Firm Profile > Payet, Rey, Cauvi, Pérez Abogados > Lima, Peru
Payet, Rey, Cauvi, Pérez Abogados Offices
VÍCTOR A. BELAÚNDE 147
TORRE TRES, PISO 12
SAN ISIDRO, LIMA
Payet, Rey, Cauvi, Pérez Abogados > The Legal 500 Rankings
Banking and finance Tier 1
The 'excellent' Payet, Rey, Cauvi, Pérez Abogados has a proven track record in major-league transactions on behalf of the country's largest banks and financial institutions - Banco de Crédito del Perú, Scotiabank, BBVA Banco Continental and Interbank are key clients, while gains this year included Citibank and Santander. Well resourced in terms of both numbers and capability, the eight-partner team is characterised by its 'high professional quality and experience'. It is co-led by José Cúneo (banking and finance) and Eduardo Vega (capital markets), both respected across the market, with input from name partner José Antonio Payet, who is widely considered as among the foremost corporate finance lawyers in Peru. Indeed, corporate finance transactions are a key strength of the practice: Cúneo led advice to Scotiabank, Citibank and Santander on a financing to Oncosalud (and parent company Auna Group) for the $165.6m acquisition of Colombia's Promotora Médica Las Américas. On the debt markets, Vega represented Credicorp Capital Servicios Financieros, Scotiabank and BTG Pactual on the $200m second corporate-bond program of Primax. Corporate and finance specialist Susan Castillo is praised for her proactivity; she led advice to Scotiabank on Plaza Norte's PEN600m first securitised bond programme and subsequent issues with an aggregate value of PEN450m. Other partners to highlight include Juan José Cauvi, who focuses on corporate and project finance, while senior associate Alan García Nores is gaining prominence in the market and led advice to Sociedad Agrícola Saturno on its $17m loan from MetLife. Aldo Reggiardo left the firm to open the new Peru operation of international Spanish firm CUATRECASAS.
Competition and antitrust Tier 1
Payet, Rey, Cauvi, Pérez Abogados is at the forefront among full-service law firms in this arena, the result of many years' focus on the sector and the almost-unrivalled expertise of practice head Carlos A. Patrón. The firm's client base speaks for itself: Graña y Montero, América Móvil Perú, Intercorp Management, Banco de Crédito del Perú and Lima Gas are among a raft of leading domestic companies instructing the firm. Publishable highlights include acting for Compañía Latinoamericana de Radiodifusión in an investigation by telecoms regulator OSIPTEL into alleged vertical agreements regarding cable television, and representing industrial company Tecnológica de Alimentos in a competition-authority investigation into a possible cartel in the purchasing of raw material. A strong bench of associates includes Julia Loret de Mola , Giancarlo Baella and David Kuroiwa, all of whom are well regarded.
Corporate and M&A Tier 1
M&A is a core strength at Payet, Rey, Cauvi, Pérez Abogados, where department head José Antonio Payet is widely accepted as one of the most respected corporate lawyers in the country. He leads a consolidated team of nine partners and 32 associates, many of whom bring expertise in other areas of practice -such as environmental, real estate, banking and mining, for example-to the table; the partners are highlighted for their 'shrewd negotiation' and industry knowledge. Key team figures include practice co-head Susan Castillo, name partner Juan José Cauvi, José Cúneo and Alfredo Chan, who have all played key roles in major transactions this year. The team acts for a broad array of corproates, investment banks, private equity firms and large family groups, with new clients this year including Nexus Group, Graña y Montero (GyM) and Scotiabank. Recent mandates inlcude advising the latter on its $100m acquisition of a 51% stake in Banco Cencosud, a matter led by Castillo, who also represented GyM on the $42.3m sale of its shares in Inversiones en Autopistas to BCI Asset Management's Inversiones Concesion Vial. In other highlights, José Antonio Payet and standout counsel Giovanna García provided local advice to Swiss multinational ABB Group on its $2.6bn global acquisition of General Electric (GE) Industrial Solutions. InRetail Peru, part of Intercorp Group, is also a key client of the practice.
Dispute resolution Tier 2
Payet, Rey, Cauvi, Pérez Abogados fields a well-resourced team which covers all types of commercial disputes across arbitral, litigious, administrative and criminial courts. Clients report 'great service' and the team's ability to 'detect problems well in advance' of their arising. In a major boost to the practice, prominent arbitration expert Mario Reggiardo joined as partner from leading arbitration boutique Bullard Falla Ezcurra Abogados where he co-led the practice. He joins Julio César Pérez (head of dispute resolution), José Caro John (head of white collar crime) and Máximo Gordillo on the partner-level disputes bench. The practice acts for some of Peru's highest-profile companies and global players, with recent matters including success in a $25m claim on behalf of BNP Paribas following a 14-year battle against Avanzit (now Ezentis). Current mandates include advising Scotiabank, Interbank, Volcan Compañía Minera and Fenix Power, among others, in high-value litigation, while arbitration cases include a $65m dispute in the oil-and-gas sector.
Electricity Tier 2
Payet, Rey, Cauvi, Pérez Abogados's practice group is 'very experienced' and provides ongoing counsel to a number of key players in the electricity sector, where it demonstrates particular strength in regulatory and public law matters. It's trophy client is Peru's largest energy conglomerate, Enel Generación Perú, which the team is advising on sanctioning and administrative proceedings before local authorities (among other issues); it is also advising subsidiary Enel Green Energy on thje negotiation of amendments to its renewable energy electricity supply agreements with the Ministry of Energy and Mines. The firm's head of regulatory matters, Gerardo Soto, has 'significant knowledge of the power sector', as does associate Mayra Aguirre, who specialises in electricity regulation and administrative law. Other clients include Electroperú and COES.
Projects and infrastructure Tier 2
Payet, Rey, Cauvi, Pérez Abogados' tier-one corporate and finance practices lend themselves well to major project work, attracting some significant project finance and development instructions. The practice acted as local counsel in the headline $900m project finance for Marcobre’s Mina Justa project, representing the 16-strong syndicate of lenders that included Société Générale, Crédit Agricole and Natixis. On a less positive note, former co-head of the practice Aldo Reggiardo left to lead the new Peru office of Spanish giant, Cuatrecasas; the firm's projects practice will now be led by fellow co-head Juan Antonio Egüez and counsel Giovanna García. Egüez is counsel to Graña y Montero, as shareholder of Gasoducto Sur Peruano, in connection with the termination of the concession agreement for the development of the Southern Gas Pipeline project. Other clients include China Development Bank, Banco de Crédito del Perú, Clean Energy del Perú, Transportadora Callao and Proinversion.
Public law and regulation Tier 2
Clients at Payet, Rey, Cauvi, Pérez Abogados benefit from the dedicated administrative and regulatory law expertise of practice head Gerardo Soto: 'very experienced' and a former head of legal at OSIPTEL, he has standout capability in the electricity segment. He is supported by versatile name partner Alonso Rey, who has experience in concessions, PPP and administrative matters. The team has capability across all aspects of public law and regulation, attracting significant matters and clients. They include acting for the Ministry of Transport and Communication regarding fees for use of radio waves by mobile telecom operators Entel Perú and Viettel Peru, and representing Clean Energy del Perú in disputes before regulatory agency OSINERGMIN and the Ministry of Energy and Mines. The group is also assisting Electroperú with regulatory compliance and public procurement matters.
Environment Tier 3
The 'very efficient' practice at Payet, Rey, Cauvi, Pérez Abogados is primarily focused on environmental support for transactions in the finance, extractive, manufacturing and agricultural sectors. A broad caseload includes advising the sizeable syndicate of bank lenders on the social and environmental aspects of Marcobre's $900m Mina Justa mining project. Non-transactional work included assisting Inca Rail with regard to the implementation of -and compliance with- new trransport sector environmental regulations. Key adviser Vanessa Chávarry was promoted to counsel and co-leads the practice, which is overseen by corporate partner José Cúneo.
Labour and employment Tier 3
Payet, Rey, Cauvi, Pérez Abogados has achieved some impressive client gains over the past year, including Inca Rail, IC Power Southern Terminals and Pepsico Sucursal del Perú, with the team assisting the latter, for example, with issues including collective bargaining, contentious proceedings and general advisory matters. Following the departure of former practice head Germán Lora to Damma Legal Advisors in December 2019, stand out individual and Counsel Cristina Oviedo is heading up the practice. Recent work Includes advising industrial company Forsac Perú on collective bargaining issues, as well as ongoing advice to Nestlé Perú and América Móvil Perú.
Mining Tier 3
Payet, Rey, Cauvi, Pérez Abogados provides a 'very professional and personalized service' with capability throughout all stages of mining projects, from exploration and construction to operation and closure, including M&A and financing transactions. Efforts to grow the practice are paying dividends, with a number of high-profile client gains and instructions during the past year. Glencore, Las Bambas Compañía Minera and state agency Proinversión are all new clients, while notable work included acting for the substantive syndicate of domestic and international lenders in the $900m financing extended to Marcobre for its Mina Justa project. The team is also advising Proinversion on a private initiative process to develop the El Algarrobo mining project in northern Peru. Head of practice José Cúneo excels on the transactional side, with counsel Angel Chavez leading on regulatory and environmental issues.
Tax Tier 3
Newly made-up Vanessa Watanabe now heads the team at Payet, Rey, Cauvi, Pérez Abogados following the 2018 departure of former lead partner Iván Chu to co-found Damma Legal Advisors. Watanabe and a team of capable associates provide tax support on some market-leading transactions, such as advising Credicorp Capital Servicios Financieros, Scotiabank Perú and BTG Pactual, as structuring banks, on Primax's $200m second corporate bond programme. The team is currently defending Scotiabank in judicial proceedings against the SUNAT concerning a disputed $170m tax bill, advice led by head of dispute resolution Julio César Pérez.
Payet, Rey, Cauvi, Pérez Abogados > Firm Profile
Founded in 1996, today Payet, Rey, Cauvi, Pérez Abogados is regarded as one of the most important law firms in the country, with significant experience and a proven track-record in providing services of the highest added value in the various areas of the law related to corporate activity.
Areas of practice
Corporate/M&A: the practice covers a broad range of topics from incorporation procedures to corporate restructuring and market exit, including corporate transactions and contracts in general, and commercial legislation, among others. The firm’s frequent participation in acquisitions and transactions provides it with the knowledge and experience necessary to provide the best and most innovative advice.
Capital markets and finance: the firm counsels institutional lenders and investors, borrowers and financial institutions in matters related to corporate finance. Its experience includes the design and listing of public equity and debt offerings, takeover bids, exchange offers, securitizations, investment funds and other innovative financial instruments. Of particular importance is the firm’s vast experience in international offerings, in which it has interacted with leading firms, auditors and investment banks internationally.
Corporate and commercial litigation: the firm regularly represents foreign and local clients in civil, commercial, corporate and regulatory disputes. In recent years it has represented clients in important local corporate and shareholder litigations. The firm’s commercial experience covers leading cases related to business recovery, insolvency, insurance and reinsurance, contract enforcement, civil liability and torts.
Competition/regulation: the firm represents clients in a broad array of corporate transactions concerning horizontal restraints, monopolization, tying, exclusive dealing, refusals to deal and numerous vertical arrangements. Its experience also involves price-fixing, exclusionary practices and merger control procedures, as well as a wide array of trade regulation, unfair competition, intellectual property, product liability and consumer protection matters. The firm’s practice covers a broad array of regulated industries. Its energy practice represents some of the country’s most important electricity generation, transmission and distribution companies, as well as other participants in the electricity and gas markets. The firm’s communications practice counsels in all procedural aspects related to the granting of licences, concessions and authorizations, negotiating and drafting interconnection agreements and implementing regulated price structures.
Projects: the firm has extensive experience in the design and execution of non-recourse or limited recourse project financing structures. The firm’s experience includes counseling developers, sponsors and lenders to important projects in the infrastructure sector in Peru, including advising in all negotiations and procedures needed to obtain the necessary governmental concessions, permits and authorizations.
Tax: the tax practice is mainly focused on tax planning and consulting, special tax audit assignments and representation before tax and customs authorities. The department has particularly relevant expertise in M&A transactions, regularly counseling on the most suitable and business-oriented tax schemes to successfully structure and implement these types of transactions. The firm also has important experience providing advice on, and enforcing, tax benefits applicable to investors and to the recipient companies of such investments.
Labor: the labor practice encompasses advice related to personnel hiring plans, including nationals and expatriates, preparation and drafting of management compensation and welfare benefits programs, as well as implementing labor cost reduction strategies.
|Partners||José Antonio Payet E: email@example.com|
|Partners||Alonso Rey E: firstname.lastname@example.org|
|Partners||Juan José Cauvi E: email@example.com|
|Corporate and M&A||José Antonio Payet|
|Corporate and M&A||Susan Castillo|
|Corporate and M&A||Giovanna Garcia|
|Banking, finance and capital markets||José Antonio Payet|
|Banking, finance and capital markets||Eduardo Vega|
|Banking, finance and capital markets||José Cúneo|
|Projects and infrastructure||Alonso Rey|
|Projects and infrastructure||Juan Antonio Egüez|
|Projects and infrastructure||Giovanna Garcia|
|Dispute resolution (litigation and arbitration)||Julio César Pérez|
|White-collar crime||José Caro John|
|White-collar crime||Juan Diego Ugaz|
|Competition and antitrust||Carlos A Patrón|
|Labor and employment||Alonso Rey|
Staff FiguresOther fee-earners : 97
OtherPartners : 17
Doing Business In
The prominent investment climate has improved dramatically in Peru since the 1990s. This positive wave remains thus far allowing the macroeconomic indicators and the forecasts for the subsequent years to be auspicious, despite the end of the commodities boom and the corruption scandal bound to the Brazilian construction giant, Odebrecht, which have endangered the bases of the Peruvian economy during the last years.
Peru has the sixth major GDP of the region ($ 214 MM) and it would reach similar levels during the following years. The Peruvian government ponders that the economy will maintain its solid macroeconomic foundations, which would allow mitigating eventual internal or external shocks.
Key Indicators 2017-2018
|Population: 32’165,485||Unemployment: 6.9%|
|GDP: $214 MM
Annual growth: 4%
GDP per capita: $6,600
|Competitiveness index: 72||Ease to doing business: 68 of 190|
Sources: World Bank, World Economic Forum, Ministry of Economy and Finance of Peru, Central Bank of Peru and Forbes.
According to the Ministry of Economy and Finance, the private investment will be the key driver in the consolidation of the economic activity growth during 2019, mainly supported by the mining investment and sectors like hydrocarbon, retail, infrastructure, tourism and real estate. It is worth to note that the mining investment would rise around 23% in 2019, due to the beginning of a new cycle of investments for the development of projects like Quellaveco, Mina Justa, Corani and the expansion of Toromocho.
Given the high domestic demand and the free trade agreements with strategic markets, the investment in the retail industry would grow more than 30% on average with respect to 2017. In fact, according to the Global Retail Development Index, Peru is ranked ninth among the thirty emerging countries most attractive for the development of said industry and is positioned as the leader among Latin American countries. Furthermore, throughout this year Peru is going to be the host of three international sports events (Pan-American Games, Parapan-American Games and FIFA U-17 World Cup), these events have boosted the investment in tourism and hospitality industries, both in Lima and the provinces.
Without prejudice of the encouraging economic indicators and forecasts, the most important challenges for the country shall be to face the endemic level of corruption rooted in public institutions and to reduce the current levels of poverty and social inequality.
GENERAL LEGAL FRAMEWORK FOR PRIVATE INVESTMENT
The Peruvian Constitution provides the cornerstones and principles that support the legal framework to protect and promote the private investments and foreign investments. Within this structure, it is established that, for instance, there must not be a discriminatory treatment among national and foreign investors. Likewise, it is guaranteed the free possession and use of foreign currencies and to use the most favorable exchange rate available in the market. There are also special regulations for certain industries, like mining, hydrocarbons, telecommunications, fishing, aviation, agriculture, among others that provide benefits and incentives.
Foreign investors (and investment recipient companies) who meet some requirements will be qualified to benefit from the legal stability regime, by virtue of which the State guarantees the stability of the rules in force at the time of execution in connection with certain relevant regimes and rights, during a 10-year term (except if executed by a concessionaire of public infrastructure and utility works or by investors therein, in which case the duration will be subject to the validity period of the concession agreement).
Moreover, the Peruvian government may refer disputes arising from a contractual relationship to courts set up by virtue of treaties in force, as well as to national or international arbitration, in the manner contemplated by law. Similarly, private investors are free to choose the law that will rule their contractual relationships, provided that foreign law shall not be incompatible with international public policy, general good behavior or with specific limitations set forth in the laws (e.g. bankruptcy, insolvency, liquidation, among others).
Finally, Peru has entered into bilateral investment treaties, among others, with Germany, Argentina, Australia, Bolivia, Canada, Chile, China, Colombia, South Korea, Denmark, Ecuador, El Salvador, Spain, Finland, France, Italy, Malaysia, Norway, Netherlands, Paraguay, Portugal, Rumania, Singapore, Sweden, Switzerland, Thailand and the United Kingdom. In addition, Peru has executed several free trade agreements, for instance, with the Andean Community, the United States of America, the European Union, Honduras and the Pacific Alliance.
COMPANY STRUCTURES TO START A BUSINESS
In order to carry out economic activities, foreign investors may choose to incorporate a permanent company or establish a branch. Both figures are recognized and ruled by the General Corporation Act.
Although the law recognizes up to seven corporate forms, the following four are currently mainly used: (a) Closed Stock Company (Sociedad Anónima Cerrada – SAC), (b) Ordinary Stock Company (Sociedad Anónima Ordinaria), (c) Public Stock Company (Sociedad Anónima Abierta – SAA) and, (d) Limited Liability Company (Sociedad de Responsabilidad Limitada – SRL).
To set up a company at least two shareholders or partners are required, and, with certain exceptions, no minimum capital will be required. Broadly, regulations applicable to corporations are similar to those found in other jurisdictions.
Maximum number of shareholders/partners
|Closed Stock Company||
|Right of first refusal, unless the bylaws set forth otherwise.||
|Ordinary Stock Company||
|None, unless the bylaws set forth otherwise.||
|Public Stock Company||
|Limited Liability company||
|Right of first refusal, unless the bylaws set forth otherwise.||
Foreign companies may also establish branches in Peru to the extent their bylaws and articles of incorporation permit them. In general terms, it is mandatory to assign capital to the branch and to appoint a permanent legal representative in the country. Since the branch will not have its own legal personhood, the parent company will be liable for the obligations incurred by the branch; however, for tax purposes, branches are deemed as an independent entity.
MAIN ADMINISTRATIVE PERMITS AND AUTHORIZATIONS
As a general rule, for initiating economic activities in Peru, an establishment must have the following permits:
- Civil Defense Safety Certificate: Is a special permission by which (i) it is assessed the risk and safety conditions of a premise and (ii) it is confirmed the facility fulfills several safety measures related to its operation, maintenance and accessibility. This certificate is an essential requirement that a titleholder of any economic activity must obtain in order to apply for the Operating Permit before the municipality.
- Operating Permit: Is a permit granted by the local government which allows its titleholder to develop the activities detailed in the document. It is given only if the economic activity to be performed is permitted in the corresponding area, according to zoning and use of land regulations.
Special authorizations or permits may be required for regulated activities, such as, mining, healthcare, transport, education, telecommunication or banking. This special authorization should be obtained in order to apply for the Operating License.
- Construction License: If a new facility is going to be built, a Construction License is required, depending on the complexity of the edification.
The Peruvian tax system involves:
- Income tax.
- Value-added tax and excise tax.
- Customs duties.
- Wealth tax: Real estate tax and provisional net asset tax.
- Other kind of taxes: Social contributions and financial transactions.
The Peruvian tax system follows the levying criteria of residence and source of income. For tax purposes, the law considers national residents to: (a) Peruvian and foreign individuals, who domicile in the country for more than one hundred eighty-three (183) days in any period 12-month period, (b) corporations set up in Peru, and (c) permanent establishments operated by foreign entities (i.e. incorporated abroad) in Peru.
In defining residence, Peruvian treaties generally follow the OECD Model Convention. Nevertheless, Decision 578 of the Andean Community contains its own definitions, including that a “resident” is a company incorporated in Peru, or, by default, the effective management of which is in Peru.
Resident individuals and corporations are liable to income tax on their worldwide income. In the case of non-resident individuals’ taxpayers, as well as permanent establishments operated by foreign entities, tax is levied solely on income from Peruvian sources.
Peruvian income sources are assessed according to a schedular system, classified into the following categories:
– First category: Income from letting property.
– Second category: Investment income (e.g. interest, royalties, proceeds from the transfer of intangibles, life annuities and dividends) and some kinds of capital gains.
– Third category (business income): Income from trade, industry, mining, farming and other similar sources, and other income not specifically included in another category.
– Fourth category: Income from independent personal services.
– Fifth category: Employment income (including pensions).
Overview: Income tax rates
|Corporate income tax||29.5% (2017 thereafter)|
|Dividends||5% (2017 thereafter)|
|Tax on interests||Related parties: 30%
Non-related parties and tax havens*: 4.99%
*Provided legal requirements are met; otherwise, the applicable rate will be 30%.
Peru is part of double taxation agreements, under the OECD model, with Brazil, Canada, Chile, Mexico, Portugal, South Korea and Switzerland. Likewise, the members of the Andean Community (Bolivia, Colombia, Ecuador and Peru) are also subject to a treaty to avoid double taxation.
Value-added tax and excise tax
Value-added tax (VAT) is levied on domestic supplies of goods and services made by taxable persons, as well as on the importation of goods by any person. The current single rate is 16%. Exports of goods and some services are 0% rated. Some specified transactions are exempt.
Transactions subject to VAT are also subject to the municipal sales tax (rate of 2%). Both taxes are collected at the same time.
Excise tax is levied on the production and importation of listed goods. The applicable rates depend on the product.
Peru does not have restrictions nor non-customs duties limitations for the importation of goods. Hence, any kind of goods can be imported without requiring prior government authorization, although some restrictions based on matters such sanitary rules, security or environment may be applicable. Likewise, importation of used goods is allowed (e.g. machinery and equipment for industrial purposes), unless specific exceptions are applicable.
Importation is taxed, in addition to the VAT and the excise tax, as appropriate, with the ad valorem tariff. The applicable rates ranging between 0%, 6%, or 11%, depending on the kind of the merchandise. A 5% surcharge is levied on certain goods.
Exports are tax-free and, as general rule, it is not required to request prior authorization, license or any registration to do so. Nevertheless, exportation of some goods (endangered animals, species, among others) could be prohibited or restricted.
Companies that export goods or services have the right to request the refund of the VAT paid during the production process. In addition, there is a drawback regime for exporters, which allows them to refund, wholly or partially, the customs duties levied on goods or raw materials that were required in the production process (without counting fuels or other energy source). This regime only applies when the CIF value of the imported goods does not exceed 50% of the FOB value of the final exported product. The refund rate is currently 3% of the FOB value.
As general rule, the rendering of employees should be with an indefinite term labor agreement. However, labor agreements for a fixed term are allowed but just in certain cases, provided the meeting of the requirements established by law.
The general labor regime is applicable to the hiring of foreign workers, with the same rights and benefits recognized for local personnel. However, as a rule, companies may hire foreign workers, provided that they do not exceed 20% of the total workforce or their salaries do not exceed 30% of the total value of the payroll. There are cases where the mentioned percentage limits do not apply.
General rules and main benefits
|Working hours||8 hours per day or a maximum of 48 hours per week.|
|Overtime||Voluntary and is paid with a surcharge.|
|Minimum wage||Approximately $ 280.00.|
|Annual paid leave||30 calendar days of paid vacation per year of service.|
|Legal bonus||2 per year (July and December), equivalent to the monthly wage.|
|Compensation for time of services||2 per year (May and November), equivalent to a half monthly wage each of them.|
|Family allowance||Approximately $ 30.00 monthly|
|Social health insurance||Contribution to 9% of the monthly wage. It is born by the employer.|
|Life insurance||After 4 years on payroll.|
|Profit sharing||(a) Fisheries, telecommunications and industry, 10% (b) mining, wholesale and retail business, 8% (c) other activities, 5%.|
|Severance payment||In case of wrongful termination (without fair cause), employees are entitled to receive 1.5 monthly wages for each year of service, up to 12 monthly wages.|
Since 2015, Peru has been promoting and extending the regulations regarding paternal leave. For instance, the maternity leave has been extended to 98 calendar days, with a compulsory period of 49 days of postnatal leave. The remaining 49 days can be taken before birth or they can be wholly or partly deferred and added to postnatal leave if the mother so desires. In case of the paternity leave, the duration is 10 consecutive calendar days. In some specific circumstances (e.g. premature or multiple births), both kind of leaves will be extended for 30 additional days.
On December 2017, the Equal Pay Act was passed by the Legislative Branch, the purpose of the law is to prevent salary discrimination among men and women, as well as to guarantee the right of employees to receive the same salary for equivalent services, not only for identical ones. The employers must have to fulfill several obligations in order to guarantee the above.
In general, titleholders of economic activities are subject to the Environmental General Act, which establishes that they must comply with environmental regulations, and are responsible for the emissions, effluents, discharges and other negative impacts generated on the environment, health or natural resources as a result of their activities. This responsibility includes the risks and eventual environmental damages that can be generated by action or omission.
In order to comply with the objectives of protection and conservation of the environment, the Environmental General Act establishes several instruments aimed at giving effect to the environmental management obligations set forth in existing regulations and to fulfill the objectives aimed by the national environmental policy.
It is important to note that, in addition to general environmental regulations, title holders must comply with the specific regulations of their applicable sector and are subject to regular supervision by the competent authorities.
Peruvians development of a well-functioning market economy is regulated by INDECOPI, the Spanish acronym for the National Institute for the Defense of Competition and for the Protection of Intellectual Property. It is a multiple registry of intellectual property rights and an administrative court for competition related issues.
Among other activities, INDECOPI encompasses responsibilities shared in the U.S. by the Department of Commerce, the National Institute of Standards and Technology, the Patent and Trademark Office, the Department of Justice Antitrust Division, the Federal Trade Commission, the Bankruptcy Courts, the Court of Federal Claims and the Court of Appeals for the Federal Circuit.
As one of its principal functions, the Peruvian Antitrust Statute establishes the general legislative framework for the promotion of free competition. The statute sanctions, on one hand, the abuse of dominant positions and, on another, practices that restrict. This statute does not contain provisions concerning ex ante merger controls; however, the electricity market regulated under Law 26876 has a pre-merger regime.
It is worth to note that the legislative branch is discussing a bill that regulates mergers and acquisitions. The purpose of this law is to regulate the prior evaluation of business concentration operations that don’t constitute a significant restriction of effective competition, always guaranteeing the costumer well-being and economic efficiency in the markets. This bill could be approved during 2019.
The Antitrust Statute does not establish market quotas or any other objective criteria for determining whether a dominant position exists. Section 7 of the Antitrust Statute simply defines a dominant position as the ability of one or several undertakings to act independently of their competitors, purchasers, clients or suppliers, which may be derived from factors such as market share, the degree of concentration in the market, technological constraints, barriers to access finance, supplies or distribution networks, as well as other barriers to entry. In turn, Section 10 of the Antitrust Statute specifically classifies the following conducts as an abuse of dominant position: (i) refusals to deal; (ii) discriminatory practices; and (iii) tying arrangements. In conclusion, it is sanction as illegal “in general, those conducts that prevent or make difficult the entry or permanence of current or potential competitors in the market due to different reasons than a greater economic efficiency”.
On the other hand, the Antirust Statute sanctions any form of collusion to restrict competition or restrain trade, specifically: (i) agreements to fix prices, commercial conditions, services, quality, production, distribution, technical innovation or investments; (ii) the allocation of market or production quotas, (iii) agreements to establish discriminatory practices; (iv) concerted tying arrangements; and (v) concerted refusals to deal and boycotts. Likewise, this section also concludes in an open-ended clause that sanctions as illegal “Other equivalent effect practices seeking for benefits due to different reasons than a greater economic efficiency”.
Decision 486 of the Andean Community, the Legislative Decree 1075 and the Supreme Decree 059-2017-PCM, set forth the rules for the protection of the following elements of industrial property: patents for inventions, certificates of protection, utility models, industrial designs, industrial secrets, brands of products and services, collective marks, certification marks, commercial names, commercial slogans and appellations of origin.
On the other hand, Decision 351 of the Andean Community and the Legislative Decree 822 provide the legal general framework to protect original works of authorship in the literary or artistic field, whatever their gender, form of expression, merit or purpose, as well as the regime applicable to collective management societies. Law 28131 specifically regulates the neighboring rights of artists, performers and performers.
As mentioned before, INDECOPI is the authority responsible for the administrative monitoring and protection of intellectual property rights.
Personal data protection is governed in Peru by (i) the Personal Data Protection Act and its regulations; and (ii) the Security Policy on Information Managed by Databanks of Personal Data. Data protection laws are applicable to the processing and transferring of personal data contained or intended to be contained in databanks.
Under the law, a data transfer requires the consent of the data subject. In the case of cross-border flow or international transfer of personal data, the level of protection of personal data must be guaranteed and the firm must communicate this cross-border flow to the Data Protection General Agency (Autoridad Nacional de Protección de Datos Personales).
Databank owners and databank processors must adopt technical, organizational and legal measures necessary to guarantee the security of the personal data they hold. The measures taken must ensure a level of security appropriate to the nature and purpose of the personal data involved.
On April 21, 2016, the Peruvian government enacted Law 30424, supplemented by Legislature Decree 1352 and amended by means of Law 30835, which came into force on January 1, 2018. These laws regulate the liability of legal entities in connection with the following crimes: (i) generic and specific bribery, (ii) money laundering, (iii) financing of terrorism, (iv) collusion and (v) influence peddling. Even though the mentioned law regulates the “administrative responsibility of the legal entities”, it has criminal consequences.
It also sets exemptions and mitigations for legal entities involved in the execution of the referred crimes, which are the following:
- When the representatives or employees of the legal entity have committed the crimes for their own benefit or for a third party other than the legal entity.
- When any person representing the company or on their behalf commits a crime fraudulently evading the prevention model or compliance program implemented previously by the company. To be exempted of criminal liability the company must prove to the criminal authority that it had a ‘prevention model’ to preempt the commission of crimes, but that despite this a worker acted unlawfully.
Regarding the model of prevention, this consists on implementing measures issued by the company to foresee and control as required, the dangers of the commission of crimes that may arise from its activity. Therefore, if the company implements a compliance program before any of their staff members or representatives commit one of the crimes that may cause the company’s responsibility it will be exempted of criminal liability in connection with the listed crimes. According to the referred law, the compliance program should be related to the company’s risks and needs, and it must have at least the following elements:
- A person responsible for preventing risks of corruption and money laundering;
- Protocols to identify, assess and mitigate the risk of corruption and money laundering;
- Regular training and scheduled dates to conduct the training; and
- System for evaluation and continuous monitoring of the prevention model.
- Mergers of legal entities. The exemption of liability will be applied when the acquiring company demonstrates that it carried out appropriate due diligence actions prior to the merger.
There are two (2) mitigating situations. First, if the legal entity adopts a compliance program after the commission of the crime but before initiation of the oral trial. Second, if the entity collaborates with the Attorney’s Office of the Prosecutor in clarifying the facts that cooperation shall be considered.
Likewise, on September 4, 2018 and by means of Legislative Decree 1385 private bribery was included as a crime in the Peruvian legislation. It punishes bribery between individuals inside a private company, NGO, associations, foundations, committees, among others.
Finally, the Peruvian government has enacted Law 30737 to secure the indemnification payment to the Peruvian State in cases of crimes committed against the Public Administration, money laundering and other related crimes. Under this regulation were include legal entities that (i) directly or through its representatives have been convicted, in Peru or abroad, or (ii) have admitted or recognized the commission of any crime against the Public Administration. Further, the law applies to legal entities associated with the entities that meet the abovementioned conditions at the time of the adjudication of a project in the bidding process of the Peruvian State, and as such have participated in agreements signed with the Peruvian State.
Certain entities covered by this law are bound to establish a trust on assets, rights, shares, certain flows or participations whose value, individually or jointly, is equal to or greater than the estimated amount to contribute to the future payment for the indemnification. Some entities are bound to
implement a compliance program appropriate to its nature, risks, needs and characteristics, consisting of appropriate surveillance and control measures to prevent the future commission of crimes or to significantly reduce the risk of its commission under warning to some restrictions stated in the law.
Peruvian law allows both the arbitration proceedings and the judicial proceedings. Regarding the judicial proceedings, the procedural law defines how the proceeding should be followed as well as the parties’ rights and obligations on the proceeding.
In Peru, judgments issued by a foreign court have the validity recognized to them by the corresponding treaties. If there is no treaty, the reciprocity principle will apply. Therefore, foreign judgment will have the same effects that are given to Peruvian judgments in the foreign country.
On the other hand, Peru is part of the Convention on the Recognition and Enforcement of Foreign Arbitral Awards since 1988 and has not made any limitation o reservation on the application of said convention. Further, Peru has signed and ratified the Convention on the settlement of investment disputes between States and nationals of other States, applicable since 1993.
The General Mining Act governs mainly the mining activities (i.e. sampling, prospection, exploration, exploitation, general works, mineral processing, commercialization and transportation). Just exploration, exploitation, general works, mineral processing and transportation of mineral are activities do require the granting of a concession by the Peruvian government.
Sampling, prospection and commercialization of minerals, as well as their storage in warehouses located outside of the mine site, are activities that can be freely carried out without requiring a concession. However, the rest of mining activities do require the granting of a concession by the Peruvian government. Concessionaires must pay surface and registration duties. The authority entitled to grant mining concessions is INGEMMET.
Type of Concession
|To explore and exploit the mineral resources located within a specific area. The mining concession is a property right that is different and separate of the surface land where the concession is located and may even be mortgaged separately from the surface land.|
General Works Concession
|To provide ancillary services, such as ventilation, drainage, hoisting or fumes extraction in two or more concessions from different concessionaires.|
|To extract or concentrate the valuable parts of an ore and/or to smelt, purify o refine it by means of a series of physical, chemical/and or physical-chemical processes.|
Mining Transportation Concession
|To install and operate a conveyor system, mineral pipes or track / cable cars for the transport of minerals from one or several mining sites to a port or processing plant, or to a refinery or in between any of the above.|
There are several other regulatory norms which regulate different aspects of the mining activity, such as those referred to health and safety, environmental management and protection, use and disposal of water resources, disposal and treatment of solid residues, handling and storage of explosives, storage and transportation of chemical products, among others.
Additionally, mining companies are subject to pay special taxes, such as the mining royalty (effectives rates ranging from 1 to 12% of the quarterly operating profits).