Domingos De Oliveira's Breaking Up (Separacoes) from Brazil won the Golden Ombu for best film at the 18th Mar del Plata International Film Festival in Argentina on Saturday (15 March) amid heated controversy over the inclusion of local film Valentin in competition.

The festival is now in danger of losing its 'A' grade status. FIAPF, the body responsible for overseeing the world's leading festivals, had ruled that the Argentine drama should be thrown out of the competition after it discovered the film had already competed in Biarritz, so making it ineligible.

Having at first announced it would agree to the ruling, the festival then reversed its decision, following pressure from the film-maker Alejandro Agresti and the Argentine Film Institute (INCAA).

FIAPF head Bertrand Moullier, attending the festival himself, commented: "At a time when Argentina is perceived as suffering from endemic corruption and the festival is trying to raise its profile and establish itself as a reputable event, if it is seen to adapt the rules to help a local champion it will undermine this."

Mar del Plata objects to the fact that FIAPF only ruled against the film after the festival had opened, further arguing that as Biarritz is not FIAPF accredited, the rules do not apply. In addition, it claims that the regulations have been interpreted in different ways by different events.

However Moullier remained unmoved. "There is no justification for repeating the mistakes of others. Rules are rules and the FIAPF regulations are not the least bit ambiguous in this respect."

He pointed out that the rules state that a competition film cannot have competed at any festival, not just FIAPF events. Although he said he considered debut festival director Miguel Pereira to be a "superb festival programmer", Moullier said the festival will now have to face the consequences.

"Even though the original decision to include the film in competition may have been a mistake made in good faith, the subsequent decision to keep it in the running damages the festival's international credibility," said Moullier.

"There will be discussions between FIAPF and Argentine film officials following the event but Mar del Plata's ability to retain its FIAPF accreditation is in serious doubt at this point."

Despite the dispute, the jury gave its special prize to Valentin, a gentle drama about a lonely misfit growing up in a dysfunctional family in Argentina in the 1960s.

Spanish director Antonio Chavarrias took the best director prize for You'll Be Back (Volveras), a dark tale of brotherly love and betrayal.

Israel's David Ofek and Joseph Madmoni won best screenplay for The Barbecue People, which follows a family's attempt to come to terms with their identity as Jews whose roots in Arabic culture and language have been suppressed.

Acting honours went to Zooey Deschanel for her role in David Gordon Green's All The Real Girls, the North Carolina-set love story already established on the festival circuit after a successful bow at Sundance, and Domingos De Oliveira for his depiction of an emotional theatre director in Breaking Up, a lively romp depicting the four stages of psychological response to the end of a relationship.

Silver Ombu for best film from Latin America and Spain went to Damian Szifron's The Bottom Of The Sea (El Fondo Del Mar) from Argentina.

Special mentions from the jury were given to Tristan Ulloa for "his remarkable performance in a complex role" in You'll Be Back and for Nils Malmros' Facing The Truth from Denmark for "its courage in portraying the ambiguity of truth".

Spanish director Ventura Pons headed the jury, which comprised Argentine director Carlos Sorin, Brazilian film-maker Suzana Amaral, French writer/director Pascal Bonitzer, US director Ulu Grosbard and the Indian-Canadian writer-director-producer Deepa Mehta.

The debut festival under the supervision of artistic co-ordinator Miguel Pereira was generally considered an improvement on last year with admissions standing at 98,000 after eight days compared to 68,000 in 2002.