The doctrine of clarifications in Ecuador: rules and procedures

DETAILS

DATE: 26-01-2024

PROFESSIONALS INVOLVED IN THE ARTICLE:

Maria Cecilia Romoleroux

MEDIA:

– WTR Daily

WTR Daily published an article written by our partner Maria Cecilia Romoleroux, in which she explains the rules and procedures related to the doctrine of clarifications in Ecuador. 

  • The doctrine of clarifications limits the cases in which last-instance judges are obliged to request a preliminary interpretation from the Andean Court of Justice

In her analysis, she points out that the Article 33 of the Treaty on the Creation of the Andean Community Court of Justice, Article 123 of the Statute of the Andean Community Court of Justice, and Resolution 14-2017 of the Supreme Court of Ecuador determine that last-instance judges must, in all cases where Andean communitarian rules are involved, forward the case to the Andean Court of Justice for a prejudicial interpretation of the content and scope of the Andean rules at issue.

She also explains that the Prejudicial Interpretations No 145-IP-2022, 261-IP-2022,350IP-2022 and 391-IP-2022 acknowledge that the doctrine of clarifications is fully compatible with such mandatory consultation, and conclude that there are cases in which the local court is not required to request a new interpretation if such rules have already been interpreted.

  • Mandatory consultation for a prejudicial interpretation is maintained in four cases

Maria Cecilia emphasizes that the mandatory consultation for a prejudicial interpretation is maintained in four cases, which may be summarized as follows:

  1. Where the Andean Court of Justice has not previously issued a prejudicial interpretation of the Andean rules at issue; this includes cases where the Andean rules have been modified and have not been subject to a preliminary interpretation;
  2. Where, although certain Andean rules have already been interpreted, others rules applicable to the case have not;
  3. If, although a preliminary ruling has previously been issued, the court considers that the Andean Court of Justice must clarify, expand or modify the legal interpretative criterion, explaining the reasons why it believes that the existing interpretation is not clear, the circumstances to be taken into account for the interpretation to be expanded, or the arguments that support the need to modify the jurisprudential line resolved through the preliminary ruling on this specific issue; and
  4. Where the court notices inevitable questions about hypothetical situations that, in the abstract, arise from, or are linked to, the corresponding Andean rules.
  • The Andean Court of Justice recently issued a Guidance Information Note in this respect, setting out a four-step process

Our partner outlines that, in order to determine the obligation to request a prejudicial interpretation, through Accord 06-2023 dated 7 July 2023, the Andean Court of Justice set forth a Guidance Information Note on the application of the legal criterion for the interpretation of the clarified act in requests for prejudicial interpretations, setting out a four-step process:

  • Step 1: Determine whether, in this specific case, an Andean rule must be applied or is in dispute, and whether it must request a prejudicial interpretation.
  • Step 2: Determine whether a clarified act exists. At this stage, make it clear that, according to the jurisprudence of the doctrine of clarifications, it is not necessary to request a new interpretation.
  • Step 3: Identify the prejudicial interpretation that contains the legal interpretative criterion for the corresponding rule.
  • Step 4: Determine whether the case at issue does not fall within the four circumstances in which a prejudicial interpretation is mandatory.

Finally, she points out that on its website, the Andean Court of Justice has developed two options to search for prejudicial interpretations that apply the doctrine of clarifications:

  1. rulings that recognise a clarified act; and
  2. an index of interpretative legal criteria that constitute a clarified act.

If you want to read the full article, click here.

This article first appeared in WTR Daily, part of World Trademark Review, in (January 2024). For further information, please go to www.worldtrademarkreview.com.

Regulations to the Organic Law of Energy Competitiveness

By Presidential Decree No. 176 of February 23, 2024, the President issued the Regulations to the Organic Law of Energy Competitiveness (“RLOCE”), set to take effect upon publication in the Official Registry.

The RLOCE amends the General Regulations to the Organic Law of the Public Electricity Service (“RGLOSPEE”), the General Regulations to the Organic Law of Energy Efficiency (“RGLOEE”), the Regulations to the Organic Environmental Code (“RCOAM”) and the Regulations for the application of the Internal Tax Regime Law (“RLRTI”).

Below, we summarize the most important energy and tax matters:

Electricity sector

1.    Energy storage systems, such as green hydrogen and thermal storage, will be incorporated into the electricity sector’s expansion planning.
2.    Natural or synthetic gases will be considered within the Electricity Master Plan (“PME”).
3.    The Ministry of Energy may delegate to foreign private or state-owned companies the participation in sector activities or generation projects foreseen in the PME through public selection processes (“PPS”). Under this scheme, non-conventional renewable energy generation projects will have preferential dispatch conditions.
4.    The Ministry of Energy may directly delegate the execution of electricity generation projects based on urban waste, with preferential dispatch and price conditions. The Ministry of Energy shall regulate the procedure for this delegation.
5.    The Ministry of Energy may directly delegate the execution of generation projects with non-conventional renewable energies not foreseen in the PME and submitted by private or foreign state-owned companies under the following conditions:
a.    If the project is up to 10MW of nominal capacity, its execution may be delegated if it does not affect the generation projects foreseen in the PME.
b.    If the project has more than 10MW of nominal capacity, the authority must determine if it is of public interest and does not affect the generation projects foreseen in the PME: (i) if it meets both conditions, a PPS will be called for its concession and the proponent may participate with bonuses in the qualification of its economic offer; and (ii) if it is not of public interest and does not affect other projects, the proponent may be enabled to develop the project at its own risk.
6.    The Ministry of Energy will have two months to qualify whether or not the project submitted by private or foreign state-owned companies is of public interest, based on three criteria: (i) whether the initiative is required to satisfy the public interest; (ii) the degree of contribution to the fulfillment of the objectives of the electricity sector; and (iii) the degree of benefit to the State and/or the consumers of the electricity sector.
7.    Until February 23, 2025, distribution tolls will be waived for regulated and non-regulated consumers with distributed generation systems for self-supply. Only regulated consumer systems can inject electric energy into the distribution network.
8.    Distribution companies or authorized entities may provide electric vehicle charging services, with tariffs established by the Agency for Regulation and Control of Energy and Non-Renewable Natural Resources (“ARC”).
9.    The ARC is delegated the authority to exercise the competence of regularization, control, and environmental monitoring of projects, works, or activities in the electric sector, as well as the power to sanction non-compliance. For this purpose, the ARC must obtain the respective environmental accreditation.
10.    All environmental regularization procedures initiated with the Ministry of Energy before the ARC’s environmental accreditation must be finalized by February 23, 2027.
11.    Within 30 days of the RLOCE’s publication in the Official Registry:
a.    The ARC must notify the Ministry of Energy regarding ongoing generation and transmission projects with at least 50% progress. This information will enable the Ministry to assess whether these projects should be deemed of national interest, prompting necessary actions for their completion.
b.    The National Electricity Operator must notify the Ministry of Energy of any generation plants requiring maintenance and their availability percentage over time. This information will enable the Ministry to determine which plants should be declared as national interest to enter into operation or determine their retirement and/or replacement plan.
12.    Until August 21, 2024, the ARC must update or issue new regulations for the electricity sector, with current regulations remaining applicable where not in conflict with the Organic Law of the Electric Energy Public Service and the RLOCE.

Energy Efficiency

1.    Autonomous Decentralized Governments should prioritize generating electric energy using the organic fraction of solid waste (biomass) as raw material without limiting the use of the inorganic fraction for the same purpose.
2.    Large energy consumers in commercial, industrial, and public activities will implement the Ecuadorian Energy Management Standard (NTE-INEN-ISO: 5001) in their operations. As of 2026, this implementation shall be carried out with the support of an energy service provider registered in the Catalog of Energy Service Providers.
3.    The National Energy Efficiency Investment Fund will be financed, in part, with the contribution of private internal combustion engine vehicles. This contribution will be 1% of the total value of the vehicle registration without considering fines and surcharges will be considered.
4.    The ARC shall introduce preferential tariffs in the tariff schedule for public electric energy and general public lighting services, aimed at reducing energy consumption starting in 2025.

Tax

1.    Certification from the competent environmental authority must be obtained to apply an additional 100% depreciation for machinery intended to implement unconventional renewable energy generation systems.
2.    The benefit of generating a net increase in employment for young people and individuals who have served a custodial sentence may only be applied for 12 months.
3.    To deduct expenses for constructing new networks to supply electric energy to consumers isolated from the distribution network, authorization from the competent authority for such construction is required.
4.    For calculating individual income tax, expenses will be considered family burdens when the taxpayer covers practically all their costs. This status will continue even if the taxpayer earns taxable income not exceeding a unified basic salary.
5.    To apply for applicable tax benefits, electric vehicles shall be understood as those solely propelled by electric energy sources, with battery charging exclusively using this source and producing zero direct polluting emissions.
6.    Previously, it had been established that special taxpayers and withholding agents must file their tax returns by the 11th day of each month. The RLOCE clarifies that this obligation applies specifically to special taxpayers.

carlos-torres

Carlos Torres, senior associate at CorralRosales
ctorres@corralrosales.com
+593 2 2544144

 

Mario Fernández, associate at CorralRosales
mfernandez@corralrosales.com
+593 2 2544144

DISCLAIMER: The previous text has been prepared for informational purposes. CorralRosales is not responsible for any loss or damage caused as a result of having acted or stopped acting based on the information contained in this document. Any additional determined situation requires the specific opinion and concept of the firm.

 

CORRALROSALES

Risks and data protection impact assessments

 Any processing of personal data involves risk. Processing is any activity performed with personal data, including collection, conversion, use and disposal. The risk arises from the likelihood of negative events occurring with personal data, such as theft, removal, alteration, or deletion.

Those who carry out the processing of personal data must clearly identify the risks they face, to mitigate, manage or assume them, through the adoption of different security measures. Risk identification can be done through risk analysis, which will help identify high-risk treatments. On the other hand, the data protection impact assessment (hereinafter the “DPIA“) will make it possible to evaluate possible violations of rights and the mechanisms to reduce them.

The Organic Law for the Protection of Personal Data (hereinafter the “LOPDP”)[1] established the obligation to have a risk methodology and to carry out a DPIA, the purpose of which is to foresee the impacts and risks to the privacy of data subjects. Therefore, the LOPDP requires the implementation of security and control measures to guarantee the rights and freedoms of individuals.[2]

I. What is a DPIA?

The Regulation to the LOPDP[3] (hereinafter the “Regulation”), in accordance with the Article 29 Working Party’s[4] statement on the DPIA, defines impact assessment as a “[…] preventive analysis, of a technical nature, whereby the controller assesses the actual impacts of data processing, in order to identify and mitigate potential risks […]”[5].

II. How do I know if a DPIA should be done?

According to the LOPDP, the DPIA is mandatory when the data processing “entails a high risk to the rights and freedoms of the data subject”. Article 42 of the LOPDP provides some examples of when data processing may generate high risks:

1. Systematic and comprehensive evaluation of personal aspects of natural persons, which is based on automated processing (such as profiling) and on the basis of which decisions are made that produce legal effects for such persons.

For example, a financial institution that researches its customers in a credit reference database; or a computer program that uses the behavioral history of persons deprived of liberty to automatically determine whether they will be granted parole[6].

2. Large-scale processing of the special categories of data referred to in Article 25 of the LOPDP, or of personal data relating to criminal convictions and offences.

Large-scale processing involves a large amount of data and many data subjects from a wide geographic diversity[7]. Article 4 of the Regulation provides some examples of large-scale treatments:

  • Patient data from hospitals and healthcare institutions.
  • Data on the movement of individuals using public transportation.
  • Real-time geolocation data.
  • Data from customers from insurance companies or financial institutions.
  • Data for behavioral advertising by a search engine.
  • Data of content, traffic, and location data by telecommunications or internet service providers.

3. Systematic monitoring of a publicly accessible area on a large scale

This type of observation[8] is a criterion for determining high risk, because personal data may be collected in circumstances where data subjects may not be aware of who is collecting their data and how it will be used. In addition, it may be impossible for individuals to avoid being subjected to this type of processing in public spaces (or publicly accessible spaces). As an example, a camera placed on a public road to record and monitor the behavior of drivers is noted.

From these examples, it must be assessed whether a processing of personal data is likely to generate a high risk. This is particularly important since failure to execute the DPIA when it is mandatory as determined by the LOPDP and the Regulation could constitute a serious infringement of the LOPDP and result in a fine of between 0.7% and 1% of the revenue for the financial year immediately preceding the financial year in which the fine is imposed.

III. What should be included in a DPIA?

The DPIA should be carried out prior to the start of personal data processing activities. Therefore, companies, as data controllers, should prepare their DPIA before and during the initial planning of their new projects. In Article 32 of the Regulation, in line with international experience[9], it is determined that the DPIA must be submitted to the data protection authority and that it must contain the following points:

1. Description of the operations and purposes of processing.

2. Reasoning for the necessity to carry out the processing.

3. Risk assessment to the rights of the data subjects; and,

4. Security measures to address the risks.

The DPIA must be a systematic process that applies objective, repeatable, and comparable methodologies and methods of execution; consequently, a DPIA must be structured in different phases. The LOPDP determines as one of the obligations of those responsible for the processing of personal data to use appropriate methodologies for the analysis and management of risks.

In summary, the LOPDP and the Regulation establish certain examples and criteria to determine in which cases a DPIA must be carried out on a mandatory basis. However, we will have to wait for the actions of the Data Protection Superintendency, whose head is not yet named, to know the interpretation and development of the concepts in the practical application of the LOPDP and the Regulation.

 

[1] The LOPDP entered into force on May 26, 2021, and its sanctioning regime is fully applicable as of May 26, 2023.

[2] The DPIA process is not new in Comparative Law, in the EU it is established in the General Data Protection Regulation. It is also contemplated in the legal systems of Australia, Mexico, Canada, Japan, South Africa, South Korea, the United States and New Zealand, among others.

[3] Issued by Executive Decree 904 of November 6, 2023.

[4] Article 29 Working Party. (2017). Guidelines on data protection impact assessment. https://www.aepd.es/sites/default/files/2019-09/wp248rev01-es.pdf

[5] Article 29 of the Regulation.

[6] Spanish Data Protection Agency (2021). Risk management and impact assessment in personal data processing. https://www.aepd.es/es/documento/gestion-riesgo-y-evaluacion-impacto-en-tratamientos-datos-personales.pdf

[7] Article 29 of the Regulation.

[8] The Regulations interpret “systematic” to mean one or more of the following:

  • pre-established, organized or methodical;
  • taking place as part of an overall data collection plan;
  • carried out as part of a strategy.

[9] Guidelines on Data Protection Impact Assessment of the Article 29 Working Group, Data Protection Impact Assessment Guide of the Argentine Data Protection Authority, and, Guide for the Preparation of Privacy Impact Assessments of the National Institute of Transparency, Access to Information and Protection of Personal Data.

 

Christian Razza
Associate at  CorralRosales
crazza@corralrosales.com

Rafael Serrano
Partner at CorralRosales
rserrano@corralrosales.com

New regulations for rejecting customs declarations

On January 29, 2024, the Customs Authority (SENAE) issued Resolution SENAE-SENAE-2024-0007-RE by which new regulations for rejecting customs declarations in the ECUAPASS customs system, were issued.

The amendments include:

1.    The grounds for rejecting the customs declaration are modified:

–   Causes that do not generate a fine: 
  • Ecuapass system error: The declarant must request the rejection to the District Director. The request will be verified by the Directorate of Information Technology within 5 days.
  • When the rule allows the rejection to carry out a customs procedure or operation: The District Director shall reject the declaration without the need for a request from the declarant.
  • Re-shipment of goods, whether or not taxes have been paid: Rejection may be requested by the declarant to the District Director or be made without his request.
  • The merchandise did not arrive to the national territory after 15 days of the transmission of the declaration: Rejection will be automatic, without request.
  • The merchandise did not enter the primary zone or does not have the transport document associated with it after the term of validity of the transmitted export declaration has elapsed: Rejection will be automatic, without the need for a request.
  • The Customs District determines that the merchandise was not exported after the customs declaration was transmitted: Rejection may be requested by the declarant to the District Director or made without his request.
–   Causes that generate a fine: 

For these causes, the declarant must request the rejection to the District Director:
  • Errors in the transmission of supporting documents that hinder clearance if taxes have not been paid.
  • Errors of transmission that generate taxes for an amount greater than that which corresponds to what is imported.
  • Application of the code of a customs district different from the district where the goods are physically located.
2.    The rejection of the declaration due to errors resulting in the payment of lower taxes is prohibited unless a tariff deferral is obtained after the declaration has been transmitted.

In the following link you can review the complete text of the Resolution:

 

Andrea Moya, partner at CorralRosales
amoya@corralrosales.com
+593 2 2544144

 

Fernanda Inga, senior associate at CorralRosales
finga@corralrosales.com
+593 2 2544144

DISCLAIMER: The previous text has been prepared for informational purposes. CorralRosales is not responsible for any loss or damage caused as a result of having acted or stopped acting based on the information contained in this document. Any additional determined situation requires the specific opinion and concept of the firm.

 

CORRALROSALES

Extended responsibility in the management of medicines and pharmaceutical products

By Ministerial Agreement No. MAATE-2023-134, issued on November 22, 2023, and published in the Official Registry No. 490 on February 1, 2024, the Ministry of Environment, Water, and Ecological Transition issued the Technical Standard for the Implementation of the Extended Responsibility Principle in the Comprehensive Management of Medicines and Pharmaceutical Products (hereinafter referred to as the Standard).

The Standard applies to any entity engaged in the production, import, and initial placement on the national market. The term “initial placement on the market” refers to the introduction of medicines and pharmaceutical products into the market through any means, including national sale or donation through electronic or remote methods, i.e., when they are first distributed in the Ecuadorian territory.

Non-hazardous medicines and pharmaceutical products are excluded, as determined by the National Health Authority, as well as medical devices.

The main obligations of the producers are as follows:

  1. Obtain the environmental administrative authorization for the manufacturing, storage, and transportation of medicines or pharmaceutical products.
  2. Obtain the registration as a hazardous and/or special waste generator for medicines and pharmaceutical products that are out of specifications or expired within the scope of the producer’s extended responsibility and update it in case of any changes.
  3. Develop and submit, individually or collectively, a Comprehensive Management Program (“CMP”). Report compliance with actions and goals established in the CMP in the first 10 days of March each year.
  4. Inform the National Environmental Authority of emergency events, accidents, and incidents involving expired or out-of-specification medicines and pharmaceutical products within one (1) day of the occurrence, using any official means.

The main obligations of the distributors are:

  1. Implement the CMP.
  2. Deliver expired or out-of-specification medicines or pharmaceutical products to authorized waste managers.
  3. Inform the Producer, within one (1) day of the occurrence of emergency events, accidents, and incidents involving expired or out-of-specification medicines and pharmaceutical products; and,
  4. Provide the consumers with areas for the installation of collection points, equipped with measures for the safe handling and disposal of medicines and pharmaceutical products that are out of specifications or expired.

The CMP will have a validity of 5 years and must ensure that the management of expired or out-of-specification medicines is carried out in a technically sound manner with the lowest possible risk, incorporating gradual collection goals.

 

DISCLAIMER: The previous text has been prepared for informational purposes. CorralRosales is not responsible for any loss or damage caused as a result of having acted or stopped acting based on the information contained in this document. Any additional determined situation requires the specific opinion and concept of the firm.

 

CORRALROSALES

Organic Law for salary equality between men and women

On January 18, 2024, the National Assembly issued the Organic Law for Equal Pay between Men and Women, hereby the “Law”, published in the Supplement to the Official Gazette No. 481 of January 19, 2024, of which we highlight the following:

  • Its objective is to guarantee equal remuneration and any other form of economic retribution between men and women.
  • It establishes guidelines to determine that the work rendered is of equal value and obeys objective factors related to performance, competence, and qualifications, working conditions, effort, and responsibility.
  • It imposes the following obligations on employers:a)    To continuously train their personnel both men and women in labor rights. These trainings will be registered and controlled by the Labor Authority.

b)    To report annually the actions oriented to achieve equal remuneration, which will be certified by the Labor Authority.

  • The employers may denounce the non-compliance of their rights to equal remuneration, which must be answered by the employer in detail within a term of 15 days.
  • If in a complaint process the violation of the right to equal remuneration is verified, the employer must make the payment corresponding to the difference in remuneration with retroactive effect and establish a new remuneration.
  • Failure to comply with the obligations established by the Law will result in a penalty.

 

Edmundo Ramos, partner at CorralRosales
eramos@corralrosales.com
+593 2 2544144

DISCLAIMER: The previous text has been prepared for informational purposes. CorralRosales is not responsible for any loss or damage caused as a result of having acted or stopped acting based on the information contained in this document. Any additional determined situation requires the specific opinion and concept of the firm.

 

CORRALROSALES