecommunications and with the policies dictated by the respective Sector. In the case of frequencies needed for the operation of private networks and others not requiring an exclusive designation (of spectrum) for their optimal functioning, concessions will be directly granted by the Executive Power, following the numbering order of each received request. SUTEL will conduct the proceedings for granting these types of concessions (article 19). A cancelation of the concession contract will occur when, among other reasons, a concession holder has not utilized the awarded frequencies after one year of having been granted, or after expiration of an extension granted for valid reasons. A declaration of cancellation of a contract will be preceded by an administrative process that will be bound by the rules of due process. The title holder of a concession whose cancellation has been decreed as a result of grave breaches to the obligations that were accepted, will not be allowed to obtain new concessions under the attributions of the present Law, during a minimum period of three years and a maximum of five years, counted from the effective date of the cancellation resolution, as provide in article 22. Authorizations Authorizations will be required by physical or legal persons desiring to:
The authorization will be granted by SUTEL upon a request submitted by the applicant. SUTEL will indicate in the corresponding grant, the conditions that must be complied with for operating under the grant. SUTEL may deny the request, based on reasoned arguments, if it determines that such request is not in line with the objectives and aims that were defined in the National plan for development of the telecommunications industry (article 23). The term of concessions and any extensions thereto, as well as any authorizations, will be governed by the following conditions (article 24):
Permits A permit will be required to utilize frequencies intended for non-commercial, official, security, succor and emergency use. Such permit will be granted by the Executive Power, subject to recommendation from SUTEL and upon compliance with the requirements that will be established by way of regulations. The duration of the permits will be five years, renewable for equal periods, at the request of the interested party. Permits for scientific or experimental uses will be granted one single time, for a maximum of five years (article 26). Other services Operators of public networks and public service providers must inform SUTEL about the services they are offering. SUTEL will register such information in the National Telecommunications Registry. This type of operators and providers may expand the scope of their services, subject to previously informing SUTEL. Once they have submitted their information, they may begin offering their new services. Non-compliance with the obligation to inform SUTEL will convey an administrative sanction, in accordance with the provisions of the regulations on penalties. Traditional basic telephone service No concessions or authorizations may be granted for the operation of public telecommunications networks associated exclusively with the provision of traditional basic telephone services. Any exception will require a special legislative concession, as described in paragraph 14) of article 121 of the Political Constitution. Nevertheless, such networks and the rendering of traditional basic telephone services will be subject to the provisions of the present Law and the authority of SUTEL, for purposes of regulation. C.2 – Regulatory Régime on Fundamental Guarantees Universal access, universal service and solidarity. Title II establishes the Regulatory Régime on Fundamental Guarantees. It includes definitions of the mechanisms for financing, allocation, administration and control of resources destined for compliance with the established objectives of universal access, universality of service and solidarity. SUTEL is charged with the responsibility of guaranteeing that operators and suppliers comply with the goals established in the present chapter and those that may subsequently be established by way of regulations. The mentioned objectives may be summarized as follows: 1) Universal Access: services must be made available in geographic areas of the country in which the cost of investments required for installation and maintenance of infrastructure render the provision of such services financially unprofitable. 2) Universality of Service: services must be provided to all inhabitants of the country who do not have sufficient means to pay for access to them. 3) Solidarity: services must be provided to institutions and persons with special social needs (child care centers, adult centers, centers for the handicapped, centers for indigenous population, public schools and colleges, public health centers, etc.). 4) Reduction of the social gap. Fonatel’s sources of financing will be:
Privacy of communications and protection of Personal data Chapter II (articles 42 and subsequent ones) establishes the obligation of public network operators and providers of telecommunications services to the general public, to guarantee the secrecy of communications, the right to privacy and the protection of personal data of their subscribers and final users, through the implementation of systems and technical and administrative procedures, as required. These protective measures will be established by the Executive Power. Operators and providers must guarantee that communications and related traffic data will not be listened to, recorded, stored, intervened or watched by third parties, without the users’ consent, except when a judicial order has been issued, in accordance with the law. Traffic data and location Traffic and location data associated with final users, which are treated and stored under the responsibility of an operator or provider, must be eliminated or placed under anonymity if they are unnecessary to carry out the transmission of communications or to provide the service. Traffic data required for carrying out the billing process for customers and the payment for interconnections may be kept until the date of expiration of the term allowed for legal opposition of billed services or demand for payment. Location data may only be utilized if treated anonymously or subject to prior consent from customers or users, within the scope and time frame that may be necessary to provide the service. Unrequested communications The use of systems destined to generate automatic dialing through voice, fax, e-mail or any other method utilized for direct sales is prohibited, except in the case of users that may have granted prior consent. Rights of final users Article 45 establishes the rights of final telecommunications users/customers. The following are important rights to be highlighted:
Taking into account the availability of technical and financial resources, SUTEL will be responsible for assuring that operators and providers make available to final users with a handicapped condition, all the services regulated by the present Law, under non-discriminatory conditions. Any claims arising from the violation of the rights guaranteed by this Chapter may be filed by the final user or by any other person who may not necessarily have been wronged by the deeds that are being claimed. Claims must be presented before the operator or provider in question, who must issue a resolution no later than ten natural days after receipt of the claim. In case the resolution is negative or insufficient, or if no resolution is provided on the part of the operator or provider, the claimant may seek assistance from SUTEL. SUTEL will process, investigate and resolve the corresponding claim and will dictate a final resolution within fifteen working days after receipt of the claim. If the claim is found to be reasonable, independently of subsequent penalties that may be imposed, as mandated by the Law, SUTEL will issue pertinent dispositions to correct the anomalies and if it is lawful, it will order administrative compensation for damages and injuries suffered by the claimant. Any resolutions issued will be considered compulsory, regardless of additional measures mandated by law. Claim actions will expire after two months, counted from the date of the wrongful deed or of the date on which it was made public, except in the case of continuous actions, in which case the time period will begin on the date of the last deed. C.3 – Regulation of competition Title III (articles 49 and those following) establishes regulations to govern competition between operators and providers. Prices and tariffs Tariffs for telecommunications services made available to the public will be initially established by SUTEL, utilizing the methodology of maximum prices or any other one that promotes competition and efficiency in the use of resources, in accordance with the basis, procedures and periodicity that will be defined by way of regulations. When SUTEL is able to determine, by means of a reasoned decision, that conditions have been reached to assure effective competition, prices will begin to be established by providers of the telecommunications services. If SUTEL should determine, after a reasoned decision, that conditions of effective competition have ceased, it shall intervene by setting the tariffs, in accordance with the dispositions contained in the first paragraph of the present article. Competition The operation of networks and the provision of telecommunications services will be subject to a body of rules defining competition, which will be governed by the dispositions of the present Law and additionally by the criteria defined in chapter III of Law No. 7472, known as Law for Promotion of Competition and Effective Defense of the Consumer, dated December 20th, 1994. Absolute monopolistic practices are forbidden, they shall be totally null by law and they will convey penalization. Relative monopolistic practices will be prohibited; they will be subject to verification of suppositions established in articles 13, 14 and 15 of Law No. 7472, Law for the Promotion of Competition and Effective Defense of the Consumer, dated December 20th, 1994 and they will be subject to penalization. Prior to entering into a concentration, network operators and providers of telecommunications services must request authorization from SUTEL, so that the latter may evaluate the impact of such concentration on the market. The mentioned authorization is required in order to avoid certain forms of joint provision of services that may be considered undesirable for free competition, harmful to the interests of users or noxious to the freedom of access to the telecommunications market. SUTEL will not authorize concentrations that will result in the acquisition of substantial power or those that may increase the possibility of exercising substantial power in the relevant market, as defined by the Law for Promotion of Competition and Effective Defense of the Consumer. Nor will it authorize concentrations that may facilitate open or tacit coordination between operators or providers or those that may produce adverse effects on the final users. Nevertheless, SUTEL may evaluate if the concentration will be conducive to achieving economies of scale, promote efficiency, avoid the exit of an operator or provider causing damage to the users, or to take action against any other circumstance foreseen in the regulations. Access and interconnection Article 59 defines the objective of guaranteeing access and interconnection of public telecommunications networks, in order to promote efficiency, effective competition, optimal use of scarce resources and greater benefits to end-users. SUTEL must guarantee that access and interconnection are provided in a timely manner and under terms and conditions that are non-discriminatory, reasonable, transparent, and proportional to the desired usage and will not imply using more resources than are necessary for the successful operation of the service that will be provided. Operators must notify SUTEL upon initiating negotiations for access and interconnection. Similarly, they must notify SUTEL about any agreement reached between them and submit it for review. In the latter case, SUTEL will have the ability to add, eliminate or modify those clauses that may be necessary to adjust the agreement to the dispositions included in the present Law, including terms and other conditions that will be defined by way of regulations. If a public telecommunications network operator should refuse to enter into negotiations intended to permit access or interconnection, or if an agreement is not reached within the three month period subsequent to the notification, SUTEL may administratively or at the request of a third party, proceed to determine the structure, the terms and the conditions under which the interconnection or access will be carried out, regardless of subsequent sanctions that may result from the provisions of the present Law. SUTEL will make such a decision after a maximum of two months time, counted from the date of the intervention decision. It is SUTEL’s duty to interpret and assure compliance of agreements related to access and interconnection. Regulatory tax (fee) Each network operator or telecommunications service provider must pay one single annual fee for (the cost of) regulation, to be established in accordance with Law Number 7593, Regulatory Law for Public Services. Network operators and telecommunications service providers must pay an annual tax or fee for reservation of their radio electric spectrum. Network operators and telecommunications service providers, who may not currently be utilizing frequency bands of the radio electric spectrum that had previously been granted to them, will be considered passive subjects of this tax, regardless of such a circumstance. Interest and fines for unpaid assessments In the case of default in the payment of taxes, fees and assessments established by the present Law, penalty interest will be calculated in accordance with article 57 of the Code of Norms and Fiscal Procedures. An additional fine for late payment will be charged, amounting to four percent (4%) (of the overdue amount) for each month of delay in payment or fraction thereof, calculated from the moment that payment should have been made, until the date of effective payment. C.4 – Regulatory régime on sanctions or penalties The section on sanctions and penalties is included in Title V, beginning with article 65. Independently of penal or civil responsibilities that may apply, SUTEL is held responsible for reviewing and penalizing administrative violations committed by operators, providers or commercial users of telecommunication networks, or those utilizing them to provide illegal telecommunications services. The determination of violations and the corresponding sanctions thereto, contemplated in the present article, will be carried out in accordance with the provisions of Book Number Two of the General Law for Public Administration, Number 6227, dated May 2nd, 1978 and its reforms. Precautionary measures During the mentioned proceedings, SUTEL may impose precautionary sanctions, deemed necessary to safeguard the end result of a penalizing procedure, or to avoid compromising the quality of the service being provided, as well as to protect the physical integrity of the facilities, networks, equipment and apparatuses being used. Once it has been verified that an illegitimate use of a network is occurring or telecommunications services are being provided illegally, SUTEL may impose as a precautionary measure the closing of places of business and public facilities, or the removal of equipment and instrumentation. Punishable conducts Violations or punishable conducts are established in article 67, which classifies them as grave and very grave, according to their type. In general, we may indicate that punishable conducts are those that relate to non-compliance with the obligations established by the Law and the National Plan for assignment of frequencies. Possible examples would be unauthorized exploitation, non-compliance with exploitation conditions approved by SUTEL, noncompliance with the right to universal access and solidarity, wrongful handling of user information, charging of non authorized tariffs and partaking in disloyal competitive practices, amongst others. Sanctions for violations or infractions Violations and breaches will be punished in accordance with the provisions of article 68, which states that: “a) Very grave violations will be penalized by a fine ranging from zero point five per cent (0.5%) to one per cent (1%) of the gross revenues obtained by the operator or provider during the preceding fiscal period. b). Grave violations will be penalized by a fine ranging from zero point twenty five per cent (0.25%) to zero point five per cent (0.5%) of the gross revenues obtained by the operator or provider during the preceding fiscal period. If an operator or provider did not generate gross revenues during the preceding period or is unable to report them, SUTEL will use the value of his assets as a parameter for imposing the penalty. The violations mentioned in paragraph a) of the preceding article, which in SUTEL’s criteria are particularly grave, may originate sanctions from the Super Intendancy ranging from one per cent (1%) to ten per cent (10%) of the gross revenues obtained by the infringer during the preceding fiscal period, or between one per cent (1%) and ten per cent (10%) of the value of the infringer’s assets. In case SUTEL in unable to apply the sanction percentages to the revenues or the assets, it will utilize presumed revenues as a parameter for determining the amount of the penalty, taking into account the amount of average gross revenues obtained by the infringer in prior periods as well as the average gross revenues collected by other operators and providers performing similar economic and commercial activities, during the preceding period. To impose its sanctions, SUTEL must take into account if the infringer is part of a larger economic group, as defined in article 6 of the present Law. If that should be the case, the calculation of the sanction will be based on gross revenues or annual sales of the companies that constitute the group, as the case may be.” Closure of places of business and removal of equipment In order to guarantee the physical integrity of the network and the quality of the telecommunications services, as well as the safety of the users, SUTEL may impose as a sanction, in the case of a very grave violation, the definitive closure of a business establishment and its service facilities, as well as the removal of equipment and instrumentation used for the operation of networks or the provision of telecommunications services in conditions of illegality, or if it represents a potential risk of physical damage to facilities, networks, equipment and apparatuses. Prescription Any action to claim administrative responsibility (for a violation) will prescribe after four years, counted from the moment the infraction began, from the day the last infraction was committed, or from the date in which the illicit situation ceased, when referring to continuing violations or permanent effects. An imposed sanction will prescribe after a three-year term. C. 5 Regulations of the Law No later than nine months after the effective date of the present Law, the Executive Power will dictate the following regulations:
No later than nine months after the effective date of the present Law, the Board of Directors of the Regulatory Authority for Public Services will dictate the following technical regulations:
C. 6. – Transitory and relevant dispositions Transitory II Network operators and providers of telecommunications services to the general public who may already be providing such services at the time of ratification of the present Law and who may be satisfied with the current judicial framework, will still be subject to the present Law. As of the effective date of the present Law, operators and providers may effectively compete for the direct provision of telecommunications services to the public, through private networks, internet and mobile wireless telephone service, as well as new services that may arise as a result of technological advances. Transitory V In a maximum term of three months, counted from the date of constitution of the SUTEL Council, the Executive Power will request that SUTEL initiate the corresponding proceedings for the granting of concessions in the frequency bands destined for mobile wireless service and other required bands, in accordance with the principles established in the present Law and in the National Plan for the development of telecommunications and the policies of the Sector. * A report prepared by Carolina Argüello Bogantes, Nassar Abogados Costa Rica, S.A., San José, Costa Rica, May 23rd, 2008
MERGER CONTROL IN CENTRAL AMERICA Merger control has gained key importance in Central America. The region’s Legislatures have enacted competition and consumer protection laws with policies to deal with combinations, merges and acquisitions between companies, better known as “economic concentrations” or simply “concentrations”, in order to guarantee free competition. For an overview of concentration control rules applicable in Central America please visit http://www.iclg.co.uk that contains articles authored by Nassar Abogados that appeared in the 2008 edition of The International Comparative Legal Guide to: Merger Control; published by Global Legal Group Ltd, London. ABSTRACTION OF DOCUMENTARY CREDIT: THE SPANISH CASE Lic. Henry Rodriguez The foregoing comment aims to briefly examine the abstraction of documentary credit, a typical banking instrument, in the light of the Spanish experience. Spain was selected as reference not by chance but instead for a specific interest: to show how to approach abstraction, even in professional and traffic-intensive environments like banking, in countries with cause obligations, as is the case in Latin America and in Europe (like France and Italy), which are civil law systems, strongly influenced by the 19th Century codes. Documentary credit is regulated by whatever the parties themselves agree and, if they so decide, by the Documentary Credit Rules and Uniform Uses of the International Chamber of Commerce, Pub. 500 (hereinafter RRUU), applied globally today. To determine the efficacy of these norms to obligate the parties involved, Decision 357-2000 of April 7 of the Tribunal Supremo Español (Spanish Supreme Court) (hereinafter STS) provides that such efficacy depends on the enforcement, particularly, of the principle of free will consecrated in Articles 1091 and 1255 of the Civil Code (although under this interpretation such norms are clearly not part of the Spanish code of laws –STS 14-4-75 and STS No. 899-1997 of 9-10-97). Article 1091 of the Spanish Civil Code provides that “obligations arising from contracts are binding for the parties thereto, and must be fulfilled accordingly.” Number 1255 indicates that “contracting parties may establish whatever pacts, clauses and conditions they may deem convenient, provided these are not in contravention of the law, the morale, or public order.” In this sense, it is worth mentioning that, at least in principle, the RRUUs would not be contrary to law unless those that specify the rights of the arrangee and the beneficiary, and those that exonerate the Bank of liability, are considered abusive in an adhesion contract, and would therefore be subject to the Law on General Contracting Conditions and, eventually, considered null. At least in Spain, the Courts have avoided using this criterion to date since they understand, a priori, how this would harm banking and, consequently, mercantile traffic. This introduction is relevant to examine the abstraction of documentary credit, as RRUUs are responsible for making documentary credit work in an abstract manner. This has become jurisprudence due to the contractual effectiveness awarded to RRUU when the parties bring them into a banking transaction. Now, since these norms are usually included in the documentary credit contract terms, and in order to analyze the abstraction, we must recall Article 3, in its latest version, which, in essence, indicates that, because of their nature, credit operations are completely separate from sales contracts or any other type of contract, and, therefore, banks are not affected or bound by them. Additionally, bank commitments under this type of operation are not subject to claims or exceptions by the arrangee caused by a relation with the issuing bank or the beneficiary. In no case may the latter use the contractual relations between the banks or between the arrangee and the issuing bank. Numeral 4 must be added to this article of the RRUU as a regulating element which really reinforces the abovementioned abstraction. It indicates that parties to a credit negotiate with documents, not with goods, services or other considerations mentioned in such documents. This norm supports the fact that the Issuing Bank, or any secondary bank in the operation, remains, in principle, foreign and somewhat unconcerned with events that do not develop or result from the documents submitted to them as instructed (a documentary analysis which is merely of appearance and formality). In documentary credit, the issuing bank commits its own credit. Therefore, if the documents submitted are in conformity, the issuing bank is bound to pay, without links or conditions to the rights and obligations of the parties to the underlying contract. Since 1942, the relevant Spanish jurisprudence has interpreted abstraction as the independence of credit from the substantiating contract, where banks are totally foreign to, in principle, and are not involved in conditioning the relations that give rise to the debt (STS 27-10-1984). Over time, this abstraction has taken on different shades and forms, such as the following: a-) Documentary credit constitutes an atypical contractual operation that includes multiple businesses, abstract in nature, and separate from the underlying contract; Clearly, abstraction is a two-way concept, which prevents the parties in the underlying relation from interfering in the documentary credit operation based on exceptions arising there from, but also implies that Banks intervening in the documentary credit cannot overstep their instructions and take actions that influence and clearly amend what the parties had agreed to in their cause relation. We would then face a rare case of amendment resulting from contract terms by a third party, clearly unacceptable. DELIMITING THE CONCEPT OF ABSTRACTION Concerning documentary credit, and based on the abovementioned jurisprudence, there is a disconnection of the cause and basic contract, and a subsequent elimination of cause exceptions and responsibilities resulting there from, that are not contrary to the functioning and operation of documentary credit. However, such a disconnection must be modulated or softened, in the sense that the abstraction of documentary credit refers to the functional cause, not the essential cause. This implies that the letter of credit is not an abstract business, lacking a cause, since under Spanish Law (and in that of Latin American countries with their respective norms), pursuant to Article 1261,3 of the Civil Code, there is no contract without cause of the obligation established, but instead functionally abstract. The Spanish Supreme Tribunal has understood this abstraction, in general, as independence, meaning in practice that, by incorporating the RRUUs to the contract, the parties have agreed that exceptions and actions will be communicated and that the relation will remain solely at the contractual level. This will of independence would be based on Articles 6,1 and 1255 of the Civil Code, that is, autonomy in the will of individuals and the waiver, which should be voluntary, to use any possible exceptions that arise from the cause contract and the commission, which must be against each other, when they are based on the law, moral or public order. With this, it could be said that the obligation taken on by the Bank is autonomous and abstract, as it functions independently from the cause, both in the relation of provision that exists between it and its client and in the obligación de valuta obligation that links beneficiary and arranger. This means that the documentary credit relation is independent from the will of the arranger and the will of the bank. The abstraction between the reason for business and the executive is not absolute, only in principle. This exception of indicating “in principle,” which has been used since the STS of 5 January 1942, opens the door to a possible dependence between both relations. Jurisprudence has also indicated, beyond this assumption “of principle,” that documentary credit and the reason for business are not totally disconnected, and must complement each other (referring to the coincidence of their respective dates of entanglement –STS of 3 May 1991-).
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