The Argentine legal system does not contain specific provisions regarding asset tracing and recovery. Thus, legal actions must be brought based on generic remedies provided in general and specific statutes, according to the case at hand.
With some exceptions, the focus of criminal actions has traditionally been the prosecution of individuals but not necessarily the recovery of assets. This is changing: Argentina has been gradually implementing new mechanisms to ensure the seizure and forfeiture of assets obtained illegally.
In relation to criminal remedies to recover assets, the following can be highlighted:
- the criminalisation of legal entities for their participation in money laundering and corruption-related offences;
- tools to confiscate assets linked with crimes;
- leniency agreements with cooperative defendants providing relevant information to trace illegal assets; and
- the requirement that companies return the undue benefits obtained by means of bribery-related crimes as a precondition to engage in settlements in a criminal case or to be exempted from penalties as a consequence of an spontaneous self-report.
In regard to civil remedies to recover assets, the civil procedure set forth in 2019 by Decree 62/2019 may be underlined. This tool allows the government to confiscate assets presumed to be linked to certain crimes such as drug crimes, bribery of public officials, kidnapping and terrorism, even before a criminal court rules conviction.
In addition, a bill submitted to the Senate in March 2019 to reform the Criminal Code introduces relevant changes in forfeiture, expanding the situations in which non-conviction forfeiture applies and incorporates other instances of corporate liability.
II LEGAL RIGHTS AND REMEDIES
i Civil and criminal remedies
Under civil law there are two basic spheres of liability: contracts and torts. The last amendment of the Argentine Civil and Commercial Code (CCCN), which entered into force in August 2015, brought both regimes of liability closer by imposing the obligation to repair damage caused either by breaching the general duty not to cause harm or by breaching an obligation.2 Although some differences still remain, plaintiffs seeking to claim liability under any of these two regimes must prove:
- an illicit act or omission;
- an adequate causation link between the illicit act or omission and the damage; and
- an attribution factor that is a sufficient cause to hold the defendant liable for the illicit act that resulted in the damage suffered (e.g., wilful intention, negligence).
If a fraudulent or any other dishonest act is identified prior to its commencement or when it is taking place, any person or legal entity holding a legitimate interest can file a preventive motion4 to obtain a court order to prevent or stop the harmful act or omission.
However, when the fraudulent act has already taken place, victims can pursue a civil claim to obtain restitution of property or compensation for damage. Additionally, the CCCN contemplates other remedies through which victims of deceit can obtain a court order to deprive the harmful act – or part of it – of its legal effects or remedy an unjust enrichment.
Persons who have property rights over assets can file an in rem motion for restitution against the person in possession of the assets.5 The restitution can be granted in whole or in part and may order the rectification of public registries. The motion does not proceed against immaterial objects, fungible or undetermined assets, accessories (when the main object is not claimed) or future objects. Thus, while not appropriate to request stolen money back, recovery motions are suitable to recover real estate property, registered movable assets and some other non-registered but identifiable movable assets.
Regarding third parties, different rules apply depending on whether third parties in possession of the concerned assets acted in good or bad faith and the type of assets claimed (e.g., automobiles). Broadly speaking, plaintiffs can obtain restitution from third parties that entered into possession in good faith, unless the latter obtained property rights against payment. In these cases, plaintiffs can claim the full price of the disputed assets.6 Notwithstanding, restitution will still be granted for real estate property and registered assets if third parties obtained them without the intervention of the rightful owner.
Compensation for damage
A motion for compensation will be the generic action for asset recovery. The general principle is that of full reparation,7 which means that injured parties are entitled to be placed in the same situation they were in before the damage was caused. Plaintiffs may choose between payment in cash or in kind and may request restitution of specific assets when legally and materially possible: otherwise, judges will order monetary compensation.
Compensation will be granted for damage that has a sufficient connection with the relevant illicit conduct. As a general rule, plaintiffs are entitled to claim compensation for damage that is the immediate consequence or foreseeable mediate consequence of an illicit act or omission.8 Immediate consequences are those that normally occur in the natural and ordinary course of events, while mediate consequences are connected with a different event.
Moreover, under contract law, parties must respond for the consequences they foresaw or could have foreseen when they entered into a contract. In the event of wilful misconduct, compensation will be granted for the consequences foreseeable at the time the contract was breached. It should be noted that limitation of liability clauses are in principle valid and enforceable, and some limitations apply when they affect certain non-disposable rights, are abusive, or are against good faith, good customs or the law.9
A lawsuit for compensation of damages can be brought against all persons that participated in a conduct that breached an obligation or caused an illicit harm.10 Only in some cases does the law attribute liability for the conduct of third parties. Moreover, legal entities are liable for the harm caused by their directors and administrators while performing their duties.11 Perpetrators and accomplices will be jointly liable as long as the cause of harm is the same.12 However, accomplices after the fact will only respond for damage resulting from their own contribution.13
Plaintiffs have the burden of proof of all the elements of their claim, unless they can resort to a legal presumption.14 As to the extent of the compensation, they will be able to claim direct loss or diminution of their assets, loss of future – and objectively foreseeable– profits, and loss of chance.15
Fraud and simulation
Third parties that are victims of dishonesty can seek the nullity of simulated acts – including simulated clauses in contracts– when they are illicit or affect their interests (e.g. untrue date of transactions, an apparent transfer of property, etc.). If the simulated act concealed a different and licit act, the latter will be valid and enforceable. The law allows injured third parties to prove the simulation by any means of proof.16 However, the judgment granting the relief cannot be enforced against individuals that acquired rights in good faith and against payment. In such a case, the perpetrator and all those who participated in the scheme in bad faith will respond for the damage caused to the victims.
Likewise, creditors can bring a civil action of fraud against debtors who disposed of their assets and waived patrimonial rights to produce or aggravate their insolvency.17 Plaintiffs will have to demonstrate that the individuals that took part in the action knew or should have known that the debtor was causing or aggravating their insolvency. If they succeed in their claim, the acts that reduced the patrimony of the debtor will be declared unenforceable only to the plaintiffs in the action and both the debtor and all those who wilfully participated in the fraud will be jointly liable for the damages caused. Notwithstanding, as in the previous case, the judgment granting the plaintiff's request cannot be enforced against individuals that acquired rights in good faith and against payment. Those who acquired rights in good faith but without payment will be affected by the judgment up to the amount of their enrichment.18
Other civil remedies
The CCCN also provides victims of fraud with other remedies such as an action to declare an act void and deprive it of all its legal effects when one of the parties of such act took advantage of the lack of experience or the necessity of the other party, obtaining a disproportional gain in return.19
Finally, the CCCN also stipulates a subsidiary civil action against the person that, without a licit cause, increased his or her wealth at the expense of others.20 This action seeks to remediate an imbalance by imposing the obligation to indemnify the injured party up to the amount of the detriment caused. It can also be employed to obtain restitution of specific assets.
Civil action for confiscation of illegally obtained assets
In January 2019, former President Macri created, by means of an Executive Decree,21 a civil procedure to confiscate, in favour of the federal government, assets presumed to be linked with certain crimes, such as drug crimes, bribery of public officials, kidnapping and terrorism. The purpose of this regime is to terminate legal title or property rights that defendants may have over the disputed assets.
Public prosecutors can pursue this civil action against any person or legal entity – not necessarily the criminal defendant – that obtained property rights or the possession of assets after the alleged date of the commission of a crime. The civil judge will grant the request when the assets do not correspond with the defendant's income or represent an unjustified and disproportional patrimonial increase that merits the suspicion that the assets come directly or indirectly from one of the crimes set forth in the regulation. In addition, the Decree provides the possibility of entering into agreements and rewarding individuals for disclosing relevant information that end up in recovery of assets.
The concrete effects of this new procedure are still to be seen, as the first civil action for confiscation was filed in June 2019. Up to now, in such case the competent court ordered a government agency to administer certain goods under question to allow their use and avoid their depreciation while a civil proceeding is carried out.22
Moreover, considering the novel federal regulation, the province of Mendoza passed a law in April 2019 setting forth a civil procedure to confiscate assets presumed to be linked with certain crimes that fell within the provincial jurisdiction.23
Argentine law imposes a duty on directors to act loyally towards the corporation and its shareholders and to perform their responsibilities with the diligence of a good businessperson. This duty prohibits any director from competing with the company in the furtherance of that director's own interest when that interest conflicts with the interest of the company. For public companies, the Capital Markets Law24 establishes further prohibitions and obligations, for instance, the prohibition on using the company's assets or any confidential information for private purposes. It also provides that, if there is any doubt, the directors will have the burden of proving that they have acted in compliance with the duty of loyalty.
Any failure of the directors to loyally and diligently perform their duties would result in their unlimited, joint and several liability in relation to the company, the shareholders and eventually third parties for damage arising therefrom. In addition, directors are unlimitedly and jointly and severally liable for a violation of the law, the by-laws and regulations, and for fraud, abuse of power and gross negligence.
A derivative action may be initiated by the company or by the shareholders on behalf of the corporation, with the aim of seeking indemnification for damage sustained by the corporation. If the derivative action is not initiated within three months as of the relevant shareholders' meeting, any shareholder may initiate it.
Shareholders and creditors may choose to pursue an individual action against directors. In this case, courts have ruled that the plaintiff must prove that he or she has suffered direct damage deriving from the activities of the directors, and not merely the breach of the directors' duties. The claim would pursue the indemnification of these damages suffered by the plaintiff directly, as opposed to damages suffered by the corporation.
As a civil law country with an inquisitive criminal law tradition, criminal investigations in Argentina have traditionally been conducted by an investigative judge and only exceptionally by public prosecutors. Although this is still the case in most jurisdictions – including federal courts – some provinces have recently reformed their codes of criminal procedure and adopted an adversarial system of criminal justice. In these jurisdictions, public prosecutors lead the investigations and press charges against defendants.
The identification of the different codes of criminal procedure in Argentina becomes relevant as fraud cases are prosecuted according to the rules applicable to the jurisdiction in which they take place (provincial, national or federal).
Congress recently enacted a new Federal Criminal Procedure Code that adopts an adversarial model of criminal procedure. After the new Code came into force in the northern provinces of Jujuy and Salta in June 2019, it also became effective in the jurisdictions under reach of the Federal Chambers of Appeals of Mendoza and Rosario in November 2019. Moreover, certain provisions of such new Code started to be applicable nationwide (e.g., certain rules related to preventive imprisonment and termination or extinction of the criminal action), and the remaining provision will gradually be implemented in the rest of the country in the coming years.
Currently, the National Criminal Procedure Code (NCPC) still governs most of the procedure in both federal and national courts.25 Since most fraud cases will fall under the competence of these two jurisdictions, for the purpose of this chapter, we refer to the provisions set forth thereof.
Victims' legal standing and role in criminal cases
When the conduct that gives rise to civil liability also constitutes a crime, Argentine law allows both civil and criminal actions to be pursued simultaneously. Despite the independence of both proceedings, the civil judge is foreclosed from reaching a decision until a judgment is passed on the criminal case.26 As a result, plaintiffs are unlikely to incur in litigation efforts and expenses until a decision on the existence of the crime and the defendant's participation is reached by the criminal court.
Victims of fraud crimes can present themselves as private prosecutors and bring criminal charges against defendants27 even when the public prosecutor decides to drop the charges.28 Alternatively, they can choose to file a request in the criminal case to act as a civil petitioner in order to claim compensation, restitution and other civil remedies against the defendant and the civil respondent.29
The Argentine Criminal Code (ACC) covers a wide spectrum of fraud and abuse of trust conducts. Fraud offences' most common elements are an intentional artifice or scheme to defraud a victim; and a patrimonial harm caused by an artifice or scheme. A fraud conviction can incur up to six years' imprisonment. Among the special types of fraud, the ACC sanctions individuals who refuse to return assets when they are under the obligation to do so (e.g., deposit, administration) or commit fraud against the government, as well as individuals who wilfully breach their fiduciary duties to obtain dishonest profits for themselves or third parties (e.g., a company defrauded by its directors and executives).
The ACC also covers bankruptcy fraud by sanctioning members of a company's management, its directors and statutory supervisors for having committed fraud in connection with the company's bankruptcy.30
Criminal remedies to recover assets
Although criminal remedies to recover assets and allow victims to get economic compensation already existed in the ACC, it was not until recently that tracing and recovering the instruments and proceeds of crimes became a pressing concern.
Mostly as a result of its international commitments to fight against certain crimes (e.g., money laundering, corruption, drug trafficking), Argentina has been gradually implementing
mechanisms to ensure seizure and forfeiture of assets obtained illegally. Among them, we can mention:
- the creation of new investigative tools in complex investigations;
- the criminalisation of legal entities for their participation in money laundering and corruption-related offences;
- tools to confiscate assets linked with crimes; and
- the requirement that companies return the undue benefits obtained by means of bribery and corruption as a precondition to engage in settlements in a criminal case or to be exempted from penalties as a consequence of an spontaneous self-report.
Overall, courts can order the forfeiture of assets following a conviction in a criminal case.31 The order can cover the instruments used to commit the crime, the proceeds of the crime (profits) as well as assets that were obtained by means of the instruments or proceeds of the crime (e.g., replacement, transformation). In addition, a defendant facing probation must forfeit all assets that would be subject to forfeiture in the event of conviction.32
The destiny and administration of the assets will be decided by the court and noted in the National Registry of Forfeited and Seized Assets.33 The law establishes that forfeited assets will be transferred to the state; however, due regard must be given to victims and third parties' rights to compensation and restitution. For instance, on certain occasions judges that ruled for forfeiture and precautionary injections to secure assets have recently allowed those assets to be used in the fight against covid-19 pandemic.34
Forfeiture can be ordered against third parties in the following circumstances: when the defendant acted on behalf of another person or legal entity (e.g., executives or directors) who profited from the proceeds of the crime; and when third parties benefited from the proceeds of the crime gratuitously.
As part of the new measures adopted to ensure the recovery of assets, since 2011 it has been possible to order a non-conviction-based forfeiture in money laundering, terrorism financing and other economic and market-based crimes. 35 In this case, forfeiture is permitted when a criminal action cannot be pursued against the defendant by reason of death, flight, statues of limitations or any other cause of suspension or termination of the criminal action, or when the defendant has recognised the asset's illicit origin or use.36 This last circumstance has allowed for the recovery of assets in corruption cases when defendants entered into leniency agreements with the prosecutor and acknowledged the illicit origin of funds and property. The affected assets will be used to repair the damage caused to the victims of the crime and the state. Any dispute regarding the nature or ownership of the concerned assets must be brought before civil or administrative courts.37
Restitution and compensation
A criminal sentence can order the reparation of the consequences of a crime, meaning that the court may order the restitution of assets and monetary compensations to victims and third parties.38 All individuals responsible for the commission of the crime will be held jointly liable, and the obligation will prevail over any fine, forfeiture or legal expense ordered by the court.
ii Defences to fraud claims
Defences to fraud claims will depend on the remedy chosen and the particular facts of a case. In general, lack of jurisdiction and limitation periods are potential viable preliminary defences against both criminal and civil actions. The statute of limitation for fraud offences is six years, a period that can be interrupted on any of the grounds established in Article 67 ACC (e.g., issuance of an indictment). On the other hand, overall civil claims are time-barred between two to five years after the harm was caused or the injured party knew about the deceit (exceptionally, restitution claims prescribe when the law grants the possessor the ownership of the asset over time, in 10 to 20 years).
As to the merits of the claim, defendants may argue that one or more of the elements of the crime or those prescribed for civil liability to emerge are not met. In addition, defendants can claim that they obtained title to the disputed objects. In this respect, it should be noted that both civil and criminal law protects the rights and interests of third parties that have acquired property in good faith. When fraud is based on an omission to act or concealment of information, defendants may argue that they were not under the obligation to act or to disclose the relevant information.
III SEIZURE AND EVIDENCE
In both civil and criminal cases, the procedure for securing assets and obtaining evidence is governed by the code of procedure of the jurisdiction where the action is brought. We will refer to the National Code of Civil and Commercial Procedure (NCCCP) and the NCCP, both applicable before federal and national courts.
i Securing assets and proceeds
Under civil law, plaintiffs can resort to interim measures such as attachments and preliminary injunctions to preserve assets held by defendants and third parties, even before civil claims are brought.39 An interim measure request must be filed before the same judge that hears the principal claim: an order granted by an incompetent judge will still be valid if it fulfils all other legal requirements. The measures will be decided and executed ex parte. The affected party may challenge the decision, but this will not suspend its immediate enforcement.40 Interim measures are provisional, meaning that they can be set aside or modified after showing a change in the circumstances that justified their order.
To be admissible, plaintiffs must have a reliable claim and prove that there is a risk that the enforcement of the relief sought will be frustrated if the measure is not granted. The court will ask plaintiffs to pay court fees and offer a bond to respond for any harm caused to the defendant or any other expense. Judges will assess the reliability of the plaintiff's claim and the circumstances of the case when deciding the nature and amount of the bond.41 In practice, this may be the most burdensome requirement to meet, as judges will calculate the bond based on the amount of the relief sought in the main claim (it can amount to 30 to 40 per cent of the credit claimed). Moreover, all interim measures will be granted under the condition that the plaintiff initiates the main civil action within a certain period (generally 10 days).
Some of the most common interim measures to secure assets are:
- a prejudgment attachment of assets, where defendants are foreclosed from disposing of specific property, which will remain under their administration unless sequestration or administration by a third party is ordered;
- seizure of mobile assets and administration by a third party;
- a judicial intervention or administration of productive assets (such as a company);
- a general restraining order to sell or transfer property rights;
- registration of the claim with any public registry; and
- restraining notices preventing defendants from selling or transferring rights in connection with certain assets.
Additionally, apart from the remedies set forth in the law, judges are allowed to order other measures to safeguard plaintiffs' interests as they see fit (e.g., freezing of assets in bank accounts).
In criminal cases, the investigating judge may order at any stage of the investigation, ex officio or at the request of the public or private prosecutor, the attachment or seizure of any goods that can be the subject of forfeiture upon a possible conviction. If these measures are proven insufficient, the judge may issue a general restraining order to sell or transfer property rights. Additionally, judges can resort to the interim measures set forth in the codes of civil procedure; however, this option is not very commonly used.
Despite the availability of legal resources to secure assets, tracing and discovering hidden property are usually the major challenges in asset recovery efforts. Overall, court orders requesting information from relevant entities, such as public registries and financial institutions, must follow formal proceedings that hinder any chance of obtaining rapid results. Furthermore, since public registries are held by provinces, requests must be addressed to each of them separately.
Consequently, the General Prosecutor's Office started taking concrete steps to tackle these problems. Since 2009, all public prosecutors acting in national and federal courts are instructed to conduct a patrimonial investigation of individuals suspected of participating in, among other things, money laundering, corruption and some white-collar crimes.42 To ensure the recovery, they were also instructed to request the seizure of assets as soon as the requirements for such measure are met.43 In this line, a special unit for asset recovery was created within the General Prosecutor's Office in 2015.
ii Obtaining evidence
There is no specific action available under Argentine law to obtain evidence in cases of fraud. Thus, plaintiffs must rely on generic means to obtain information to support their claim. As a general principle of evidence, in civil claims each party has the burden of proof regarding the facts on which they base their claim or defence.
As in most civil law jurisdictions, the concept of document discovery is alien to the Argentine civil procedure. Courts have the power to order the defendant and third parties to submit material documentation in their possession, and parties may ask the court to issue such orders on their behalf. If granted, the party that requested the order will be responsible for the necessary arrangements and notifications that the request entails.
Evidence must be submitted by means expressly provided by law (documentary evidence, expert witnesses, witness testimonies, reports), but the court may request other measures ex officio or at a party's request.
In criminal cases, as explained above, evidence rules depend on the kind of procedure (adversarial versus inquisitorial) and the specific regulations set forth in each jurisdiction's code of procedure. Overall, victims acting as private prosecutors are entitled to offer and control evidence collected during an investigation and can resort to the investigating judge or public prosecutor to obtain evidence on their behalf. Civil parties' rights, on the other hand, are restricted to these investigative measures that are needed to uphold their claim.
If a fraud is investigated by national and federal courts, the criminal investigation dossier will contain all the information relevant to the criminal investigation and the criminal charges against the defendant. The NCPC recognises victims' right to offer and control evidence.44 It prescribes that the dossier is public to the parties, which includes the private prosecutor45 but not a civil petitioner. Despite this general principle, in practice, judges may be reluctant to grant private prosecutors full access to some confidential information (witnesses' identity, telephone tapping or interception of records, information normally protected by banking secrecy) based on security or privacy reasons.
Some recent developments are worthy of notice. Driven by the need to boost efficiency in the fight against serious crimes, Congress has enacted a series of statutes that contribute to obtain relevant information in criminal investigations. For certain crimes, Law 27,304 allows prosecutors to conclude leniency agreements with defendants willing to provide information material to a case, including the destiny of any assets, property, profits or benefits of the crime.46 This norm has been used quite effectively in recent corruption cases, such as the Notebooks case.47 In addition, Law 27,319 brought about relevant changes in the set of tools available to obtain evidence in complex investigations, such as the possibility to use cover agents and offer monetary rewards to whistleblowers. Likewise, a permanent rewards fund for whistleblowers created in 2009 was used to offer monetary rewards in exchange for useful information to trace and recover assets in a high-profile corruption case.48
IV FRAUD IN SPECIFIC CONTEXTS
i Banking and money laundering
Over the past few years, Argentina has modified its anti-money laundering (AML) system in accordance with international standards. Law 25,246 and its complementary regulation defines money laundering as an autonomous offence, and imposes on certain financial and non-financial institutions (obliged subjects) the duty to perform risk assessments of their customers, and to implement compliance programmes or measures to mitigate the risks related to their business.
General obligations common to all obliged subjects are:
- to conduct risk-based know your customer procedures;
- to report to the Financial Intelligence Unit (UIF) any transaction suspected of money laundering or terrorism financing;
- to implement compliance programmes or measures to mitigate the risks related to their business; and
- to abstain from disclosing activities performed in compliance with AML regulations.
The information and documents requested by the UIF in the context of its suspicious activities investigations cannot be denied based on bank secrecy or any legal or contractual commitment.49 As a member of the Egmond Group,50 the UIF shares information with other financial intelligence units across the world. Recently, the UIF has been admitted as a private prosecutor in corruption and money laundering cases.
An important feature of AML law for the recovery of assets is that it permits the forfeiture of the presumed instruments or proceeds of a crime when a criminal action cannot be pursued under the reasons described above. In addition, if money laundering offences are committed in the name, with the intervention or in benefit of legal entities, they will be subject to sanctions such as a fine ranging between two and 10 times the value of the amounts involved, among other penalties.51
Under the Argentine Bankruptcy Law (ABL) there are three proceedings under which the insolvency of a debtor may be treated and solved: the reorganisation proceeding, the out-of-court reorganisation agreement and the bankruptcy proceeding.
The aim of the reorganisation proceeding is to maintain and continue a debtor's business and restructure the outstanding debts by negotiating with creditors. The debtor must conclude a restructuring plan with a certain majority of creditors and submit it to the approval of the court. During this proceeding, the debtor maintains the administration of its assets under the supervision of a court-appointed receiver. However, acts exceeding the debtor's ordinary business must be authorised by the court.
By reaching an out-of-court reorganisation agreement, the debtor negotiates a payment plan with its unsecured creditors without following, in principle, the legal process of the reorganisation proceeding. If the debtor obtains the consent of the number of creditors that hold the majorities prescribed by law, the agreement can be submitted for court approval, and this will be binding on all unsecured creditors that did not give their approval.
The purpose of bankruptcy proceedings, on the other hand, is to identify and sell all the debtor's assets to distribute the proceeds among creditors. The court will adjudicate the bankruptcy when the debtor fails to comply with the restructuring plan or at the debtor or creditors' request, or when the debtor requests its own bankruptcy because it is unable to pay its debts when due. If the debtor is adjudicated bankruptcy, its assets will be subject to liquidation – some exceptions apply – and the proceeds distributed to the creditors. Bankruptcy adjudicated in a foreign court constitutes grounds to start insolvency proceedings in Argentina over assets located in the country. However, it cannot be used to challenge local creditor's rights over the assets located in Argentina.52
The ABL prescribes that a control committee, consisting of the holders of the most substantial credits and a representative of the debtor's employees, will supervise diverse acts during the bankruptcy.
According to the ABL, a receiver has the power to challenge transactions that have been entered into within the clawback period and are detrimental to the debtor's estate. Another aspect with regard to asset recovery in the context of insolvency is the possibility of extending the bankruptcy to third parties in specific cases.53 Likewise, representatives, managers and directors of a bankrupt company who have intentionally produced, facilitated, allowed or aggravated the company's economic and financial situation or its insolvency will be liable before creditors and subject to liability proceedings against them.54
If the assets available in the debtor's estate are insufficient to cover the expenses of the bankruptcy proceeding, the judge will terminate it under presumption of fraud and will request a criminal investigation. 55 It is unusual that these cases be prosecuted.
Argentine law regulates both domestic and international commercial arbitration. While domestic arbitration is ruled by the CCCN56 and the Argentine Civil and Commercial Procedural Code, international commercial arbitration is governed by the International Commercial Arbitration Law passed in 2018, which is mostly based on the UNCITRAL Model Law.57
Overall, parties may only opt to resolve their controversy through arbitration when a dispute relates to pecuniary rights. Although most arbitrations deal with contractual liability, nothing prevents an arbitral tribunal from deciding on claims arising out of tortious liability.
Argentine law also recognises arbitrators' authority to order interim measures, including those aimed at preserving assets (although enforcement must be requested of the judicial courts).58
Foreign awards may be easier to enforce than foreign judgments, as Argentine courts will recognise them in accordance with the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (1958).
iv Fraud's effect on evidentiary rules and legal privilege
Under Argentine law, there are no specific rules regarding the effect of fraud on legal privilege. Attorney–client privilege is associated with fundamental rights provided in the Constitution, such as due process and the right to have a fair trial. Thus, courts protect the secrecy of communications between defendants and their lawyers.
Similarly, there are no specific rules regarding fraud effects on evidence matters. In both civil and criminal litigation, parties have the right to control the evidence submitted to and ordered by the court. Parties may challenge evidence, for instance, on the basis that it is forged or it was illegally obtained. If they succeed, the court will strike the piece of evidence from the record.
V INTERNATIONAL ASPECTS
i Conflict of law and choice of law in fraud claims
Conflicts of law will be dealt with according to the applicable treaties between Argentina and the relevant foreign state. In the absence of an applicable treaty, courts will resort to local norms.59
When directed to consider foreign law, local courts will apply it as the courts from the foreign state would do. In this case, if the foreign law establishes the renvoi to Argentine law, the latter applies. Exceptionally, local courts may disregard the foreign law that would apply pursuant to conflict of law rules when the facts of a case are barely connected to that forum.60 Moreover, foreign law does not apply when it would result in situations incompatible with Argentine principles of public order.61
As a general rule, Argentine law permits parties to an international contract to select the laws that will govern their agreement except in the case of consumer contracts and non-disposable rights. However, the choice of foreign law will only be valid to the extent that it is not agreed to evade the application of mandatory rules of Argentine law, and it must not contravene Argentine public order and the internationally mandatory rules of those states that may have a strong connection with the case.
In the absence of choice, contracts are governed by the law of the place of performance of the main obligation of the contract. Alternatively, the law of the debtor's domicile applies. As to civil liability, in general, in the absence of choice, the applicable law is the one of the place where the harm was caused, regardless of the place where the harmful act or the indirect consequences of such act were caused.62
ii Collection of evidence in support of proceedings abroad
Cooperation with foreign authorities regarding evidence collection and transfer are ruled by specific bilateral treaties and conventions applicable to Argentina's relation with the relevant state. Argentina is party to several multilateral treaties such as the Hague Convention of 18 March 1970 on the Taking of Evidence Abroad in Civil or Commercial Matters,63 the Inter-American Convention on the Taking on Evidence Abroad64 and the Montevideo Treaties of International Procedural Law of 1889 and 1940. Moreover, additional cooperation commitments stem from specific treaties, such as the UN Convention for the Suppression of the Financing of Terrorism.65
Besides international agreements, Argentine law establishes that local courts must cooperate with foreign authorities in civil, labour and commercial matters. Local courts must grant foreign evidence requests if they do not affect the national public order.66 Requests must be made through letters rogatory but, if needed, direct communications are allowed as long as due process is respected.67
iii Seizure of assets or proceeds of fraud in support of the victim of fraud
In the absence of applicable treaties, local courts have jurisdiction to order interim measures when deciding on a principal case, even if the assets are located outside Argentine jurisdiction. Local courts can grant foreign interim measures:
- from a court with jurisdiction over the principal matter or, in the event of urgency, when the persons or assets subject to the request are or could be in the country; and
- when the foreign decision must be enforced in Argentina.
The Argentine Supreme Court has held that due process and the right of defence constitute principles of public order that must be respected in order for a foreign decision to be executed in Argentina.68
iv Enforcement of judgments granted abroad in relation to fraud claims
Recognition and enforcement of foreign judgments will be governed by applicable treaties. Argentina has signed treaties on this matter with the MERCOSUR countries, China, Russia, Italy and France, among others. In the absence of an international treaty, the enforcement of foreign judgments is governed by the local procedural rules.
Article 517 NCCCP, which will apply before federal courts or if a defendant is domiciled in Buenos Aires, establishes that local courts must enforce foreign judgments when:
- the judgment is a final sentence issued by a court with jurisdiction according to domestic law;
- notification to the defendant and due process was respected;
- the judgment complies with the authenticity requirements of the country of origin and domestic law;
- the judgment does not affect national principles of public order; and
- the judgment does not overlap with a domestic judgment.
v Fraud as a defence to enforcement of judgments granted abroad
Based on Article 517 NCCCP cited above, conclusions can be drawn that local courts will not allow recognition or enforcement of a foreign judgment if the result of that recognition or enforcement is manifestly incompatible with Argentine principles of public order.
VI CURRENT DEVELOPMENTS
As part of its efforts to improve the efficiency of the criminal justice system, in 2017 the government created a Commission for the Reform of the Criminal Code. The bill submitted to the Senate in March 2019 brings about relevant changes in forfeiture, such as the possibility of expanding the situations in which non-conviction forfeiture applies. The project also incorporates other instances of corporate liability and increases the penalties of crimes such as bribery, terrorism, and drug trafficking.
1 Pedro Serrano Espelta is a partner and María Agustina Testa is an associate at Marval O'Farrell Mairal.
2 Article 1,716 CCCN.
3 Article 1,737 CCCN broadly defines damage.
4 Article 1,711 CCCN.
5 Articles 2,252–2,261 CCCN.
6 Article 2,260 CCCN.
7 Article 1,740 CCCN.
8 Article 1,726 CCCN.
9 Article 1,743 CCCN.
10 Article 1,749 CCCN.
11 Article 1,763 CCCN.
12 Article 1,751 CCCN.
13 Article 1,752 CCCN.
14 Article 1,744 CCCN.
15 Article 1,738 CCCN.
16 Article 336 CCCN.
17 Article 338 CCCN.
18 Article 340 CCCN.
19 Article 332 CCCN.
20 Article 1,794 CCCN.
21 DNU 62/2019, Procedural Regime for Civil Actions Regarding the Extinction of Illegal Asset Domains.
22 The civil action was filed in connection with a drugs case. https://www.mpf.gob.ar/procunar/files/2020/02/Informe-de-Gesti%C3%B3n-2019.pdf, pages 44 to 46.
23 Law 9,151 of the Province of Mendoza.
24 Law 26,831.
25 National courts have jurisdiction over felony cases committed in the Autonomous City of Buenos Aires.
26 Articles 1,774 and 1,775 CCCN.
27 Articles 82–86 NCPC.
28 Argentine Supreme Court, Santillan, 1998.
29 Articles 87–96 NCPC.
30 Articles 176–180 ACC.
31 Article 23 ACC.
32 Article 76 bis ACC.
33 National Decree 826/2011.
34 For instance, see https://www.cij.gov.ar/nota-37023-Resoluci-n-del-Tribunal-Oral-en-lo-Criminal-Federal-n.--1-de-la-Capital-en-causa-2.806--L-PEZ--Jos--Francisco-y-otros-s--enriquecimiento-il-cito-.html.
35 Article 23 ACC.
36 Article 305 ACC.
37 Article 5, Law 26,683.
38 Article 29 ACC.
39 Article 195 NCCCP.
40 Article 198 NCCCP.
41 Article 199 NCCCP.
42 Resolution 134/2009.
43 Resolution 129/2009.
44 Article 80 NCCP.
45 Article 204 NCCP.
46 Article 1 Law 27,304.
47 The Main Court Docket 9,608/2018, in Fernandez, Cristina Elisabet y Otros s/ Asociación Ilícita, triggered related investigations of money laundering and cartelisation, among other things.
48 The monetary reward was set forth in Resolution 678/2018 of the Federal Ministry of Security but is no longer in force.
49 Article 14, Law 25,246.
51 Article 304 ACC.
52 Article 4 ABL.
53 Articles 160–171 ABL.
54 Article 173 ABL.
55 Article 233 ABL.
56 Articles 1,649–1,665 CCCN.
57 International Commercial Arbitration Law 27,449.
58 e.g., Article 39, Law 27,449.
59 Article 2,594 CCCN.
60 Article 2,597 CCCN.
61 Article 2,600 CCCN.
62 Article 2,657 CCCN.
63 Approved by Law 23,480.
64 Approved by Law 23,506.
65 See Article 12.
66 Article 2,612 ACC.
67 Articles 2,611 and 2,612.
68 Argentine Supreme Court, Aguinda Salazar, Maria v. Chevron Corporation s/ medidas precautorias.