: A Guide to Uruguay's Legal System and Research
by Pablo Sandonato de Leon
Pablo Sandonato de Leon is Associate Professor in Public International Law at the Law Schools of the Catholic University of Uruguay Dámaso Antonio Larrañaga, and of the University of Montevideo, Professor in Public International Law in the General and Technical Staff Course of the Naval War School, High Command, Ministry of National Defence. He has a degree in Law from the Catholic University of Uruguay and a Master's degree in International Relations from the School of Political Science of the University of Bologna (Italy). He is a member of the "International Law Association" and of the "American Society of International Law". He is currently a candidate for the Master in International Studies degree at the Graduate Institute of International Studies, Geneva.
Published September/October 2007
Table of Contents
GENERAL AND COUNTRY INFORMATION
Codification and decodification of the Law
Applicability of International Law in Uruguay
Conflict of Laws (Private International Law)
CITIZENSHIP AND STATUS OF FOREIGNERS
Consortia
Foreign Companies
in Uruguay
INTELLECTUAL AND PROPERTY RIGHTS
International Regulations Ratified by Uruguay
LABOUR AND SOCIAL SECURITY LAW
Business Activities Income Tax (IRAE for its acronym in Spanish)
Specific Internal Tax (IMESI for its acronym in Spanish)
THE PRACTICE OF LAW IN URUGUAY
GENERAL AND COUNTRY INFORMATION
Full local name: "República Oriental del Uruguay"
English full name: Oriental Republic of Uruguay, or Eastern Republic of Uruguay
Short form: Uruguay
Independence: October 28th 1828 (official celebration: August 25th 1825).
Geographical location: South, Southeast of the American continent, South American subcontinent, latitude 30º - 35º South and longitude 53º - 68º West.
Area: 176,215 square kilometres.
Population: 3,241,003 (2004).
Official language: Spanish
Capital City: Montevideo (pop. 1,325,968; 2004)
Membership in International Organizations: ALADI, CSN, FAO, G-77, IADB, IAEA, IBRD, ICAO, ICC, IFAD, IFC, IFRCRCS, IHO, ILO, IMF, IMO, INTERPOL, IOM, IPU, ISO, ITU, MERCOSUR, MIGA, OAS, OPANAL, OPCW, PCA, PUASP, UN, UNCTAD, UNESCO, UNFICYP, UNIDO, UNOCI, UNWTO, UPU, WCO, WHO, WIPO, WMO, WTO.
Uruguay is located in a strategic geographical area in the region, it is a buffer state between Brazil and Argentina and a gateway to the basins of the River Plate and the River Parana. Its population has a high literacy rate and there is a large urban middle class. Income distribution is relatively even, infrastructure is good, and telecommunications are well-developed. There is an adequate and dependable juridical framework. Regarding governance and governability, Uruguay is known in the region for its political and economical stability. It is a market-oriented economy in which the state still plays an important role.
Uruguay is a major destination for regional and extra-regional investment, and provides market opportunities in information technology, telecommunications equipment and chemicals. Major infrastructure projects in the pipeline are: the Paraná-Paraguay River Transportation System, energy projects (combined power plant, transmission, wind), railway rehabilitation, a new airport terminal, port projects and cellulose and wood chipping plants.
At a diplomatic level, Montevideo hosts the headquarters of a number of regional international organizations: the Secretariat and the Permanent Representatives Commission, both organs of MERCOSUR; the Latin American Integration Association (ALADI for its Spanish acronym, created at Montevideo in 1980); the Postal Union of the Americas, Spain and Portugal (UPAEP); and the Inter-American Children's Institute, a subsidiary organ of the Organization of American States.
Uruguay is ranked second in Transparency International's Corruption Perception Index in Latin America, second only to Chile, and 28th globally[1].
THE URUGUAYAN STATE
To the North and Northeast: with the Federal Republic of Brazil; to the East: with the Argentine Republic; to the South-Southwest: with the River Plate and the Atlantic Ocean
Semi-Presidential, Proportional, Representative Republic.
19 departments ["departamentos" (pl.) "departamento" (sing.)]: Artigas, Canelones, Cerro Largo, Colonia, Durazno, Flores, Florida, Lavalleja, Maldonado, Montevideo, Paysandú, Río Negro, Rivera, Rocha, Salto, San José, Soriano, Tacuarembó, Treinta y Tres.
Rule of Law and democratic values are a constant in the civic life of the country, with exceptions in the late 19th Century and between 1972 and 1985.
The President and Vice-President of the Republic are elected by direct, universal and secret ballot, as are the legislators, both national (in a bi-cameral system of Senators and Representatives, the latter also known as "Diputados") and departmental, and the departmental executive branch ("Intendente Municipal"). The legislative branch, in a joint session of both Chambers (General Assembly) elects citizens to constitute the jurisdictional organs: namely, for judicial justice (the Supreme Court of Justice), for electoral justice (the Electoral Court), and for administrative justice (Contentious Administrative Court); all of whom are known as "Ministers". It also elects the members of the disbursements and payments external control organ (Court of Audit).
The President of the Republic is elected for a period of five years, non-renewable consecutively. According to most received constitutional doctrine, the President is only the Chief of State; while the office of Chief of Government corresponds to the President acting in Cabinet (with his Ministers). The President acting with one or more Ministers, or with the entire Cabinet depending on the issue, constitutes the Executive Branch. It is said that Uruguay's system is not entirely presidential because, even though the President elects his Ministers freely (according to the Constitution), he can only do so from amongst citizens who, through Parliamentary support, are assured of their permanence in office. State Ministers can be censured by Parliament.
The Legislative Branch is composed of three organs: the Chamber (House) of Senators, the Chamber (House) of Representatives and the General Assembly (both Houses in joint session). Members of this branch are also elected by universal and secret ballot by means of an integrated system of proportional representation (albeit in a weakened version). The Vice-President of the Republic is President of the Senate, which has thirty-one members. The House of Representatives has ninety-nine members.
As a remnant of early and mid-twentieth century state interventionism, the state is still engaged in commerce and industry, acting through autonomous entities and decentralized services, which have varying degrees of independence from the Executive Branch.
Territorial administration is decentralized and carried out in 19 Departments, each of which has its own non-autonomous executive branch (the executive authority is the Mayor, or Governor, known as the Intendente) and legislative branch (Departmental Council). The Departmental Council is composed of thirty-one honorary members (councillors), who pass regulations which are legally binding within the territory of the department. The Council must approve the departmental budget (that is, the budget proposed by the Council itself and the Executive Authority).
The national budget is five-yearly, with yearly balances and indispensable adjustments. The initiative in budgetary issues is the exclusive responsibility of the Executive Branch, except in the cases of the controlling organs and the decentralized services and autonomous entities.
The Uruguayan juridical system comprises a code of Civil Law based on the Spanish legal system, since Uruguay's territory was once part of the Kingdom of the Indies, whose sovereign was the King of Spain.
The current Constitution was approved in 1967 (with amendments in 1989, 1994, 1996 and 2004). It establishes that laws should be written and passed by Parliament and enacted by the President of the Republic.
Uruguay has adopted the Civil Law system; however, sentences issued by jurisdictional justice (Courts of the first instance, Higher Courts and the Supreme Court of Justice), are used as a guide in subsequent trials; although they are not binding (do not constitute a legal precedent).
In issues pertaining to property rights and their guarantees, secured interests in property and contracts are recognized and enforced. Mortgages exist, and there is a recognized and reliable system of recording such securities. Uruguay's legal system protects the acquisition and disposition of all property, including land, buildings, and mortgages. Nevertheless, execution of guarantees is usually a slow process.
The only two sources of Law in Uruguay are the Constitution and the Law. Juridical custom is only a source of law when the law expressly refers to it, and general legal principles are only used as instruments of interpretation.
The structure of the Uruguayan juridical system is strongly pyramidal in shape, with the Constitution at the apex. Below the Constitution is the Law (and Departmental Council decrees-departmental legislative acts which are binding within their territory-the decrees of the Executive Branch, Ministerial Resolutions, etc.)
Bills may originate amongst the citizens (by means of a popular initiative, both for the passing or the repeal of a law), in the Legislative Branch (in any of the two Houses of Parliament) or in the Executive Branch. However, legislative initiatives in matters related to the budget, public expenditure, tax exemptions, and minimum wages are the exclusive prerogative of the Executive Branch (in its capacity as leader of the State's economic policy), as are bills which are declared urgent.
In every case, Bills must be considered and passed by both Houses. Thus, a Bill passed by one of the Houses must be sent to the other, but if the latter fails to pass it and rejects it, the Bill will not be approved and may not be submitted again during the same year's session. On the other hand, if the House receiving the Bill should only have observations or addenda to include, the Bill is returned to the originating House which, if it accepts the observations or addenda, will communicate this fact to the other House and send the Bill directly to the Executive Branch so that the process may continue. However, if the originating House does not accept the observations or addenda and insists upon the original Bill, an assembly of both Houses may be requested (General Assembly), which will reach a decision, by a majority of two-thirds of the votes, passing one of the two Bills or drafting a new one.
Once a Bill is passed by both Houses, it is sent to the Executive Branch to be enacted and published. However, if the Executive Branch should have objections or observations, in total or in part (veto), the Bill must be returned with the objections or observations to the General Assembly, within a peremptory term of ten days. The General Assembly is convened and must decide, by a majority of three fifths of the members present in each of the Houses, whether to accept the Executive Branch's modifications, or to reject them, maintaining the Bill which was previously passed. If, after thirty days, the General Assembly has not expressly rejected the modifications, they will be taken as approved. On the other hand, if the assembled Houses reject the Bill returned by the Executive Branch, it will not be passed and may not be submitted again during the year's session. If, however, the Executive Branch's modifications are reconsidered, the Assembly will vote nominally, for aye or for nay, and each voter's vote and justification is published in the press.
The interpretation of the Law is regulated by the Preliminary Chapter of the Civil Code. The established method is referred to in doctrine as the "logical-systematic" method and consists of interpreting the text and context of a law, avoiding abstract results which may not be just. Thus, if the letter of the law is clear, it must be applied: "the literal meaning of a law may not be ignored, under the pretext of consulting its spirit". On the other hand, if the literal meaning of a law is not clear, the intention or spirit of the law, as clearly manifested by the law itself, or by reliable records of its application, may be invoked. The historical method is, therefore, only auxiliary.
National legislation is heavily decodified, in spite of the existence of ten Codes: Civil, Commercial, Criminal, Civil Procedures and Criminal Procedures, Mining, Water, Rural and Tax. The Civil Code was passed in 1867, the Commercial Code in 1865 and the Criminal Code, in 1934. The remaining Codes are more recent but in every case, are evidently outdated, with the sole exception of the General Procedural Code, of 1988, which has been used as a model for procedural codes in various Latin American countries.
There are at present innumerable laws which expressly or tacitly modify the regulations contained in the codes and which generate practical difficulties for those who must apply the law, and students. The problem is also invested with systemic significance, in view of the general obsolescence of juridical institutions which are somewhat anachronic and others which lack regulation, in particular taking into account the advances of science and technology in the last few decades.
The phenomenon of decodification in Uruguayan Law has not been fully taken into account by national doctrine, but it is a serious problem, which requires attention.
In Uruguay, juridical controversy may be resolved in one of two ways (except where the law states otherwise): judicially or extra-judicially. The first consists of applying to the Judicial Branch's institutions; the second, to the institutions of conciliation and arbitration existing in Uruguay or abroad. The Uruguayan Stock Market has a Conciliation and Arbitration Centre; which also officiates as an International Court of Arbitration for the MERCOSUR.
Legislation in Uruguay establishes a procedure for arbitrating tribunals (Articles 472 to 507 of the General Procedural Code). International arbitration tribunals may be guided by Uruguayan law or by foreign law, without distinction. Legislation recognizes the full effectiveness of foreign findings and sentences, which are submitted to exequatur procedure for their enforcement. The possibility is also established enabling national judicial institutions to suggest cautionary measures before an arbitral award is approved.
Uruguay is party to several of the principal international agreements regarding international arbitration, such as the Obligatory General Arbitration Treaty, of 1922; the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, of 1958; the Convention on the Settlement of Investment Disputes between States and Nationals of other States, of 1965; the Inter-American Convention on International Commercial Arbitration, of 1975; the Inter-American Convention on Extraterritorial Validity of Foreign Judgments and Arbitral Awards, of 1979; the MERCOSUR Convention on International Commercial Arbitration, of 1998; the MERCOSUR-Chile-Bolivia Convention on International Commercial Arbitration, of 1998.
The negotiation, signing (of assent or adherence) and ratification of treaties is the responsibility of the Executive Branch, in its capacity as the conductor of Uruguay's foreign policy. Once a treaty is signed, the Executive Branch sends it to the Legislative Branch for approval. In Uruguay, this is effected by means of a law, in both the formal sense (the same process is followed as in the case of a regular law) and the material sense (the text of the law which approves a treaty usually uses the following terms: Aprúebase el tratado..... sucrito por la República el..., that is, "the treaty. is hereby approved... subscribed by the Republic on..."). The only formal difference regarding other types of law is that the Legislative Branch may only pass or reject the treaty; it may not, obviously, introduce modifications or amendments. Once the text has been approved, it is sent to the Executive Branch, who now has a double task: as a law, it must be enacted (and ordered to be enforced within the national territory) and published (in the official Gazette). However, as a treaty, the Executive Branch is also responsible for depositing the instrument of ratification, a procedure carried out by the Ministry of Foreign Affairs.
The approval of a treaty by means of a law generates a problem concerning the hierarchy of the treaty within the legal system, since the Constitution lacks any express or tacit reference to the subject. Doctrine is not in agreement in this matter and jurisprudence very rarely expresses an opinion on international treaties and, when it does, it refers to the laws which approve them. It may be seen that Uruguay is an extremely dualistic country.
There is a problem regarding the method of interpretation of treaties, which has not been taken into account by jurisprudence, although it has, however, been considered by Uruguayan internationalist doctrine. As each treaty is also a law, a judge could interpret it in accordance with the procedures laid down for the interpretation of laws; on the other hand, as it is also a treaty, it must be interpreted according to the provisions of the Vienna Convention on the Law of Treaties (which is also in force in Uruguay as a law). Furthermore, as the text of a treaty is legally binding, due to its nature as a law, it could be modified internally by a subsequent law ("lex posterior derogat legi priori"). All this could generate, in our view, different and irreconcilable interpretations (due to the lack of provision as regards the hierarchy of international treaties) or a regulatory conflict, with the consequent danger of incurring international liability.
The Uruguayan juridical system provides a series of solutions regarding Private International Law, or the conflict of laws, established in the Appendix to the Civil Code, and in the Treaties on Private International Law of Montevideo, of 1889 and 1940, both still current. Regulations in this matter are of "ordre publique", and thus may not be modified by agreement of the parties.
It is also established that in Uruguay, "in no case, [shall] foreign laws which manifestly contravene the essential principles of international public order on which the Republic bases its juridical individuality" be enforced (an expression which doctrine has used to define the concept of "public order" in the matter of conflicting laws).
The solutions are:
The status and capacity of persons are determined in accordance with the law obtaining in their place of residence.
The existence and capacity of legal persons are determined in accordance with the law obtaining in the State in which they have been recognized as such. However, when carrying out the habitual actions included in the specific objectives of the institution, within the national territory, conditions established by our laws will be respected.
The capacity of persons to enter into a marriage contract; the form, existence and validity of the matrimonial act, are determined by the law obtaining in the location where the marriage takes place.
Personal relations between spouses, separation and divorce, and relations between parents and children, are determined in accordance with the law obtaining in the place of residence of the married couple.
In matters pertaining to ownership of assets in a marriage, the law which obtains is that of the State of the first place of residence of the married couple, in every aspect which is not against the law of the place where the assets are located, as regards issues of a strictly real nature.
As regards assets, whatever their nature, the quality, ownership, absolute or relative transference, and all real legal transactions to which they are susceptible, are governed exclusively by the law of the location in which they are found.
Juridical acts, as regards their existence, nature, validity and effect, are governed by the law of the place of enforcement.
The law of the location of inherited assets, at the time of death of the person whose assets are inherited, governs all matters pertaining to legitimate or testamentary inheritance.
In trials arising from international juridical relationships, judges in the State whose Law governs such relationships are competent to find. In the case of personal patrimonial suits, they may also be tried, at the request of the plaintiff, before a judge in the country in which the defendant resides.
Procedural forms are governed by the law of the locality where the trial takes place.
Justice in Uruguay is centralized in the Judicial Branch, which has national authority; that is, there are no autonomous judicial institutions within each department or city.
The Judicial Branch is organized on the basis of its independence with respect to the other governing branches in the State, and of the functional independence of the judicial institutions which compose it. That is, there is no functional hierarchy between the various institutions of the Judicial Branch, in the exercise of the jurisdictional function. In its administrative activities, however, all institutions and offices of the Judicial Branch are subject to the authority of the Supreme Court of Justice.
The institutions of jurisdictional justice in Uruguay are: the Supreme Court of Justice, the Courts of Appeal, District Courts (Juzgados Letrados), Peace Courts (Juzgados de Paz) and Rural Courts (Juzgados Rurales).
The Constitution establishes that the responsibilities of the SCJ (Supreme Court of Justice) are:
i) To judge all offenders against the Constitution; to intervene in matters regarding the Rights of Persons; in admiralty cases; in matters related to treaties, pacts and agreements with other States; to find in cases involving accredited diplomats in the Republic, in cases established by International Law;
ii) To declare the unconstitutionality of laws-whenever a law, or a regulation which is legally binding, must be applied. A favourable pronouncement in answer to a petition (put forward by any person who considers himself injured in his direct, personal and legitimate interest-by way of action, or exception, or ex officio) results in the inapplicability of the regulation in the specific case;
iii) To find in cassation appeals relating to criminal issues and non-criminal issues, lodged against sentences passed in the second instance by the Courts of Appeals, as well as by District Courts of the first instance, based on the existence of a violation or erroneous application of a legal regulation, either with regard to its subject matter or to its form;
iv) To find in appeals for review in criminal and non-criminal issues (an appeal for review is an extraordinary means of impeachment used-in the face of a sentence passed with the authority of a matter which has been tried-in order to exercise certain grounds for exception expressly established by the law, with the object of obtaining the reversal of the impeached decision);
v) To protect departmental autonomy (of mayors-"Intendentes"-or Departmental Councils);
vi) To settle disputes of jurisdiction between two or more tribunals of the Judicial Branch;
vii) To pay annual visits to prison establishments, exercising the power of pardon (which extinguishes the crime).
The SCJ is composed of five judges, elected by the General Assembly with a majority of two thirds of the votes of the total number of members.
The Courts of Appeal find, in the second instance, in appeals lodged against sentences of the first instance passed by District Courts in the respective areas. The Courts of Appeal are specialized according to subject matter; at present there are Courts of Appeal in the following areas: Civil, Family, Labour and Criminal.
The Court is the basic jurisdictional unit; the difference between a Court and the Courts of Appeal being that the Courts find in the first instance and are individual, whereas the Courts of Appeal find in the second instance and are composed of a tribunal (three members). Courts may be of three types: District, Peace and Rural.
District Courts are of two kinds: District Courts of First Instance, with territorial jurisdiction within the department of Montevideo, and District Courts of First Instance in the Interior, with jurisdiction in departments other than Montevideo (in Uruguay, the area beyond the capital city of Montevideo is known as the "interior" of the country).
District Courts of First Instance
Although their full name includes the term "of First Instance", this is a redundancy, as, in fact, there are no District Courts of Second Instance. Furthermore, District Courts of First Instance act as appeal courts for Peace Courts, so the name is not entirely apt.
Specialization of the District Courts, according to subject matter, is as follows:
Criminal District Courts of First Instance: find in all stages in the first instance of the criminal procedure (instruction, summary proceedings and plenary proceedings).
Civil District Courts of First Instance: find in the first instance in all matters of contentious, civil, commercial and property jurisdiction, which do not involve other judges. They also find in the second and last instance (there is no third instance in Uruguay), in appeals against sentences passed by Departmental Justices of the Peace, in the capital city.
Labour District Courts of First Instance: find in the first instance in matters originating in labour conflicts involving individuals.
Customs District Courts of First Instance: have jurisdiction over contentious matters related to customs (violations of customs legislation: differences, fraud and contraband), as well as abandoned merchandise and tax violations.
Juvenile District Courts of First Instance: find in all preventive, educational and corrective procedures originated by anti-social acts committed by minors and the situations of abandonment in which they may be found.
Family District Courts: find, in the first instance in matters pertaining to the name, civil status and capacity of individuals and to personal and patrimonial relationships between members of legitimate and natural families. These matters are:
Claims and pleas with regard to legitimate and natural filial relationships and to civil status; actions related to marriage and the situation of spouses; legal separations, divorce, marriage annulments, alimony or maintenance payments and visiting rights; guardianship, tutelage, administration of children's assets; suspension, limitation, loss and restitution of parental authority; emancipation, coming of age rights and permission to make use of assets; adoption and legitimization through adoption; declarations of incapacity, guardianship and absence; matrimonial assets system; inheritance procedures; and personal or patrimonial matters arising from concubinage.
Contentious Administrative District Courts of First Instance: find in all contentious administrative matters related to patrimonial reparation, in which a public legal person connected to the State is a defendant in a process of expropriation; in appeals on the grounds of unconstitutionality (in the case of actions, events or omissions incurred by State officials), and in the second instance, in sentences passed by Departmental Justices of the Peace in Montevideo, in matters within their material jurisdiction.
Bankruptcy District Courts: find in the first instance in all proceedings involving creditors and debtors: civil meetings of creditors, deeds of composition, corporate moratoria, bankruptcy and compulsory liquidations, within the department of Montevideo.
District Courts of First Instance in the Interior
Their territorial jurisdiction is in the departments in the interior of the country (outside of Montevideo), whereas their material jurisdiction comprises various matters: criminal, labour and customs; and in civil matters, commerce, property, family and minors. They also find in the second and final instance in appeals originating against sentences passed by the Peace Courts within their territorial jurisdiction.
Peace Courts ("Juzgado de Paz")
As in the case of the District Courts, Peace Courts are of four types, and their jurisdiction is distributed according to two criteria: territorial and monetary.
Departmental Peace Courts in the Capital
These Courts find in non-contentious judicial matters, which are outside the orbit of Family District Courts, whatever the monetary sum involved. Also within their jurisdiction are contentious matters; civil, commercial and of property when the monetary sum involved does not exceed a fixed amount which is determined annually (in 2007; approx. USD 7,000).
Offence and Misdemeanour Courts: find in a single instance in cases which arise from offences committed within the department of Montevideo; however, their involvement in forensic procedures is minimal.
Departmental Peace Courts in the Interior
Their territorial jurisdiction is limited to the department in the interior of the country in which they are located. In material terms they find: in the first instance in contentious matters, civil, commercial and relating to property, involving monetary sums not exceeding an amount fixed annually (in 2007; approx. USD 3,800 or 1,700, depending on the case); in voluntary jurisdiction; non-contentious jurisdictional actions, whatever the sum involved.
Peace Courts in Cities, Towns or Villages in the Interior
These Courts find in single instance in contentious matters, civil, commercial and relating to property, involving monetary sums not exceeding an amount fixed annually (in 2007; approx. USD 1,700); and in the first instance, in matters involving sums exceeding that amount but not exceeding an amount fixed annually (in 2007; approx. USD 3,800).
Rural Peace Courts
These Courts find, in the first instance, in civil, commercial and property suits involving monetary sums not exceeding an amount fixed annually (in 2007; approx. USD 1,700).
CITIZENSHIP AND STATUS OF FOREIGNERS
Citizens of Uruguay (known as "Orientales" from the country's official name, República Oriental del Uruguay) may be natural or legal citizens.
Natural citizens are:
i) every man and woman born within the territory of the Republic, and;
ii) children of an Uruguayan mother or father, whatever their place of birth, if they become residents in the country and register at the Civil Registry Office.
Citizenship does not extend jure sanguinis beyond the first generation. That is, the children of the persons described in (ii) do not transmit Uruguayan citizenship to their children, according to legislation regarding nationality and citizenship.
The phrase "become residents in the country" is understood to imply the carrying out of actions which make the individual's intention in this regard unequivocally manifest; such as, for example, remaining in the country for over a year; renting, promising to acquire or acquiring real estate in order to reside in it; installing a place of business or industry, becoming employed in the public or private sector, or "other similar actions which provide evidence of intention".
Legal citizenship may be requested by any person who:
i) shows evidence of good conduct, has established a family within the Republic; owns a certain amount of capital or a property in the country or practises a science, art or industry; and has been a habitual resident in the Republic for three years; or
ii) shows evidence of good conduct, has no family in the Republic, but some other of the qualities mentioned above, and has been a habitual resident in the country for five years.
In addition to the above conditions, it is required that the foreigner:
i) should be free of physical or mental handicaps which may prevent him or her from acting freely and reflexively;
ii) should not be legally prosecuted for any criminal case which may derive in a sentence of more than two years;
iii) should be over 18 years of age;
iv) should not have been sentenced for a crime, to banishment or disqualification from the exercise of political rights;
v) should not habitually engage in morally reprehensible activities;
vi) should not belong to social or political organizations which, by means of violence or propaganda inciting to violence, tend to destroy the basic foundation of nationality.
The rights inherent to legal citizenship, in the cases described in (i) and (ii), may not be exercised until three years have lapsed since the citizenship was granted. The existence of any of the reasons for suspension referred to in Article 80, will be an obstacle to granting citizenship.
However, the General Assembly may, notwithstanding, grant special grace and favour citizenship, when an individual's notable services or significant merits should so warrant.
There is no provision for jure matrimonii citizenship in Uruguay.
Entry to Uruguay is free, and there are no prior permits, invitations, visas (in most cases), nor vaccinations required. Foreigners arriving in Uruguay may remain for 90 days, without paid employment. This may be extended to a further 90 days at the request of the interested party.
Only citizens of the following countries require a visa to enter Uruguay: Albania, Armenia, China, Egypt, Guyana, India, Morocco and Russia.
There is no discrimination in law or in fact between nationals and foreigners, except as regards the exercise of political rights and those rights which are inherent to nationality, such as employment in the civil service.
Corporations and Companies enjoy ipso facto legal personality and are incorporated by contract, either by natural persons or moral entities, domestic or foreign, with the object of pursuing a trade or commercial activity and the participation in the earnings and the assumption of debts. There are seven types of corporation.
These are Limited Liability Companies whose capital is divided into quotas of participation of equal value. They are cumulative, indivisible and non-negotiable. Partners' liability is limited to the amount of their participation. The number of partners cannot exceed 50, and its authorized capital has a minimum and a maximum determined each year by the government's Executive Branch. The maximum is equivalent to the legally established minimum initial capital for corporations. Partnerships are managed and represented by one or more persons, either partners or not.
Their capital is represented by shares, which can be presented as negotiable shares, and which represent an undefined proportional share of authorized stock. Shares are commercial documents representing shareholders' participation in a corporation, their rights and obligations. Shareholders' liability is limited to the amount of their shares in the company. Management and representation of a corporation is entrusted to a manager or a Board of Directors, unless otherwise established in the act of incorporation. The Shareholders' Meeting is the sovereign body of the corporation. There is a government office which oversees the constitution, function and liquidation of corporations, including dissolutions, transformations, mergers, spin-offs and changes in their authorized capital.
There are two types of corporations:
Open: whose shares are offered to the public and are traded on the Stock Exchange. They can contract loans by issuing public debt.
Closed: whose shares are not offered to the public or traded on the Stock Exchange. They may not contract loans by issuing public debt.
Unlimited Companies
The members of an Unlimited Company are liable, jointly and severally, without limitation, for the full amount of the company's obligations. They are governed by Corporate Law.
Limited Partnerships
These companies have two types of partner. There are partners who are liable, jointly and severally, without limitation, for the full amount of the company's obligations. And there are partners (silent or sleeping partners) whose liability is limited to their original contribution when the company was incorporated.
Limited Shareholding Partnerships
These companies also have two types of partner. There are shareholding partners who are liable, jointly and severally, without limitation, for the full amount of the company's obligations. And there are partners who are only liable for the original value of their shareholding. In these companies, the first type of shareholder may hold negotiable shares.
Mixed Companies (Capital and Labour)
In these companies, the shareholding partners are liable to the same extent as partners in unlimited companies (see above), whereas the partners whose contribution is their labour, are only liable for unperceived profits.
Temporary or Participative Companies
These are companies whose sole object is the realization of specific and transitory business, undertaken by one or more agents. They are not legally incorporated and therefore, third parties can only claim rights or assume obligations with regard to the individual agents, whose liability is unlimited.
These involve a contract between two or more persons, either physical or legal, whereby they constitute an organization with the purpose of facilitating or developing the economic activity of its members, or to improve or increase the product of these activities. They are legally incorporated, but not intrinsically entitled to obtaining and distributing profits amongst its associates.
The participation of their members cannot be represented by negotiable shares and the managers incorporate the groups in all their relationships with third parties as well as in all activities consistent with its objectives. For their part, the members of the group are jointly and severally responsible for all obligations assumed by the group.
A Group of Economic Interest is not a business company, but nonetheless, it is classified within the category of plurilateral contracts related to unassociated organizations.
These involve a contract between two or more persons, either physical or legal, who come together temporarily in order to undertake a task, perform a service or supply certain goods.
They lack legal status and each party must undertake its specified activity in accordance with the terms of the contract, answering personally to third parties regarding the obligations assumed in said undertaking, service or supply, without joint responsibility unless specified.
A consortium is managed by managers or administrators and represented by the administrator or whoever is nominated by the consortium.
Uruguay recognizes their validity, subject to confirmation of their existence by means of reliable documentation testifying to their incorporation and their decision to operate in Uruguay. Foreign companies are subject to the laws of the place in which they are incorporated, provided that these are not contrary to Uruguayan public international legislation. However, a foreign company may only carry out sporadic activities and take part in valid legal activities in a court of law.
On the other hand, if they wish to undertake activities included in their objectives, on a regular basis, establishing branches, they must register their contracts and decision to establish their residence in the Republic, with the National Commercial Registry (Registro Nacional de Comercio), indicating their address, administration and representation. The company's minimum issued capital will be legally specified.
Uruguay has taken measures to encourage private investment, within a framework of legal and financial security.
Law Nº 16,906, known as the "Investments Law", of 1998, constitutes (together with a series of decrees issued by the Executive Branch) the basic legal framework for investment in Uruguay. It declares that the promotion and protection of national and foreign investment is in the national interest. The Law defines foreign investment as any capital originating abroad.
The basic principles of this law are as follows:
There are no restrictions to the transfer of technology, one hundred percent foreign ownership is allowed, except where restricted for reasons of national security.
Products may be imported into Uruguay under temporary admission or drawback provisions, exempt from import duties, in order to be processed, assembled, transformed or integrated, but they must be re-exported within 18 months.
The system applies to raw materials; parts and accessories; motors; packaging and packaging materials; matrix, moulds and models; intermediate goods; agricultural products and products that are part of the manufacturing process.
These are areas within the territory which are enclosed and isolated and in which industrial, commercial and services activities are carried out, under a special legal system of customs and fiscal exemptions and state monopoly exclusion. All types of commercial, industrial and service activities are allowed. These activities are considered to take place outside the nation's territory.
The law allows storage and warehousing, manufacturing, and financial and data processing, and related activities to take place within FTZs. Nine FTZs are located throughout the country (one public, one of mixed ownership, and seven private). MERCOSUR regulations treat products manufactured in all member state FTZs as extra-territorial. Products manufactured by Uruguayan or foreign firms in Uruguayan FTZs are not eligible for MERCOSUR certificates of origin. Furthermore, these products do not benefit from MERCOSUR customs union advantages and must pay the MERCOSUR common external tariff when entering member countries.
Goods, services, products and raw materials of foreign and Uruguayan origin may be brought into the zones, held, processed, and re-exported without payment of Uruguayan customs duties or import taxes (temporary admission); and goods of Uruguayan origin entering FTZs are treated as Uruguayan exports for taxation and other legal purposes.
The only additional cost to employers is the contribution to social security for Uruguayan employees. The employer does not pay social security taxes for non-Uruguayan employees if those employees waive coverage under the Uruguayan social security system. However, Uruguayans must comprise 75% of a company's labour force.
Uruguay is a member of the Latin American Integration Association (ALADI for its acronym in Spanish), since its creation by the Treaty of Montevideo, in 1980. Within the framework of ALADI, Uruguay has subscribed to 37 Partial Scope Agreements (AAP for its acronym in Spanish) and ten regional agreements with regard to tariff preferences.
Within the framework of the ALADI Agreements, Uruguay signed a Free Trade Treaty with Mexico on November 15, 2003, establishing a Free Trade Zone between both countries and stipulating that the treaty's provisions would prevail in case of incompatibility between them and the provisions of the treaties and agreements both countries are party to, including the WTO and MERCOSUR Agreement. Both parties undertook to eliminate tariffs as from the date on which the Agreement came into force, with the exception of car manufacturing, crude oil and its by-products, and the products contained in the list of exceptions.
Uruguay was a founding member, together with Argentina, Brazil and Paraguay, of the Common Market of the South (MERCOSUR), in 1991, by the Treaty of Asuncion.