Report No. 13873-BO

How Legal Restrictions on CollateralLimit Access to Credit in BoliviaDecember1 994

Office of the Chief EconomistLatin America and the Caribbean Region

Document of the World Bank

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HOW LEGAL RESTRICTIONS ON COLLATERALLIMIT ACCESS TO CREDIT IN BOLIVIA

December 1994

*This report is based on the findings of two missions to Bolivia in March 1991 and March 1992.The team was led by Heywood W. Fleisig of the Bank and included Juan Carlos Aguilar, economist atthe La Paz Resident Mission, and Nuria de la Pefia, laywer and consultant to the Bank. The authors areobliged to Robert Effros of the International Monetary Fund for his early guidance about the economicimportance of these legal provisions, and to Alejandro Garro and Andrew Spanogle for extensive adviceon the legal issues. Marcelo Selowsky advised throughout on the economic analysis and its bearing onthe Bank's credit line operations. William Shaw worked closely with us and advised us from theinception of the project. Roberto Cucullu, Mark Dorfman, Graciela Rodriguez Ferrand, Lance Girton,Thomas Glaessner, Roberto Laver, and Hal Scott made many helpful comments. Many Bolivians havegenerously given their time to explain their perspectives on these problems. Any errors are entirely theresponsibility of the authors.

CONTENTS

Executive Summary ............. -

I. Introduction.. 1 -

II. How the Laws Governing Financial Instruments Affect Credit and EconomicGrowth .- 3-

How Do Borrowers Back Their Loans? .- 3-Collateral Problems Reduce Investment and Growth .- 4 -

Collateral Problems Distort Credit Allocation. -6-CoHateral Problems Narrow the Distribution of Credit. -6-Conclusion.. 8-

III. Extralegal Repossession and Sale of Collateral .- 10 -

IV. Financial Instruments and Collateral: Overview of Legal Issues .- 14 -

Definition of Property .- 14 -Structuring Claims Against Property .- 15 -Establishing the Existence of a Claim Against Collateral in Bolivia .- 17 -Obtaining and Enforcing Judgment.. 17 -

V. Creation and Perfection of Security Interests .- 18 -

Creation and Perfection with Physical Possession .- 19 -Creation and Perfection without Physical Possession and without Written

Registration .- 22 -Creation and Perfection without Physical Possession and with Written

Registration .- 23 -The Registries .- 24 -

Problems and Options for Solutions .- 26 -Pass a Comprehensive Law of Secured Transactions .- 27 -

Improve the Operation of Legal Registries .- 29 -

VI. Obtainine Judgment in Bolivia .- 31-

Judicial Procedures .- 31 -Problems and Options for Solution .- 35 -

Permitting Private NonJudicial Enforcement of Loan Contracts .- 36 -Improve the Administration of Justice.- 37 -

VII. Enforcin2 Judoment .......................... - 41 -

Determining the Amount Owed . .......................... - 42 -Attachment and Seizure . ..........................- 43 -Public Auction ...........................- 44 -Problems and Options for Solution .......................... - 45 -

Appendix I: Economic Cost of Deficiencies in Bolivia's Collateral Law ....- 49 -

Appendix II: Results of an Analysis of Bolivian Debt Collection Cases ... - 61 -

Appendix III: le2islacion Sobre Garantias Reales Mobiliarias: Terininos de Referencia . - 71 -

Appendix IV: Legislacion Sobre Acceso Publico a los Registros. Bienes Inembargables vContratos Modelos para el Credito Mobiliario: Terminos de Referencia - 107 -

Glossaries: English/Spanish .. . - 119 -

Spanish/English .. . - 127 -

MAP (IBRD 16591)

Executive Summaary

i. In Bolivia, banks supply most of the loans to the private sector. Bolivian banks usuallyaccept only real estate as collateral for these loans, or the personal guarantee of someone whoowns real estate. They usually will not accept inventory, accounts receivable, livestock orindustrial equipment as collateral without demanding a supplemental guarantee based directly orindirectly on the ownership of real estate.

ii. These policies:

* Make it difficult for anyone without real estate to finance the purchase ofequipment, inventory, or livestock.

Limit access to credit by business enterprises in rented quarters, by farmers whowork rented land or have unclear title, and by all who don't own real estate.

* Limit profitable and socially useful lending by banks, as well as credit sales byindustrialists, importers, and merchants.

Make non-bank credit expensive, because lenders find collateral other than realestate very risky.

Deprive lenders and borrowers of due process of law, by misusing the punitivesanctions of the criminal law to substitute for inadequate civil enforcement ofcontracts.

Broadly, these lending policies lead to high interest rates, low volumes of lending,investment rates that fall short of socially profitable needs, and lower output and incomes.

Problems in Securing Loans Against Movable Property

iii. Why is credit so tightly linked to urban real estate and large rural land holdings inBolivia? Not because of low income, low growth rates, or the relatively small size of thecountry. Nor is there evidence of excessive conservatism by commercial banks, disinterest inthe needs of commerce, or excessive restriction by the Superintendency of Banks. Rather, thislink arises from Bolivian law and legal procedures.

iv. Lenders regard loans secured only by movable property and equipment as more risky thanloans secured by real estate; this is correct:

- ii -

* Inadequate legal definition of collateral and guarantees makes it impossible tocover some important economic transactions with legally-recognized agreements.

* The law permits only complex and time-consuming measures for repossessingcollateral, procedures that take longer than the economic life of many movableproperty.

* Inadequate registries make it hard for lenders to trace claims, pledges andmortgages and to identify their collateral in the eyes of the court.

v. Movable property typically depreciates rapidly with time and use. If collection procedurestake too long, such property has little value as collateral. In an examnination of over 500 debtcollection cases, the average collection time was over two years. Lenders, understandably,require other forms of collateral.

Ad Hoc Solutions to the Collateral Problem Have Failed in Bolivia

vi. Lenders and borrowers, struggling to make profitable and socially beneficial deals despitethe inadequacies of laws and legal institutions, go beyond the law. They use postdated checksto guarantee payment and send the borrower to jail in the event of default. They use baileeagreements that subject the bailee, typically a family member of the borrower, to jail if thecollateral is not delivered. Nearly a third of the people in jail in La Paz -- and 60 percent of thewomen -- are there because debt collection has been criminalized. Debt-related "crimes" accountfor more prisoners than murder, theft, drugs, or rape.

vii. Because these ad hoc solutions convert ordinary commercial risk into criminal risk, theseare not good remedies. Where ordinary businessmen outside Bolivia face the prospect of lossif they default on a loan, Bolivian businessmen face the prospect of jail. Understandably,potential sellers hesitate to sell on credit, and potential buyers hesitate to buy on credit. Lenderswith important reputations to protect, like banks, will not use these illegal methods to protectclaims on movable property; for banks, illegal solutions are not solutions at all.

The High Economic Cost of the Collateral Problem

viii. Breaking this tight link between access to credit and ownership of real estate requireschanging the law so that more lenders would find it profitable to make loans secured by movableproperty. This change could provide large and broadly distributed economic benefits.

Banks would gain from undertaking profitable loans presently closed to thembecause of excessive collateral risk.

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* Manufacturers and dealers in equipment, fertilizer, seeds, and grains couldextend their own credit to buyers.

* Banks could accept the loans arising from such credit sales as collateral for otherloans that would let these manufacturers and dealers sell more on credit.

* Other financial intermediaries such as leasing companies could borrow to financesales, accounts receivables, and machinery.

* Potential buyers who now lack access to credit because they cannot offer realestate collateral could borrow in the private sector for productive loans using themovable property itself as collateral.

ix. The overall benefit to the Bolivian economy would arise from the wider use of equipmentand working capital in projects where it is profitable but, at present, difficult to finance. A roughestimate of this benefit indicates that -- with the drop in interest rates that might be expected fromimproved collateral -- the demand for equipment could rise by about $1 billion. That expandeduse of equipment could increase output by an estimated $230 million to $330 million, about3 percent - 4 percent of Bolivian GDP.

Options for Solutions

x. Addressing this problem requires revising Bolivia's Laws, improving legal registrysystems for those commercial and civil contracts that create security interests, and speeding upthe process for settling claims. The government of Bolivia has several options.

Change the Law to Permit a Broader Range of Security Interests to Cover all EconomicallyImportant Transactions:

xi. Enact a new law on secured transactions for business and consumer borrowers thatincludes substantive and procedural rules that:

* Expand the range of assets that can serve as collateral.

* Regulate floating security interests for all secured transactions and agreements,using commercial inventory as collateral.

* Regulate accounts receivable as collateral, avoiding the transfer of accountsrequirement.

* Give a clear perfection of security interest in the goods sold on credit.

- iv -

* Establish clear regulations for disclosure of fees, interest rates, and other termnsof lending.

Accelerate the repossession and sale of collateral:

In the short-tern:

* Apply rapid resale to all movable collateral. Regulate or amend Article 171of the Civil Code to clarify that its application is not limited to fruits andvegetables, but applies to all movable property that decline in value (si hubierepeligro de perdida o desvalorizaci6n) in an amount sufficient to endanger thecollateral because of the long time required to litigate repossession and sale.Regulate or amend the law to clarify that the judicial power to order sale in themost convenient way (podra ordenar la venta en la forma mas conveniente)should include sale controlled by the creditor.

* Clarify rapid repossession procedures. Regulate or amend Article 162 of theCivil Code, which gives the court the power to act rapidly, to set specificprocedures for the rapid repossession of movable property.

(Clarify which contracts pernit rapid repossession and sale. Regulate oramend the law to provide that rapid repossession and sale procedures can applyto several important secured transactions contracts such as right of retention(Commercial Code, Article 812); the right of adjudication related to the pledgewithout transfer of possession (Civil Code, Article 1427); and to the conditionalsale or sale with retention of title (Commercial Code, Article 839).

Draft sample contracts. Include model standard contract forms for seller credit,specifically a standard contract for business borrowers, negotiated under freedomof contract (Commercial Code, Article 786 and Civil Code, Article 454),providing that the seller can retain title to the goods. For bank credit: usepledge-without-transfer and chattel mortgage agreements when lending againstmovable property.

In the long-term:

* Change the law. Let private parties bypass the court procedure for executionof judgment by allowing them to write contracts permitting harmless repossessionso that the creditor may repossess collateral, to sell it through private salecontrolled by the aggrieved lender or through judicial sale without appraisal.This procedure will also let private parties bypass existing auction procedures.

Improve Legal Registries:

xii. After the law has been changed to make it economically useful to register security interestagainst movable property, reform the registries:

* Index and computerize the registries in which secured claims are registered.* Computerize and modernize the Commercial Registry.* Expand the use of equipment registration at the Real Estate Registry.* Strictly enforce the public access requirements to government registries.* Set targets for improved performance and maintain public records of the amount

of time required for each step in the registration process.

How Legal Restrictions on CollateralLinit Access to Credit in Bolivia

I. Introduction

1. In Bolivia, most lenders require real estate as collateral. This practice makes it very difficultfor merchants, mine owners, industrialists, professionals, and farmers to borrow againstequipment, inventory, crops, or anything else they might use in the course of their trade orbusiness.

2. This paper asks why such a limited range of property should serve as collateral for loans.It finds the answer in the Bolivian legal, judicial, and regulatory systems: the court systemoperates very slowly and the system of laws makes it difficult for parties to make loan contractsthat can bypass the courts for their full enforcement.

3. This paper aims at both economists and lawyers. The economic problem is relatively simple:collecting any debt in Bolivia is expensive and takes a long time. Only the most durable andvaluable collateral is worth anything in such a system; therefore, most loans are ultimatelysecured by urban real estate, which will last beyond the time expected for a court decision andhas great enough value to cover at least the minimum cost of collection. The typical piece ofindustrial or agricultural equipment is worth less than the typical real estate holding and, unlikereal estate, typically falls in value with age. For lenders facing high fixed legal costs ofrepossession and sale, equipment is much less attractive as collateral than land.

4. This problem has complex legal and judicial roots. Consequently, this paper covers theseissues at a level of detail that may seem tedious to some legal readers; this is regrettable butunavoidable. It is important to distinguish technical legal terms from common usage. To indicatetechnical legal terms for the non-legal reader, italics are used for English legal terms, withSpanish terms in parentheses. This also identifies legal terms for lawyers trained in only one ofthe legal systems, civil or common law, relevant to discussions in this paper. In most cases,these terms appear in the appended glossary. In some cases, differences between the civil andcommon law usage means that no equivalent term exists in the other language. In that case, theglossary sets out the sense in which the term is used in this paper.

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5. Chapter II discusses how Bolivian lenders actually secure their loans in the face of thesesevere problems that restrict the use of collateral. Chapter III discusses how the legal treatmentof collateral affects credit and, in turn, the financing of investment and economic growth.Chapter IV introduces the legal issues: it defines property, explains how claims are secured bycollateral, and discusses how the legal and judiciary system in Bolivia enforces those claims.Chapter V presents the general issue of the creation and perfection of security interests and howthey are handled in Bolivia. Chapter VI describes how a Bolivian creditor would obtain judgmentfrom the court in the event of a breach of a financial contract; it explains why the process takesa long time and sets out some options for shortening the process. Chapter VI discusses how aBolivian creditor would enforce such a judgment; it also explains why that process is soprotracted and discusses options for reform.

6. Appendix I sets out a back-of-the envelope estimate of the economic cost of the collateralproblem in Bolivia. Appendix II presents the analysis of debt collection cases in Bolivian courts.Appendix III contains the terms of reference for a general law of secured transactions for Bolivia,prepared by Professor Alejandro Garro. Appendix IV has the terms of reference for a series ofshort-term solutions that address aspects of the collateral problem.

II. How the Laws Governiig Financial Instruments Affect Credit and Economic Growth

7. Bolivian law envisions two broad classes of private borrowers: commercial banks andeveryone else. As a practical matter, the debt of non-bank private borrowers is backed by realestate: property other than real estate cannot readily serve as collateral. This system limits thevolume of credit available for productive transactions. It allocates credit away from farmers whorent, from farmers with unclear title to land, and from manufacturers who need large amountsof machinery relative to their real estate holdings. It allocates credit toward real estatedevelopment, and keeps credit out of the hands of those without land. This credit system reduceseconomic growth and directs the benefits of growth away from the poor.

How Do Borrowers Back Their Loasm?

8. Private lenders care deeply about how their debts will be repaid. Therefore, they care aboutwhat backing the borrower offers. Commercial banks borrow by taking deposits, by sellingcertificates of deposit, or by issuing bonds. They back their debts with their real property, theirinvestment assets, and their expected profits. At one level, these anticipated profits depend onthe bank's expected interest costs, interest receipts, and loan performance. At a deeper level,however, the quality of the backing that the bank offers depends indirectly on the quality ofclaims against the government. First, because the de facto and de jure policy of the Boliviangovernment on insuring depositors effectively provides a state guarantee to some of the debt ofcommercial banks. The state does not offer comparable guarantees for non-bank privateborrowers. Second, because how well a commercial bank services its own debt will depend ongovernment policies -- how freely the Central Bank rediscounts the private loans presented to itby the commercial banks, and how aggressively the bank regulators force banks to recognizelosses.

9. What backs the promises to repay by other borrowers -- consumers, industrialists, merchants,and farmers? For some loans to individuals, collateral is not necessary. To some degree,individuals, like nations, will service debts because the gain from future, larger loans exceeds theburden of servicing past, smaller loans. Accordingly, revolving funds that lend for recurringneeds, like seeds for farmers, often show high servicing rates. In other cases, communitypressure ensures repayment. Often community or church cooperative lenders show high servicingrates, and, no doubt, some individuals can be counted on to repay loans because they have strongmoral views that loans should be repaid. These loans are unsecured but they have good backing.

10. But, even while some lenders will make unsecured loans, if they have intimate knowledgeof the borrower, few lenders will make substantial loans under such conditions. For lenders inmost countries, good collateral and good collection make good loans. In most cases in Bolivia,

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such borrowers secure their promises to pay by either mortgaging real estate to secure theirloans' or by giving evidence of the ownership of real estate that could be attached to pay loans.Such borrowers give personal guarantees,2 which involve a generalized pledge of their wealth,or use a surety of the wealth of another. Few Bolivian borrowers secure their loans by pledgingdurable equipment or personal belongings. This situation has roots in problems of Bolivian lawand legal procedures.

Collateral Problems Reduce Investment and Growth

11. How important are these legal obstacles compared to other factors in explaining highinterest rates or reduced investment? Do legal problems in creating collateral explain the highinterest rates facing borrowers who secure loans with real estate? Most likely, they do. Considersome frequently offered alternative explanations:

12. Macroeconomic instability and high bank intermediation margins. Only a smallamount of the high interest rates facing Bolivian borrowers arises from macroeconomic factorsor high bank intermediation spreads. Loans to individuals without real estate in Bolivia runbetween 36 percent and 72 percent per year, versus a range of 9 percent to 14 percent in theUnited States -- a difference of 22 - 63 percentage points (Table 1).

13. Of that difference, about 8.5 percentage points arises from the risk of macroeconomicinstability in Bolivia and another 5.5 percentage points arise from higher bank intermediationspreads. The additional interest rate differential -- 14 to 50 percentage points -- arises fromproblems with movable property as collateral.

14. Put a different way, half to three-quarters of the higher interest rates observed in Boliviaarise from the collateral problem.

For lawyers, "real property" refers to real estate as distinct from other physical or 'personal property.' For economists, "realproperty" connotes both real estate and 'personal property,' as distinct from "nominal" assets like paper securities.

Broadly speaking, under Bolivian lav, borrowers can give lenders one of two guarantees: a real guarantee or a personal guarantee.Under a real guarantee, the creditor has a security interest in a specific asset of the debtor, such as a mortgage on the debtor's houseor a pledge on the debtor's equipment. The lender is then a secured creditor who holds a position in the line of priority to recoverthe amount that he is owed from the proceeds of the eventual sale of that specific piece of property. tJnder a personal guarantee,the lender is an unsecured creditor because the borrower will [respond] with any and all of his property, giving the creditor no specificinterest, priority, or security interest against any specific property (C(6digo Civil, Art. 1335). In such a situatiol, the lender-creditorwill be unsecured until a court orders an attachment or a judgment lien recorded in the appropriate registry. Whetn the creditorrecords such a court order, the creditor creates a specific lien on a specific asset of the debtor; the lender then becomes a lien creditorwith respect to that specific asset, and will remain an unsecured creditor for any deficiency judgment (the creditor will have a personalguarantee on any of debtor's assets until the total balance due is paid). Under Bolivian law, the parties need not stipulate in theircontracts the debtor's personal guarantee: a personal guarantee of the debtor always exists under the law. without the need to providefor it specifically.

Table 1: Explaining High Interest Rates for Loans in Bolivia

United States Bolivia Difference

I. Greater Macroeconomic Risk in Bolivia:[7There is no risk that the U.S. government will be unable to pay its bonds in dollars, because it has the legal monopoly onprinting dollars. The government of Bolivia must get its dollars by raising taxes or cutting spending. These are politically

difficult actions and lead to perceptions of macroeconomic risk. The differnce between the U.S. interest rate on dollar bonds

and the Bolivian interest rate on dollar bonds is entirely macroeconomic risk.

Government borrowing rate in dollars | 3.5% 12.0% 8.5%

2. Higher commercial bank intermediation spreads in Bolivia:[Commercial banks in Bolivia have less competition than do U.S. banks so they charge more to intermediate funds. Reserverequirements are similar and do not explain differences in intermediation spreads]

Prime business rate 6.0% 20.0% l

--Spread over govemment borrowing rate 2.5% 8.0% 5.5%

3. Movable property is less adequate collateral for loans in Bolivia:

[Differences in macroeconomic risk and intermediation cost apply equally to loans secured by real estate and loans secured bymovable property. In the United States, loans secured by movable property have interest rates close to the interest rates onmortgages; in Bolivia, banks do not make loans secured only by movable property and informal lenders charge rates of 36percent to 72 percent]

Mortgage Interest Rate 8.25% (25 year) 18% (5-10 years)

Equipment/Automobile Loan 9.30% (4 yr) - 12.7% (10 yr) 36% - 72%

FSpread 1.05% - 4,45% | 18.00% - 54.00% 13.55% - 50.00%

Source: U.S. data taken from Federal Reserve Bulletin, July 1993, tables 1.35, 1.53, 1.56; Bolivian data from the Bulletin of the CentralBank. Rates for loans secured by movable collateral based on evidence given during interviews.

15. High transactions costs relative to loan size. One explanation offered for the reluctance to lendfor equipment rests on the supposed small size of such loans. This doesn't hold up well underexamination. In fact, about three-fourths of the loans made by Bolivian commercial banks are forUS$10,000 or less. Loans of that size for movable equipment are common in the United States, wherethe labor costs of loan processing are higher. High transactions costs can't explain the reluctance of theBolivian banks to make these loans. Their reluctance, rather, arises, as the bankers themselves repeatedlyand consistently stress, from their belief that the movable property do not offer much value as guaranteesfor loans.

16. Structure of banking. Some explanations of high interest rates rest on allegations ofconservative bank lending policies. But banks cannot substantially liberalize their policies regardingcollateral unless the underlying quality of collateral policy is changed. Without reform, loans securedonly by movable property do present substantial additional risks. Where high bank intermediation spreadsarise from too little competition, the collateral problem limits development of non-bank lenders that couldcompete with banks and lend for movable equipment.

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Collateral Problems Distort Credit Allocation

17. Restrictions on collateral distort Bolivian economic activity. Economic sectors in Bolivia, aselsewhere, differ substantially in their most profitable combinations of real estate, equipment, and humancapital. Since real estate security is better in Bolivia, the legal and regulatory environment for lendingoperates to lower the risk of lending for real estate; this permits lower interest rates for such loans andleads the market to allocate more capital toward operations intensive in real estate. Hotels andcommercial buildings will be relatively easy to finance. By contrast, though, a factory operating in rentedspace will find it difficult to finance machinery because it cannot mortgage the real estate. A servicecompany -- such as a bus, taxi, or road transport company -- that requires large inputs of durableequipment and relatively little real estate will also find financing difficult. A landless farmer, or onewhose land is covered by murky homestead provisions, will have trouble financing equipment.

18. How much is it worth to address this problem? Appendix I sets out a rough estimate. In Bolivia,about 10 percent of commercial bank loans are granted using movable equipment as collateral; in theUnited States, about 40 percent. If fixing the problem of collateral led to a similar expansion in lendingand drop in interest rates, total lending for equipment could rise by as much as $675 million. Thatincrease in equipment use could increase Bolivian GDP by as much as $200 million a year, an increaseof about 2 percent.

Collateral Problems Narrow the Distribution of Credit

19. While both wealth and income are distributed quite unevenly in Bolivia, real estate is distributedeven more unequally. Indeed, Bolivia has one of the most concentrated patterns of land ownership inLatin America, with about 5 percent of the people owning about 95 percent of the land (Table 2).Problems with using movable property as collateral, therefore, lead the present system to distribute crediteven more narrowly than the distribution of wealth. In countries with different credit-granting systems,an employed person without wealth can borrow using movable property as security: a businessman inrented quarters might borrow to buy equipment or inventory, using these goods as security for the loan;a farmer on rented or inalienable land might pledge his equipment or his crop as collateral. PresentBolivian laws and legal procedures make such transactions nearly impossible. Not surprisingly, smallfarmers, small businessmen, and the poor cannot borrow in the formal banking sector. Nor can they getmuch credit from merchants or machinery dealers because those businesses, in turn, cannot get credit tofinance their movable property: inventories and accounts receivables. Instead, they must borrow in theinformal or illegal sector, where rates are higher than they would be if the legal framework permittedcompetition, and where borrowers are often subject to extralegal collection techniques.

Table 2: Size Distribution of Loans, Deposits, Borrowers and Lenders

Amount of Deposits Number of Depositors

Million Comulative Comulative

DEPOSITS US$ Percent Percent Number Percent Percent

$200,000+ 301.4 25.8 25.8 599 0.2 0.2

$100,000 - $200,00() 131.2 11.2 37.0 947 0.3 0.5

$50,000 - $100,000 170.5 14.6 51.6 2,439 (.8 1.2

$40,000- $50,(0() 63.9 5.5 57.1 1,463 0.5 1.7

$30,000- $40,000 65.4 5.6 62.7 1,933 0.6 2.3

$20,001)- $30,000 92.0 7.9 70.6 3,855 1.2 3.5

$10,00(0- $20,000 128.1 11.( 81.5 9,220 2.9 6.3

$5,00) - $10,000 93.6 8.( 89.6 12,899 4.0 1(0.4

$1,000 - $5,000 92.7 7.9 97.5 37,93() 11.8 22.1

$500- $1,00(0 12.6 1.1 98.6 17,351 5.4 27.5

< $500 16.6 1.4 1((.( 233,529 72.5 10().(

Total 1,167.8 1(XI.0 322,165 1()(1.()

Amount of Loans 1/ Number of Borrowers

Thousand Cumulative Cunmulative

DEPOSITS US$ Percent Percent Number Percent Percent

$1,500,0(0)(+ 314,366 18.0 18.0 108 (1.1 (.1

$1,0(0,(X)( - $1,500,000 84,551 4.8 22.8 78 ().1 0.2

$750,000 - $1,0)0).0()(( 94,519 5.4 28.2 134 (0.2 (1.4

$500,00) - $750,000 128,572 7.4 35.6 30)0) 1).4 ().8

$250,0(X) - $5(0,((( 229,151 13.1 48.7 752 1.() 1 7

$1(0),00) - $250,000 260,431 14.9 63.6 1,71)8 2.2 3 9

$75,0(0) - $10(1),1000 78,548 4.5 68 1 979 1.2 5.1

$50,)0 - $75,0(00 88,718 5.1 73.2 1,559 2.( 7.1

$25,000 - $50,000 141,132 8.1 81.3 4,15(0 5.3 12.4

$1(0010 - $25,(0(N) 157.466 9.() 90.3 1(),168 12 9 25.2

< $1(,0(1() 109,335 9.7 1()().() 59.056 74.8 10.()

Total 1,746,791 1()().() 78,992 1()().()

Source: Superiltelldenley of Banks of Bolivia, Monthlv Bulletih.

I/ Including contingents.

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Conclusion

20. These effects of law on the allocation and distribution of credit reflect the rational responses ofborrowers and lenders to the legal structure of the country. These allocative and distributive effectswould not, however, follow in an environment where the legal structure made personal property bettercollateral, as it does, for example, in Trinidad, Jamaica, the United States, and Germany. A differentlegal structure would yield lower interest rates without lowering risk to lenders. That would permit moreinvestment in equipment at the same level of profit and, consequently, produce a higher rate of economicgrowth.

21. The policy question facing Bolivia revolves around devising an alternative legal structure thatcould meet these economic needs and yet remain at least as politically acceptable as the current structure.Setting up public institutions that lend for the purchase of movable property despite these legal problemswill not solve the problem -- such institutions would simply find themselves with non-collectable loans.They would fail for precisely the same reasons that private lenders originally refused to make such loans.

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Table 3: Gini index values for concentraion of land ownership

in 54 couz,ties a!

Number of countries in range

Range of index values Latin American countries Other non-industrial countries b/ Industrial counries cl

.80 and over 12 3 3

.70to .79 5 4 4

.60to.69 0 7 4

.50 to .59 0 4 3

.40 to .50 0 3 3

Total 17 21 17

Gini values for selected Latin American countries

Bolivia .94 Brazil .84

Venezuela .89 El Salvador .83

Peru .88 Uruguay .82

Guatemala .86 Dominican Republic .79

Ecuador .86 Honduras .76

Colombia .86 Nicaragua .76

Argentina .86 Panama .74

Mexico .69

a Most available data are frouitn e 1960s For three countries, irtdex values before and after land reform were available. Pre- and post-refoim valucs are, respecsely:Mexico, 0 96-0 69, Egypt, 0 81-0 67; Taiwan, 0.65.0.46

b/ Countries in Asia, North Africa, Southern Europe, plus Jamaica.

c/ Less than 30 percent of labor force employed in agriculture.

Source Samuel P Huntington, Political Order in Changing Societies (New Haven, Conn Yale University Press, 1968); Table 6.2, p. 382, cited an Malcolm Bale, LATenare in Venezuela, IBRD 1992

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III. Extralegal Repossession and Sale of Collateral

22. If Bolivia could use property other than real estate as collateral, it would open up a large numberof profitable transactions between lenders and borrowers. These transactions would increase Bolivianeconomic efficiency, production, and incomes. Not surprisingly, Bolivians have devised ways to bolsterthe value of personal property as collateral, but these solutions are not legal: the postdated check (chequepostdativo), theft of collateral, police harassment, misuse of the bailment (depositario) agreement, misuseof sale with an option to repurchase (venta con pacto de retroventa), and illegal pawnshops. This chapterexplains how these Bolivian laws and legal procedures criminalize these business transactions.

23. The postdated check. The borrower writes a check to the lender for the amount of the loan butdoes not date the check. If the borrower does not pay the lender, the lender can threaten to deposit thecheck. If the borrower has insufficient funds, the check bounces; the borrower who wrote the check hascommitted a criminal offense.3 The lender can present the returned check to the police station and havethe borrower arrested. While using postdated checks to guarantee loans is a criminal offense for bothborrower and lender, respondents could cite no case of a person jailed for accepting a postdated check.

24. The postdated check, Dickensian though it is in its workings, is a major form of guarantee inBolivian lending. Half the inmates in La Paz jails are imprisoned for non-drug offenses; of these, halfare imprisoned for the crime of writing checks without funds. The mission interviewed approximately15 of these inmates. In each case, the "check without funds" had been written as the guarantee of abusiness transaction and in each case the prisoner was a small business operator. Those imprisonedtypically lacked the family connections necessary to raise the funds necessary to cover the check. Theyremain in prison until the check is covered, even if that means staying imprisoned beyond the four-yearmaximum penalty for crimes related to the use of the check. For imprisoned women this can take on aparticularly disturbing dimension, as they bring their children to the jail.

25. Abuse of the bailment (dep6sito). Under a bailment agreement, a third person is named bailee(depositario). The lender drafts the agreement requiring the borrower to name a close relative as thebailee, such as the wife, mother or child. That person is responsible for turning over the collateral inthe event of nonpayment. Failure to turn over the collateral is a criminal offense and the bailee can bejailed.

26. Misuse of the sale with reservation of title (venta con reserva de propiedad). The lender hasthe borrower execute a sale document granting the lender ownership until the total purchase price ispaid.4 If the borrower fails to repay, the lender gets a summary judgment and the property is passed

Codigo de Comercio, Art. 602, 640; C6digo Penal, Art. 204-205. See also D.S. 1943, March 6, 1950 which defines checks drawnwithout funds as a swindle (estafa) punishable under the C6digo Penal, Art. 637.

4 The sales agreement under reservation of title does not constitute a security interest, but merely an agreement specifying the time atwhich ownership passes to the buyer. See Alejandro M. Garro, 1990. "The Reform and Harmonization of Personal Property SecurityLaw in Latin America," Revista Juridica de la U.P.R., V59:1:90.

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to the lender. Sometimes the amount of the loan is a small fraction of the value of the collateral, so thedebtor loses far more equity than would be the case with legal foreclosure procedures. The abuse arisesfrom the frequent occurrence of unconscionable contracts where the loan is for only a small fraction ofthe value of the property. Under conventional foreclosure procedures, the borrower receives thedifference between the selling price of the collateral and the loan due; in this case, the borrower does not.Such contracts are typically unenforceable because they are unconscionable, but a borrower withinsufficient funds to exercise the option to repurchase may also lack the funds for a lawyer to press thecase and will lose the property anyway.

27. Police harassment. Some lenders avoid judicial proceedings by requesting police investigationof a person whose payments are in arrears. Such investigations can lead to the debtor being jailed forminor infractions, apparently unrelated to the debt. Such harassment continues until the debt is servicedor the collateral returned. Legally, the police have no such function; in practice, creditors prepared topay the police can sometimes obtain their cooperation in such efforts.

28. Forcible repossession of collateral. Some industrial countries permit harmless repossession:a creditor may seize collateral for a loan so long as there is no breach of the peace, and a debtor wrongedin the process can sue for redress. In Bolivia such peaceful seizure would, strictly speaking, be theft.Nonetheless, creditors on occasion simply seize the collateral. In some cases, repossession is doneharmlessly; in other cases, bands of armed men are sent to collect equipment. It is then up to the debtorto use the painfully slow legal system to recover the property if it was wrongfully seized.

29. Illegal pawnshops. Informal lenders apparently grant loans with personal property as collateral.They charge interest rates above the usury ceiling and illegally privately sell collateral. It is difficult topass and enforce consumer protection legislation stipulating publicly quoted rates and clear proceduresfor privately selling collateral. The current practice ensures that the poor pay higher interest rates thanthey would if legal lenders competed under clear disclosure rules.

30. Extralegal solutions are socially undesirable; lenders averse to taking risks will avoid them,making interest rates and transactions costs higher than they would be otherwise. Borrowers averse totaking risks will also avoid them, because sanctions in the extralegal market expose them to far greaterrisks to person and property than would sanctions in a country whose laws facilitated these transactions.The fundamental issue is that private parties can contract around many defects in governmentperformance, but they will have great difficulty contracting around defects in the government's provisionof a legal framework in which to exercise the right to contract.

31. Arrest and imprisonment of debtors. A credible criminalized debt collection mechanism mustactually imprison debtors who fail to pay. In Bolivia, those who used the foregoing security devices aretypically jailed for check without funds, fraud, or abuse of confidence.

32. Who gets arrested? Offenders can be arrested and detained or they can be arrested andsubsequently freed. Over the period 1990-1993, about 20 percent of those arrested and detained andabout 40 percent of those arrested and freed were arrested in connection with an offense broadly

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associated with substituting criminal sanctions for collateral -- about 1/3 of those arrested in La Pazbetween 1990 and 1993 (Table 4).

Table 4: Arrests, annually, with and without detentionTotal and arrests related to the use of checks as collateral

Year 1990: 1991: 1992: 1993 (Jan-Mar): Total

19993)

Year arrested arrested, arrested arrested, arrested arrested, arrested arrested,and not and not and not and notdetained detained detained detained detained detained detained detained

bad check 75 1215 98 942 81 1227 12 495 4145

fraud 61 295 43 248 54 170 25 72 968

abuse of confidence 11 112 16 85 10 39 8 12 293

total, collateral- 147 522 157 1275 145 1436 45 579 4306related (est)

total arrested or 541 2869 661 2654 834 2832 314 971 11676detained for allcrimes

| Collateral-related 27.2% 18.2% 23.8% 48.0% 17.4% 50.7% 14.3% 59.6% 36.9%(es() as a percentage|lllllllllof total crimes l l l l l l l l l

Source: Corte Superior del Distrito, Presidencia, La Paz, Bolivia. Statistics supplied to the mission, April 19, 1993

33. Who is in jail? Because different groups of offenders get jail sentences of different lengths, thenumber of people in jail for different crimes may differ from the number of people arrested for differentcrimes. Counting as collateral-related crimes only check offenses and "fraud," typically both used inpost-dated check guarantees, would place the number of inmates imprisoned for collateral-related crimesat just under 20 percent of the jail population (Table 5). This represents a heavy concentration of womeninmates -- over 40 percent of the women in jail are there for check and fraud offenses.

34. A larger category of "economic" crimes would embrace other collateral-related offenses -- forexample, misuse of bailee and trustee agreements. About 40 percent of the La Paz jail population isimprisoned for "economic crimes" -- about 2/3 of the women and about 1/3 of the men.

35. Economic crimes represent the largest single cause of incarceration in La Paz -- more thanmurder, theft, narcotics, or rape. Indeed, even narrowly defined collateral-related crimes like check andfraud offenses are a more important cause of imprisonment than theft, drugs, or rape and a close tie for

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murder and assault. Between 40 percent and 60 percent of women inmates are imprisoned for collateral-related crimes. In many cases, their children live in jail with them.

36. The mission spent a day in the La Paz jails interviewing inmates of the men's and women's prisoncharged with economic crimes. In every case, these were business people who used post-dated checksor bailee's agreements to secure a business deal -- a truck, a liquor shipment, a tv shipment. Asinterpreted by Bolivian courts, those jailed for check-related crimes are not freed until they have paid thecivil penalties; the civil penalty is typically equal to the amount of the check. The mission interviewedinmates who had been in jail for 5 to 7 years and who had no prospect of release.

37. In considering changes in the law that speed up repossession and sale of property used ascollateral, it is important to consider not just the abstract concepts of the rights of the debtor and creditor;important as well is the reality that confronts the actual borrowers in the system.

Table 5: Inmates of La Paz Prisonsby Gender and by Nature of Crime, 1993

Men Women Total

Crime: Number Percent Number Percent Number Percentof total of total of total

Minimum Estimate of 14.0% 41.9% 18.3%Collateral-related Crimes

--Check offenses 120 8.8% 79 31.2 % 199 12.3 %

--Fraud 71 5.2% 27 10.7% 98 6.0%

Maximum Estimate of 33.6% 60.9% 37.9%Collateral-related Crimes

--Economic Crimes 460 33.6% 154 60.9% 614 37.9%

Non-Economic Crimes:

--Crimes against people 325 23.8% 33 13.4% 358 22.9%

--Crimes against property 214 15.6% 11 4.4% 225 13.9%

--Narcotics trafficking 134 9.8% 62 24.5% 196 12.9%

--Sex crimes 167 12.2% 167 10.3%

--Other 38 2 8% 3 1.2% 41 2.5%

Total: 1368 253 1621 .

Sotircc Coret Superior del Disirito, Presideiscia, La Paz, Bolivia. Statistics supplied to die missioin. April 19, 1993.

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IV. Financial Instruments and Collateral: Overview of Leal Issues

38. Assets may have great economic value but be useless in credit transactions if the law does notpermit transfer of property rights in those assets. For example, mining machinery could representexcellent collateral for a loan in a legal system that permits the pledge of mining equipment, but not ina legal system that forbids it.5 Agricultural land may produce a good yield but be useless as collateralif the terms of occupancy forbid transfer of land rights or the seizure of the crop. For assets technicallyacceptable as collateral, such as a car or a lettuce crop, collection procedures may be so slow that thecollateral loses its economic value during the collection process.

39. Such restrictive legal institutions can have major effects on credit markets. Land reform thatmakes land inalienable makes farmers better off by ensuring they will always own land. It makes themworse off by preventing them from borrowing against the land. Under such a land policy, othercompensating measures are necessary to make it possible to seize collateral like cash crops or farnequipment, if the farmer is to receive secured credit at all. Similarly, when lengthier and more extensivelegal procedures are introduced to protect the rights of debtors, compensatory policies to maintain thespeed of these legal processes are necessary if those protected are to have access to credit.

40. These legal issues raise several general questions: What does the law view as property? Howcan individuals establish claim to property when they secure a transaction with an interest in thatproperty? If the borrower does not perform under the contract, how does the creditor obtaincompensation? If compensation is necessary, how does the creditor arrange for it, including seizure andsale of the collateral? When a court judgement is required for compensation, how does the creditorexecute that judgment?

Definition of Property

41. The law defines property. This paper follows the following definitions, typical in common andcivil law:

* Real Property -- real estate.

* Fixtures -- property physically attached to but not incorporated into real estate, like carpetsor most production machinery in a factory.

Bolivian law exempts mining equipment from the reach of all creditors. Bolivian lenders cannot legally accept movable personalproperty used in mining activities as collateral. Articles I to 10, 27 and 28 of the C6digo de Mineria states that they are 'goods ofpublic utility" (bienes de utilidad publica). Article 179 (Clauses9 and 10) of the Code of Civil Procedure, in conjunctionwith Article449 and 456 of the Commercial Code, states that property indispensable for the operation of the mine (or any business) cannot beattached to satisfy creditors' claims. So "protected," these citizens cannot buy such equipment on credit without offering otherproperty as a guarantee.

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* Tangible Personal Property -- inventory, equipment, farm products, or consumer goods.

* Intangible Personal Property -- assignments of rights for payment of money, such as theaccounts receivable, promissory notes or documents of title (a warehouse receipt, apromissory note, or a bill of lading); intangible assets of a business may include its value asan on-going concern, good will, or the right to use a trademark, copyright, or patent.6

Structuring Claims Against Property

42. Claimants against property fall into two classes:

* General creditors having a general claim against a debtor's property.

* Secured creditors having a security interest in a specifically designated property of the debtor.

43. A security interest7 is "a right of satisfaction" from the property -- the collateral -- to which thesecurity interest is attached. When the collateral is sold or exchanged, the claim of the secured creditorwill be paid or "satisfied" in the order of its priority among all claims against the collateral.8 A securedcreditor has a security interest in the designated property of the debtor. This secured claim must besatisfied before any claim of the general creditor.9 The general creditor has a general claim against allpast, present or future properties of the debtor, but has no security interest in any specific property ofthe debtor."' A security interest in a designated property has priority over the general claim of a generalcreditor. "

44. Using security interests, firms can borrow from suppliers, merchants, or banks, and can offertheir inventory as security; they can borrow to buy equipment and secure their promises to pay with that

'This paper uses the term "movable property" to include tangible, intangible, and fixtures property.

7 The term security interest should be distinguished from securities. Securities are instruments that represent a general claim againstall the nonexempt assets and income of the issuing agent or corporation, such as stocks, bonds, commercial paper, certificates ofdeposit, or bank deposits.

Under U.S. concepts, a security interest is also an ownership interest in the property itself but less than full ownership.

For example, a mortgagee or pledgee is a secured creditor (Bolivian Civil Code, Articles 1360, 1397, 1398, 1405, 1406, 1427, and1428).

'° Bolivian Civil Code, Article 1335.

" Some important public-policy exceptions exist to this general rule: government liens for unpaid taxes, property that is exempt fromseizure for debts, and workers claims for severance pay and back wages are the most important] In the event that the securedcreditor's claim is not satisfied by sale of the collateral, the secured creditor has a general claim against the debtor's other propertyfor any deficiency balance.

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equipment; they can borrow with loans secured by warrants that are issued by warehouses and representclaims on merchandise in the warehouse.

45. Security interests need not be created only against tangible personal property. They may becreated against intangible property, such as commercial contracts that economic agents use to assigndifferent property rights to the goods and services in which they deal. In most civil and common lawcountries, many types of commercial contracts exist: sales contracts to move goods from producer toconsumer; leases of goods that permit their use without ownership; consignments of goods that permittheir sale without use; contracts with carriers for the shipment of goods conveying no right to use or sell;contracts with warehouses for the storage of goods; assignments of accounts receivable; promissory notesissued as evidence of debt; documents of title; and rights to payment under letters of credit that ensurethat shipped goods are paid for before delivery.' 2 Security interests may also be created using a security(titulo-valor) as collateral: a lender could have a security interest in stock, bond, or a certificate ofdeposit. "

46. Each contract assigns property rights in a way that solves some economic problem; each contractmakes some improvement in economic efficiency. A commercially useful mechanism for secured loansmust minimally accomplish the following five basic tests:

1. It must cost little to create an enforceable security interest.2. It must cost little to enforce the security interest.3. The security must produce real commercial value for the lender when enforced.4. The lender must be able to determine before the loan is made, with certainty and

at little cost, whether any other lender has better claims to the security.5. The lender must be protected from claims of third parties, including secured and

unsecured creditors, the trustee in bankruptcy, and some purchasers of thesecurity. 14

47. Bolivian law permits many contracts with which creditors can secure a debt with movableproperty. Nothing in the Bolivian system is inconsistent with a commercially useful law system, but theBolivian secured transactions system does not meet the five tests. Moreover, Bolivian law unnecessarilyrestricts the types of collateral that may be covered by security interests, especially concerning thesecurity interests in fixtures and personal property on which this paper focuses.'5

12 Richard E. Speidel. Sales and Sales Financing. 1984. St. Paul; West's Publishing Co. 28.

'3 Usually this refers to a security agreement used as collateral (chattel paper). A lender may take as collateral all of another lender'ssecurity interests in equipment from the second lender's secured loans to its borrowers. Legal constraints in Bolivia give limited,almost non-existent use to chattel paper.

'' John A. Spanogle, Proposed Polish Charges Act (1992).

IS Uider Bolivian law, parties cannot fully contract security interests on any collateral they choose. The asset must be specificallymentioned in the law. Moreover, the law must also define the type of contract to be used. See Bolivian Civil Code, Articles 1417and 1418 and Bolivian Commercial Code, Articles 878 and 886.

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Establishing the Existence of a Claim Against Collateral in Bolivia

48. When a creditor and debtor agree that a loan will be secured with some interest in the debtor'sproperty, the creditor obtains a security interest in the debtor's property. The agreement that creates thissecurity interest is the security agreement, and the transaction is a secured transaction.

49. The creditor gains public recognition of the security interest by giving effective public notice ofthat interest; if public notice is effected in accordance with the local laws, the creditor's interest isperfected. The process of perfecting an interest is crucial for the lender: it establishes the priority of thelender's claim among all claims against the property, and it permits the lender to legally defend this claimagainst the claims of other creditors. In some cases, the creditor must perfect an interest by filing it ina public registry. In others, the creditor is presumed to have a perfected interest by possessing thecollateral. Chapter V discusses how security interests are created and perfected in Bolivia.

Obtaining and Enforcing Judgment

50. If one of the parties to a contract believes that a contract has been breached, what proceduralsteps must be taken to give that party relief? For example, if a creditor makes a loan to a debtor topermit the debtor to buy a truck and the contract specifies that the creditor may repossess the truck ifpayment is not made in a timely way. If the borrower falls into arrears on the loan, what procedurecertifies that payment was not made and establishes the right of the creditor to take the truck?

51. Broadly speaking, that procedure is obtaining judgment; Chapter VI discusses it. But if a courtrules that the creditor is entitled to the truck, how does the creditor actually seize it? What distinguishesthe creditor in seizing the truck from a thief? Can the creditor physically take the truck? If the borrowerobjects, can the creditor use physical force? Will the judicial police enforce the judgment? How doesthe creditor enforce his rights? Chapter VII discusses enforcing judgment in Bolivia.

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V. Creation and Perfection of Security Interests

52. The law determines what property can serve as collateral -- the object of a security interest. Thelaw also determines the circumstances under which that property can serve as the object of a securityinterest. Broadly speaking, these two features of the law set out how a security interest may be created.The law also establishes the procedure for determining the position, ranking, or seniority of differentsecurity interests in the same property. This takes place through perfection -- the legal process thatwarns all other potential creditors that a prior claim exists on the asset. This chapter sets out a briefoverview of Bolivian practices and then discusses the processes of creation and perfection in more detail.

53. Creation. Lenders may create security interests in goods that remain il the hands of theborrowers with three instruments: the civil pledge (prenda civil), the commercial pledge (prenidacomercial), and the chattel mortgage (hipoteca mueble). The law states that the civil pledge may be usedfor goods used by hotels, industries, agriculture and ranching. The commercial pledge must he used forother goods in commercial use that do not involve those sectors. The chattel mortgage regulates licensedpersonal property. Table 6 spells out the relationships among these instruments and types of contracts.

54. There are many "gaps" in Table 6 -- many economic agents, types of property, and types ofcontracts that are economically useful but not envisioned under the law. Any lender who, nonetheless.writes a loan contract will run a heightened risk of not collecting his loan.

55. Perfection. A lender may have a security interest in a property, but what prevents another lenderfrom taking another, more senior, security interest in the same property? Perfection is the legal processthat warns all other potential creditors that a prior claim exists on the assets and ranks the claims oflenders. In Bolivia, creditors may perfect the order of priority of their interests, either with or withoutphysical possession. When an interest is perfected with physical possession, the secured party physicallyholds the collateral, as does a pawnshop or bonded warehouse. This physical possession warns all otherpotential creditors that a prior claim exists on the asset. When an interest is perfected without physicalpossession, however, the creditor usually must file a notice of the security interest in a public registrymaintained for that purpose.

56. For both economic and legal reasons, the publicity is crucial for perfection. When lenders canreadily determine who else has a claim against the personal property or fixture, they can also know withconfidence that they can defend their claims against other potential claimants. They know the law willreject the claims of those who have failed to post their claims to the collateral publicly. The general rulethat all claims must be publicly registered permits a workable ranking system in which lenders can haveconfidence, and permits an economically superior outcome. By contrast, a system that permitted secretclaims would raise the risk to all lenders, reduce lending, and produce an economically inferior outcome.

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Table 6: Personal property and fixtures that can serve as collateral and the loan contract that can secure loans against them.

Type of collateral Pledge with Pledge Chatteltransfer without mortgage

transfer

Type of contract Pawnshop Warehouse Civil Commer-receipt receipt pledge cial pledge

Any physical merchandise Yes, acceptable Yes, if No No Noby pawnshop acceptable byproprietor warehouse

proprietor

Licensed property (car, boat, Yes, if Yes, if No Yes, if Yesplane) acceptable acceptable acceptable

Licensed property used in hotel, Yes, if Yes, if Yes No Yes, ifindustry, ranching, or acceptable acceptable accep-agriculture table

Licensed property used in other Yes, if Yes, if No Yes Yescommerce acceptable acceptable

Unlicensed property used in Yes, if Yes, if Yes No Nohotel, industry, ranching, or acceptable acceptableagriculture

Documents of sale No No Not Not readily Noreadily

Revolving inventory; No No No No Notransformable inventory;professional office equipment

Unlicensed property used in Yes, if Yes, if No Yes Nocommerce other than hotel, acceptable acceptableindustry, ranching, oragriculture

Accounts receivable, chattel No No No No Nopaper

Creation and Perfection with Physical Possession

57. Creation. A variety of broad problems arise in Bolivia with the creation of security interests incollateral held by the lender. These are laid out broadly in Table 6. The most serious arises from thedefinition of the "floating pledge" that would be written over a homogeneous commodity like wheat ina grain elevator, cattle, or generalized inventory -- where the definition is very restrictive and raises therisk that the lender will lose the security interest in the commodity when the physical composition of thatcommodity changes in the normal course of business. For example, when the borrower sells some grain

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from inventory and replaces it with other grain, the security of the lender's claim may be underminedeven when the total value of the grain in storage remains the same.

Table 7: Place of registration of the loan contract

Licensing registry (motor Real estate registry Commercial registryvehicle, boat, airplane)

Prenda Civil Yes, if property has license Yes, if non-licensed used innumber, and used in hotel, hotel, industry, agricultureindustry, agriculture, or or ranchingranching

Prenda Comercial Yes, if property is licensed Yes, if property isand not used in hotel, unlicensed and not used inindustry, agriculture, or hotel, industry, agriculture,ranching. or ranching

Hipoteca Mueble File against any goodreceiving a license number

58. A lender can perfect a security interest by taking physical possession of the collateral. That is,the physical possession alone serves to notify all other potential lenders that the possessor has a securityinterest in the property.'6 For example, a pawnbroker retains the item pawned; afield warehouse placesthe inventory under the custody of the lender or the lender's agent; collateral placed in the custody of abailee remains in the physical possession of the lender so long as the lender controls the document oftitle. In such cases, the law regards the lender as having a perfected security interest. By merepossession, the lender maintains this interest.'" In some countries, but not in Bolivia, the creditor maysell the collateral with no further court action. Several important examples of perfection with physicalpossession exist in Bolivia: pawned items held in pawnshops or deposits in bonded warehouses.Pawnshops and warehouses are examples of the use of pledge agreements where the collateral remainsin the hands or the control of the lender, the "prenda con desplazamiento."

59. Pawnshops. Decree Law No. 07438 (December 14, 1965) established the "Caja de Ahorro yCr6dito Popular," (CACP) a combined public savings bank and pawnshop that would extend creditsecured by personal property. Formally, CACP negotiated pledge agreements. Under DL 07438,however, in the event of a loan default when it had possession of the collateral, CACP could privatelysell the collateral -- that is, sell without a court-administered auction."8 DL 07438 overruled the pledgeprovisions of the Civil and Commercial Codes, which forbid such private sales.'9 This law providedthat CACP must maintain custody and auction the movable property given as collateral. Legal pawnshops

1" C6digo Civil, Article 1403 and C6digo de Comercio, Article 882.

1' C6digo de Comercio, Articles 882 to 885 and C6digo Civil, Articles 1403 to 1412.

II D.L. 07438, Articles 20 and 28.

" C6digo Civil, Articles 1340 and 1409, and C6digo de Comercio, Article 880.

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no longer exist in Bolivia: the combination of usury ceilings20 and interest rates that soared withinflation made private pawnshops unprofitable; nor could private pawnshops use the private saleprovisions accorded to CACP. The CACP closed when the losses from its subsidized operation becameunmanageable.21

60. Bonded warehouses. Bolivian law authorizes general deposit warehouses (almacenes generales)for the storage of goods; warehouses have the power to issue warehouse receipts (certificados dedep6sito) which banks may accept as collateral.22

61. A warehouse receipt demonstrates ownership of the goods deposited in the warehouse. Endorsingthe warehouse receipt can transfer ownership of the goods. Attached to the warehouse receipt is acollateral receipt (bono de prenda). Endorsing the collateral receipt can transfer the security interest inthe goods.'

62. If the debtor does not pay the pledge credit when due, the holder of the collateral receipt for thegoods held as collateral can request that the warehouse manager sell them at a private auction.24 Thisauction may not be suspended except by order of a competent judge, or by payment of the amount dueplus interest and costs. The creditor will be paid from the proceeds of the auction. The secured creditorhas priority over any other creditor; no legal action is required to document this priority, as the lawdeems the fact of the goods being in the warehouse as constituting such notice.' Warehouse receiptsare readily accepted as collateral by Bolivian banks. They represent good collateral because, in the eventof default on a loan, the collateral may be quickly sold.6

63. This is important evidence against the charge that Bolivian banks are excessively conservative andunreasonably unwilling to lend on collateral other than mortgages and personal guarantees. Their

20 Usury laws prevent Bolivian consumers from not legally contracting to pay more than 3 % in monthly interest. 'De acuerdo a loprevisto por los Articulos 409 y 410 del C.C., que por ser imperativas de orden puiblico, el interes convencional no puede excederdel 3 % mensual y si se estipula una suma superior debe reducirse a dicha tasa...." (G.J. No. 1646, A.S. No. 120 de S.C. Ia., de 24-VII-80).

21 The law for the restructure of the Agrarian Bank contains similar provisions for private sale, arid it includes provisions for harmlessrepossession (Decreto Supremo 16699, July 5, 1979, Articles 57 and 58). See also D.S. 11658, Article 64.

22 C6digo de Comercio, Articles 689 to 711, and D.L. of January 15, 1931.

u C6digo de Comercio, Article 692(7), 694(1) and 698. Article 699 also requires giving notice, underthe responsibility of the endorser,that the security interest has been transferred to the endorsee. However, it seems that failure to give this notice would not affect theeffectiveness of the endorsement.

24 C6digo de Comercio, Article 706.

25 C6digo de Comercio, Articles 706-711. Also, and more importantly, constitutes notice the fact that the warehouse receipt, which

represents the stored goods, indicates that the collateral receipt has been negotiated (C6digo de Comercio, Articles 692(7), 694(1)and 698).

26 See also, Banking law (1928), Article 147; D.S. No. 06456, D.S. No. 07507, D.S. No. 7878, D.S. No. 8351, D.S. No. 8768, D.S.

No. 9229, D.S. No. 9733, D.S. No. 10326, D.S. No. 11658 (Article 64), D.S. No. 13100, D.S. No. 11536, D.S. No. 16699(Articles 57 and 58), D.S. No. 19534, D.S. No. 20252; and D. L. No. 07070 (2.3.65).

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acceptance of warehouse receipts as collateral supports the view that lending would broaden if proceduresto repossess and sell collateral were improved for other classes of property.

64. Other types of possession. Aside from pawnshops and warehouses, Bolivian law broadly permitsbusinesses to make loans secured by personal property and fixtures in the lender's physical possessionunder the Commercial Code; non-business individuals can make similar loans under the Civil Code. Inthese cases, however, the provisions of the Commercial and Civil Codes prohibiting private sale apply.If the borrower defaults, the creditor must go through the full court procedure for obtaining and executingjudgment. These court processes are expensive and lengthy, reducing the usefulness of movable propertyas collateral from the perspective of the lender.

65. The parties to the loan contract could privately agree to private sale and shorter procedures; butsuch a private agreement would be contrary to the Civil and Commercial Codes and, therefore, void.27

The lender would be unable to enforce this right in court if the debtor objected. As the objection of thedebtor is not improbable, the lender would not view this extra-legal agreement as substantially reducinghis risk. The collateral, therefore, would not make the loan substantially less risky than an unsecuredloan to the same borrower.

66. Economic problems. Loans that rely on perfection with physical possession can severely restrictthe economic usefulness of collateral to the debtor, especially where the debtor needs to use the collateralsuch as retail inventory, a farm tractor, a truck, or woodworking machinery. Nor would physicalpossession reduce the lender's risk where the collateral was intangible; for example, physically possessingthe accounts receivable of a company would yield little advantage to the debtor.28

67. Summary. Perfection with physical possession plays an important role where the borrower doesnot need to retain physical possession of the collateral. Where it works in Bolivia, in warehouses andformerly in pawnshops, it works well even though gaps in the law could be closed and permit itsexpansion. This type of lending underscores the substantial role that movable collateral could play inBolivia if the problems surrounding obtaining and executing judgment (see below) could be solved orcircumvented.

Creation and Perfection without Physical Possession and without Written Registration

68. In Bolivia, as in most countries, security interests are never created automatically by the law.Only a formal agreement between the parties can create a security interest. However, in some othercountries, the law specifies that the underlying features of the transaction give a creditor a perfectedinterest without registration. Moreover, if a security agreement accompanied the credit or sale, and ifthe seller discovers that the buyer did not pay for the goods, the seller may satisfy the debt byrepossessing or selling the goods without going to court. Under Section 9-503 of the UniformCommercial Code (U.C.C.), the seller has the right of harmless repossession -- the seller/creditor canphysically take the collateral from the debtor so long as the seller/creditor does not breach the peace.

27 Bolivian Civil Code, Articles 1340 and 1409, and Commercial Code, Article 880 void any contract stipulation for private sale.

2M See, Alejandro M. Garro. 1987. "Security Interests in Personal Property in Latin America: A Comparison with Article 9 and a

Model for Reform," Houston Journal of International La v 157:171.

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For example, a truck that serves as collateral for a loan in default can be towed from its parking placeand returned to the lender.

69. Bolivia's secured transactions law does not have similar provisions. In no case does a securityinterest arise automatically for the seller of goods against a debtor who has not paid for those goods.Typically, however, upon default the creditor gets a preference (privilegio) or statutory lien on paymentof the amount due, as a landlord would if a tenant failed to honor a lease, or seller if a buyer failed topay.'9 However, this statutory lien is much weaker than that implied by a perfected interest in theUnited States because it does not imply priority over other creditors.3 0

70. In Bolivia, the creditor without possession of the goods can only sell them judicially -- that is,get a court order to sell them.3' The creditor could not, as in the United States, repossess and privatelysell the goods and avoid going to court.

Creation and Perfection without Physical Possession and with Written Registration

71. In Bolivia, when the collateral stays in the possession of the debtor, the only legal way to createa security interest is by using one of the formal agreements specified in the law. The Civil and theCommercial Code regulate two such agreements: the pledge without transfer of possession and the chattelmortgage. The chattel mortgage requires a more specific identification of the property than does thepledge and is typically used for licensed movable property. The pledge can be used for some movableproperty. For any loan contemplated, whether the chattel mortgage or the pledge is most appropriatedepends on the nature of the property and the transactors. The criteria are set out in the Civil and theCommercial code.

72. To be perfected, these contracts must be recorded in the appropriate registry designated by thegovernment.32 Filing such claims with the state establishes priority of claims, because potential lendersknow where to look to discover whether other lenders have prior, conflicting claims to the samecollateral. In the simplest example, perfection would give notice to other creditors that a senior securityinterest exists in the same collateral. The borrower could grant another security interest, but only onewith less seniority than the first perfected security interest.

29 Besides the vendor's privilege, Bolivian law recognizes the lessor's privilege in the goods of the tenant, the repairman's lien privilegeover the property repaired, and the privilege of the innkeeper in the baggage of his guest. Bolivian Civil Code, Articles 1349, 1350,and 1351.

30 `[The privilege] comes into existence by operation of law if a seller is not paid for the goods sold; and its effects are generally limitedto the time during which the goods sold remain in the hands of the buyer. However, even during this period the privilege is generallynot effective in the buyer's bankruptcy. It is this lack of effectiveness vis-a-vis all third persons which diminishes the practical valueof the seller's privilege, making it merely a second-rate security device." Drobnig, Ulrich, 1977. Report of the Secretary General:study on security interests (A/NC.91131), Yearbook of the United Nations Commission on International Trade Law [hereinafterUNCITRAL Yearbook], 3:175.

31 C6digo Civil, Articles 1340 and 1341; C6digo de Comercio, Article 880.

32 C6digo Civil, Articles 1424, and C6digo de Comercio, Article 887.

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The registries33

73. Bolivian law directs that different claims be registered in different registries (see Table 7). Mostclaims in Bolivia will be registered in one of three registries: the Real Estate Registry,34 the MotorVehicles Registry,35 or the Comnmercial Registry.36 Other registries exist, however, for licensedpersonal property; for example, title and security interests in an aircraft are registered in a separateregistry for aircraft, and title to some copyrights and trademarks are registered in the Registro de Patentesy Marcas.

74. Registering a claim in the wrong registry typically represents a fatal defect in perfection, becausea convincing case can be made that public notice is incomplete if notice is filed in a registry in whichinterested parties would not normally look. A creditor who misfiled a claim could, therefore, losepriority on the collateral.

75. All registries in Bolivia present major obstacles to the filing of claims against personal propertyand fixtures. The most important arises from the general barrier to public access, the key in establishingthe general credibility of claims against personal property and fixtures. In addition, registries typicallylack adequate computerized indexes or document retrieval systems. Consequently, retrieving documentsis time-consuming, expensive, and subject to great uncertainty about priority and authenticity.

76. The Real Estate Registry (Registro de los Derechos Reales). Located in the real estate office(oficina de los derechos reales), is the legally-designated registry for mortgages and for some agriculturalcredit instruments, like crop security interests and security interests on farm equipment. This registryfiles security interests according to the location of the property.37 Since physical location isunambiguous, a lender searching for security interests on a property offered as collateral has a clearindication of where to look. In principle, the record is public and can be inspected by any citizen.38

In practice. the system has been computerized, but searches can only be conducted by staff. This cansometimes involve a lengthy wait. Although the filing system is not fast, it is a workable way of locatingmortgages or other encumbrances in real estate.

77. Security interests against agricultural movable property such as tractors or grain driers, as wellas security interests against crops orfixtures -- equipment attached to the land -- are also filed in the real

33 Bolivia's legal registries are examined at greater length in Nuria de la Pefa, Heywood Fleisig and Frederick Miller, "Improving LegalRegistries in Bolivia to Facilitate Lending" (Govemment of Bolivia, 1992).

34 Registro de los Derechos Reales, C6digo Civil, Articles 1538 and 1566.

35 D.S., No. 15191, 12-15-77.

36 C6digo de Comercio, Article 26.

37 Generally, the real estate registry is the proper place to file documents affecting the financial status of property that can be easilylocated.

M C6digo Civil, Articles 1523 and 1562, Clauses I and 11.

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estate registry office having jurisdiction over the place in which the collateral is located.39 When filed,the interest makes explicit that it refers to tangible personal property or fixtures, not to the land. Underthe law, the security interest is filed in this registry even if farmer does not own the land. In practice,registry officials will not file security interests unless the borrower owns land recorded in the registry.In La Paz and Santa Cruz, at least, farmers who lack clear title to the land or who do not own land haveno place where a potential creditor could file a claim or security interest.'

78. The Motor Vehicle Registry (Registro de la Direcci6n General de Trinsito) provides a localfiling system for registering title and security interests in most cars, trucks, and other vehicles requiringregistration to operate on the road. This state function arises from the responsibility of the state not toregister stolen motor vehicles. Security interests and security interests in vehicles must be filed in themotor vehicle registry office of the jurisdiction where the vehicle is registered.4 ' Any security interestor lien must be disclosed in the certificate of title. The index system of this office works well: liens andsecurity interests are located both by name of the owner and by serial number of the vehicle. It couldwork faster if it were computerized. There is no centralized computer registry of vehicle ownership.

79. Other registries. Security interests in other licensed personal property, such as those arisingunder chattel mortgages or pledges without transfer, either under Civil or the Commercial Code, are filedin the same specialized registries in which the licensing occurs.42

39 Security interests against a crop are filed in the real estate office for the region in which the crop is grown. D.S. No. 16699, Article50, July 5, 1979.

40 There is no legal justification for the registry office to refuse recordation. In principal, crops and equipment attached to land aredeemed to be immovable property (inmuebles por su destino); C6digo Civil, Article 75(l). However, C6digo Civil Article 82identifies certain kinds of property as fixtures called appurtenances (pertenencias). Paragraph III of that article expressly providesthat they may be subject to legal transactions independently of the immovable fixture to which they are attached.

41 C6digo Civil, Articles 1395 and 1418.

42 C6digo Civil, Article 1395, and D.S. 16699, Article 56.

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80. The Conmmercial Registry (Registro de Comercio). Much personal property is not licensed.Non-licensed personal property includes tangible personal property which includes equipment, such asheavy machinery that does not require a certificate of title to operate, such as mining or constructionequipment; inventory, cash, and jewelry. It also includes intangible personal property such as interestsin accounts receivable, the value of an on-going operational concern, and goodwill. Security agreementsthat create security interests in non-licensed personal property under the rules of the Commercial Codemust be perfected by filing the agreement in the Commercial Registry.43

81. The commercial registry (registro de comercio), an agency of the Ministerio de Economia,operates under the terms of the Decreto Supremo 15191, (December 20, 1977). It registers all securities(titulos-valores) issued by businesses," commercial mortgages (hipotecas mercantiles), and securityinterests in unlicensed personal property (prenda comercial sin desplazamiento).4 It also contains thedocuments necessary to file a security interest against a corporation: articles of incorporation, bylaws,bankruptcy decisions," and annual reports.

Problems and Options for Solutions

82. Clear rights to collateral and unambiguous rules about what happens to collateral when borrowersdefault make lenders more willing to lend against that collateral. So long as borrowers understand theserules clearly, and so long as lenders fully disclose their terms, borrowers can only gain through publicpolicies that expand their borrowing options. Since they can always refuse to borrow under these newarrangements, new options cannot hurt them and can increase willingness to lend and expand access tocredit.

83. They operate through expanding loans secured by property that remains in the physical possessionof the debtor, giving clearer priority to the claim of the wholesale seller of goods, so that retailers whodo not own real estate could get credit against those goods; and improving the registries so that potentiallenders can more easily trace claims against collateral.

43 C6digo de Comercio Articles 26 to 35, 886 to 897, and D.S. 15191 (12-20-77), Articles 2 and 3.

44 Reglamento del Registro de Comercio, Article 3, Clause j.

" Reglamento del Registro de Comercio, chapter IX.

46 C6digo de Comercio, Article 30.

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Pass a Comprehensive Law of Secured Transactions4 7

84. Many potentially economically important loan contracts cannot be written in Bolivia, eitherbecause gaps in the law that govern creation of security interests do not contemplate such transactionsor because it is too difficult and risky to use existing law to write such contracts. A new securedtransactions law is needed to close that gap.4" The revised law must specifically:

Give a clear and perfected security interest in the goods sold on credit, instead of thepresent weaker privilege (privilegio). In Bolivia, a wholesaler who advances inventory toa retailer, such as a peddler, gets a privilegio in the goods sold to the retailer on credit,without negotiating another agreement, such as a pledge.49 Such a wholesaler has a weakpriority in claims over these goods in the event of bankruptcy. The wholesaler will also losehis vendor's lien (privilegio) upon sale of the merchandise by the retailer. The existingBolivian vendor's lien system lacks key features that the secured transactions law needs toprovide to encourage lending. Moreover, wholesalers and dealers cannot represent to theirbanks that such extensions of credit are sound. Consequently, commercial banks will notrefinance such extensions of credit by merchants and dealers; if they did, the superintendentof banks would be acting appropriately in objecting.

47 For a proposal to adopt UCC Article 9 to Civil Code systems, see Alejandro M. Garro, "Security Interests in Personal Property in

Latin America: A comparison with Article 9 and a Model for Reform," 9 Hous. J. of Int'l Law 157 (1987), and the "Reform and

Harmonization of Personal Property Security Law in Latih America," Revista Juridica de la U.P.R., Vol. 59:1 (1990), and R.C.C.

Cumming, Q.C., "Public Registration of Security Interests in Personal Property: Some Recent Canadian Developments," International

Academy of Comercial and Consumer Law Conference, Nattonal Autonomous University School of Law, Mexico City, Mexico, June

15, 16, & 17, 1983, Revista de la Facultad de Derecho de M6xico, Tomo XXXV, Enero-Junio de 1985, Ntms. 139-140-141.

The United States Commission on International Trade Law authorized the Secretary General to undertake a study for a law on security

interest in 1968 [Official Records of the General Assembly, Twenty-Fifth Session, Supplement No. 17 (A/8017), in 1 UNCITRAL

Yearbook, Part 2, 111, A (1968-1970)]. Professor Ulrich Drobnig of the Max Planck Institute for Foreign and Private International

Law completed this study in 1977 [Report of the Secretary-General: Study on security interests (A/CN.9/131), in 8 UNCITRAL

Yearbook 171 (1977)].

The study aimed at assessing the feasibility of a uniform law on security interests to help international sales. The Drobnig study,

going one step further, recommends a unified law on security interests. It also points out the importance and magnitude of the

restrictions on collateral in various civil law countries. The UNCITRAL study, however, did not specifically link the restrictions

on collateral with economics (issues such as access to credit were not considered). In 1979, the Secretary General submined to the

Commission a report on the feasibility of uniformn rules on security interests and on their possible content [Report of the Secretary-

General: Security interests; feasibility of uniform rules to be used in the financing of trade, 10 UNCITRAL Yearbook, para 6. at p.

81 (A/CN.9/165), 19791. At this time, the Commission concluded that "... the subject matter of security interests is of sufficient

importance for it to continue work in respect of it. The importance derives from the fact that, while the use of security interests is

an important means of financing commercial transactions, the law in most States is rudimentary and as such is not appropriate to

respond to the needs of modem commerce. " However, UNCITRAL did not continue this work. It was suggested that the commission

await the conclusion of other studies before undertaking further work on its own.

The terms privilege in "tide-type secured transactions" and "pledge-type secured transactions" are misleadingly similar: the "title

type secured transaction" is a privilege given to a lender while the "pledge-type secured transaction" is a security interest given a

seller. But priority of position should be based on the economic function of the security interest; to facilitate the availability of credit

to enable debtor to purchase goods-rather than on the basis of whether the creditor happens to be the owner of the collateral.

Equalizing the status of sellers who give credit, lenders who take a purchase money pledge, and mortgagees will be an important step

forward in the modernization and harmonization of personal property security law in Latin America. See, Alejandro M. Garro,

"Harmonization of Personal Property Security Law in Latin America, " Revista Juridica U.P.R. V59: 1, at p.9 3

(1990).

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Permit security interests to continue in the proceeds of the collateral. Under Bolivianlaw, the creditor loses the security interest in the collateral when the collateral is sold ortransformed.50 This increases the risk to the lender, because the security interest does notcontinue in the proceeds of the collateral: so, for example, a creditor with a security interestin collateral would no longer have a security interest in the cash realized from the sale of thecollateral. It also can increase the transactions cost of financing by requiring repeatedredrafting of security agreements: for example, a supplier selling wool on credit to make ofblankets would require a new security for each transformation of the wool -- from wool toyarn to woven fabric to trimmed product. Instead of this, the law could specify that thesecurity interest continues "with the good" no matter how it is transformed.

Permit floating security interests. Bolivian law does not expressly allow security interestsin a group of goods. This limitation makes financing inventory very difficult.5 ' If amanufacturer borrows and wants to offer his inventory as collateral, the manufacturer mustidentify every inventory item; new items entering inventory are not part of the collateraloffered. A farmer could pledge $100,000 worth of cattle, rather than enumerate eachmember of the herd of cattle. A floating security interest would make it possible to securea loan with whatever assets happen to be part of the inventory.

Increase the use of account receivables as collateral by avoiding the notice-and-notarization requirement. When a merchant has made many sales on credit, these "accountsreceivables" can serve as collateral for another loan. For example, the merchant could takethe account receivables to a bank to secure financing to continue the merchant's own sales oncredit. Bolivian law imposes burdensome requirements on using account receivables ascollateral. The merchant wishing to use accounts receivable as collateral must transfer theaccounts to the lender by notifying his customers of the assignment or by acknowledging theassignment in writing before a judge or a notary public.52 This requirement can be verycostly to a merchant. In some cases, merchants will want to continue collecting from theircustomers without the customer knowing of the sale; in other cases, merchants make manysmall credit transactions each day and the transaction costs are prohibitive.53 Registrationof security interests in accounts receivable can completely avoid the need to transfer theaccounts.

5 See, C6digo Civil, Article 1421, Clause 4. A creditor could rely in the civil law doctrine of real subrogation. However, since Article1421(4) does not address this problem squarely, the uncertainty is too wide for a lender to rely on any doctfinal theory for recovery.

5' See, Alejandro M. Garro, "The Reform and Harmonization of Personal Property Security Law in Latin America," Revista Jurldicade la U.R.P., V59:1, at p. 45 (1990).

52 See C6digo Civil, Articles 389, 390 and 391. Notice should be required for the protection of the customer so that he does not pay

the wrong person. But, notice should not be required for other creditors.

53 See, Alejandro M. Garro, "The Reform and Harmonization of Personal Property Security Law in Latin America," Revista Juridicade la U.R.P., V59:1, at p. 47 (1990).

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Improve the Operation of Legal Registries

85. Enforce the laws that pennit public access to the registries. Without direct public access,lenders cannot determine their priority in actual or contemplated secured transactions.

86. Improve technical functioning. Records must be stored in ways that information can beretrieved by all concerned parties in a timely manner. Index systems should, for all registries, identifysecured interests by the name of the borrower or lender and should be computerized, with full publicaccess.54 This would improve the attractiveness of non-real estate collateral and would speed up courtdebt-collection processes that depend on requesting information from these registries. In particular, theCommercial Registry must be computerized and indexed if non-licensed machinery is to serve ascollateral. Registry reform should distinguish between creating an index -- which is essential; andcomputerizing the index -- which is desirable but not as urgent; and computerizing record retrieval, whichis typically still less urgent.

87. Clarify the identification of the registry to be used for different types of collateral. Underthe civil code, secured interests against non-licensed goods for hotels, farmers, and small industries arefiled with the real estate registry office. Under the commercial code, secured interests against non-licensed goods for large industries and merchants are filed in the commercial registry.55 This divisioninvites confusion between small and large industry and between multi-product enterprises. Options forimprovement include producing a unified system of regulations that allocates chores to registries with lessambiguity, and computerizing cross-references among directories.

88. Enforce the law that permits filing security interests in the real estate registry even when theborrower owns no real estate. Bolivian law states that secured interests against agricultural crops andagricultural equipment are to be filed in the real estate registry of the district in which the crops oragricultural equipment are located.56 Under the law, the farmer need not own land; nor does thesecurity interest in the crops or equipment need to be filed along with the land. Contrary to the law,however, Bolivian registries have sometimes refused to file security interests against borrowers that donot own land. It is essential that registries permit such filings.

89. Centralize the filing of security interests in goods. A central registry for security interests ingoods could give creditors important advantages and expand lending. Creditors could avoid confusionabout where to file their security interests. The place of filing now depends either on the domicile of thedebtor or on the location of the goods. Creditors can lose their priority on the collateral if, not knowing

54 See, Alejandro M. Garro, Recordation in Argentine Law, V15 Revista Juridica de la Universidad Interamericana de Puerto Rico,Jan-April '81, pp. 175-220; Douglas Whalan, Immediate Success of Registration of Title to Land in Australasia and Early Failuresin England, New Zealand Universities Law Review, Vol.2, p. 416; Paul R. Welshons, The Mini-Computerization of an AbstractOffice, Title News, Feb. 1984, p. 8; M. Scott Stovall, Efficiency 'From the Ground up', Title News, June-July 1984, p.15; Beginningan Automated Title Operation, Title News, September-October 1985, p. I 1; Herben N. Morgan, Workshop: Automation in The LocalTitle Office (Future Office or Future Shock - the Office of the Future Contrasted with the Office of the Present), Title News, January1984; Richard J. Oliver, Automation: What Agents and Underwriters Should Expect, Title News, January-February 1985, p. 30;and, David L. Drury, Computerization Increases Productivity, Title News, September-October 1986, p. 13.

55 C6digo Civil, Article 1424 and C6digo de Comercio, Article 887.

56 D.S. No. 16699, Article 56, and C6digo Civil, Article 1424.

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where the debtor resides or where he has placed the goods, they file their interest in the wrong place.Central registration would allow creditors to file a security interest valid for the entire country.

90. Limit procedures prior to registration. Bolivian law often requires individuals to comply withnotarizations, certificates, certificates of mapping, certificates of residency, or acknowledgements ofpayments of duties or fees before filing in the registry. These steps need to have a careful evaluation oftheir economic return because they raise the cost of transactions and lead parties not to undertake them.

91. Use standard forms and model contracts for commonly-registered documents. A great dealof time is spent reading and transcribing the content of deeds in registries. Standard forms certified bythe law as acceptable could speed processing and lower the cost of registry processing and the private costof preparation.

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VI. Obtaining JudLynent in Bolivia

92. When the parties to a contract dispute the facts of its performance, the disputants will obtainjudgment: they will follow some procedure, binding on both creditor and debtor, and settle the dispute.A creditor with a security interest, for example, may conclude that the debtor has not honored the termsof the agreement by not making payments on the loan. Sometimes the parties do not dispute the factsof the case; the debtor may concede that payment is impossible and freely give up the collateral to satisfythe debt. Or, the debtor may dispute the facts and block repossession of the collateral. The debtor maypresent defenses to justify non-payment: for example, he may claim that the signature on the note issomeone else's and that the debt is owed by another, or that payment has been already made.

93. The rules of civil procedure in Bolivia are such that obtaining judgment takes a long time. Thelaw also limits the ability of private parties to make contracts that attempt to bypass this lengthy judgmentprocess.

94. To determine the typical experience faced by creditors in court-administered collections, weexamined over 500 court-processed debt collection cases (Appendix 2). Fewer than half these casesbrought to court were collected under court supervision. The court operates under rules of civilprocedure that call for a judge to reach judgement in eight days and, if there is no appeal, to executejudgement in another three days. The practice is quite different; on average, cases required 670 days tobe carried to the point of collection.

95. This is simply too long a period to make most movable property usable as collateral: livestockdie; equipment depreciates; inventory becomes shopworn; accounts receivables are paid to the wrongperson. Only real estate will preserve its value over a collection period this long. Businesses understandthis; banks understand this; the superintendent of banks understands this. Consequently, movableproperty is not acceptable as collateral from borrowers who have no real estate to back up their loans.The credit structure remains tied to real estate.

Judicial Procedures

96. Bolivian law specifies five civil procedures for obtaining judgment:" ordinary (ordinario),executive (ejecutivo), and summary (sumario and sumarisimo). The ordinary civil procedure is the mainlegal framework under which the parties operate. It includes the general provisions, such as those fortaking evidence or filing motions, and can require as much as five years to complete. Bolivian lawyerswill typically structure agreements to avoid ordinary procedures, but this is not always possible.

97. The Code determines how other special procedures apply, typically depending on the type ofdispute. The executive procedure usually applies to debt collection cases supported by an executivedocument, such as a negotiable instrument or a mortgage deed and typically requires 566 days.58

'7 They are contained in the C6digo de Procedimiento Civil of Bolivia.

See appendix 11.

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Summnary procedures are for small claims. They could require as little as twenty days, but typically takesmuch longer.

Ordinary Procedure (Proceso Ordinario)

98. Ordinary procedure must be followed in several cases:

* Whenever the Code of Civil Procedure does not indicate any other proceeding to be allowed.* When procedural problems occur while parties attempt to follow the executive procedure.* When taking evidence, since the rules set out in ordinary procedure apply to all the other civil

procedures.

Usually applicable to civil and commercial contracts, ordinary procedure provides the broadest provisionsfor taking evidence but can be extremely time consuming; obtaining judgment can take as much as fiveyears and, in some cases, even ten years.

99. The rules for taking evidence set out for ordinary procedure also apply when the executive,coactive, summary and summary procedures do not provide otherwise.59 While the different proceduresmay state shorter time limits for taking evidence to speed up the procedure, any departure from routineor any legal gaps in the rules for taking evidence throw the process back under the rules of ordinaryprocedure. Therefore, these short deadlines that the law sets for the other procedures are rarelyenforced.6'

100. Much of the slowness of Bolivian civil procedure is rooted in provisions that aim to protect thedebtor's right to due process and fair trial, a traditional protection accorded to citizens in civil andcommon law countries. Both Common Law countries and the Civil Code countries of Europe, however,have devised other procedures that protect a citizen's right to a fair judicial proceeding while aiding thecitizen's right to speedy redress.6" Some of the procedures that delay the taking of evidence in theBolivian judicial system are described below.

101. Unlike countries with a Common Law system, in Bolivia, the parties in dispute, or at issue,undertake no pre-trial discovery, or do not begin gathering evidence before the trial. Rather, parties takeevidence after the trial begins, before the court, and at the expense of the court. This means that takingevidence, potentially time consuming, must be paced by the court's schedule.62

59 C6digo de Procedimiento Civil, Articles 316, 481, 485 and 51(),

See Appendix 11. C6digo de Procedimicnto Civil, Article 510: "Opuestas con las condiciones previstas en el articulo precedente,las excepciones seh3aladas en el articul 5110, cI Juez abrira el plazo probatorio improrogable de 10 dias." While the law specifies10 days for taking evidence, the average time between the first court order and the final decision in the case -- a period that mosdyinvolves the taking of evidence -- is 269 days (Appendix 11).

6' See Codigo Procesal Civil y Procesal Penal, Modelos para Iberoaamerica. Ministerio de Justicia, Madrid 1991.

'Z This discussion does not address advantages or disadvantages of pre-trial discovery. Since taking evidence at the court is a sourceof delay, taking evidence by the parties with minimal court supervision should be considered.

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102. Moreover, nearly all discovery normally takes place in writing, not orally.63 That includescalligraphic testimony, accounting or appraisal reports by independent experts and objections by theparties.64 Not surprisingly, this slows the exchange of views and makes it more expensive. Moreover,the court may need to issue an order to require the other party to respond to an objection; or the partiesmay need a ruling from the judge in order to proceed with discovery, so the court must issue aninterlocutory decision.65 It can take a week to issue such an order and a case may require many ofthem.

103. In countries where experts testify orally, where witnesses are all on hand to testify and rebut, andwhere court reporters transcribe that testimony, a judge can require response to objections or makeinterlocutory decisions on the spot. In such a system, a single exchange between counsels for plaintiffand defendant may take minutes, and many exchanges can take place in a single day.

104. In Bolivia, attempts to set time limits for admitting evidence cannot work because they areinconsistent with the rules for obtaining evidence. Simply specifying a shorter procedure withoutspecifying how it is to be shortened, moreover, raises the conceptual problem of potentially abrogatingthe right to present and rebut testimony that will affect the case.6' Some borrowers believe there is aneed to implement more restricted procedures for introducing evidence, such as oral proceedings in whichthe grievances of the defendant may be heard and disposed on the spot, bypassing the solemnities andformalities that surround written proceedings.

105. Under rules for obtaining evidence, all motions, including the complaint, are first filed beforethe court. Only after the court enters an order may the opposing party be notified or a motion be served.Such notice must always be made by an officer of the court.6" This method requires numerouscommunications back and forth. The court will not make a decision before the other party responds inwriting. Since each step must be routed through the court, the case proceeds slowly.

106. Bolivian courts remain very overloaded and are limited by law in how they can expediteprocedures. Service of process and all other notices to the opposing party must be done by the judiciary;opposing counsel cannot serve court documents. The mail is never used to serve notice of motions toopposing parties. New technology is forbidden: telephone conversations for the record between the courtand the representing counsels may not be recorded, and facsimile transmissions of legal documents forthe record are forbidden. Motions must be filed in writing during the hours the court is open: there isno provision for dropping off a paper after the court has closed.

107. Most objections to admissibility of evidence must also be in writing. If the testimony of anindependent expert is required, experts have to accept their appointment from the court. If one expert

61 C6digo de Procedimiento Civil, Articles 92 to 97.

Except for taking depositions before the Court.

65 C6digo de Procedimiento Civil, Article 203.

66 Compelling the enforcement of deadlines, without attending the specific problems that cause the delay, will replace a fair judicialdecision by an expeditious one, in order to meet the deadline, regardless on whether such judicial decision is just.

67 C6digo de Procedimiento Civil, Articles 121, 133 and 138.

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declines, a second expert is appointed; the judge may take a week to receive any filing and request theopposing party to respond, and then take another week to take an interlocutory decision. Therefore, ifthe case is open for taking evidence, the rules of civil procedures apply and at least three to four monthspass before closing the procedure for the admission of evidence.

108. The procedure can sometimes be taken to an extreme: for example, to photocopy a documentin the record, some courts require a written motion to petition the court for such copy. The court maytake a week to act upon the motion, and only then miay the authorized individual make the desiredphotocopies.

109. Stenographers are not normally used for taking depositions. Witnesses may, however, speakslowly while an officer of the court types the testimony. This increases the time needed to takedepositions. There is no word processing equipment in the court. Ordinary typewriters are used; carboncopies are the only method of copying permitted by the courts.

110. Records are not computerized; they are kept manually, either by date or in alphabetical order,but not both. Records are never microfilmed; space and security for written records are very limited ineach court. Cases are physically stacked in aisles and on the floor, where they are unavoidably kickedand knocked over in daily work. A motion filed before the court must be physically sewn, with a needleand thread, into the record books before it actually reaches the desk of the judge or the clerk of the court.

111. The code does not set a deadline within which the clerk of the circuit or appellate courts has tosubmit the record to the judge to be acted upon. The court may withhold the record for months beforesubmitting it to the judge's chamber.

112. Article 191 of the Code of Civil Procedure provides that a Judge must examine the record tocorrect any errors before ordering that it is in status for taking a final decision. Since the Code of CivilProcedure does not set any time limit, a judge can take months for this examination and only then permitthe record to pass to the chamber for taking a final decision. There are no tabulated records of theperformance of judges or the number of cases they handle, of speed of disposition, of frequency ofreversal."5 The study in appendix 11 is the first quantified study of judicial performance on debtcollection cases.

Executive Procedure (Proceso Ejecutivo)

113. While ordinary procedure applies to any dispute concerning contracts, executive procedure is apotentially faster procedure, restricted to a suit against a debtor who has defaulted on a payment. A suitfor payment, executive procedure, is one in which a creditor sues a debtor who defaulted on payment,or in which the creditor demands fulfillment of an obligation. The debt must be supported by one ofthree instruments: mortgages, negotiable instruments, and pledges (titulos de fuerza ejecutiva)."9 The

In some other civil law countries the problem is addressed bs fixine a shon-tinie litilit in whichi the judge must act or otherwise besubject to fines. However, this is not a real solutioni it lack of comilpeteit personntel is not also addressed.

C6digo de Procedimiento Civil, Articles 486 and 487.

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most important instruments are those demonstrating the existence of a mortgage in favor of the creditoror a claim for default payment on a negotiable instrument.70

114. The creditor may file suit against the debtor on the basis of such an instrument. If the creditoris unsecured, he will demand the imnediate attachment of the debtor's property and the filing of thisattachment in the appropriate registry. From that time onward, the property is subject to the results ofthe suit with respect to junior secured creditors; the security interest will have no effect against seniorcreditors.

115. The judge orders the attachment and if the demurrers or preliminary defenses are rejected, a finaldecision is taken that will order public auction of the attached property. The enforcement of thisjudgment is governed by the enforcement of judgment procedure (Proceso de ejecuci6n de sentencia) ofthe Code of Civil Procedure.

Summary Procedures (Procesos Sumario and Sumarisimo)

116. Summary procedures apply usually to causes of action in torts law and to small claims, whereall documentary evidence must be introduced and all other discovery must be petitioned before trial andpresented with the complaint. The case is open to admit evidence for only twenty days. No closingargument is required and, with few exceptions, appeals may not suspend the enforcement of judgment.Once the complaint is filed, the Court will set a time for hearing counsels and parties in the case. Thesame provisions apply to proceso sumarisimo except that the defendant may answer the complaint orallyor in writing the day of the hearing; the case is kept open to admit evidence for 10 days; and as soon asit is closed, the judge must decide the case within 10 days. Notice for appeals are not allowed to suspendthe enforcement of the judgment.

117. These potentially useful procedures founder, however, on being subject to the same time-consuming rules for taking evidence set out in ordinary procedure. The short deadlines in these civilprocedures conflict with the longer periods specified for taking evidence in the ordinary procedure and,in the end, the longer periods are the ones enforced.

Problems and Options for Solution

118. Obtaining judgment takes a long time in Bolivia and is expensive.7" Anticipating that, lendersare reluctant to accept consumer durables and inventory as collateral because their value will usually benegligible by the time judgment is obtained. They are equally reluctant to make loans too small to coverthe sizeable costs of collection. Therefore, lenders demand collateral that will last as long as it takes tosecure judgment and is of sufficient value to cover the high costs of litigation: typically, that means realestate. Improving registries cannot, by itself, solve this problem. Nor will improving the definition ofsecurity interest.

7'' Both secured and unsecured creditors may use this procedure for collecting debts.

For a more comprehensive study of the problems that affect the administration of justice in Bolivia, see, Eduardo A. Gamarra, "TheSystem of Justice in Bolivia: An Institutional Analysis," Center for the Administration of Justice Centro Para La Administracion deJusticia, Florida International University -- Led. -- San Jose, C.R., CA], p.104 (1991).

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119. Two broad strategies exist for attacking this problem. One relies on changing the legalprocedures for obtaining judgment to permit consenting private parties to moving outside the judiciarysystem for routine debt cases; the second centers on legal and judicial reform.

Permitting Private Non-Judicial Enforcement of Loan Contracts

120. Bypass the execution procedure by permitting non-judicial repossession of collateral. Toexpand access to credit, the law must give creditors an expeditious way to enforce collection.7 2 Ifcreditors are permitted to seize the collateral from debtors without disturbing the peace, they can bypassslow procedures for obtaining judgment. This would make those foreclosures much faster and, byremoving a large class of transactions from the court, permit the remaining transactions to be handledfaster. Such a system protects debtors differently from the procedure outlined under Bolivia's laws. Inthe first instance, the only question asked of the debtor is whether he had paid. If he had not, thecreditor may seize (and sell -- see below) the collateral. In subsequent proceedings, the debtor may raiseall legally permitted defenses of non-payment. The debtor is also entitled to damages in the event ofwrongful repossession of the collateral. Consumer debtors typically have more safeguards than businessdebtors. All debtors are empowered to recover from the secured party any loss caused by failure toobserve the general rules governing harmless repossession and private sale.73 In addition, and consistentwith the parties right to freely contract, the law may allow the debtor to agree with the creditor on otheralternate collection measures.

121. Banco Agricola Boliviano had the power of harmless repossession and used it effectively inmaking small loans for equipment to farmers in the altiplano. The policy problem arises not in theconstitutionality of the process, but rather in devising effective ways to extend this power to moreeconomic agents and still regulate it in the public interest.

122. Similar advantages would accrue from expanded powers to offset which give the bank creditorthe legal power to take debt payments out of the debtor's deposits in that bank. Gains would also arisefrom rules where the debtor is precluded from raising some defenses. This power requires safeguardssimilar to those that must surround harmless repossession.

* Harmnless repossession. The law may authorize the right of a creditor to use self-help torepossess collateral upon default.74 In order to protect the general public, in no case may

72 The success of a comprehensive secured transactions law lies in giving creditors considerable freedom to enforce their securityinterests. "Essentially, the model rules should be oriented toward permitting secured creditors considerable freedom in the exerciseof their remedies, irrespective of the location of title to the collateral. These remedies should include the right to agree on forfeitureclauses, the right to take possession of the collateral after default with the consent of the debtor, the right to pursue the debtor forany deficiency remaining after realization of the security (except where this had arisen form the secured creditor's failure to act ina commercially reasonable manner), and the right to private foreclosure." Alejandro M. Garro. 1990. "The Reform andHamtonization of Personal Property Security Law in Latin America." Revista Juridica U.P.R., 59(1j:53.

71 U.C.C., § 9-507.

74 Under all legal systems it is difficult to reconcile the due process rights of a defaulting debtor and the economic need to providecreditors with efficient means to enforce their rights. Bolivian Civil Code presents some conflicting provision with self helprepossession. Some forbid parties to take justice in their own hands (C6digo Civil, Art. 1282), some require that the creditor obtaina court order for repossessing collateral (C6digo Civil, Art. 1465 & 1467). The Bolivian Supreme Court has not dealt specificallywith this issue.

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a creditor breach the peace; this means that creditors may not use violence, actual or potentialforce, intimidation, fraud, or trickery. Any activity that violates the public order (not justviolation of the law), or any violent activity that is fraught with the likelihood of resulting inviolence, is prohibited. Moreover, the law should specifically forbid creditors from using theassistance, or even the mere presence, of any government official, including the police.75

* Permit business borrowers to borrow with fewer safeguards. In some other legal systems,different groups of borrowers receive different degrees of protection. For example, somelegal systems give consumers more rights than does Bolivian law. Consumers do not operateprofessionally in the credit market and little social gain arises from having consumers consultlawyers over routine transactions. In such cases, business borrowers are relieved fromfollowing special safeguards that apply to consumers.76 Sellers may be prohibited fromtaking commercial paper, such as a promissory note negotiable for all purposes. Theconsumer would retain the right to refuse to pay if the goods were not as represented. In theUnited States, for example, a consumer may justify refusal to make a payment on an autoloan held by a third party by alleging that the car does not work; a business may not refuseto make a payment on that ground, but may enter into a civil suit against the dealer.' TheUnited States Congress has enacted statutes concerning interest rate disclosure, loss of cashmachine cards, and check clearing that apply to consumers but typically not to businesses.Restricting these rights to consumers alone can serve the purpose of protecting lesssophisticated borrowers, while more sophisticated business borrowers can get access to morecredit on better terms.

Improve the Administration of Justice

123. Numerous thoughtful suggestions have been made about improving the administration of justice.Some revolve around improving the selection and training of judges; others around changing proceduresspecified generally under the Civil Code, particularly as practiced in Latin America. Such changesinclude introducing oral argument, improving equipment, modernizing systems of case load management,and instituting fines against judges for improper conduct. Several broad remedies exist to correct theseslow court procedures, including amending the law to permit more actions to fall under the faster coactiveand summary procedures; devising faster and more restricted procedures for introducing evidence; and

75 Burke and Reber. 1973. State Action, Congressional Power and Creditor's Rights: An Essay on the Fourteenth Amendment, 47.Southern California Law Review, 1(5).

76 Although Bolivian law provides for a division between business and non business borrowers and business and non businesstransactions [Commercial Code, Article 1, and 8], business borrowers cannot waive many rights and defenses accorded to them underthe law (C6digo Civil, Articles 1340, and 1282, C6digo de Comercio, Article 880; Codigo de Procedimiento Civil, Articles 90, 179,252, and 498). A less restrictive way of protecting debtors lies in enacting a general law applicable to all secured transactions andwithin the same law providing for special considerations whenever the collateral qualifies as "consumer goods. "

7 See Holder in Due Course Regulations: Code of Federal Regulations, 16 Code of Federal Regulations, Sec. 433.1 - 433.3. Thesesupersede state commercial code provisions on the negotiability of consumer installment paper.

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speeding up court processes by making court administration more efficient78 and amending thearbitration laws.7

124. This study does not judge the desirability of these reforms. It is the view of the authors,however, that the problems of legal impediments to credit access arising from restrictions on the use ofcollateral can be addressed with the specific remedies mentioned above and do not require general reformof the judiciary. The wider use of movable property as collateral in Great Britain and the United Statesappears to arise more from the unique features of the law, especially of Article 9 of the UniformConmnercial Code. Differences in perfornance of courts between these countries and the better managedCivil Code countries of Europe do not display compelling evidence that one model is superior to another,but the differences in the use of movable property as collateral are readily ascertainable.

125. Subject to these cautions, the following suggestions are frequently encountered in the literaturethat discusses proposed improvements in the administration of justice in Latin American civil codecountries.i' These are economically attractive features of any judicial reform program.

126. Convert executive procedure into a genuine debt collection procedure and convert summaryprocedures into genuine small claims procedures. These improvements can be accomplished byrestricting the arnount of time for judgment, limiting the evidence that may be brought, introducing oralhearings, specifying in the law that it is permissible to use prepared forms to permit non-lawyers to

7' See, Kostanze Pett, "Civil Justice and its Reform in West Germany and The United States," V13 The Justice System Journal Fall1988, p. 186-201; and Doris Marianne Provine and Carol Seron, "Innovation and Reform in Courts: a Cross Cultural Perspective,"V13 The Justice System Journal, Fall 1988, p. 158-167; 'Crisis de la Justicia y Reformas Procesales," I Congreso de DerechoProcesal de Castilla y Le6n, Ministerio de Justicia, Secretaria General Tecnica, Centro de Publicaciones, p. 1, Madrid, 1988; andIgnacio de Otto, "Estudios Sobre el Poder Judicial," Ministerio de Justicia, Secretarla General Tecnica, Centro de Publicaciones,p. 1, Madrid, 1989.

79 Bolivia's laws do not reflect modem trends on arbitration, especially compared to modem arbitration laws, such as the UNCITRALmodel (Model Law on International Commercial Arbitration adopted by the United Nations Commission on Intemational Trade Lawin 1985), or the 1988 Spanish Arbitration law. Bolivia's majorlegal deficiencies in arbitration include the following: the requirementthat arbitrators only be lawyers; the lack of authority of the arbitral tribunal to enforce provisional orders; the lack of freedom of partyautonomy to determine the place of arbitration, to appoint independentexperts, and to take certain types of evidence; and the judicialcourt's broad authority to review the arbitral tribunal's findings of facts. See, C6digo de Procedimiento Civil, Articles 712 to 746,and C6digo de Comercio, Articles 1483 to 1486.

Modem legislation on arbitration limits the intervention of the courts. The Spanish arbitration law of 1988 limits the grounds uponwhich courts can review arbitral awards, authorizes the arbitral tribunal to rule on its jurisdiction, abolishes the two-stage procedureto enforce arbitration agreements, allows the parties to choose the procedural rules, and authorizes the parties to let institutionsadministrate the arbitration procedure.

See also, Sharon A. Jennings. 1991. "Court-Annexed Arbitration and Settlement Pressure: a Push Towards Efficient DisputeResolution or Second Class Justice?" Ohio State Journal on Dispute Resolution, 6:133-132. John Flynn Rooney, "Ist District toExplore Settlement Program," Chicago Daily Law Bulletin, 37:1. Lloyd Burton and John P. McIver, "A Surnmary of the Court-Annexed Arbitration Evaluation Project," Colorado Lawyer, August 91, p. 1595.

^" For current trends in the administration of justice problem, See, Crisis de la Justicia y Reformas Procesales, I Congreso de DerechoProcesal de Castilla y Le6n, Ministerio de Justicia, Secretaria General Tecnica, Centro de Publicaciones, Madrid, 1988; y Ignaciode Otto, Estudios Sobre el Poder Judicial, Ministerio de Justicia, Secretaria General Tecnica, Centro de Publicaciones, Madrid, 1989.

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prepare claims, letting judges take charge of managing cases instead of letting lawyers dictate the flowof the litigation, and involving judges actively in the settlement of cases.8'

127. Devise separate rules of evidence consistent with different means of obtaining judgment.5 2

The five different procedures for obtaining judgment differ superficially in speed but use the same rulesof evidence as the relatively slow ordinary procedure. In practice, the guidelines for time limits areconsistently violated. This problem could be addressed by establishing different rules of taking evidencefor different procedures. For example, the sumarisimo procedure could become a freestanding procedurethat can be used reliably for a class of transactions -- Bank loans.

128. Change the Code of Civil Procedure to restrict the right to appeal. Civil suits in Boliviainvite abuse because the court permits appeals on very general grounds and on insufficient evidence.83

In debt collection procedures the law should provide that all judgments are final unless the appellantfurnishes evidence that the judgment is manifestly wrong; otherwise it should narrow the grounds forappeal to very limited and specific grounds.

129. Amend the Code of Civil Procedure to speed case flow. Bolivian procedures can be modifiedto speed case flow without diminishing the rights accorded debtors and creditors. Most of these changeshave already been undertaken in Common Law countries and in European Civil Code countries:'

* Permit oral evidence and have it transcribed for the record.

8' "Students of the judicial process in the United States have in recent years noted a significant shift in orientation among trial judges.

There is a new willingness to involve judges actively, aggressively, and creatively in the settlement of cases. This emergingcommitment to settlement challenges the traditional role of a judge in key respects, setting the stage for an exciting and heated

debate.... Despite the strongly held differences in view, all sides of this debate have been similarly myopic in one important sense:a review of this literature leaves the impression that the United States is the only country engaged in efforts to rearticulate anappropriate judicial role in civil adjudication in light of mounting demands (but see Lagbein, 1985). Actually, many countries areundertaking reforms designed to reduce the cost and delay of civil litigation and to render judges more accountable and efficient....Germany has gone much further than England in overcoming resistance to reform. Managerial principles have been applied to everyaspect of the pretrial process in a way that encourages litigants to settle disputes without court intervention." D. Marie Provine andCarroll Seron. 1988-89. "Innovationan Reform in Courts: A Cross-Cultural Perspective," The Justice System Journal, 13, Number(2):1561158. See also, Felix Carrisoza, "'Fast Track' is Success," Claims Judicial Council, Los Angeles Daily Journal, April 4,1991:1.

82 See, Jose Almagro Nosete, C6digos Procesal Civil y Procesal Penal, Modelos para lberoamerica, Presentaci6n y Coordinaci6n,Ministerio de Justicia, Secretaria General Tecnica, Centro de Publicaciones, Madrid (1990), p.179, Articles 311 to 316.

X' Italian law, under very similar procedural rules to those of Bolivia, also determines lengthy procedures for appeals that delay the timeof disposition of the case. "In Italy too, there is a deeply ingrained concem about closing the gateways to judicial dispute resolution.This concem is manifest in the debate over reorganizing the complex appeals process in civil cases. Ferrarese describes an appealssystem that, in an effort to insure a fair and complete reevaluation of the case, allows for the presentation of evideAce at the appellatelevel. As one might imagine, this practice helps create what is widely understood to be another serious problem: civil cases in whichmany years elapse between filing and final disposition. " D. Marie Provine and Carroll Seron, Innovation an Reform in Courts" ACross-Cultural Perspective" The Justice System Journal, Volume 13, Number 2 (1988-89), p. 149. See also, Daniel J. Mador,Appellate Subject Matter Organization: The German Design from an American Perspective, Hastings I,it'l and Comparative Law

Review, Vol.5:27.

'4 "Reform of civil procedure can appear to be a very technical problem, but it provides a good perspective from which to analyze thelogic of the civil trial and the ideas of legal culture that suppron it as a social institutioni." Maria Rosaria Ferrarese, Civil Justice andthe Judicial Role in Italy, The Justice Systemn Journal. Volune 13, Number 2 (1988-89). Crisis de la Justicia y Reformas Procesales,I Congreso de Derecho Procesal de Castilla y Le6n, Ministerio de Justicia, Secretaria General Tecnica, Centro de Publicaciones,Madrid, 1988; and Ignacio de Otto, Estudios Sobre el Poder Judicial, Ministerio de Justicia, Secretarta General Tenica, Centro dePublicaciones, Madrid, 1989.

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* Permit oral argument anong opposing lawyers and the judge.

* Provide for hearings on a certain date so that the judge may hear both partiesarguments, take evidence, and decide then how to proceed.

* Permit direct notification by the parties of steps in the case, with copies sent to the court.

* Permit copies for the record to be xeroxed or faxed.

* Eliminate the requirement that copies for the record be physically sewn into the legalrecord; introduce a modern computerized filing system that keeps track of disparate evidencelike xerox copies, faxes, electromagnetic media, and videotapes.

* Use a computerized system for marking case material that permits multiple access toavoid delays associated with having legal documents missing from the records when counselor the judge needs to consult it.85

* Introduce the technology and skills training required to speed the case, including copyingmachines, fax machines, and computers; train a professional group of court administratorsto administer such systems instead of judges.

* Provide financial support for new courts, hearing rooms, and higher salaries for judges.

' "it is time for the court system to modernize its operational infrastructure. Fax technology provides a method for the prompttransmission of information with a minimum of human effort. Must court business be done with volumes of paper that have to betransported from place to place and carefully filed and store? Why, for example, couldn't the courts have a central fax computercenter serviced by toll-free telephone numbers which would automatically file complaints, answers and other pleading? This centralfacility could automatically retransmit to appropriate local forums. All the information would be on tape. The information couldbe rapidly furnished to any computer station. The savings to the court system of space would be monumental and the labor used tomove papers from courtrooms to storage facilities would be substantially eliminated. If every judge had a tie-in computer printeravailable, records could be made instantly available as needed. A relatively small additional fee for filings would pay for the costof the system. In exchange, lawyers as well as the courts would save time, labor and storage space.... There is no reason why thecourts couldn't develop standardized forms for actions involving motor vehicle accidents, collection cases and simple divorce. Atthe very least it would reduce the volume of the paper in the system... they could be designed so that computers could read them,sort them and schedule and assign the matters automatically." 21 Century Pleading (automating of pleading procedures), editorial,V 129 New Jersey Law Journal, p. 282. See also, Joyce Plotnikoff, The Future of Court Technology: Lessons from North America,V2 Computers and Law, Feb '91, p.5; Janet Stidman Eveleth, Automation Expedites Court System, V23 The Maryland Bar Journal,Nov-Dec '90, p. 27; Paul Mitchell, computerize Docket Systems, V20 Colorado Lawyer, June '91, p. 1185.

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VII. Enforcing Judgment

130. To conclude the judgment process, the victorious plaintiff must enforce judgment. Because theCode of Civil Procedure sets out lengthy steps for enforcement, the same economic problems arise as inobtaining judgment.'

131. Suppose the debtor fails to perform, the creditor sues, and the court finds in the creditor's favor.How does the creditor gain physical possession of the collateral? the right to sell the collateral? the rightto the proceeds from the sale of the collateral? the right to seize more of the debtor's property if the saleof the original collateral is insufficient to cover the debt? Depending on the relief requested from thecourt, the plaintiff may obtain a court judgment stating:

* The defendant owes the plaintiff a specific sum of money.

* The defendant is liable to the plaintiff for certain expenses incurred by the plaintiff but notyet determined.

- The defendant is liable for specific performance, such as returning the collateral.

While these are the most common outcomes, few general restrictions apply to how the plaintiff mayrequest the court to rule.

132. Arbitration. Even when contracts specify that disputes will be arbitrated and not taken to court,the final holdings of the arbitrator will be enforced under the procedure described in the precedingparagraph (Proceso de ejecuci6n de sentencia).' The steps followed will vary depending on what thefinal arbitral decision says, as in any of the different court's decisions.8'

133. In principle, the Bolivia Code of Civil Procedure could provide for rapid enforcement: finaldecisions are to be enforced within three days, if the decision itself does not determine another time limit.Enforcement may not be delayed by the interposition of any motion, and appealing an interlocutorydecision during this procedure will not suspend its execution (apelaciones s6lo en efecto devolutivo).9

134. The procedure, however, has numerous steps. If any of these steps is not followed, the aggrievedparty may file a motion to void the procedure and the process must be repeated. Therefore, most courtscomply meticulously with each of the steps for attachment and seizure, public auction, and payment setforth in the enforcement of judgment procedure. Nor may parties agree in the contract to a speedier

The (proceso de ejecuci6n de sentencia), literally translated: "enforcement of judgment procedure," C6digo de Procedimiento Civil,Articles 514 to 561.

^ C6digo de Procedimiento Civil, Article 556 (Arbitration).

^ During that process arbitrators do not have any power to enforce or compel any order, interlocutory or final, by themselves. Rather,upon request of the interested party, they should petition the appropriate judicial court to enforce any court order. C6digo deProcedimiento Civil, Article 726. Therefore, the enforcement of any arbitral decision will follow the rules in the Code of CivilProcedure.

"9 C6digo de Procedimiento Civil, Article 516.

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resolution: any contract that attempts to waive these rights are held void by the court as contrary topublic policy. A contract that reads, in part, "I, borrower, agree that creditor may repossess my car atany time if I do not pay and I agree that I will not press criminal charges but, rather, will only sue incivil court to get the return of my collateral" would be unenforceable in a court and would give thecreditor no additional protection. It would be pointless to include it.

135. Enforcement of judgment typically moves through three stages: the court determines the amountowed; the court orders the attachment and seizure of the collateral; and the court orders the public auctionof the collateral. Final decisions that involve specific performance, such as determining an obligation togive something back, must be specified in the contract. For example, suppose a vendor sells a machinereserving the ownership of the machine until the purchaser completely pays the purchase price; supposethe purchaser defaults on the payment, and the vendor claims possession of the machine. The finalholding in the case might order the purchaser to give the machine back to vendor, because the originalcontract specified that the creditor retain title to the goods in question, and the creditor so petitioned(Interdicto de recobrar la posesi6n).' Otherwise, the Court may not adjudicate the goods back to thecreditor but must proceed as before with attachment, seizure, and public auction. Since the process forattachment, seizure, and public auction is very slow, sellers draft agreements reserving the ownership ofthe goods to avoid these steps and, instead, seek a final decision to recover the goods.

136. The final decision to recover the goods will be enforced under a judgment procedure forrepossession. A court order is issued to seize the goods and give them back to creditor; this order willbe enforced if necessary by the judicial police.9'

137. However, if the debtor does not comply with the court order, and the judicial police cannotenforce it (for example, the police break into debtor's house to seize the property but find nothing), orthere is a deficiency judgment (for example, when the current value of the collateral does not cover thedebt), the court will proceed through the steps to determine a specific amount owed, attach and seizeenough of the debtor's movable or immovable assets to satisfy the debt, and publicly auction these assets.

Determining the Amount Owed

138. If the final decision to enforce does not determine a specific amount owed, the parties willgenerally disagree, and the court must determine the amount. For example, suppose a creditor sues adebtor over a debt for $1,000 that was due and payable a year ago. The plaintiff could obtain a judgmentthat the debt is valid, but the parties might disagree about the amount now owed. What interest rateshould cover the amount outstanding on the loan since the original contract expired? What allowanceshould be made in the principal for inflation or exchange rate depreciation? What allowances foradditional damages or lost profits such as depreciation and wear and tear of the collateral?

139. In the event of such a disagreement, either party may request that the court reopen the case toreceive additional evidence. The court will hear both parties if there is any controversy. With few

C6digo de Procedimiento Civil, Articles 607 to 613.

Any court order may be enforced by using force if so required, with the assistance of the judicial police. For example, if at the timefor seizure the defendant does not open the door for the officer of the court, the officer will request that the police (usually judicialpolice will accompany the officer) break into the dwelling.

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exceptions, evidence for this purpose will be taken under the relatively slow rules for evidence set outin the Code of Civil Procedure. Under these rules, the court typically would not comply with the three-day deadline the code requires.

140. Once the plaintiff has obtained a judgment that specifies the amount of money owed, the plaintiffreturns to the court to obtain a judicial order to enforce the money judgment. The plaintiff will petitionthe court to attach the debtor's assets until the plaintiff recovers the amount due. As under other legalsystems, certain property of debtor may not be attached.92 The court generally orders attachment andseizure concurrently.93 An officer of the court, assisted by the judicial police, carries out these courtorders, but, under Bolivia's law, the officer will not immediately sell the goods.94

Attachment and seizure95

141. The plaintiff will request a court order to attach and seize the debtor's movable or immovableassets up to the total amount due the creditor. Within the court order, the judge will specify a date fora public auction where the assets attached will be sold.

142. The attachment and seizure procedure differs with the type of property. For personal property,the officer of the judicial police who attaches and seizes goods may give the goods to a bailee appointedby the parties or, if the parties do not agree, to a bailee appointed by plaintiff. The bailee holds thegoods until the public auction.96 Once the officer has executed the court order (mandamiento), he willfile the appropriate report with the court describing the assets attached9". If the assets of the debtor arereal or licensed personal property, the attachment will be perfected by filing the court order forattachment, or judgement security interest, in the appropriate registry.98

For example, movable office furmiture, Cod. Proc. Civ., Art. 498icle or any other exempt property, Cod. Proc. Civ., Article 179.

9 This is done with a (mandamiento) (C6d. Proc. Civ., Articles 497 to 506), which is similar to a writ of execution to levy and seizethe debtor's property.

'" In some other legal systems, the law officers can sell the goods. For example, is the United States, the sheriff's office would directlyauction such goods within 10 days.

The winning party may also file a motion requesting gamishment of the salary of the losing party until the amount due is totallyrecovered. In this case, the plaintiff obtains a court order for gamishment, filing the (officio) of the court order for the judge'ssignature, delivering the (officio) with the appropriate employer, and filing a stamped copy with the court.

9h C6digo de Procedimiento Civil, Article 497.

97 The (acta de embargo) (Cod. Proc. Civ., Article 501).

98 Cod. Proc. Civ., Article 502. The lien may be extended to other assets of debtor if later the assets originally attached do not totallycover the amount due (Cod. Proc. Civ., Article 506).

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Public auction

143. Bolivian law makes no provision for private sale,' where a creditor, without further recourseto a court, can dispose of the collateral provided by the debtor. All liquidations occur at public auctionwhich involves substantial costs and additional delays. If the amount raised by this sale fails to cover thejudgment, the plaintiff will return to court for another order to seize and sell other property of the debtor.This process continues until the judgment is satisfied.

144. Appraisal. Before auction, and as part of the enforcement of judgment procedure, the court willorder the appraisal of property (trarmite de tasaci6n) by independent experts if the parties disagree aboutits value."4 This appraisal sets a floor as protection to the debtor. The court orders the appraisal byfiling a subpoena notifying the expert of the appointment. The independent expert has three days toaccept or reject the appointment. If the expert does not accept the appointment, the court repeats theprocess until one accepts. The independent expert must, in three days, file an appraisal. The appraisalmust be approved by the court and parties may file opposition. Afterwards, the judge will determine thereal estate base price in an interlocutory decision.

145. Preparation for the auction. For registered and licensed property such as real estate or cars,the court undertakes several steps before the auction. The court will request that the registry inform thecourt about the status of ownership and security interests on the property. The court does not do thisdirectly; rather, the plaintiff petitions the court for a court order (oficio or memorial) to the appropriateregistry asking for this record. The plaintiff types the court order on court stationary and files it withthe court for the judge's signature. When the judge has signed the order, the interested party takes it tothe appropriate registry, filing a stamped copy with the court."5

146. The auction cannot proceed until this record is obtained from the registry. For some registries,this may take a long time. Registries have a great backlog of documents to process and cumbersome,time consuming retrieval methods. The auction of real property requires additional steps. Before thepublic auction, the judge will require certifications of taxes due, certifications of fees on theadministration of the property, and certifications of mortgages or security interests on the property. Thisis also done through court orders and also requires consulting the appropriate governnment registries.

147. Auction schedule. A public auction does not take place immediately and, even where an ordergranting a writ of execution states a date and time, the requirements are not generally observed becauseof typical delays in getting information from the registries. Once the appraisal is approved, the court setsa new date for a public auction. This decree must be served by the court on all other creditors that have

w However, if seller sold the goods under a sales agreement with reservation of title and the entforcement of such final decision wasa court order repossession that brought those goods back to seller, seller may sell those goods without any further acknowledgmentsby the court. This private sale procedure takes place if, and only if. seller had previously obtained a final decisioni in the matter thatsupported his title and possession of the goods sold. This is a trial that will establish that defendant is in default and that notifies thedebtor or the creditor's claim in the collateral. The final decision will consider any surplus but will not re(quire the debtor's agreementto a strict foreclosure. It is not until after this final court decision is enforced, that seller may privately sell the goods or mayadjudicate them to himself.

"' Cod. Proc. Civ., Article 534. The appraisal report must be served on the parties which have three days to file oppositioni.

"' Cod. Proc. Civ., Article 525.

- 45 -

perfected security interests or security interests on the goods subject to the auction,"6 and must bepublished."7 The draft of the publication must be filed by the plaintiff for the signature of the judge,then taken to the appropriate newspaper and published, then filed with the court again in the publishedformat.

148. Operation of the auction. The auction must be performed by a public auctioneer. The buyermust pay the purchase price within three days. If payment is not made, the buyer will lose the bonddeposited at the auction and the plaintiff must request the court to issue a second order for date and timeof auction and the whole auction procedure will be repeated.

149. If nobody buys the property, the base price will be reduced by 15 percent. If the property stilldoes not sell, the creditor may petition the court to adjudicate the property to the creditor for 80 percentof the adjusted base. Otherwise, the court may give the property back to debtor (prenda pretoria) untila new auction. Under any situation in which a new public auction must be held, all steps for notificationand publication must be repeated. The steps for appraisal of the property will be repeated only ifconsiderable time has passed."8

Payment

150. The plaintiff will not receive payment immediately after the auction. Once the property or thegoods attached or given as collateral are sold, the proceeds of the sale are deposited with the court andheld until the judge issues an order approving the outcome of the auction."9 The court pays theproceeds of the sale only after the plaintiff files a final claim for liquidated damages (liquidaci6n) andthe court approves it. The final claim will contain the total amount that the debtor owes to date,accounting for inflation, devaluation, or adjustment to the current exchange rate if the amount waspayable in a foreign currency and the legal fees of the winning party. Any legal interest is accrued at6 percent. The other party may oppose, on the grounds that the accounting is wrong, and the court willhear arguments on both sides.'"' This process for payment typically takes at least three weeks.

Problems and Options for Solution

151. The length of time required to obtain and execute judgment makes it unprofitable to lend againstcollateral with a short economic life or collateral whose value falls short of the typical legal fee to obtainand execute a judgment. The options include procedural rules that regulate the creditor-controlled salesof collateral in a law of secured transactions. The policy framework for those rules must balance adebtor's rights to due process against the need for expeditious foreclosure. The law should set aprocedure to assure that sales will take place in a commercially reasonable manner. That will assure a

llb Cod. Proc. Civ., Article 525.

117 Cod. Proc. Civ.. Article 526.

1 Cod. Proc. Civ., Articles 542, 543, and 544.

9 Cod. Proc. Civ., Anicle 545.

120 Cod. Proc. Civ., Article 545.

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reasonable market price for the collateral. The law should not attempt to specify such features as howmnany times the auction should be announced, in what location, or in what newspaper.'2 ' Rather, theprocedures should regulate the standard of commercial reasonableness.

* Creditor-controlled sale. Instead of prohibiting the parties from stipulating private sale intheir contracts, Article 880 of the Commercial Code and Articles 1340 and 1409 of the CivilCode should be abolished and a sale controlled by the creditor must be specifically providedfor.'" To protect debtors against an unfair disposition of the collateral, a standard ofcommercial reasonableness should be enacted, requiring that the seller be held to suchstandard. For example, a standard of commercial reasonableness requires creditors to sellgoods in the customary manner for dealers in that type of goods. Delay in the disposition ofperishable collateral, or any goods likely to reduce in value speedily, may constitute failureto act in a commercially reasonable manner and the creditor would lose any rights to adeficiency if the sale did not cover the debt.

* Creditors should be required to notify debtors and junior secured creditors before anyresale. The law must allow the secured creditor any deficiency, only if he complies with thelegal requirements for private sale. The law must always allow debtor a redemption period,during which collateral can be reclaimed upon payment.'" The law should void anystipulation allowing the debtor to waive his right to redeem collateral before foreclosure. Thedebtor may also recover damages arising from any wrongful repossession, including caseswhere the debtor actually did not default or where the creditor in fact had no security interestin the repossessed property. 1'

- Strict foreclosure in limited cases. Once the secured creditor recovers collateral, he maykeep the collateral in satisfaction of the secured debt (strictforeclosure). As a policy matter,the law may provide that the parties may not agree to strictforeclosure in advance of debtor'sdefault and after notice, or may prohibit strictforeclosure against a consumer that has (a) paid60 percent of the debt or (b) objects. Strict foreclosure may not allow the creditor anydeficiency, nor does it protect the debtor of any surplus.

12 For example, pursuant to the policy followed by the Model Code of Civil Procedure, the parties can agree to sell the property in thejudicial public auction without reserve and without base (C6digo Procesal Civil y Procesal Penal Modelo para Iberoamerica, Article325.1).

In A creditor-control sale can be either a public sale -- for example an auction arranged by the creditor, not by the court -- or a privatesale in which the seller negotiates with an individual buyer.

123 Such a provision is made under U.S. law; see UCC §9-506.

124 NationIal procedures differ: legal costs are not always recoverable under U.S. law; U.K. law and Bolivian law does permit recoveryof legal costs by the winning party. See also, C6digo Procesal Civil y Procesal Penal Modelo para lberoamerica, Article 328.

Appendix I:

Economic Cost of Deficiendesin Bolivia's Collateral Law

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Appendix I: Economic Cost of Deficiencies in Bolivia's Collateral Law"25

1. As the text indicates, deficiencies in Bolivia's collateral laws lead to higher interest rates for loanson movable property. These higher interest rates make it less profitable for producers to hold capital;therefore, they produce less. Hlow much less? This annex examines that question. It shows, underplausible assumptions, that Bolivia could lose as much as $230 million to $690 million annually as aresult of deficiencies in collateral laws. This represents between 3 percent and 9 percent of BolivianGDP. By contrast, the comprehensive legal changes that are needed could be studied and implementedfor well under $1 million.

2. While these are only rough estimates, the benefits potentially outweigh the gains by so much thatthey support the importance of placing the solution to this problem high on the policy agenda forgovernment.

3. This appendix first shows how the interest rate determines the total amount of capital in use inBolivia. Then it discusses how differences in the quality of collateral will lead lenders to charge higherinterest rates for movable property and reduce the amount of such property in use. Then it compareslending for movable property in Bolivia with lending for movable property in the United States, wheremovable property is considerably better collateral. The appendix then assumes that, potentially, lendingfor movable property could be proportionately as great as real estate lending in Bolivia as it is in theUnited States. Using this assumption, the appendix then estimates the size of the loss in Bolivian GDPthat arises from having a legal framework that limits lending for movable property.

The Interest Rate and the Production Function Determine the Total Demand for Capital

4. In a typical production process (f), output (Y) depends on the amount of capital (K), labor (L),and land (T), as well as on the technology used to combine them (a) -- Y=f(a,K,L,T). The marginalproduct of capital. fK(a,K,L,T), derived from that production function, determines the demand for capital.Private individuals who maximize profit will demand as much capital as they can so long as the marginalrate of return on this capital exceeds the interest rate. For a small country, with financial agents able toborrow at the world market interest rate (iw), and re-lend at a retail interest rate adjusted for risk (i*),businesses would find it profitable to employ K* in capital (Figure 1). At interest rate i-, this economywill use a total capital stock equal to KW.

Demand for Capital When One Kind of Capital is Less Risky than Another

5. Suppose there are two kinds of capital -- low-risk collateral (like land and buildings thereon --KA) and high-risk collateral (like machinery and inventories -- KB). Demand for these two types of capitalcould be analyzed by partitioning the previous production function into the two types of capital so thatY= f(a,KA,K, L,T). Then the demand for fixed capital that is less risky collateral would be represented

125 1 am obliged to Lance Girton for helpful comments on this section. Any errors are my responsibility.

- 50 -

Figure 1: Total Demand for CapitalWhen All Capital is Equally GoodCollateral

~~~~K 4~~~~~~~

K'~~~~

Dtotal output minus interest payTeneit or interest foregone

Eintemeedianin spread

GiDinternational interest payments or alternative interest foregone

Facing a production function fla,K,L,T), investors findit profitable to add to their capital stock so long asthe extra return from additional capital (the marginalproduct of capital -- fKla,K,L,T) -- exceeds the interestrate. The local interest rate Wii exceeds the worldmarket interest rate li.l because of the cost of theintermediation of funds. The total output of capital isthe shaded area under the curve; that total output ofcapital can be decomposed into payment of foreigninterest (or the alternative cost of foreign funds),domestic intermediation costs for financialinstitutions, and the return to owners of capital overand above the interest cost.

wn .. \hfteisig\shar_doc\figl1..a.\Decenbe27, 1 994\rza

- 51 -

by fKA (Figure 2, panel 1) and the demand for movable capital that is more risky collateral would berepresented by fKB (Figure 2, panel 2).

6. Reflecting the lower risk of fixed capital as collateral, lenders offer lower interest rate (.A) whenlending for fixed capital than they do when lending for movable capital (iB). Producers would use lesscapital at the higher interest rate (i,,) than they would at the lower interest rate (iA).

Lowering the Risk of Lending against Movable Property

7. To compensate for the greater riskiness of bad collateral, lenders will charge higher interest rateson those loans and lend less at any given interest rate. The higher the interest rate on capital that is riskycollateral, the less such capital people will demand. Suppose, however, that improvements in the legaland regulatory system could lower the risk on such collateral. For example, suppose that the environmentfor lending against movable capital improved so that the interest rate that lenders offered for loanssecured by movable equipment fell from 'B to iB (Figure 3, panel 2).

8. With a risky collateral system, the society uses KB in movable capital; with a better collateralsystem, the society uses K B in capital. The judicial and regulatory system that makes movable capitalrisky forces society to lose the services of capital because of the higher interest rates that arise from thisriskiness. The gain to society of improving the quality of movable property as collateral arises from theincrease in output that it could have gotten from that capital. That gain is the shaded area in Figure 3,panel 2 outlined in in a heavy dark line. The gain is divided into three broad shares. Internationalinterest payments (or, equivalently, international interest foregone) increases from i. x KB to i. x K B;

they are shown as shaded in cross-hatch. Revenues of local financial institutions (shaded diagonally) willrise or fall depending on the sensitivity of the demand for capital (which will always rise) to the drop inthe interest rate. The revenues of capital owners (shaded horizontally), over and above interest cost, willalways rise.

How Big is the Output Loss from Restrictions on Collateral?

9. Figure 3 shows the output loss that results from existing secured transactions laws. But how bigis that loss likely to be? The size of the output loss depends in part on the likely impact of this highinterest rate on the demand for movable capital in Bolivia. This appendix does not examine this relation.However, it is reasonable to suppose that production technologies in Bolivia are sufficiently similar tothose in other countries so that movable and non-movable capital would be demanded in similarproportions when interest rate differentials are similar. (Of course, the lower wage in Bolivia wouldensure that even with the same technology, the capital/labor ratio in Bolivia would be much lower thanin the United States. However, it is not obvious that a lower wage would affect the relative use of fixedand movable capital. Hence, the assumption that the relative amounts of fixed and movable capital thatare demanded will depend on the interest rates charged for loans for fixed and movable capital and noton the wage seems, on its face, plausible.)

- 52 -

Figure 2: Total Demand for Capital When Some Capital is More Risky Collateralthan Other Collateral

Panel 1: Less Risky Fixed Capital ("A") Panel 2: More Risky Movable Capital ("B")

f KAiu_ fiNt 'e

'A iA

iw iw

KA K.K'- K-, K'

total ourutpimununerest pyntorintetfonrege totai output miuus iuterest puywent or interat ftegoer

Lntermeation spread intemediation sprftd

E intematumal intenst paiymene or rinteriuive iLterdt foregone nratterai interest payments or altertmve intet fr.g,m

The capital stock can be divided, however, into However, investors in capital "B" face a muchtwo types of capital -- fixed capital ("A"), which is higher interest rate (B). This higher interest rateless risky as collateral and movable capital ("B") compensates lenders for the greater risk of makingwhich is more risky as collateral. Lenders assess loans secured by the more risky movable capitalthe risk in lending against fixed capital and set an ("B"). Facing these higher interest rates, investorsinterest rate ('A). Investors in capital "A" invest in find it less profitable to invest. They hold anan amount of capital K'A, the amount that can be amount of capital K'B, much less than they wouldprofitably invested at the interest rate 'A* invest at the lower interest rate 'AI shown

notionally by the capital stock K B (Figure 2, panel2).

c:\wpwin\fig2

- 53 -

Figure 3: Effect of Lower Interest Rates on Investment: Movable Capital

Panel 1: Movable Capital Before Reformn--More Panel 2: Movable Capital After Reform--LessRisk, Higher Interest Rates Risk, Lower Interest Rates

iB~~~~~K

B

lB

IA~~~~~~~~~~~~~~~~~

iw

R tDtal output munus interest payment or iterest foregone K ors

itreitosped total otutput minuis intest paynment or interest foregone

ttrair&ittpyeoatftieneetf::3n tS mtermediaabon spreadPBY~nent~or mtnterenat i~eE ineatonal interest payments or alternative interest fofegme

The social cost of the more risky collateral system Panel 2 shows the larger capital stock that wouldis the output lost from having an interest rate that follow from reducing the riskiness of the collateral.is higher than would be charged by a different and Less risk would lead lenders to charge the lowerless risky system. Panel 1 shows the smaller interest rate "B. Comparing the panels 1 and 2,capital stock associated with the high interest rate payments of foreign interest and the profits ofwith risky collateral. ( same as Figure 2, Panel 2). domestic capital owners (over and above interest

costs) will always rise. Total payments todomestic financial intermediaries may rise or falldepending on whether the rise in capital demanded(from K, to K',) compensates for the fall in interestrates.

c:\msoffice\powerpnt\fig3

- 54 -

10. Volume of Lending. Improving the collateral laws to permit lending against movable propertypermits the expansioni of credit for such goods in two important ways: non-banks, such as financecompanies, extend credit against movable property, and banks lend more, taking movable property ascollateral.

1H. --Expanded Lending for Mlovable Property by Non-Bank Lenders

12. Weak collateral laws Iimit the development of non-bank lenders that specialize in loans securedby movable property. In Bolivia, consequently, commercial banks supply about 89 percent of the creditin the forimial sector (Table 1. I), compared to 30 percent in the United States when considering only thesame institutions as exist in Bolivia. The relative importance of commercial banks would be even lessif we included other elements of the financial market. No non-banks in Bolivia are important suppliersof credit for movable property -- warehouses amount to only $3 million in credit out of $2. 1 billion total;there are no leasing companiies (Table 1.2). A maximilumii of 2.6 percent of total credit outside banks isused to finance movable property (Table 1.1).

TABLE l.l: Outstanding credit of major financing institutions for movable equipment in Bolivia and theUnited States

Bolivia Share ot total UJiiited States Share of total($ miillion) ($ billion)

Commercial Banks $1,870 89.0% $2,944 31.1%

Savings Banks $176 8.4% $1,127 11.9%

I[surance & Pension na 0.0% $2,860 30.2%

Otiel $54 2.6% $2,250 23.7%

--Finance comnpanlies na $656 6.9%

--Securitized Debt Obligation na $305 3.2%

rotal $2,100 100.0% $8,807 100%

Note: This table shows only the U.S. financial institutions that are the counterparts of the Bolivian financialinstitutions. Total private credit in the United States, excluding corporate equities and mutual fund shares,amounted to about $14.2 trillion in December 1992.

Source: Government of Bolivia, Superintendency of Banks; also, as cited in Bolivia: Restructuring for Growth:The Remaining Agenda for Public Enterprise Reform and Private Sector Development (Report 11075-BO),September 1992; U.S. data taken from Federal Reserve Board, Federal Reserve Bulletin, July 1 993, table 1 .60.

13. By contrast, in the United States, non-banks extend about 70 percent of the credit. Of this, atleast 10. 1 percent of total credit outside banks is used to finance movable property (Table 1.1).

- 55 -

--Bank Lending for Movable Property

14. Improved secured transactions laws would also increase the willingness of commercial banks tolend against movable property. Of the credit supplied by commercial banks in Bolivia, 48 percent isgranted with a real estate guarantee, while 42 percent is granted against a personal guarantee (Table 1.2).But few banks would accept personal guarantees from individuals without real estate. Only 10 percentof the credit is granted to individuals who have neither real nor personal guarantees at the bank.Consequently, no more than a maximum of 10 percent of Bolivian commercial bank credit is used tofinance movable property and without requiring other security.

TABLE 1.2: Commercial bank lending secured by movable property in Bolivia and the United States

Commercial Banks Bolivia Percent of total United States Percent of total($ million) ($ billion) l

Real Estate Loans $561 48.0% $892 30.4%

Personal Guarantee $490 42.0% $356 12.1%

Guaranteed without real estate $117 10.0% $810 27.6%

--commercial & industrial $590 20.1%

--agricultural $35 1.2%

--lease financing $31 1.1%

--non-bank financing $44 1.5%

--personal loan with $110 3.7%collateral

Total for which $1168 100.0% $2060 100.0%collateral identified

Source: Bolivian data taken from table 1.2, below, and from Superintendent of Banks; U.S. data taken from FederalReserve Board, Federal Reserve Bulletin, July 1 993, table 1.24, 1.55 (for commercial bank car loans).

15. The comparison with the United States is striking. Only 30 percent of commercial bank loansare secured with a real estate guarantee. But only about 12 percent of loans are granted only with apersonal guarantee. About 28 percent of loans are granted with some movable property as collateral(Table 1.2).

16. Interest rate. The difference in interest rates between good security and poor security in Boliviais about 36 percent to 48 percent -- interest rates are 12 percent at the banks on loans secured by realestate while they are 48 percent to 60 percent per year in the informal sector. Some borrowers pay lowerinformal market interest rates but they give illegal collateral like postdated checks that subject them toprison terms. What is that disutility worth? At the margin, obviously, 48 percent to 60 percent.

17. By contrast, loans in the United States secured only by movable property are typically availablefor a couple of percentage points over the rates charged for home mortgage loans. Establishing the same

- 56 -

differential in Bolivia would put the interest rate at 14 percent for movable property. The interest ratedecline that would follow from improved collateral laws ranges between 34 percent and 46 percent.

Estimating the Impact of Improved Secured Transactions Laws on Bolivian Credit and Capital

18. As figure 3 indicates, the social gain from improving the secured transactions system isrepresented by the area bounded by the heavy black line. This annex estimates the social gain for Boliviaby asking how much Bolivian lending would increase if lending for movables in Bolivia became asimportant, relative to real estate lending, as lending for movables in the United States. This standard ofcomparison depends on the earlier assumption that the relative use of fixed and movable capital woulddepend on relative interest rates for the two types of loan and be insensitive to differences in relativewage rates.

19. Commercial bank lending for real estate in the United States amounts to $892 billion; commercialbank loans secured by other collateral amount to $812 billion, or about 91 percent more loans thanrepresented by the real estate loans alone. (Table 1.3, lines 1, 3). Commercial bank lending for realestate in Bolivia is recorded at $561 million (Table 1.3, line 1). However, another $490 million inpersonal loans are outstanding; on the basis of extensive interviews, these personal loans are given onlyto borrowers who have real estate that could be pledged. The Bolivian banking system may have as muchas $1,051 million in loans secured de facto by real estate (Table 1.3, line 1).

20. If Bolivian lending for non-real estate collateral were proportionately as great as that of U.S.commercial banks, it would be 91 percent of real estate lending or between $511 billion and $957 billion(Table 1.3, line 4). The range depends on whether the low or high estimate of Bolivian real estatelending is used.

21. In the United States, non-bank lending secured by movable property amounts to at least $656billion to $776 billion, between 74 percent and 87 percent of commercial bank real estate lending (Table1.3, lines 3, 5). If improved secured transactions laws permitted a proportionate amount of non-banklending, then Bolivian non-bank lending secured by movable property would range between $413 millionand $914 million (Table 1.3, line 5).

22. The sums of high and low estimates form the range of total lending against movable property(Table 1.3, line 6), shown as $923 million to $1871 million. The estimated increase in total lendingdepends on the rise from the original lending against movable property in Bolivia, ranging between $0and $161 million (Table 1.3, lines 2, 3). The range of differences is between $752 million and $1871million.

Social Gain from Better Collateral

23. The above elements can be combined to estimate the social gain from better collateral. The dropin interest rates from jB to 'b would range between 34 percent and 46 percent; the rise in total lendingwould range between $752 million and $1871 million. Using the mean value theorem to approximatethe area under the triangle, the total gain would range between $230 million and $683 million. Thesegains represent, respectively, 3 percent to 9 percent of Bolivian GDP.

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TABLE 1.3: If the Bolivian economy had the same legal provisions concerning collateral as the United States:

1. Commercial Bank real estate loans: Bolivia US

low $561 $892

high $1,051 $892

2. Commercial Bank other collateral

low $0 $812

high $117 $812

3. Non-bank Financial Intermediaries

low $0 $656

high $54 $776

Increase in credit over commercial bank real estate lending:

4. Commercial Bank non real estate lending as percentageof real estate lending

low $511 predicted 91.0% actual

high $957 predicted 91.0% actual

5. Non-bank financial intermediary lending as percentage ofcommercial bank real estate lending

low $413 predicted 73.5% actual

high $914 predicted 87.0% actual

6. Sum of the estimates:

Sum of the low estimates: $923 predicted -

Sum of the high estimates: $1,871 predicted

7. Estimated change in Bolivian Lending:

low $752 predicted

high $1,871 predicted

Source: Table 1.1, 1.2; derivation discussed in text.

Appendix II:

Results of an Analysis ofBolivian Debt Collection Cases

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Appendix II: Results of an Analysis of Bolivian Debt Collection Cases

1. To supplement anecdotal evidence about the length and effectiveness of judicial procedures,a random sample of debt collection cases was investigated."'' This procedure first analyzed asample of 516 debt collection cases. It then analyzed in greater detail a sample of 29 contesteddebt collection cases.

A. All Debt Collection Cases

Plaintiffs

2. The study investigated 516 debt collection cases. About 60 percent of debt collection casesare brought by corporations and 40 percent by individuals. Among corporations, banks are themost important plaintiffs, amounting to about 45 percent of the total cases (Figure 1).

3. Despite the predominance of banks, only 19 cases were processed under the ProcesoCoactivo Bancario only available to banks; 497 were processed under Proceso Ejecutivo rules.

Defendants

4. Among the defendants, individuals predominate: Of the 516 cases only in 59 of them thedefendant was a corporation. None of the corporations was a bank.

Payment

Number of Cases Pursued to Completion:

5. Cases can have several outcomes: the plaintiff's suit can be dismissed; the plaintiff's suitcan be sustained; the case can be settled out of court; and the case can be dropped.

6. None of the suits examined was dismissed, supporting the view that only strong cases arebrought to court. However, only 155 of the 516 or about a third of the cases were resolved inthe court system, either settled in the court or brought to the point where final judgment wasenforced. That supports the qualitative evidence that the courts are not used to resolve disputes;rather, the courts are employed to threaten the party. As one bank lawyer explained, when a loanfalls into arrears, a case would be brought and then kept open, with the threat of resumption oflitigation used to keep payments coming. That is, the sanction of the law is the cost of beingsubjected to the legal process, not the resolution of the legal process itself. Apparently, where

2h The study was designed by the mission and undertaken on behalf of the mission by Instituto Latinoamericano de Naciones Unidas parala Prevencion del Delito y Tratamiento del Delincuente (ILANUD) in Bolivia. The mission is particularly obliged to Eduardo Rodriguez,Director of ILANUD-Bolivia and Cynthia Aramayo Aguilar, for their assistance. Any errors in fact or interpretation remain theresponsibility of the mission. The data were ably processed by Babak Fouladi.

- 62 -

this threat does not suffice, the case is simply dropped. Ihere is little reward froml litisgating thecase to its successful conclusion.

F-igure I

fLERCE lACL 01 fLAN TIl SFOR ALL C AEL (516)

Where judgment is obtained, it takes a lon\g timiie:

For all cases:

7. The average length of time between the day thiat the case was filed in court anid the first finalholding was 269 days. In the first final holdinig the judge rules oni the case. Under the law, thisstep should take no more than 8 days.

- 63 -

Figure 2

PERCENTAGL OF DEFENUANTSFOR ALL CASES (516)

8. If thie finial hioldinig is niot appealed, thec execution of judgment is supposed to take place in3 working days -- typically nio miore thlan 5 calendar days. In fact, including the appeals process,the timie required to execute the judgment was 401 days after the first final hiolding -- a total of670 days or- jUSt unider two years.

9. The actual average tiime betwveen thec filing of the case and the date of the final payment was566 days. r-eflectinig thle payment hy somie parties before final judgment was executed.

Foi- Baniks alonie:

10. Baniks only did marginially better in gettling a first ruling from the court. The average length

ot timie between thle day that the case was filed in court and the first final holding was 261 days.

I 1 Banks did somewhat better in thieir overall receipt of final payment, since the average lengthot timie between the tflilg oif the case in court and( thle date of the final paymienit was 480 days,compared to 566 daN s thor all creditors.

- 64 -

12. Banks, however, did somewhat worse in those cases that required the enforcement of finaljudgment, taking 442 days after the first final holding for a total of 703 days in those casesrequiring the enforcement of judgement.

Cases dwindle rapidly as they move forward in adjudication

13. The attrition rate of cases as they move through the court process is rapid, supporting againthe view that the judicial process does not itself resolve disputes but rather represents a costlybargaining threat to the weaker party.

14. Of 516 cases, 483 had a filing date; the remaining 33 were dropped by one of the parties,however, only 195, or about 40 percent, received a first final holding from the court.

15. The appeals procedure, potentially lengthy and costly, in fact did not account for much ofthe delay. Of the 195 cases that had a first final holding, only 14, or about 7 percent wereappealed to the appellate court; only one of those, or about 7 percent, was appealed to thesupreme court. (See figure 3.)

- 65 -

Figure 3

NUMBER OF CASES PER STAGEFOR ALL CASES (SI6)

loo

A acoK n1c rTC m RotE wa w/ niAI

B. Contested Debt Collection Cases

16. In some cases, defendants contested the debt collection case. The study analyzed 29 suchcases chosen at random from the archives. Of these 29 cases, the plaintiff was a corporation in19; in the rest, the plaintiff was an individual. As stated before, corporations are categorized intotwo different sections, Banks and others.

- 66 -

Figure 4

PERCENTAGE OF PLANTIFFSFOR THE CONTESTED CASES (29)

Time elapsed

17. Contested cases took about six months longer to resolve thani unicontested cases. Theaverage time from the first filing to the first finial holding was 202 days. The average time forenforcing the judgement was 499 days. The average timie fr-omi thle frst filinig to the Finalpayment date was 834 days.

- 67 -

Figure 5

PERCENTAGE OF DEFENDANTSFOR THE OONTESTED CASES (29)

"CMVlas (.b%

M| att

- 68 -

Figure 6

AVERAGE TIIE SPENT BETWEEN PROCESSESFOR T'K CONTESTED CASES (29)

IOS

No

No

7'm

too

.Di

ISH

too

In0

Appendix m:

Legislacion Sobre Garantias Reales Mobiliarias:Terminos de Referenca

Este iocumento ha sido redactado por Alejandro M. Garro, Lecturer in Law, Columbia University, porencargo y para uso exclusivo del Banco Mundial. Todo otro uso, distribuci6n o cita de este documento deberequerir la autorizaci6n de su autor (enero 1993).

I

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I. INTRODUCCION

1. El borrador del informe del Banco Mundial, de fecha 30 de setiembre de 1992 ("Informe"),contiene un analisis econ6mico y juridico del funcionamiento de las garantias reales mobiliariasen Bolivia.'27 El informe destaca que la legislaci6n vigente, el sistema de publicidad registraly el procedimiento previsto para la ejecucion de las garantias obstaculiza el acceso al creditomobiliario a una parte significativa de la poblaci6n. El Informe es concluyente en el sentido deque el sistema de garantias reales carece de la confiabilidad de entidades financieras, bancos yotras fuentes potenciales del cr6dito mobiliario.

2. Sobre las bases de las conclusiones a las que se lleg6 en ese Informe, se me solicit6 laelaboraci6n de los "terminos de referencia" que podrian enmarcar un anteproyecto de "Ley deGarantias Reales" para Bolivia. Este documento es presentado en respuesta a ese pedido.

3. El mandato encomendado indica que el proyecto de reforma debe inspirarse en los principiosque informan al Articulo 9 del C6digo de Comercio de los Estados Unidos ("Articulo 9") y losestudios realizados por la Comisi6n de las Naciones Unidas para el Derecho MercantilInternacional (C.N.U.D.M.I., aqui citado por sus siglas en ingles, "UNCITRAL"). Los terminosde referencia tambien deben incluir las propuestas de reformas sugeridas en el informe del BancoMundial citado precedentemente. Ademas, los terminos deben precisar toda disposici6n delordenamiento juridico boliviano que pueda ser afectada por la reforma, explicar brevemente cadauno de los capitulos que deberian incluirse en una eventual ley sobre garantias reales e incluircualquier otro tema pertinente al mejor cumplimiento del objetivo encomendado.

4. Antes de proceder a desarrollar el temario de estos terminos de referencia, creo importanteapuntar, a modo de aclaraci6n y advertencia, algunas observaciones preliminares. En primerlugar, cabe destacar que la elaboraci6n de una ley sobre garantias reales en materia de bienesmuebles es una tarea compleja si se la toma en serio, es decir, si en lugar de limitarse aemprender reformas cosmeticas la tarea es realizada con el prop6sito genuino de facilitar elacceso al credito mobiliario y agilizar la ejecuci6n de las operaciones financieras con garantia realmobiliaria. La complejidad radica en la necesidad de alterar la politica juridica que inspira lalegislacion vigente, modificar en forma significativa la tecnica empleada, y verificar su impactoen cada una de las areas del ordenamiento juridico boliviano.

5. Una reforma legislativa que regule de manera completa la constituci6n, formalizaci6n,perfeccionamiento, orden de prelaciones y ejecuci6n de las garantias reales implica tener encuenta su impacto en el derecho de las obligaciones y de los contratos (en lo que se refiere a losrequisitos del acuerdo de garantia, el perfeccionamiento de una cesi6n de creditos con fines degarantia), derechos reales (en lo que se refiere a los efectos reipersecutorios de una garantia realy su publicidad registral), quiebras (en lo que se refiere al efecto de la declaraci6n de quiebrasobre las relaciones juiridicas prexistentes), procedimiento civil (en lo que se refiere alprocedimiento de ejecuci6n ante el incumplimiento del deudor) e incluso en lo que atafie a la

" The World Bank, Law, Legal Procedure, and the Econiomic Value of Collateral: The Case of Bolivia, September 30, 1992,Confidential Draft, Report No. 10627-BO (green cover).

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garantia constitucional del debido proceso (en lo que se refiere al derecho de audiencia que se ledebe al deudor ejecutado).

6. AIn cuando en el Capitulo VIII de estos terminos de referencia se sefialara en forma tanprecisa como sea posible aquellas normas del C6digo Civil ("C.Civ."), C6digo de Comercio("C.Com.") y del C6digo de Procedimientos Civiles ("C.P.C.") que seran afectadas en formadirecta por una ley de garantias reales, no es posible a esta altura del proyecto detectar conprecision todas aquellas disposiciones que, al ser afectadas en forma directa o indirecta por la ley,deberan ser enmendadas o derogadas. Tampoco es posible precisar en toda su extensi6n lasreformas legislativas o administrativas que deberan llevarse a cabo al derogarse algunas normassustantivas, suprimirse algunas practicas administrativas, o eliminarse algunas reglas deprocedimiento, que puedan ser incompatibles con el texto de la nueva ley.

7. Claro esta que al tratarse de una lex specialis, las normas a ser promulgadas en materia degarantias reales no pueden afectar normas mas generales sobre obligaciones, contratos, derechosreales, procedimiento civil, etc. En la medida en que puedan presentarse conflictos con el restodel ordenamiento juridico, la ley sobre garantias reales se aplicara por via de excepci6n a lasoperaciones financiadas con este tipo de garantias. Esto no empece a perseguir el objetivo de quela ley mantenga una consistencia terminol6gica y doctrinaria con el resto del ordenamientojuridico boliviano, destacando en forma expresa todo desvfo y seflalando las razones por lascuales se adopta una pofitica legislativa diferente a la que insipir6 al codificador.

8. En segundo lugar, cabe anticipar la ley de garantias reales a ser adoptada debe inspirarseen una politica legislativa que en muchos aspectos se desvia de aquella que inspiro- a la legislacionboliviana vigente y el modelo legislativo que se tuvo en cuenta al adoptarla.'2x Mas adelantese explicara porqu6 este cambio de aproximaci6n al temna es necesario para poder cumplir conel objetivo de facilitar y promover el uso del credito mobiliario. Lo importante a sefhalarpreliminarmente es que este cambio de enfoque polftico-econ6mico de c6mo se deben regular lasoperaciones financieras con garantias reales requiere de la comprension y cooperaci6n de aquellosque van a aplicar y vivir bajo la nueva regulaci6n. Me refiero a los operadores del sistemajuridico boliviano, sus jueces, notarios, abogados, etc. Abundan los antecedentes de transplanteslegislativos, incluso en el area de las garantias reales, que han fracasado debido a la falta departicipaci6n activa y discusi6n critica a nivel local de la ley a ser adoptada. De alli laimportancia de contar con la participaci6n activa de los abogados y juristas bolivianos duranteel proceso de elaboraci6n de un anteproyecto de ley sobre garantias reales.

9. En tercer y ultirrmo lugar, es importante sefialar que la inserci6n exitosa de una reformalegislativa sobre garantias reales en Bolivia reposa en gran parte en la compatibilidad que existey que podria lograrse en base a un calculo realista entre las normas que se proponen y la culturajuridica, la estructura econ6mico-social y la capacidad admninistrativa y judicial boliviana. Seranecesario adaptar, calibrar y si es necesario ajustar los principios que inspiran al Articulo 9, losestudios de UNCITRAL y las recomendaciones del Inforiie, como asi tambien la formulaci6nde las norimias a ser incluidas en la ley, a los condicioniainientos que iiponigani los usos y

I SC ha SeihAlad& qLue en niayur miedida que c ('odigo ( Civil italainl de 1942. el iodclo IeLIC inspir- atl codificador hbolivianotiue la ley espafioIa sohre hipO[eca muchie v prenda silt desplazaTImienito del 16 d e diciembre de 195 4. V'as s C'ARLOS MORALES(UIIIlLEN OODIGO CIVIL ('ONCORDAD)O Y ANOTADO, 2a ed. la Pa,'. I1')2 p. ')1(. iota i art 9(() dcl (CCiv.

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practicas, las posibilidades de infraestructura administrativa y otros factores culturales, politicos,sociales y econ6micos propios de la sociedad boliviana.

10. Hecha estas tres salvedades, cabe referirse al disefio de exposici6n de los terminos dereferencia. El capitulo II comienza con una descripci6n somera de las formas juridicas que elC6digo Civil y el C6digo de Comercio de Bolivia le otorgan a las diversas garantias realesmobiliarias. En el capitulo III se sefialan aquellos defectos del sistema de garantias reales que --segun el Informe del Banco Mundial-- entorpecen el funcionamiento amplio y fluido de lasoperaciones financieras con garantias reales sobre bienes muebles. El capitulo IV incluye unaexposici6n de los principios de politica legislativa que deben inspirar una reforma legislativa eneste campo. El capitulo V aspira a explicar, en forma sumaria, en que medida el Articulo 9 y losestudios realizados por UNCITRAL incorporan y promueven esos principios. El capitulo VIsefiala en que medida las recomendaciones sugeridas en el Informe del Banco Mundial se ajustana las directrices que sugieren los modelos enunciados.

11. La parte medular de los terminos de referencia comienza en con el capitulo VII, que destacalas caracteristicas mas relevantes que debe incluir una ley de garantias reales e intenta explicarbrevemente cada una de ellas. El capitulo VIII seniala en forma breve pero especifica el impactoque tendra la reforma en la legislacion que se encuentra en vigor. La parte final que se incluyeen el capitulo IX incluye un esbozo de los pasos a seguir en la implementaci6n del proyecto deelaboraci6n de una ley sobre garantias reales.

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II. LEGISLACION VIGENTE

12. Bajo Ia legislaci6n boliviana vigente coexiste una amplia variedad de operaciones financierasque tienen por objeto la constituci6n de garantias reales sobre bienes muebles. En la mayoria delos casos, el ropaje juridico de la operaci6n o acto juridico con efectos reales se determinaconforme al tipo de bien mueble que puede ser objeto de una garantia real, su caracter civil ocomercial, y, ocasionalmente, conforme al tipo de actividad econ6mica para el cual se admite lacreaci6n de una garantia real sobre bienes muebles. A continuaci6n se pasa revista al esqueletonormativo que regula las garantias reales en el derecho boliviano.

A. TIPOS DE GARANTIAS REALES

13. En la mayoria de los casos, la regulaci6n diferenciada de las garantias reales se refleja sumetodo de constituci6n y perfeccionamiento. Esta diferencia de enfoque se incluye en lasdisposiciones del C6digo Civil (arts. 1395-1429), del C6digo de Comercio (arts. 878-901) y leyesespeciales que crean garantias reales adicionales a las reconocidas en los c6digos. Asi, el derechoboliviano distingue por lo menos ocho tipos de garantias reales, cada una de las cuales seencuentra sujeta a una reglamentaci6n particularizada. En muchos casos esta regulaci6n seencuentra intimamente relacionada, lo que se refleja en las remisiones cruzadas del codificadorpara cubrir posibles lagunas (v.gr., C.Civ., arts. 899, 1402).

14. Prenda con desplazamiento. Luego de incluir disposiciones generales aplicables a lapignoraci6n de bienes en general (C.Civ. arts. 1398-1400), el C6digo Civil regula la prendaclasica, esto es, la prenda sobre "bienes muebles, universalidades de muebles, creditos y otrosderechos que tengan por objeto bienes muebles" (C.Civ., art. 1401). La constituci6n yperfeccionamiento de este tipo de garantia real requiere el desplazamiento de la tenencia del bienal acreedor garantizado (C.Civ., art. 1403). A su vez, la prenda con desplazamiento admite unaregulaci6n particular dependiendo si la prenda se constituye con la finalidad de garantizar elcumplimiento de una operacion comercial (C.Com., art. 878)."29 Esto resulta en una prenda condesplazamiento civil y otra de naturaleza comercial.

15. Prenda sin desplazamiento. A diferencia de la prenda clasica, cuya constituci6n yperfeccionamiento requiere la transferencia del bien prendado a manos del acreedor, la prendasin desplazamiento, aunque constituida con el acuerdo de garantia, necesita de la inscripcionregistral para ser perfeccionada. La distinci6n entre la prenda civil y comercial se extiende a laprenda sin desplazamiento; un de naturaleza civil (C.Civ., arts. 1417-1429) y otra de naturalezacomercial (C.Com., arts. 886-897). Pero el criterio de distinci6n entre estos dos tipos degarantias reales no esta basada en la naturaleza de la obligaci6n garantizada, sino en el tipo de

'2 No resulta facil de explicar la "rernisiin" al C6digo de Comnercio y ]eyes especiales a la que se refiere el art. 1402 del C6digoCisil, que dice asi: Remisi6n a leyes especiales. "Las disposiciones del Capitulo presente [Capitulo IV, "De la pignoraci6n"] noderogan las del C6digo de Conmercio y leyes especiales concernientes a casos y formas particulasres de constituir la prenda, ni lasreferenites a las instituci(roes autorizadas para hacer prestamos sobre las prendas". En realidad, esta disposici6n no efectuia unarernision, ni siquiera un reenvio, a otras normas; simplemente deja en claro que otras foirmas particulares de prenda se rigen por sulex specialis.

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bien otorgado en garantia. Asi, por un lado, la prenda sin desplazamiento que regula el C6digoCivil s6lo puede ser constituida por el agricultor y ganadero, el hotelero, y el industrial, sobredeterminados bienes que especifica el art. 1418 del C.Civ. y al s6lo efecto de garantizarprestamos de dinero destinados a la explotaci6n agricola, ganadera, hotelera o industrial (C.Civ.,art. 1420). Por otro lado, la prenda sin desplazamiento que regula el C6digo de Comercio puedeconstituirse sobre "toda clase de muebles destinados a una explotaci6n econ6mica o que seanresultado de la misma explotaci6n, salvo las exclusiones legales" (C.Com., art. 886).

16. Prenda de creditos en general. Los diferentes tipos de prenda a los que nos hemos referido,con y sin desplazamiento, de naturaleza civil o comercial, se constituyen sobre bienes corporales(tangibles). Si la operaci6n de financiamiento tiene por objeto crear una garantia sobre "creditos",la garantia real tambien recibe el nombre de "prenda" pero encuentra su regulaci6n en el C6digoCivil (C.Civ., art. 1413). Sin embargo, no toda pignoraci6n de "creditos" se regula de la mismaforma; el metodo de constituci6n y perfeccionamiento de la garantia real varia dependiendo sidicho credito ha sido o no incorporado en un papel, es decir, si el derecho se encuentrarepresentado en alg6n documento, instrumento o titulo-valor. En este sentido, los c6digosbolivianos tambien incluyen una regulaci6n especifica.

17. Prenda de derechos diversos de los cr6ditos. Asi, conforme al C6digo Civil, la pignoraci6nde algunos derechos de credito, como los derechos de autor, marcas y patentes, puede encontrarsesujeta a leyes especiales, al menos con respecto a sus requisitos de inscripci6n, que deberealizarse en un registro especial ("Registro de Patentes y Marcas") (C.Civ., art. 1416).

18. Hipoteca gue garantizan los tenedores de titulos valores. Si el credito consta en undocumento o titulo de credito, la garantia real recibe el nombre de "hipoteca" y encuentra suregulaci6n en el C6digo de Comercio (C.Com., art. 901).

19. Prenda de mercaderias almancenadas. Las garantias reales sobre derechos incorporados adocumentos que representan mercaderfas tienen una regulaci6n especifica en el derecho boliviano,al menos cuando la garantia real es otorgada sobre mercaderias depositadas en almacenesgenerales. Esta garantia real es objeto de regulaci6n especial en el C6digo de Comercio (C.Com.,arts. 689-711, 1189-1204). Conforme a estas disposiciones, el derecho al dominio de lasmnercaderias es representado por un titulo valor denominado "certificado de dep6sito". Eldepositante y titular de las mercaderias puede otorgar una garantia real sobre ellas si solicita alAlmacen General un formulario denominado "bono de prenda", cuyo endoso y entrega alacreedor garantizado perfecciona la garantia real (C.Com., arts. 689, 691, 1189).

20. Hipoteca de un establecimiento comercial. Bajo el nombre de hipoteca sobre un'establecimiento comercial", el C6digo de Comercio contempla en forma especifica lapignoraci6n de una universalidad de bienes, corporales e incorporales (C.Com., art. 900). Ignorosi este tipo de garantia real es o no utilizada en la practica comercial y con que resultado. Sinduda que conocer la experiencia comercial y jurisprudencial boliviana con este tipo de normassera de gran utilidad para precisar las razones de su falta de uso y los requisitos que debe reuniruna ley que tenga mayores posibilidades de exito.

21. Hipoteca sobre bienes muebles suietos a registro. La legislaci6n boliviana tambiencontempla otras garantias reales que no se perfeccionan con el desplazamiento de la tenencia delbien al acreedor sino con la inscripci6n registral; pero estos no reciben el nombre de "prenda",

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sino de "hipoteca sobre bienes muebles sujetos a registro".'30 Estas hipotecas tambien sonobjeto de regulaci6n separada en el C6digo Civil y en el C6digo de Comercio, aunque laregulaci6n de estas uiltimas se remite al C6digo Civil y "leyes especiales respectivas" (C.Civ.,art. 899).

22. Por un lado, la hipoteca mueble que regula el C6digo Civil puede constituirse sobre lossiguientes bienes: barcos y embarcaciones que tengan mas de una tonelada de capacidad de carga,aeronaves, vehiculos automotores, maquinaria pesada y "otros muebles sujetos a registro porleyes especiales" (C.Civ., art. 1395). El C6digo Civil tambien se admite la constituci6n de unahipoteca mueble en favor de un vendedor, sobre instrumental y equipos destinados a unaexplotaci6n, y en favor de quienes financien la producci6n de peliculas, sobre los derechosemergentes de las mismas (C.Civ. 1396).

23. Por otro lado, las hipotecas sobre bienes muebles sujetos a registro que regula el C6digo deComercio tambien admite la constituci6n de un gravamen sobre embarcaciones, aeronaves,vehiculos automotores, maquinaria pesada y "otros bienes muebles sujetos a hipoteca por ley"(C.Com. art. 898). La distinci6n fundamental entre la hipoteca mueble civil y la comercial parecebasarse en el mismo criterio utilizado para distinguir las otras garantias reales sujetas a dobleregulaci6n, esto es, dependiendo si la obligaci6n garantizada puede ser clasificada como una"operaci6n comercial" (C.Com. art. 878).

B. CONSTITUCION DE UNA GARANTIA REAL Y DERECHOS DE LAS PARTES

24. El metodo de "constitucion" de una garantia real se refiere a los requisitos que debenreunirse, incluyendo el metodo de formalizaci6n del contrato de garantia (v.gr., escritura publicay la inclusi6n de determinada informacion en la misma), para que la operaci6n de financiamientotenga efectos entre las partes. Asi, aunque la prenda con desplazamiento se constituye yperfecciona con la entrega del bien al acreedor, o un tercero designado por las partes (C.Civ.,art. 1403), las normas generales aplicables a todo tipo de contratos requiere que este acuerdo degarantia sea realizado por escrito cuando supere una cuantia minima (Civ.C., art. 1328 (1)). Laconstituci6n de una prenda sobre creditos, en la medida en que presupone un contrato, tambi6nse encuentra sujeta a la formalidad escrita conforme a su cuantia (Civ. C., art. 1328 (1)).

25. La garantias real que se perfeccionan mediante la inscripci6n registral, como la prenda sindesplazamiento, debe ser constituidas por documento publico (C.Civ., art. 1421, C.Com., art.887). Ademas, la legislaci6n impone, aparentemente bajo pena de nulidad, que dicilo docullmelntoo instrumento publico incluya cierta informacion minima (C.Civ., art. 1421, C.Com., art. 888).Para la hipoteca voluntaria sobre bienes muebles registrales, las nornias aplicables a laconstituci6n de hipotecas sobre bienes inmuebles se aplican por analogia.

"' Se ha dicho que esta distinci6n fue tomada por el codificador boliviano sguienido a la lev espafiol.a de 16 de diciembre de 1')54.que fundamenta la distinci6n entre "prenda sin desplaziento " e "hipoteca mueble' en base a. respectivainenle, lai nienior o mayvorsusceptibilidad de identificaci6n registral del bien gravado. V., C. MORAIES GUILLEN, (ODIGO CIVIL. ('ONCORDADO YANOTADO, La Paz, 2a, edici6n, 1982, p. 908.

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26. Los derechos del acreedor garantizado y del deudor, con respecto al bien en garantia, seencuentran someramente regulados en el C6digo Civil (v.gr., C.Civ., art. 1407-1408, 1422-1423)y el C6digo de Comercio (v.gr., C.Com., art. 883-884, 890-891). Ocasionalmente, lasobligaciones y derechos del acreedor garantizado con una prenda con desplazamiento, o aquellosque ejerce el deudor sobre un bien otorgado en garantia pero sin transferencia de la tenencia alacreedor, pueden estar sujetos a las normas generales aplicables a los derechos y obligaciones deldepositario con respecto al bien entregado en dep6sito.

C. PERFECCIONAMIENTO DE UNA GARANTIA REAL

27. El metodo de "perfeccionamiento" se refiere a los pasos que deben llevarse a cabo para quela garantia real tenga efectos contra terceros y otorgue una determinada prelaci6n al acreedorgarantizado. En el derecho boliviano, los requisitos de perfeccionamiento son aquellos que serefieren a la necesidad, el grado y la forma de publicidad posesoria o registral que debeotorgarsele a la garantia real. Tambien estos requisitos se rigen por las normas generales oespeciales contenidas en el Codigo Civil y el C6digo de Comercio.

D. REQUISITOS DE POSESION E INSCRIPCION REGISTRAL

28. Aquello que se refiere a los requisitos que deben cumplirse para perfeccionar una garantiareal mediante la entrega del bien al acreedor o a un tercero designado de comulln acuerdo, no tieneuna regulaci6n especifica en las normas sobre garantias reales. Por lo tanto, se aplican las normasgenerales del C6digo Civil que se refieren a los requisitos del control fisico sobre el bien (corpus)y la intencion del que ejerce dicho poder de hecho de actuar como titular de un derecho real(animnus). Con respecto a las cuestiones que se refieren al lugar, forma y requisitos de lainscripci6n registral tambi6n son reguladas, en forma directa o por analogia, por normas delC6digo Civil sobre registros de derechos reales (C.Civ., arts. 1538-1566) y leyes especialesaplicables a diferentes tipos de garantias reales. 3'

E. PRELACION DE LAS GARANTIAS REALES

29. La prelaci6n de cada una de las garantias tampoco cuenta con una reglamentaci6n sistematicay global. Las prioridades deben ser determinadas en base al juego arm6nico de las disposicionesdel C6digo Comnercio y del C6digo Civil acerca de la transferencia del dominio sobre bienesnmuebles, el principio de que "la posesi6n vale titulo", los limites y alcances de lareipersecutoriedad de los derechos reales de garantia, y las disposiciones de este uiltimno c6digo

'' ase, por ejemplo, Ley del 15 de noviembre de 1887 sobre Registro de los Derechos Reales; Decreto Suprenio (D S.) No.15.191 del 15 de dicieribre de 1977 sobre el registro de automotores que lleva la Direcci6n General de TrAuisito: D.S No. 16.699del 5 de julio de 1979, ar. 50, regulando la inscripci6n registral de garantias reales sobre coseclias pendientes junIto al titulo (dedomniino del imiiueble al que acceden.

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acerca de los privilegios generales y especiales aplicables a los bienes muebles (C.Civ.,arts. 1346-1359).

F. EJECUCION DE UNA GARANTIA REAL

30. Con respecto a los medios con los que cuenta el acreedor para realizar o ejecutar unagarantia real en caso de incumplimiento del deudor, y la protecci6n que goza este ultimo, lasreglas tambien se encuentran dispersas en el C6digo Civil (art. 1409-1410) y el C6digo deComercio (v.gr., C.Com., art. 880, 891). Las disposiciones mas importantes, sin embargo, seencuentran en el C6digo de Procedimientos Civil. Este c6digo distingue entre una variedad deprocedimientos especiales (v.gr., procedimiento ejecutivo, sumario y sumarisimo), pero ningunade sus normas esta especialmente orientada a regular la ejecuci6n de una garantia real sobre unbien mueble. El procedimiento a seguir, por lo tanto, depende de la naturaleza de la obligaci6ngarantizada y la forma o formalidades de con las cuales dicha ha obligaci6n ha sido revestida.'32

31. Sin embargo, algunas disposiciones generales destinadas a ser aplicadas al juicio ordinariose aplican por analogia, a falta de reglamentaci6n especifica, a los procedimientos especiales. "'Ademas, existe otra serie de leyes especiales que regulan los procedimientos de ejecuci6n quepueden llevar a cabo determinados acreedores garantizados, que incluye a ciertos bancos yreparticiones del Estado.'34 Una vez obtenida la sentencia de condena, el procedimiento deejecuci6n de sentencia tiene su propia regulaci6n en el C6digo de Procedimientos Civiles(C.P.C., arts. 514-551).

1 Vease, por ejemplo, C.P.C., arts. 486-487 (proceso ejecutivo); Ley de Organizaci6n judicial, art. 146 (proceso Su[ltarisiilo).

'Poer ejemplo, las reglas aplicables a Ia obtencion y producci6n de prueba. C.P.C., anrs. 316, 481, 485, y 510.

14 Vease, v.gr., Ley No. 1178 del 20 de julio de 1990 (regulando el proceso coactivo fiscal, que puede ser utilizado por laContraloria General de la Naci6n); D.S. No. 18.130 del 19 de marzo de 1981 (en favor del Departamnento del Tesoro y Aduanas);Ley bancaria de 1928, arts. 185-190 (regulando el procedimiento aplicable a la ejecuci6n de hipotecas inmuebles por aquellos bancosque cuentan con la aprobaci6n de la Superintendencia de Bancos).

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III. DEFECTOS DE LA LEGISLACION VIGENTE

32. Uno de los defectos mas relevantes de la legislaci6n vigente es la multiplicidad de formasjuridicas reconocidas a las garantias reales por el C6digo Civil y el C6digo de Comercio, cadauna de ellas sujeta a requisitos diferentes en lo que se refiere a su constituci6n,perfeccionamiento, prelaci6n y ejecuci6n. En la mayoria de los casos, el trato distinto que recibecada garantia real carece de unajustificaci6n econ6mica y funcional. La diversidad y consecuentecomplejidad de esta regulaci6n juridica, especialmente cuando no encuentra justificaci6n enrazones funcionales, repercute en la falta de confiablidad del sistema.

33. Un segundo aspecto, no menos importante que el anterior, es el caracter fragmentario conel cual se legislan los derechos de las partes que intervienen en una operaci6n financiera congarantias reales sobre bienes muebles. A fin de colmar lagunas respecto a los derechos yobligaciones de las partes y los terceros, estos derechos y obligaciones suelen determinarse enbase a las disposiciones generales del C6digo Civil que no han sido adoptadas con el prop6sitode regular las garantias reales. Las disposiciones a las que me refiero, que conciernen al derechoy transferencia del dominio sobre bienes muebles, el contrato de dep6sito, etc., no han sidoestablecidas teniendo en consideraci6n el contexto econ6mico y comercial de operacionesfinancieras.

34. Un tercer defecto a senialar concierne la falta de coordinaci6n y sistematizaci6n respecto alas reglas que determinan la prelaci6n de las diversas garantias reales. El enfoque debe ser globaly sistematico y no disperso y fragmentario, considerando los numerosos conflictos que podrianplantearse para determinar prioridades entre acreedores con garantias reales, perfeccionadas y noperfeccionadas, con respecto a los acreedores embargantes, los adquirentes del bien en garantiay la masa de acreedores en el concurso del deudor.

35. Ademas, existen cierto tipo de garantias reales cuya prelaci6n debe ser determinada en basea los problemas especiales que plantea la funci6n comercial que cumplen dichos bienes en elpatrimonio del deudor. Este es el caso, por ejemplo, de garantias reales sobre existenciascomerciales para la venta y cuentas por cobrar. Tambien es necesario incluir reglas especiales quecontemplen la prelaci6n de garantias reales sobre bienes muebles incorporados, o destinados aser incorporados, a un inmueble (v.gr., una viga de acero, un equipo de aire acondicionado, unhorno o maquina empotrada en un edificio). Esta reglamentaci6n se impone a fin de precisar laprelaci6n de una garantia real sobre este tipo particular de bien mueble y la garantia real que haadquirido, o podria adqurir, el titular de una hipoteca sobre el inmueble en el cual instalacionesfijas han sido incorporadas.

36. Otro vacio legislativo se presenta respecto a bienes que, por su naturaleza, se encuentranadheridos al suelo pero con el destino de ser separados del mismo (v.gr., maderas, frutos,cosechas, minerales y productos analogos). La ausencia de una reglamentaci6n especial quecontemple la prelaci6n de una garantia real sobre dichos bienes con relaci6n a la prelaci6naquellos que constituyen una garantia real sobre el suelo plantea una fuente potencial deincertidumbre, con la consecuente falta de confiabilidad de la garantia real. En ausencia de estareglamentaci6n y ante la insolvencia del deudor, el acreedor con una garantia real sobre losbienes adheridos al suelo pero destinados a ser separados del mismo puede ser descubrir que sugarantia real se encuentra subordinada a una hipoteca posterior constituida por el duefio del suelo.

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En la medida en que esta prelaci6n no se encuentra debidamente legislada, la demora eincertidumbre que requiere un pleito para determinar la prelaci6n constituye un factor inhibitoriopara la concesion del credito garantizado con ese tipo de bienes muebles.

37. Comno la efectividad de una garantia real contra terceros depende en gran medida de laoponibilidad que adquiera a traves de la inscripci6n registral, la incertidumbre e ineficiencia delregistro publico se traduce en un grave defecto del sistema de garantias reales (Informe, §§62-72). Cuestions que se refieren a que, d6nde, c6mo y cuando debe inscribirse un contrato oacuerdo de garantia destinado a constituir una garantia real son aspectos fundamentales que hacena la confiablidad del sistema. Cualquier complicaci6n o incertidumbre con respecto alprocedimiento de inscripci6n y su costo en terminos de tiempo y dinero, como asi tambi6n la faltade acceso a la informaci6n que brinda o debe brindar el registro, constituyen aspectos claves paradeterminar el exito o fracaso de un sistema de garantias reales.

38. Si ademas de la oscuridad con que este teina es regulado se agrega la multiplicidad degarantias reales reconocidas por la ley, cada una de ellas con sus propios requisitos y lugares deinscripci6n, no resulta sorprendente que el sistema de garantias reales sea poco confiable.

39. Otro de los defectos, que ha sido senialado reiteradamente el Informe del Banco Mundial,concierne la lentitud y costo del procedimiento para realizar el valor econ6mico del bien engarantia en caso de incumplimiento por parte del deudor (Informe, §§83-114). Con la nobleintenci6n de proteger los derechos del deudor, se ha establecido un sistema conforme al cual seimpide a ese mismo deudor acceder al credito. La onerosidad y lentitud del procedimiento judicialno otorga es incapaz de otorgar al acreedor la seguridad de que podra satisfacer su credito conla realizaci6n del valor economico del el bien en garantia. AIn cuando se le permitiera alacreedor obtener el bien en una forma expedita, la necesidad de proceder a la subasta publica delbien no permite que en muchos casos la venta arroje precios similares a los que se habriaobtenido en una venta comercial de bienes semejantes (Informe, §§141-153).

of

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IV. PROPOSITOS FUNDAMENTALES QUE DEBEN INSPIRAR UNA REFORMASOBRE GARANTIAS REALES MOBILIARIAS

40. Hay varios enfoques posibles que se podrian adoptar para adecuar la legislaci6n vigente ala necesidad de facilitar el acceso y promover la mayor utilizaci6n del credito mobiliario. Losprop6sitos fundamnentales que deben inspirar toda reforma en este campo se orientan a lossiguientes objetivos: simplificaci6n de la regulaci6n de las garantias reales; simplificaci6n ydisminuci6n del costo de su constituci6n; claridad y precisi6n en la determinaci6n de su rangocon respecto a todo tipo de acreedores; simplificaci6n y claridad con respecto a su publicidadregistral; y rapidez y bajo costo de su ejecuci6n.

41. El texto de una ley de garantias reales debera crear un tipo unificado de garantia real. Elperfeccionamiento de esta garantia real puede obtenerse mediante la transferencia de la tenenciadel bien al acreedor, inscripci6n registral, u otros medios adecuados al tipo de bien y la funci6nque cumple el bien en garantia en el contexto de la operaci6n financiera. Distinciones en lo querespecta al mntodo de perfeccionamiento, al lugar donde debe realizarse la inscripci6n registral,e inclusive los derechos y obligaciones de las partes no deberian basarse en la vestimenta juridicade la operaci6n financiera, sino en consideraciones funcionales. Entre este tipo de consideracionesfuncionales cabe incluir la naturaleza corporal o incorporal del bien en garantia, el uso al quenormalmente se destina dicho bien, y el prop6sito comercial del financiamiento. Mas adelante,en el capitulo siguiente, se ilustrara este enfoque a la luz de las disposiciones del Articulo 9 delC6digo de Comercio de los Estados Unidos.

42. Exponer los objetivos de una reforma, obviamente, es mas facil que formular suimplementaci6n. Hay mas de un enfoque que se podria adoptar, y cada uno de ellos pone enjuego cuestiones de politica juridica importantes. Por ejemplo, mientras que la legislaci6nboliviana exige que cierto tipo de garantias reales se constituyan mediante un documentoautentico, la forma exigida a los contratos de garantia podria limitarse a un acuerdo por escritoen el cual surja con claridad la voluntad del deudor de otorgar una garantia real sobre cierto tipode bienes. Este enfoque, sin duda, contribuiria a la simplicidad y bajo costo de la operaci6n.Cabe preguntarse entonces si el temor al fraude y la simulaci6n justifica realmente irnponer laforma autentica o la existencia de "fecha cierta". La experiencia de muchos paises ha sido queestos requisitos formales ha cumplido la funci6n de encarecer el costo y la demora de laconstituci6n de una garantia real, como asi tambien ha resultado en la nulidad de muchoscontratos de garantia, mas que la de prevenir el fraude y la simulaci6n.

43. Asi comno la legislaci6n boliviana exige que cierto tipo de garantias reales sindesapoderamiento del bien de manos del deudor cumpla con una serie de requisitos, estableciendola informnaci6n minima que el acuerdo o contrato de garantia debe incluir, la informaci6n a serincluida en el contrato podria limitarse al minimo indispensable para corroborar la voluntad deconstituir la garantia e identificar el bien. A tal efecto, el sistema juridico deberia admitir todotipo de prueba a efectos de demostrar la voluntad de las partes respecto a aquellos puntos noincluidos en forma explicita en el contrato.

44. Sera necesario especificar, caso por caso, quienes serian los terceros que tendrian prioridadde derechos sobre el bien en garantia respecto del acreedor garantizado y quienes estariansubordinados. A tal efecto, es importante estructurar juridica y administrativamente el

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funcionamiento de registros, centralizados y/o descentralizados, facilitando la indentificaci6n degarantias reales a traves de diversos medios, principalmente en base al nombre del deudor.

45. Tambien es necesario regular el efecto juridico de la inscripci6n registral, y por lo tantodeterminar la oponibilidad a terceros de la garantia real, en caso de que los bienes seandesplazados a otro distrito, circuito o departamento registral, de que el deudor cambie dedomicilio, o el impacto juridico de los errores tipograficos o de otro tipo que pueda comneter elregistrador, a causa de los cuales se impida a los terceros tomar conocimiento de la garantia real.

46. Respecto a los derechos del acreedor garantizado en caso de incumplimiento, la ley podriaviabliziar la posibilidad de que el acreedor garantizado adquiera el control fisico del bien a losefectos de disponer del mismo, sin necesidad de intervenci6n de las autoridades p6blicas. En estecaso, habria que especificar bajo que condiciones y dentro de que limitaciones el recobro de laposesi6n se podria Ilevar a cabo sin violentar los criterios constitucionales del debido proceso,otorgando al deudor la posibilidad efectiva, aunque ex post, de ser indemnizado por los dafnosy perjuicios que le pueda causar la actitud intempestiva del acreedor garantizado.

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V. MODELOS LEGISLATIVOS A TOMAR EN CUENTA

A. El ARTICULO 9 DEL CODIGO DE COMERCIO UNIFORME DE LOSESTADOS UNIDOS

47. La complejidad e inadecuaci6n general de las legislaciones estatales sobre garantias realesllam6 la atenci6n, durante la decada de los anios 50 y 60, de los circulos comerciales y juridicosde los Estados Unidos de Am6rica. Esta inquietud determin6 la voluntad politica de reunir losrecursos humanos y tecnicos necesarios para crear un sistema unificado y coherente de garantiasreales. Este sistema normativo fue incorporado al Articulo 9 del C6digo de Comercio Uniformede los Estados Unidos (conocido por sus siglas en ingles com "UCC").

48. El UCC ha sido dividido en nueve grandes subdivisiones Ilamadas "articulos",funcionalmente equivalentes a lo que en un c6digo comercial decimon6nico recibirian el nombrede "libros". Estos "articulos" regulan ciertos aspectos del derecho mercantil (v.gr., compraventa,instrumentos negociables, credito documentado o cartas de credito, etc.). El Articulo 9 del UCCregula las garantias reales sobre bienes muebles.'35

49. Se han promulgado diversas versiones del Articulo 9. La ultima modificaci6n importantetuvo lugar en 1972. Algunos estados de la Uni6n americana han adoptado disposiciones nouniformes. Sin embargo, a pesar de no haberse logrado una uniformidad completa, las variacionesexistentes del Articulo 9 s6lo difieren en algunos aspectos t6cnicos de detalle, sin afectar suestructura conceptual y sistematica.

50. El Articulo 9 ha sido adoptado por los 50 estados de los Estados Unidos, incluyendoLouisiana, cuyo sistema juridico de derecho privado fue influenciado por la cultura juridicaromanista a traves de su herencia juridica francesa y espafiola. El Estado Libre Asociado dePuerto Rico, territorio incorporado a los Estados Unidos de America y de cultura juridica deacentuada raigarnbre espafiola, considera actualmente la reforma de su legislaci6n en materia degarantias reales. El Articulo 9 aporta un model util de reforma porque la legislaci6n comercialvigente en la materia en Puerto Rico fue adoptada, en parte, en base a leyes vigentes en algunosestados de los Estados Unidos, que habia sido sancionada con anterioridad a la sanci6n delArticulo 9.

51. La adopci6n del Articulo 9 no ha sido simplemente motivada por Ia necesidad de armonizar,y hasta cierto punto unificar, el sistema de garantias reales en los Estados Unidos. Un prop6sitofundamental fue la modernizaci6n y simplificaci6n del esquema juridico. En efecto, a pesar deque con anterioridad a la adopci6n del Articulo 9 existian diversas leyes "uniformes" sobre el

135 El Articulo 9 no regula las garantias reales sobre bienes inmuebles, excepto en la medida en que se refiere a aquellos bienesque en algunos paises se ubican en la categoria de bienes inmuebles "por incorporacion", "por su destino" o "instalaciones fijas"(fixtures), es decir, los bienes muebles que se encuentran o estAn destinados a adherirse a un inmueble. La regulaci6n de esta materiaha sido motivada fundamentalmente por la necesidad prictica de contemplar el potencial conflicto de prelaciones entre las garantiasreales sobre inmuebles por incorporacion y aquellas que afectan al inmueble mismo.

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tema. la diversidad y formulaci6n tecnica de esta legislaci6n no era del todo satisfactoria.'36 Afin de comprender la magnitud del cambio que introdujo el Articulo 9, es oportuno destacar enforma breve la regulaci6n que tenian las garantias reales en los Estados Unidos con anterioridada su adopci6n.

52. Antes de la adopci6n del Articulo 9 del UCC, cada formajuridica que adquiria una garantiareal bajo el derecho de cada estado se regulaba por normas diferentes. Esta particularizaci6n seextendia a los requisitos formales de validez, los derechos del acreedor garantizado con respectoal deudor y terceros, los requisitos de inscripci6n registral, y los derechos del acreedor a ejecutarla garantia real. Asi, en un mismo estado podian coexistir media docena de sistemas deinscripci6n registral. Algunos de los registros eran locales, a nivel de distrito municipal ocondado; otros registros centralizaban la inscripci6n de gravamenes sobre propiedad de deudoresdomiciliados en todo el estado. Era necesario inspeccionar todos los registros para verificar losgravamenes que podian afectar el patrimonio del deudor y cumplir con los requsitos deinscripci6n requeridos por cada una de las garantias reales reconocidas por la ley.

53. A pesar del gran numero de garantias reales, la legislaci6n vigente en aquella epoca tenialagunas que dejaban sin respuesta problemas que se presentaban en la practica diaria de lasoperaciones financieras. En algunos estados no era posible constituir eficazmente una garantia realsobre existencias comerciales para la venta. En otros no se permitia constituir gravamenes sobrebienes en proceso de fabricaci6n que al tiempo de establecerse el gravamen constituian materiaprima, pero durante el transcurso de la operaci6n financiera se transforman en bienessemielaborados y al momento de ejecutarse la garantia podrian encontrarse completamenteelaborados. En otros estados el perfeccionamiento de una garantia real sobre cuentas por cobrarestaba sujeto a las normas generales aplicables a la cesi6n de creditos, con la consiguienteincertidumbre respecto a la publicidad del gravamen y la determinaci6n de su prelaci6n. Enresumen, a pesar de la imperiosa necesidad de facilitar el financiamiento en base a este tipo debienes, su regulaci6n juridica era deficiente.

54. La falta de uniformidad legislativa entre diversos estados constituia otro problema. Cuandoel deudor devenia insolvente, muchos acreedores comprobaban que no podian hacer valer susderechos porque sus garantias reales no se habian constituido o perfeccionado conforme alderecho del estado en el cual se pretendia ejecutar la garantia. Otros acreedores que conocian ladiversidad de requisitos que imponia el derecho interno de otro estado, encontraban que los gastosnecesarios de ajustar sus tecnicas de financiaci6n a las exigencias de tantos sistemas diferentesde garantias reales provocaba un aumento en el costo del credito.

55. Uno de los cambios fundamentales que introdujo el Articulo 9 del UCC fue el de regulartodas las garantias reales sobre bienes muebles de manera sistematica, unificada y global. Asi,el Articulo 9 introdujo un conjunto de disposiciones aplicables a todas las garantias reales sobretoda clase de bienes muebles, corporales o incorporales, unificandolas bajo el nombre de

" La secci6n 9-102(2) del Articulo 9 (§9-102(2)) ilustra esta diversidad de garantias prexistentes al Articulo 9, incluyendo unalista de aquellas garantias reales que, a partir de la adopci6n del Artlculo 9, quedan subsumidas en un tipo unico de "garantfa real"(security interest). Asi, la secci6n 9-102(2) dispone que el Articulo 9 se aplicara "a las garantfas reales creadas por contrato,incluyendo la prenda, la cesi6n, hipoteca sobre bienes muebles, fideicomiso mobiliario (chattel trust), escritura de fideicomiso (trustdeed), gravamen de un "factor" sobre cuentas por cobrar y existencias para la venta (factor's lien). venta condicional, fideicomisode equipo (trust receipt) u otro gravamen o contrato de retenci6n del dominio, arrendamiento y consignaci6n con fines de garantla".

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"garantia real" (security interest). En particular, se eliminaron las diferencias entre los derechosy obligaciones de las partes y los efectos reipersecutorios que le corresponden a un acreedorgarantizado coIn la retenci6n del dominio del bien (title) (venta condicional o con reserva dedominio) y el acreedor que s6lo retiene un derecho real de garantia o gravamen (lien) sobre elbien (prenda, hipoteca mueble).

56. Las distinciones que se introducen en la regulaci6n de las garantias reales bajo el Articulo9 s6lo responden a necesidades comerciales o funcionales. Asi, se establece una distinci6nfundamental entre el rango de una garantia real obtenida para financiar "el importe de compra"del bien en garantia (purchase money security interest) y aquella que no se relaciona con dichoimporte. Ademais, las reglas de prioridad del acreedor garantizado con una garantia por importede compra difieren tomando en consideracion la utilizaci6n comercial al que se destina el bienen garantia. Por ejemplo, se establecen reglas de prioridad diferenciadas entre la prelaci6n quese le otorga a una garantia para financiar la adquisicion de existencias comerciales para la venta(inventory) y otra para financiar la compra de un equipo (equipment). En la medida en que elprimer gravamen afecta bienes que se adquieren para ser luego revendidos, la reipersecutoriedady prelaci6n del mismo es diferente al segundo, que afecta un bien destinado a permanecer en elestablecimiento comercial del deudor.

57. El Articulo 9 elimin6 las dificultades que se presentaban para usar como garantia lasexistencias comerciales y los creditos monetarios no representados por un instrumento odocumento, como las cuentas por cobrar (accounts receivables). Bajo el Articulo 9, las cuentaspor cobrar pueden ser otorgadas como garantia real a fin de asegurar el cumplimiento de unaobligaci6n. La prelaci6n de gravamenes sobre este tipo de bienes muebles se determina en basea la inscripci6n registral.

58. Sin perjuicio de la vigencia de leyes federales o estatales para protecci6n al consumidor, ode aisladas disposiciones destinadas a proteger el derecho de los consumidores, el Articulo 9 nodistingue entre garantfas reales conforme la naturaleza comercial o no-comercial de la obligaci6ngarantizada, o al caracter de comnerciante o no-comerciante de aquellos que celebran unaoperaci6n financiera. La financiaci6n con garantia para los industriales, comerciantes, agricultoresy consumidores, esta sometida, en gran medida, a una regulaci6n uniforme.

59. Existe un consenso generalizado en los Estados Unidos de que el credito mobiliario revisteuna importancia fundamental para el desarrollo econ6mico. Ademas, asi como existia un consensode que el sistema atomizado de garantias reales creaba dificultades que aumentaba el riesgo yafectaban el costo de las operaciones financieras, tambien hay un acuerdo generalizado de queel Articulo 9 ha resuelto bien los problemas juridicos que plantean las garantias reales.

60. Cabe admitir que la adopci6n del Articulo 9 del UCC responde a ciertas particularidadesderivadas de la cultura juridica, estructura socio-econ6mica y politica, y las necesidadescomerciales de una sociedad altamente industrializada como los Estados Unidos. Tambi6n debedestacarse que el estilo de redacci6n del Articulo 9 es sumamente detallado y que numerosasexcepciones a principios aparentemente de aplicaci6n general lo convierten en un texto de lecturadificil. Sin embargo, la regulaci6n de las garantias reales bajo el Articulo 9 cuenta, por primeravez en la historiajuridica de esta rama del derecho, de un prolijo esquema conceptual, sistematicoy global, que a menudo expresa ideas viejas en un idioma juridico nuevo a fin de acentuar elenfoque funcional a los problemas juridicos que se presentan. Por ello es que el Articulo 9 del

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UCC se ha convertido en un modelo legislativo de inevitable consulta y orientaci6n politico-juridica para la adopci6n de una ley de garantias reales en todo pais orientado a establecer unaeconomnia de mercado.

B. LOS ESTUDIOS DE LA COMISION DE LAS NACIONES UNIDAS PARA ELDERECHO MERCANTIL INTERNACIONAL

61. La complejidad y falta de adecuaci6n del sistema de garantias reales a las necesidades deltrafico comercial, dom6stico e internacional, tambien llam6 la atenci6n de la Comisi6n de lasNaciones Unidas para el Derecho Mercantil Internacional (conocida por sus siglas en ingles,"UNCITRAL"). A fines de la decada del 60 y coniienzos de la decada del 70, este organismointernacional convino una reuni6n de expertos con la finalidad de estudiar el papel quedesempanian las garantias reales en la creaci6n de un sistema moderno de credito mercantil.'37

62. Tras extensos debates, la reuni6n de expertos destac6 que en muchos paises la legislaci6nsobre garantias reales no responde a las necesidades del comercio moderno dentro del propiopais, y mucho mnenos a las necesidades del comercio internacional.'35 Los principales problemasque destac6 UNCITRAL fue la falta de enfoque de las garantias reales como un todounificado. 13

63. La reuni6n de expertos lleg6 al consenso de que las disparidades existentes en laslegislaciones nacionales constituian un impedimento importante al comercio internacional, comoasi tambien a la utilizaci6n de las garantias reales dentro de un mismo pais. UNCITRAL destac6la conveniencia de proyectar una ley modelo sobre garantias reales que sea aplicable tanto a lastransacciones internas como internacionales. A tal efecto, recomend6 un estudio sobre elfuncionamiento de las garantias reales en el derecho comparado, ' otro sobre el Articulo 9 del

" 'En su octavo periodo de sesiones, U NC ITRALpidi6 al Secretario General "que pro siga el estudio de viahilidad sobre el posiblealcance y contenido de las normas unrformes sobre garantias reales en las mercaderias y, a tal fin, que consulte con las organizacionesinternacionales interesadas y con las instituciones comerciales y financieras". Documentos Oficiales de la Asamblea General de lasNaciones lJnidas, trigesimo periodo de sesiones, Suplemento No. 17, A/10017, parr. 63 (ANUARIO DE LA COMISION DE LASNACIONES UNIDAS PARA EL, DERECHO MERCANTIL INTERNACIONAL (en adelante "ANUARIO DE UNCITRAL"), vol.VI: 1975, primera part, 11, A, pArr. 63.

"' Comisi6n de las Naciones Unidas para el Derecho Mercantil Internacional, Decimo periodo de sesiones, Viena, 23 de mayode 1977, A/CN.9/13(0. Garantias Reales. Informe del Secretario General (en adelante, "UNCITRAL, Informe sobre garantias reales").

"' UNCITRAL, Informe sobre garantias reales, parr. 6, p. 3: "La explicaci6n de esta gran diversidad de garantias reales pareceradicar en el hecho de que hasta fecha reciente la legislaci6n sobre las garantias reales en las mercancias no ha sido considerada comoun todo unificado. En vez de ello. como las necesidades del comercio requerian la creaci6n de nuevos tipos de garantias reales, estasfueron creadas a partir de conceptosjuridicos que originalmente tenian otra finalidad. De este modo, varios tipos de garantias realeshan sido elaborados segun criterios completamente distintos, dependientes del concepto juridico subyacente, por ejemplo, si elacreedor tiene la propiedad o la posesi6n de las mercancias, aunque en realidad dichas garantias fueron creadas para desempefharfunciones econ6micas similares."

'"" UNCITRAL, Informe del Secretario General: estudio de las garantias reales (A/CN.9/131, 15 de febrero de 1977), ANUARIODE UNCITRAL, vol. V11l: 1977, segunda parte, p. 191 (citado como "UNCITRAL, Estudio de las garantias reales").

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UCC,141 y otro estudio sobre la posibilidad de establecer nornas uniformes de alcanceuniversal. 142

64. Las conclusiones de UNCITRAL fueron terminantes: "...A pesar de que el uso de lasgarantias reales es un medio valioso para financiar transacciones comerciales, la legislaci6n dela mayoria de los Estados es rudimentaria y, como tal, no responde a las necesidades delcomercio moderno".4 3 UNCITRAL propuso la elaboraci6n de una ley modelo, aunqueconsider6 que la unificaci6n del derecho en esta materia no era factible en la actual etapa deldesarrollo del derecho. Los estudios realizados tambien sefialaron que "el regimen estadounidensepuede considerarse como el sistema mas moderno, racional y amplio de garantias en el mundoactual. " 1

65. Las tareas de UNCITRAL fueron interrumpidas a comienzos de la d6cada del 80,'14 perolos estudios realizados arrojan un numero de recomendaciones dignas de ser tenidas en cuenta pordos razones. Por un lado, dichos estudios se inspiraron en una politica juridica y econ6micaadecuada a las necesidades del comercio moderno. Por otro lado, los estudios realizados porUNCITRAL, al reconocer que la elaboraci6n de una ley modelo constituiria una "empresaformidable", enfatizan la necesidad de adaptar la formulacion legislativa de las garantias realesa los sistemas juridicos de raigambre romanista y a las necesidades econ6micas y practicascomerciales de los paises en desarrollo. 1

66. En este aspecto, cabe apuntar que el criterio orientador del Articulo 9 del UCC no s6lo hasido propugnado y adaptado por paises del common law como la mayoria de las provincias delCanada, 147 el Reino Unido,148 y la India,'49 sino que tambien ha inspirado proyectos de

14 UNCITRAL, Garantias reales en los Estados Unidos de America, Nota de la Secretarla sobre el Articulo 9 del C6digo deComercio Uniforme, A/CN.9/132, ANUARIO DE UNCITRAL, vol. VIII: 1979, segunda parte, p. 249.

1'4 Informe del Secretario General: garantlas reales: posibilidad de establecer normas uniformes para ser utilizadas en lafinanciaci6n del comercio, ANUARIO DE UNCITRAL, vol. X: 1979, segunda parte, p. 82 (citado como "UNCITRAL, Posibilidadde establecer normas uniformes").

141 UNCITRAL, Posibilidad de establecer normas uniformes, ob. cit., parr. 60, p. 88.

UNCITRAL, Estudio sobre garantias reales, ob. cit., parr. 2.6.2.3, p. 237.

14 ANUARIO DE UNCITRAL, XI: 1980, primera parte, parr. 28, p. 11 (destacando que los estudios realizados "pueden resultarprovechosos en el caso y en la oportunidad en que el tema sea considerado por otros organismos").

UNCITRAL, Informe sobre garantfas reales, ob. cit., parrs. 10 y 18.

1' Vease, R. C. Cuming, National and International Harmonization: Personal Property Security Law, en COMMERCIAL ANDCONSUMER LAW FROM AN INTERNATIONAL PERSPECTIVE, Papers from the Conference of the International Academy ofCommercial and Consumer Law, Castle Hofen, Austria, 17-22 July, 1984, p. 471 (ed. por D.B. King, 1986).

'' Vease, A. L. DIAMOND, A REVIEW OF SECURITY INTERESTS IN PROPERTY, Her Majesty's Stationery Office,Londres, 1989.

'41 V6ase, BANKING LAWS COMMITMTEE (GOVERNMENT OF INDIA), PROJECT STUDY ON PERSONAL PROPERTYSECURITY LAW. PROJECT REPORT, 1976.

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reformas en jurisdicciones con tradici6n juridica neorromanista como Luisiana,'5 Quebec'5 'y Puerto Rico.'52 Ademas, un estudio sobre la legislaci6n sobre garantias reales en nueve paisesen desarrollo del sudeste asiatico, cinco de los cuales pertenecen a la 6rbita de la tradici6ncontinental-romanista, tambien propugnaron la adopci6n de una reforma orientada hacia losobjetivos perseguidos por el Articulo 9 del C6digo de Comercio Uniforme de los EstadosUnidos. '53

"' V6ase, W. HAWKLAND, HAWKLAND'S HANDBOOK ON CHAPTER 9 LOUISIANA COMMERCIAL LAW, Callaghan,1990.

''' V6ase, Fradette, Les sOret6s r6elles: Apercu des principales nouveautes propos6es par la reforme du Code Civil, LA REVUEDU NOTARIAT, 1987, vol. 89, p. 732.

12 La Academia Puertorriquefia de Legislaci6n y Jurisprudencia se ha embarcado en un estudio de reforma del C6digo deComercio que incluye la adopci6n de una ley de garantias reales sobre bienes muebles. En los aspectos estructurales, el anteproyectode la Academia de Legislacion y Jurisprudencia se inspira en el Artfculo 9 del C6digo de Comercio Uniforme de los Estados Unidos.

"' D. E. ALLAN, M. E. HISOCK & D. ROEBUCK, CREDIT AND SECURITY. LAW AND DEVELOPMENT FINANCEIN ASIA (St. Lucia, Univeristy of Queensland Press, 1974; New York, Crane, Russack and Co., 1974).

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VI. EL INFORME DEL BANCO MUNDIAL Y SUS RECOMENDACIONES

67. El Informe del Banco Mundial al que se ha hecho referencia al comienzo de este documentono s6lo destaca sino que tambien ofrece pruebas empiricas acerca de la demora que el sistemajudicial boliviano impone al proceso de ejecuci6n de una garantia real. Tambien sefiala el Informela falta de confianza en el sistema de garantias reales y el costo que ello implica para la economiaboliviana (Apendices I y II, pp. 59-71). El Informe describe los procedimientos alternativos eilegales a los que suelen recurrir los acreedores a fin de sortear los inconvenientes del sistemajuridico. Obviamente, estos procedimientos no aportan una soluci6n eficaz a los problemasplanteados; no s6lo porque son ilegales, sino tambien por su falta de idoneidad para reducir elriesgo y por lo tanto el costo del credito (Informe, §§156-168).

68. Luego de realizar un analisis del esquema juridico boliviano de las operaziones financierascon garantia real, el Informe incluye una serie de recomendaciones a corto y largo plazo. Estosterminos de referencia, en la medida en que estan destinados a disefiar el marco de una reformasustancial y a largo plazo del sistema de garantias reales, no tiene en cuenta ni entra a juzgaracerca de la conveniencia o viabilidad juridica de reformas "a corto plazo". El Informe parte dela base de que las reformas seran Ilevadas a cabo a traves el proceso legislativo que determinay permite el ordenamiento constitucional boliviano, y que dichas reformas estanfundamentalmente destinadas a dotar a la legislaci6n boliviana de un instrumento juridico 6til,global y relativamente perdurable.

69. Entre las diversas recomendaciones que realiza el Informe, se acentuan aquellas que se serefieren al sistema de inscripci6n registral, incluyendo la organizaci6n administrativa,operatividad y tecnologia computarizada con la que deben contar los registros donde se inscribengravamenes sobre bienes muebles (Informe, pp. 20-28). Otro aspecto que recibe especialconsideraci6n en el Informe se refiere al procedimiento judicial que debe seguirse para obtenerla realizaci6n de la garantia real (Informe, pp. 29-50).

70. En estos terminos de referencia se propicia una reforma tanto del sistema de publicidadregistral como de ejecuci6n judicial de las garantias reales, pero incluye a la vez aspectosestructurales del sistema de constituci6n, perfeccionamiento y prelaci6n de las garantias reales.

71. Las propuestas de reforma que incluyen los terminos de referencia se refieren en formaespecifica al sistema de garantias reales. Debe quedar en claro, por lo tanto, que estos terminosde referencia destacan la necesidad de reformar el funcionamiento de los registros publicos y elprocedimiento de ejecuci6n s6lo en la medida en que el sistema registral y la administraci6n dejusticia entorpece la eficacia de las garantias reales. Cuestiones relacionadas con el sistemaregistral inmobiliario y aspectos generales del procedimiento civil caen fuera de la 6rbita de estosterminos de referencia.

72. Como la tarea legislativa a realizar se limita al campo de las garantias reales, una ley sobrela materia, aun cuando regule sobre aspectos relacionados con el registro puiblico y elprocedimiento judicial de ejecuci6n de sentencia, no tiene otro alcance mas que el que le confieresu categoria de lex specialis, esto es, el de derogar toda disposici6n legal que sea incompatiblecon ella, pero s6lo en la medida en que afecte el regimen de garantias reales. La importancia deeste punto justifica insistir en el en los capitulos subsiguientes, al analizar el campo de aplicaci6nde la ley de garantias reales y la manera en que dicha ley afecta el resto del ordenamiento juridicoboliviano.

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VII. PROPUESTAS DE REFORMA

73. El prop6sito de este capitulo es el de explicar brevemente la estructura que tendra la ley degarantias reales y explicar brevemente los diversos titulos, partes, o capitulos en los que seconsidera conveniente subdividir su contenido. Previo a ello, conviene dejar en claro dos aspectosfundamentales: (A) La conveniencia de dotar a esta legislaci6n del caracter de ley especial, fueradel marco de los c6digos civil, comercial y de procedimiento; y (B) la conveniencia de regularlas operaciones financieras con garantias reales independientemente de la dicotomia clasica civily comercial en la que se divide el derecho privado. Con posterioridad, se discuten las reformasmas importantes que debera contener esta legislaci6n (C).

A. CONVENIENCIA DE REGULAR LAS GARANTIAS REALES COMO "LEYESPECIAL" Y FUERA DEL MARCO DE LOS CODIGOS

74. Como se destac6 anteriormente, el C6digo Civil y el C6digo de Comercio de Boliviaintegran la regulaci6n de las garantias reales dentro de sus disposiciones.1'54 Desde un puntotradicional y purista de metodologia legislativa, el tema de las garantias reales podria encontrarun lugar adecuado en los c6digos, ya sea en la parte que regula los contratos especiales, losderechos reales de garantia, o en otro titulo especial. Sin embargo, soy de la opini6n de que, almenos en un principio, las garantias reales deberian ser objeto de una ley especial.

75. Una de las razones en apoyo de esta metodologia es el caracter comprensivo o global querecibiran las garantias reales, que no reconoce divisiones, como se anticip6, en base a ladicotomia tradicional entre la materia civil y comercial. Ademas, esta materia no s6lo incluyeaspectos relacionados con la constituci6n de un contrato de garantia y el derecho real que surjedel mismo al ser perfeccionada, sino aquellos relacionados con el sistema registral y elprocedimiento de ejecuci6n de la garantia. Existirian razones, por lo tanto, para desparramar elcontenido de una ley sobre garantias reales en mas de un c6digo sustantivo o procesal.

76. Existe una raz6n de mayor peso para que este tema sea objeto de regulaci6n separada yespecial, fuera del marco de los c6digos. Aunque la legislaci6n que se proponga debe ser objetode un cuidadoso analisis a fin de detectar su compatibilidad, armonia o conflicto con lasdisposiciones de los c6digos, en muchos aspectos la politicajuridica y la terminologia que inspiraa esta ley se aparta de la que orient6 la incorporaci6n de normas similares en los c6digos civily comercial. De alli la conveniencia de que, al menos en un principio, la legislaci6n sobregarantias reales se incorpore a una ley especial. Esta metodologia facilitaraa su revisi6n peri6dica.En el caso de ser necesario ajustar o calibrar algunas de sus disposiciones a las necesidades oproblemas que indique su aplicaci6n practica, siempre sera mas facil Ilevar a cabo esos ajustesen una ley especial que embarcarse en la modificaci6n de un c6digo.

's' C6digo Civil, Libro V ("Del Ejercicio, Protecci6n y Extinci6n de los Derechos", Titulo 11 ("De la Garantia Patrionial de losDerechos'); C6digo de Comercio, Libro III ("De los Contratos y Obligaciones Comerciales"), Titulo 11 ("De los ContratosMercantiles en Particular").

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77. Obviamente que lo expresado no importa una salvedad a la imperiosa necesidad dearmonizar la ley de garantias reales con el articulado de los c6digos civil y comercial. Seranecesario derogar o reformar dichos c6digos en la medida en que to requiera la imperiosanecesidad de mantener la congruencia del ordenamiento juridico. Este tema sera tratado conmayor detalle en el pr6ximo capitulo.

B. REGULACION DE LAS GARANTIAS REALES CON INDEPENDENCIA DELA NATURALEZA CIVIL 0 COMERCIAL DE LA OBLIGACIONGARANTIZADA

78. Se destac6 con anterioridad que algunas garantias reales en el derecho boliviano reconocenuna distinci6n, en muchos aspectos meramente nominal, conforme a si la obligaci6n garantizadapuede ser calificada como operaci6n comercial. En otras circunstancias, el codificador hadecidido regular la hipoteca y prenda sin desplazamiento sobre ciertos bienes muebles en elC6digo Civil, mientras que otras garantias reales que revisten la misma forma juridica, pero seconstituyen sobre otro tipo de bienes muebles, han sido incorporadas al C6digo de Comercio.Bajo estos terminos de referencia, se recomienda regular las garantias reales independientementede la categoria comercial o civil de la obligaci6n garantizada e independientemente del caracterde comerciante del acreedor garantizado o del deudor.

79. Bajo ciertas circunstancias, a ser claramente especificadas en la misma ley, las garantiasreales que se constituyan sobre bienes muebles destinados al consumo personal del deudor puedenencontrarse sujetas a reglas de prelaci6n o a un metodo de ejecuci6n diferente al que sea aplicablea garantias reales sobre bienes que no estan destinados al consumo personal del deudor. Tampocopodria esta ley descartar la aplicaci6n de otra legislaci6n boliviana especialmente dirigida aproteger los derechos de los consumidores. Independientemente de lo que exprese la ley degarantias reales, las normas de protecci6n al consumidor suelen considerarse de orden p6blico,no susceptibles de renuncia por las partes a quienes dichas normas intentan proteger y por lo tantode aplicaci6n inmediata. Estimo conveniente, empero, que todo conflicto eventual entre la ley degarantias reales y los derechos de protecci6n al consumidor sean materia de discusi6n yevaluaci6n durante el transcurso de la elaboraci6n de la ley sobre garantias reales.

C. MATERIAS A SER CUBIERTAS POR UNA LEY DE GARANTIAS REALESSOBRE BIENES MUEBLES

80. La Ley de Garantias Reales debera cubrir las siguientes materias:

- (1) Un titulo introductorio que se ocupe de determinar el campo de aplicaci6n de la ley,las definiciones que sea conveniente incluir a fin de precisar la terminologia a ser empleada yotras disposiciones de caracter general.

- (2) Un titulo que se ocupe del contrato o "acuerdo de garantia" destinado a crear unagarantia real, regulando los requisitos de forma y sustancia que deben acompafiar la

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"constituci6n" de una garantia real y prescribiendo la extensi6n de la garantia real con respectoa la obligaci6n garantizada y los bienes gravados.

- (3) Un titulo dedicado al "perfeccionamiento" de una garantia real, esto es, especificandolos pasos que deben Ilevarse a cabo a fin de otorgar a la garantia efectos reales u oponibilidad,y por lo tanto protecci6n, frente a terceros.

- (4) Un titulo que prescriba los pasos a seguir para inscribir una garantia real en un registrop6blico, especificando el lugar, requisitos y efectos de la inscripci6n registral.

- (5) Un titulo que incorpore las reglas de prelaci6n de una garantia real frente los diferentestipos de "terceros" que pueden competir por el reconocimiento de un rango preferente sobre losbienes gravados. Entre estos "terceros" deben incluirse los acreedores desprovistos de unagarantia real, adquirentes (incluyendo compradores) del bien gravado, otros acreedores con unagarantia real sobre el mismo bien, acreedores hipotecarios con gravamen sobre un inmueble alque se ha incorporado en forma fija un bien mueble gravado con una garantia real, acreedoresprivilegiados o con un gravamen otorgado por ministerio de la ley, y el sindico que representaa la masa de acreedores en la quiebra del deudor.

- (6) Finalmente, la ley incluira un titulo especialmente dedicado al procedimiento deejecuci6n en caso de incumplimiento del deudor.

1. Campo de Aplicaci6n y Disposiciones Generales

81. En esta parte introductoria debe especificarse que la ley abarca todo tipo de garantia realconstituida en forma consensual, excluyendo por lo tanto los gravamenes creados por disposicionde la ley (privilegios), excepto en lo que se refiere a la prelaci6n de estos frente a las garantiasreales de origen consensual.

82. Distinciones tradicionales entre prenda, hipoteca sobre bienes muebles y prenda sindesplazamiento, reconocidas en los c6digos vigentes, quedarin sin efecto a los fines de determinarc6mo se constituye una garantia real, cuales son los derechos de las partes, la forma deperfeccionar la garantia, la prelaci6n que se le ha de otorgar y el procedimiento de ejecuci6n aseguir. Es decir, nada impide que la doctrina o las partes llamen o califiquen a una operaci6nfinanciera como "hipoteca" o "prenda", pero los efectos juridicos seran los que determine la leyy no dependeran de quien retiene la titularidad del dominio sobre el bien gravado.

83. En la medida en que las reglas de prioridades distinguen entre diferentes tipos de bienesmuebles para determinar su prelaci6n, esta parte tambien debera precisar las diferentes categoriasde bienes muebles que reconoce la ley, remitiendose, cuando corresponda, a la terminologia ycategorizaci6n de los bienes muebles establecida por el C6digo Civil (v.gr., bienes muebles,creditos) y el C6digo de Comercio (v.gr., titulos-valores). En caso de ser necesario, deberaexpandirse la subdivisi6n de bienes muebles, creando conceptos especificamente diseniados pararegular las garantias reales (v.gr., "instalaciones fijas", "cuenta por cobrar", etc.)

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84. A menos que las normas de derecho internacional privado vigentes en Bolivia contemplenespecificamemnte la problematica que se presenta para reconocer efectos juridicos a las garantiasreales constituidas o perfeccionadas en el extranjero, seria conveniente establecer normas deconflicto apropiadas a fin de que dichas garantias puedan ser reconocidas en Bolivia cumpliendocon ciertos requisitos. Las normas de derecho internacional privado deben incluir en formaespecifica aspectos relacionados con la ley aplicable al perfeccionamiento y modo deperfeccionamiento de las garantias reales, contemplandose el caso en que un bien mueble sujetoa una garantia real perfeccionada en el extranjero sea trasladada posteriormente a Bolivia.

85. Otra disposici6n de caracter general, ya incorporada al derecho boliviano pero que debesujetarse a las excepciones que se determinaran al regularse las prelaciones, es que una garantiareal debidamente constituida continua afectando el bien en garantia aun cuando este salga delpatrimonio del deudor. Un corolario de este principio es el efecto de subrogaci6n real automaticaque se produce cuando el bien sale del patrimnonio del deudor, voluntaria o involuntariamente.Conforme a esta disposici6n, cualquiera sea la naturaleza de la enajenacion del bien y delproducido de dicha enajenaci6n, el acreedor garantizado adquiere automaticamente una garantiareal sobre ese producido, siempre y cuando pueda ser identificado como un bien que reemplazao sustituye al que originalmente se encontraba sujeto a la garantia real.

2. Constituci6n

86. En la medida en que la ley abarca todo tipo de garantias reales nacidas del consentimientode las partes, es necesario precisar en esta parte qu6 se entiende por "acuerdo de garantia" y querequisitos minimos debe cumplir dicho acuerdo, de forma y sustancia, para su validez entre laspartes. Asi, el acuerdo de garantia real debera constar por escrito, firmado por el deudor y deberacontener una descripci6n general del bien otorgado en garantia.

87. Sera necesario volver a examinar axiomas referentese al principio de especialidad, en cuantoa la obligaci6n garantizada y en cuanto al bien en garantia, a la luz de la politica juridica que sepersigue. Con respecto a esto 1ltimo, la descripci6n del bien sera juridicamente suficiente en lamedida en que permita identificar razonablemente lo que describe. Con respecto a la obligaci6ngarantizada, no sera necesario identificar con precisi6n su naturaleza y terminos; a lo sumo sepodria requerir informaci6n acerca del monto maximo cubierto por la operaci6n financiada conuna garantia real.

88. Si bien el acuerdo de garantia por escrito puede celebrarse tan pronto las partes lleguen aun acuerdo, la garantia real no quedara debidamente "constituida" hasta que surja una obligaci6nprincipal y el deudor adquiera derechos sobre el bien en garantia. Nada impide, obviamente, queel acuerdo se celebre con anterioridad a que se cumplan estos dos ultimos requisitos, pero lagarantia real no tendra validez o eficacia ni siquiera entre las partes hasta que surja la obligaci6ngarantizada y el deudor adquiera derechos sobre el bien. La forma escrita no s6lo facilita laprueba del acuerdo, sino que tambien sirve para el proposito de la inscripci6n registral.

89. En la practica comercial, la mayoria de los acuerdos de garantia son redactados enformularios que contienen numerosas clausulas que regulan los derechos y obligaciones de laspartes. La ley debera otorgar a las partes amplia libertad para estipular las condiciones que ellas

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consideren mas convenientes. Las limitaciones a la autonomia de la voluntad, en lugar de adquirirel caracter de prohibiciones que fulminen toda omisi6n o apartamiento con la nulidad del acuerdo,seran establecidas al regularse las prelaciones y el procedimiento de ejecuci6n de la garantia.

90. Debe autorizarse expresamente la constituci6n de una garantia real para garantizar unprestamo de dinero que el acreedor se compromete a prestar en algun momento futuro, sinnecesidad de que el acuerdo de garantia exprese la cantidad concreta de estos anticipos ni lasfechas en que han de realizarse. Tambien en este aspecto es necesario volver a examinar lospresupuestos generalmente relacionados con el llamado principio de especialidad. Otras partes dela ley se encargaran de determinar la prelaci6n que se le otorgara a esta garantia real con respectoa otras garantias reales que se hayan perfeccionado con anterioridad a que el anticipo anunciadoen el acuerdo sea efectivamente entregado al deudor.

91. Al permitirse este tipo de financiamiento, se habilita al acreedor (bancos, entidadesfinancieras) para otorgar una linea de credito contra la cual el deudor puede girar en el futuro,en la medida en que lo requieran sus necesidades financieras. Esta flexibilidad faculta al acreedora reservar el rango que obtuvo la garantia real al ser inscripta en el registro. Este mecanismotambien dispensa al acreedor de la necesidad de celebrar un nuevo acuerdo o de efectuar unanueva inscripci6n registral cada vez que otorga un anticipo.

92. Otra innovaci6n importante que debera incorporar la ley es la posibilidad de que el deudorconstituya una garantia real sobre bienes a ser adquiridos en el futuro. Abrir esta posibilidad esimportante a los efectos de permitir el financiamiento de prestamos otorgados a comerciantescuyo activo econ6mico mas importante consiste en existencias comerciales y cuentas por cobrar,bienes que no se habran incorporado a su patrimonio al momento de celebrar el acuerdo degarantia o inscribir el gravamen.

3. Perfeccionamiento

93. Si las partes en una operaci6n de financiamiento se limitan a celebrar un acuerdo de garantiacon el fin de constituir una garantia real, dicha garantia es valida contra el deudor perosubordinada a los derechos de la mayor parte aquellas personas que no han sido partes al acuerdo.De alli la necesidad de que la garantia real, ademas de haber sido debidamente "constituida",tambien haya sido debidamente "perfeccionada".

94. El modo de perfeccionamiento de una garantia depende del tipo de bien mueble otorgadoen garantia o del tipo de obligaci6n garantizada de que se trate. En este sentido, debe reconocersela posibilidad de perfeccionar la garantia real de diversos modos, incluyendo los siguientes:

- La transferencia al acreedor garantizado, o a un tercero desigando de comun acuerdo, dela tenencia fisica del bien en garantia.

- La inscripci6n registral del acuerdo de garantia o de un "formulario" o "declaraci6n" deinscripci6n que contenga la informaci6n necesaria para alertar a terceros acerca de la posibilidadde que los bienes del deudor se encuentren gravados con una garantia real.

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- El perfeccionamiento automatico, es decir, por ministerio de la ley, temporario opermanente, con respecto a ciertos acreedores garantizados, en aquellos casos en que el costo,la demora o inconvenientes que presente la inscripci6n registral o la transferencia de la tenenciadel bien en garantia no justifique exigir el perfeccionamiento por via de la entrega manual o lainscripci6n registral. El caso tipico es aqu6l en que el deudor haya otorgado una garantia real quegarantize la devoluci6n del precio de compra de un bien mueble adquirido para uso personal,familiar o domestico del deudor.

- Cualquier otro tipo de medio de publicidad que se considere conveniente en atenci6n altipo de bien en garantia.

95. La ley debera especificar que tipo de perfeccionamiento se requiere o se permite para losdiferentes tipos de bienes muebles (v.gr., titulos valores, cuentas por cobrar y otros creditos,etc.). Asimismo, deberan indicarse las circunstancias en las cuales cierto modo deperfeccionamiento confieren una prelaci6n mayor al acreedor que si recurriera a otros modos deperfeccionamiento.

4. Inscripci6n Registral

96. El medio mas comun de perfeccionar una garantia real sobre la mayoria de los bienesmuebles es la inscripci6n registral. Con excepci6n de garantias reales sobre titulos-valores(instrumentos negociables), que s6lo pueden perfeccionarse mediante la tenencia, las garantiassobre los demas bienes muebles pueden ser perfeccionadas mediante la inscripci6n del acuerdode garantia o de un formulario de inscripci6n en el registro puiblico correspondiente.

97. Es fundamental distinguir la politica legislativa y la funci6n que cumple la inscripci6nregistral de gravamenes sobre bienes muebles, de la funci6n tradicional que se le suele otorgara dicha inscripci6n bajo el derecho registral inmobiliario. El objetivo de la inscripci6n registralen materia de garantias reales sobre bienes muebles es el de disponer de un sistema simple y pococostoso (tanto para las partes como para la autoridad encargada de administrar el registro) quepermita a terceros interesados averiguar el estado financiero o gravamenes que pueden afectar elpatrimonio mueble del deudor.

98. De esto se sigue que la "declaraci6n de inscripci6n", a diferencia del "acuerdo de garantia",no requiere otra informaci6n mas que la estrictamente necesaria para cumplir con el objetivoantedicho. No es necesario que el documento a ser inscripto contenga todo tipo de clausularegulando los derechos y obligaciones de las partes. Es suficiente que en la declaraci6n deinscripci6n conste los nombres de las partes, la direcci6n postal del deudor y del acreedorgarantizado, al cual pueda dirigirse el deudor para solicitar mayor informaci6n sobre la extensi6ndel gravamen o de la obligacion garantizada, que describa en forma "general" el tipo de bienesafectados por la garantia e incluya la firma del deudor. Esta forma resumida de inscripci6n nootorga todos los detalles de informaci6n que puede necesitar un tercero a fin de decidir si otorgaro no un credito al deudor; simplemente indica la posibilidad de que el deudor haya gravado ciertotipo de bienes. Este es el objetivo del sistema registral en materia de garantias reales sobre bienesmuebles.

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99. Otro aspecto importante que debe contemplar la ley de garantias reales, y que tambien sederiva del papel limitado que cumple la registraci6n en el contexto de las garantias realesmobiliarias, es la posibilidad de registrar una declaraci6n de inscripci6n con anterioridad a lacelebraci6n de un acuerdo de garantia. La importancia que reviste esta inscripci6n anticipada parael acreedor garantizado consiste en que si en cualquier momento futuro este celebra una acuerdode garantia con el mismo deudor, y con respecto al tipo de bienes sujeto a la garantia realinscripta, dicha garantia se perfecciona automaticamente al celebrarse el acuerdo. En este caso,no existiria ningun intervalo, ni siquiera de minutos, entre el momento de la constituci6n de lagarantia real y el momento de su perfeccionamiento. La ventaja de este mecanismo, como seexplica a continuaci6n, es la de reservar la prioridad de rango.

100. Tradicionalmente, los sistemas registrales no contemplan la posibilidad de inscribir ungravamen con anterioridad a que se hayan reunido todos los elementos necesarios para que lagarantia real se haya constituido (es decir, adquisici6n de derechos del deudor sobre el bien engarantia y existencia de la obligacion garantizada). El anteproyecto contempla la posibilidad deinscribir un gravamnen potencial. La inscripci6n anticipada del gravamen, aun antes de que sehaya "constituido" la garantia real, permite al acreedor garantizado asegurar su prelaci6n a partirdel momento de la inscripci6n registral. Esta flexibilidad es crucial para promover el creditogarantizado con existencias comnerciales que no se han incorporado al patrimonio del deudor almomento de inscribirse la garantia real. Asi, al momento de la inscripci6n registral, el deudorpuede negociar una linea de cr6dito con cargo a la cual el deudor podra girar en el futuro. Lainscripci6n anticipada le otorga al acreedor la seguridad de que en caso de insolvencia del deudor,su garantia real afectara, con el rango que le otorga la inscripci6n anticipada, a todos los anticiposde credito que haya otorgado. Este rango otorga una prelaci6n al primer acreedor por sobre lagarantia real de los acreedores que hayan inscripto sus gravamenes con posterioridad a lainscripci6n anticipada del priher acreedor.

101. Cabe preguntarse si las declaraciones de inscripci6n deben registrarse en registros locales(es decir, que abarcan una subdivisi6n politica determinada del pais) o en un registro 6nico queinforme acerca de los gravamenes existentes sin importar el lugar o regi6n del pais donde seencuentre el bien. Ambos sistemas tienen sus ventajas. Por un lado esta la conveniencia de contarcon una fuente de informaci6n crediticia local, que ofrece mayor disponibilidad y facilidad deacceso. Por otro lado, un registro centralizado ofrece la ventaja de concentrar toda la informaci6nen un s61o lugar. ventaja particularmiente apreciable para operaciones financieras en las cualestanto el establecimiento del deudor o la localizaci6n del bien garantizado son susceptibles decambio o desplazamiento.

102. La tecnologia de la computaci6n puede ofrecer el beneficio de ambos sistemas, ya quese podria instalar un banco de datos centralizado en la ciudad capital, del cual se podria obtenery el cual podria expedir informaci6n a las terminales de computaci6n ubicadas en diversasregiones del pais. Obviamente que para determinar el efecto juridico de la inscripci6n registralhabra que asegurarse primeramente cuales son las posibilidades que ofrece la infraestructuraadministrativa y la capacidad tecnol6gica del registro. Lo que esta fuera de toda duda es que losregistros deben ser publicos y que los registradores deben estar dispuestos a brindar informaci6nmediante la expedici6n de certificados y la utilizaci6n de todo medio de comunicaci6n del cualse pueda dotar al registro (v.gr. telefonos. telefax).

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5. Prelaci6n

103. El acreedor garantizado tiene interes en hacer valer su preferencia al cobro sobre el valordel bien garantizado frente a varios terceros, principalmente cuatro de ellos: los titulares deprivilegios (gravamenes otorgados por disposici6n de la ley), otros acreedores con garantfa real,acreedores embargantes, adquirentes y compradores del bien objeto de la garantia, y el sindicoen el concurso civil o quiebra del deudor.

104. Con respecto a los privilegios, la prelaci6n suele ser especificada en la misma ley quecrea el privilegio. En caso de que esta no exprese el rango, seria conveniente que las garantiasreales prefeccionadas tengan prelaci6n sobre todos los privilegios perfeccionados conposterioridad al momento de perfecci6n de la garantia real.

105. Si el conflicto de prioridades se plantea entre dos garantias reales sobre el mismo bien,ninguna de las cuales ha sido perfeccionada, la prelaci6n le corresponde al primero que hacumplido con todos los requisitos de su constituci6n (esto es, acuerdo por escrito, existencia dela obligaci6n garantizada y de la obligaci6n principal). Si el conflicto se presenta entre unagarantia perfeccionada y otra no perfeccionada, prevalece la primera (aun cuando haya sidoconstituida con posterioridad a la garantia perfeccionada). El principio general aplicable aconflictos entre garantias perfeccionadas es que prevalece la que primero se haya perfeccionado.

106. Sin embargo, este principio tradicional prior tempore potior jure debe ceder cuandorazones de politica legislativa asi lo aconsejen. Una garantia "por el importe de compra" de unbien en garantia puede tener prelaci6n sobre una garantia real perfeccionada con anterioridad. Elcriterio que inspira a esta regla es que el bien en garantia no existiria en el patrimonio del deudorde no haber sido por el financiamiento que le otorg6 el acreedor garantizado para posibilitar lacompra del bien. Cuanto y contra quien se aplica esta regla de prioridad varia conforme al tipode bien en garantia.

107. En principio, la garantia real, como todo derecho real, persigue al bien en garantia apesar de que el deudor disponga del mismo. Sin embargo, tambien este principio reconoceexcepciones fundadas en razones de politica legislativa. La excepci6n mas importante es la queprotege al comprador de buena fe de bienes de consumo o de bienes destinados para la venta. Eneste caso, el acreedor garantizado podra satisfacer su credito atrapando bajo la garantia al"producido" de la venta, como asi tambien a las existencias comerciales que reemplacen a losbienes vendidos por el deudor.

108. Con respecto al conflicto de prelaciones entre el acreedor garantizado con una garantiareal y un acreedor embargante, el principio general es que la prelaci6n le pertenece al queprimero haya perfeccionado la garantia real o el embargo. En cuanto al conflicto que se planteacon el sindico de la quiebra, este toma los bienes del deudor sujetos a las garantias realesperfeccionadas con anterioridad a la declaraci6n de quiebra o el estado de sospecha. Si elacreedor garantizado no ha perfeccionado su garantia con anterioridad al estado de insolvencia,entonces no podra pretender en la distribuci6n de los bienes del fallido otra condici6n que la deun mero acreedor quirografario.

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6. Procedimiento de Ejecuci6n

109. El procedimiento a seguir en caso de incumplimiento del deudor tiene la doble finalidadde: (a) asegurar en la mayor medida posible de que la obligaci6n del acreedor garantizado serasatisfecha con el valor del bien en garantia, y (b) proteger, tambien en la medida de lo posible,el interes del deudor en obtener el mayor valor del bien, como asi tambien su derecho a obtenerel valor del excedente, si lo hubiere. A fin de conjugar ambos objetivos, es necesario dotar alacreedor de un metodo expedito de ejecuci6n y asegurar al mismo tiempo que el valor del biensea obtenido mediante una venta que se lieve a cabo por un metodo "comercialmente razonable"para ese tipo de bienes.

110. El Informe del Banco Mundial concentra gran parte de sus criticas al sistema bolivianode garantias reales en la excesiva demora del procedimiento judicial que debe seguirse para, enprimer lugar, obtener una sentencia condenatoria (Informe, §§ 83-127) y, en segundo lugar,ejecutar la sentencia mediante la venta del bien en garantia (Informe, §§ 128-155). Estos terminosde referencia coinciden con el Informe en la necesidad de dotar al procedimiento de ejecuci6n dela celeridad necesaria para que cumpla la finalidad para el cual ha sido destinado. El equilibriode intereses en juego debe desembocar en un proceso que fortalezca la facultad del acreedor derecuperar en forma inmediata el bien en garantia, responsabilizando al mismo tiempo a ese mismoacreedor por los dafnos y perjuicios que pueda causar al deudor en caso de no cumplir con unprocedimiento de venta que sea comercialmente razonable bajo las circunstancias.

111. La intervenci6n de funcionarios publicos, jueces y oficiales de justicia en el proceso deejecuci6n suele desembocar en un procedimiento lento, administrativamente costoso e incapaz demaximizar el valor econ6mico del bien en garantia al momento de su disposici6n. Estaexperiencia indica la conveniencia, para todas las partes, acreedor y deudor, de propiciar que laventa del bien en garantia se desarrolle de la manera mas parecida posible a una venta comercial.Para ello, el acreedor debe ser autorizado a recurrir al procedimiento de venta que considere masrapido y adecuado.

112. A tal fin, el acreedor puede valerse de aquellas disposiciones del C6digo deProcedimiento Civil aplicables a juicios de ejecuci6n de sentencias en general, o bien puederecurrir al procedimiento especial autorizado especificamente para la ejecuci6n de garantiasreales. Este procedimiento especial serA incluido en la 6ltima parte de la ley; sus lineamientosgenerales se expresan a continuaci6n.

113. Un obstaculo que se interpone a la celeridad del procedimiento radica en la necesidad decontar con un pronunciamiento judicial acerca del incumplimiento de la obligaci6n garantizada.El procedimiento tambien suele entorpecerse en aquellos casos en que el deudor inclumplientese niega a colaborar, rehusando entregar el bien en garantia o bien negandose a negociar con elacreedor acerca de la mejor forma de realizar el valor econ6mico del bien en garantia. Tambienel acreedor puede abusar de la vulnerabilidad econ6mica del deudor para imponer condicionesde venta que no contemplan el interes del deudor de obtener un precio mayor que el del montoadeudado al acreedor.

114. La politica legislativa que debe orientar a la ley de garantias reales se basa, en primerlugar, en otorgar al deudor la facultad de redimir el bien si cumple con todas sus obligaciones

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dentro de un periodo breve con posterioridad a ser notificado de su incumplimiento; en segundolugar, en permitir expresamente que las partes, despues del incumplimiento del deudor, se pongande acuerdo acerca de c6mo disponer del bien; y en tercer lugar, previendo el caso en que nopueda llegarse a un acuerdo y el deudor se niegue a entregar el bien al acreedor para que estedisponga del bien, en permitir al acreedor tomar posesion del bien en garantia siempre y cuandoproceda sin violencia en las cosas o intimidaci6n en la persona del deudor o quien tenga controlfisico sobre el bien en garantia cuya venta se persigue.

115. A fin de estimular a que las partes lieguen a un acuerdo respecto de la mejor forma dedisponer del bien, la ley debera expresar que, con posterioridad al incumplimiento del deudor,el acreedor puede proponer al deudor que el primero se quede con el bien dado en garantia. Encaso de que el deudor acepte la propuesta, la retenci6n del bien opera como una daci6n en pago.En caso de que el valor de la cosa no cubra el monto de la obligaci6n garantizada, incluyendolos costos y gastos complementarios a su ejecuci6n, el deudor no puede ser responsabilizado porel deficit o saldo insoluto de la obligaci6n garantizada.

116. Si el deudor se niega a aceptar esa propuesta, ya sea porque considera que el bien puedevenderse por una suma superior a la deuda pendiente o por cualquier otra raz6n, el acreedordebera venderla conforme a un procedimiento "comercialmente razonable". En este caso, eldeudor sera responsable por el deficit y queda facultado a percibir el excedente del precio deventa.

117. Si con posterioridad al incumplimiento de la obligaci6n el deudor se niega a entregar elbien al acreedor, o a acordar con este un procedimiento de venta, el acreedor queda facultadopara tomar posesi6n del bien siempre y cuando, como se dijo anteriormente, no recurra ni a laviolencia en las cosas ni a la intimidaci6n del deudor o quien tenga el poder de hecho sobre elbien.

118. La experiencia en los Estados Unidos con este tipo de procedimiento ("self-helprepossession") no ha dado razones para temer que los acreedores abusen de este procedimientoen forma sistematica. Por el contrario, el hecho de que la legislaci6n autorice al acreedor areposeer el bien ha creado un incentivo para que el deudor negocie con el acreedor la forma dedisponer del bien, de tal forma que su venta arroje el mayor precio posible. En los pocos casosen que se han presentado de abusos, los tribunales han condenado al acreedor al pago de dafliosy perjucios. Esta facultad del deudor de accionar por dafios debe ser expresamente reconocidapor la ley y cuidadosamente viabilizada mediante un procedimiento sumarisimo. Ademas, deberancontemplarse limites especiales para proteger los derechos de aquellos casos en que el bien engarantia este destinado a ser utilizado para consumo personal, familiar o domestico del deudor.

119. Una vez que el acreedor ha obtenido el bien en garantia, podra disponer del mismo enventa publica o privada, pero siempre en forma comercialmente razonable. Este requisito derazonabilidad incluye la obligaci6n de notificar al deudor con respecto al metodo, tiempo, lugary condiciones en que se realizara la venta. Si el acreedor no sigue ese procedimiento, la ley podraestablecer una presuncion, dependiendo del tipo de bien en juego, de que el precio obtenido dela venta es inferior al que se podria haber obtenido de haber cumplido el acreedor con losrequisitos (entre ellos, la notificaci6n al deudor) establecidos por la ley. Ademas, como se destac6anteriormente, el acreedor sera responsable por todos los danlos irrogados al deudor.

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VIII. IMPACTO DE UNA LEY SOBRE GARANTIAS REALES MOBILIARIAS SOBREEL ORDENAMIENTO JURIDICO BOLIVIANO

120. Estos terminos de referencia deben citar en forma especifica "toda disposici6n legalcontradictoria que sea abolida, de forma tal que establezca un cuerpo juridico congruente con lalegislaci6n boliviana, especialmente con relacion a las normas de los C6digos Civil, Comercialy Procesal Civil de Bolivia." 155

121. Teniendo en cuenta el amplio espectro normativo y doctrinario que abarca la materia degarantias reales, y habiendo destacado que la legislaci6n cuya adopci6n se recomienda tendra elcaracter de ley especial y no sera incluida en los c6digos vigentes, estimo apropiado distinguirentre aquellas disposiciones especificas que, a primera vista, se veran "afectadas" por la ley degarantias reales y aquellas otras que, por ser manifiestamente "contradictorias", deberanderogarse al adoptarse la nueva ley.

122. En primer lugar, es necesario identificar las normas del C6digo Civil, C6digo deComercio y C6digo de Procedimiento Civil que cubren en forma directa el tema de garantiasreales sobre bienes muebles. Estas normas deberan ser derogadas para dar lugar a un nuevoesquema juridico general de garantias reales.

A. CODIGO CIVIL

123. Parte Segunda, Libro Cuatro, Titulo II ("De la Garantia Patrimonial de los Derechos"):

- Capitulo 1: Disposiciones generales (arts. 135-1340). Estas disposiciones son aplicables nos6lo a las garantias reales sobre bienes muebles sino tambien aquellas constituidas sobre bienesinmuebles. En la medida en que las modificaciones que corresponda incluir en este capitulotambien afectaran al regimen de la hipoteca inmobiliaria, tema que se encuentra fuera de lost6rminos de referencia, sera necesario determinar, articulo por articulo, en que medida se deseaextender principios generales sobre garantias reales al derecho inmobiliario. Una alternativa mascongruente con los terminos de este mandato es la de limitarse a llamar la atenci6n de que lasgarantias reales mobiliarias tienen un regimen especial que, en caso de conflicto, prevalece sobredisposiciones aplicables a todo tipo de garantias reales.

- Capitulo II: De los privilegios (arts. 1341-1459). Aunque la ley de garantias reales s6lose ocupa de los gravamenes consensuales sobre bienes muebles, la ley incluira disposiciones quese refieren a la prelacion de las garantias reales consensuales con respecto a los privilegios. Porlo tanto, sera necesario determinar, articulo por articulo, en que medida el rango de losprivilegios bajo este capitulo del C6digo Civil es compatible con el rango que se les confiere alas garantias reales. La preocupaci6n fundamental de armonizaci6n se concentra en aquellos

" Caria de fecha 4 de enero de 1993, encomendando la elaboraci6n de los terminos de referencia para una ley sobre garantiasreales.

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articulos que se refieren a los privilegios, generales y especiales, sobre los bienes muebles deldeudor.

- Capitulo III: De las hipotecas (arts. 1360-1397). Estas disposiciones no s6lo cubren lashipotecas sobre bienes inmuebles sino tambien se aplican, en lo pertinente, a las hipotecas sobrebienes muebles (C.Civ., art. 1397). Bajo el C6digo Civil, cabe aclarar, las hipotecas, tanto sobrebienes inmuebles como muebles, reconocen una subdivisi6n entre hipoteca legal, judicial yvoluntaria. Por lo tanto, aqui tambien sera necesario analizar, articulo por articulo, lacompatibilidad de cada uno de ellos con la regulaci6n de las garantias reales en la ley, quecomprende obviamente la hipoteca voluntaria sobre bienes muebles. La Secci6n VI de estecapitulo debera ser derogada (arts. 1395-1397).

- Capitulo IV: De la pignoraci6n (arts. 1398-1428). Con la excepci6n de las normas queregulan el contrato de anticresis (arts. 1429-1435), todas las disposiciones de este capitulo serefieren a las garantias reales perfeccionadas mediante desplazamiento de la tenencia del bien alacreedor, o mediante inscripci6n registral. Como estas figuras juridicas y su regulaci6n quedaransubsumidas bajo el concepto de "garantia real", se impone su derogaci6n al adoptarse la nuevaley.

124. Titulo V ("De los Derechos Reales") (arts. 1521-1566). Este Titulo no se aplicasolamente a las garantias reales, ni tampoco se limita a las garantias reales sobre bienes muebles.Por lo tanto, tambien aqui debe procederse con cautela, articulo por articulo, para verificar,modificar o anotar toda discrepancia que pueda presentarse con el titulo de la ley de garantfasreales destinado a regular la inscripci6n registral de gravamenes sobre bienes muebles. Lasdisposiciones generales sobre la organizaci6n de los registros publicos (art. 1521-1524), comoasi tambien aquellas mas especificas sobre el registro de derechos reales (arts. 1538-1560),contienen disposiciones aplicables, expresa o implicitamente, a la manera de inscribir, anotar,cancelar y formalizar actos juridicos destinados a crear una garantia real sobre bienes muebles.Estas disposiciones deberan ser derogadas o modificadas en la medida que presentenincompatibilidades con las disposiciones de la ley.

125. La ley del 15 de noviembre de 1887 sobre "Registro de los Derechos Reales" se ocupafundamentalmente de la inscripci6n y anotaci6n registral de derechos reales sobre inmuebles (art.1). Sin embargo, en la medida en que cualquiera de sus disposiciones pueda ser invocada por viade analogia para ser aplicada en el campo de las garantias reales, sera necesario compulsararticulo por articulo de esta ley para verificar todo posible conflicto de interpretaci6n con lasnormas que se incluyan en la ley sobre garantias reales.

B. CODIGO DE COMERCIO

126. Libro Tercero, Titulo 11 ("De los Contratos Mercantiles en Particular"), arts. 878-901:Deben derogarse todas las disposiciones que se refieren a la prenda, prenda sin esplazamiento,hipoteca de bienes muebles sujetos a registro e hipotecas que garantizan los derechos de lostenedores de titulos-valores.

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127. Libro Segundo, Titulo II ("De los Titulos-Valores"), Capitulo VIII ("Bonos, cedulashipotecarias y otros titulos"), arts. 642-723: Deben derogarse todas aquellas disposiciones de estetitulo que se refieran a la pignoraci6n de titulos-valores e instrumentos negociables. La ley degarantias reales incluira disposiciones especificamente aplicables a c6mo establecer una garantiareal sobre los titulos, instrumentos, o documentos y se ocupara de reglamentar los efectos quedicha garantia tendra frente a terceros.

128. Otras disposiciones del C6digo de Comercio, aun cuando regulan una materia enprincipio ajena a la constituci6n, perfeccionamiento y prelaci6n de garantias reales sobre bienesmuebles, pueden encontrarse indirectamente involucradas en el tema. Dentro del contexto de estosterminos de referencia no es posible efectuar un analisis especifico de cada una de esas normas,y mucho menos determinar en forma especifica en que medida son incompatibles con aquellasque se adoptaran en la ley de garantias reales. Esta tarea ineludible, empero, debera realizarsedurante el proceso de elaboraci6n de la ley sobre garantias reales.

129. Entre las disposiciones que deberan revisarse con atenci6n se incluyen aquellas incluidasen el Libro Segundo del C6digo de Comercio que se refieren a la constituci6n y transferencia dederechos sobre bienes muebles tales como una empresa mercantil (Titulo I), diferentes tipos dede titulos-valores (Titulo II), p6lizas de seguro (Titulo III), bienes representados por certificadosde dep6sito en almacenes generales (Titulo V), y los dep6sitos bancarios (Titulo VII).

130. Tambien es necesario revisar aquellas normas que se refieren al concurso preventivo yla quiebra y que afectan la prelaci6n y ejecuci6n de una garantia real sobre bienes del fallido(Libro Cuarto, Titulo II, Secci6n VI, arts. 1591-1602). Obviamente que estas normas contemplanel impacto de la quiebra sobre todo tipo de relaciones juridicas establecidas por el fallido, peroes importante especificar en las disposiciones de la quiebra en que medida las garantias realesobtenidas bajo la ley pueden ser opuestas, y por lo tanto prevalecer, sobre los reclamados por lamasa de acreedores.

C. CODIGO DE PROCEDIMIENTO CIVIL

131. El procedimiento de ejecuci6n de una garantia real, en la medida en que requiera delauxilio judicial, puede encarrilarse por aquellos procedimientos regulados por el C6digo deProcedimiento Civil. Aunque la ley de garantias reales no le niega esta opci6n al acreedor,tambien le confiere un procedimiento especial que sera materia de especial regulaci6n por la leya ser promulgada. Toda disposici6n de la ley de garantias reales que se refiere a la ejecuci6n dela garantia prevalece sobre las normas generales del C6digo de Procedimiento Civil,especialmente aquellas incluidas en el Libro Segundo que regulan los procesos de conocimiento(Titulo II, proceso ordinario, sumario, sumarisimo), el proceso ejecutivo (Libro Tercero, TituloI), e incluso el de ejecuci6n de sentencia (Titulo II).

132. Una observaci6n similar merece la legislaci6n especial que contempla un procedimientoespecial, en favor de determinados acreedores institucionales, para ejecutar una garantia real. Merefiero al procedimiento coactivo fiscal en favor de la Contraloria General de la Naci6n (Ley No.1178 del 20 de julio de 1990), coactivo tributario en favor del Departamento del Tesoro (D.S.No. 18130 del 19 de marzo de 1981) y coactivo bancario en favor de entidades bancarias

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autorizadas para realizar pr6stamos hipotecarios por la Superintendencia de Bancos (Ley debancos de 1928). Si bien nada impide que estas entidades pueden recurrir a este procedimiento,pueden optar por el procedimiento abreviado y extrajudicial que contempla la ley de garantiasreales.

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IX. ESBOZO DE LOS PASOS A SEGUIR EN LA IMPLEMENTACION DELPROYECTO

133. Como no es posible precisar el grado de incompatibilidad entre la legislaci6n vigente yla propuesta de reforma hasta contar con un texto experimental, es aconsejable proceder aredactar un anteproyecto para recien entonces adentrarse a tantear su compatibilidad o rechazocon el ordenamiento vigente.

134. Un borrador inicial de un anteproyecto de garantias reales, redactado dentro del marcode estos terminos de referencia, permitira obtener una visi6n de conjunto de la reforma propuesta.Esta visi6n de conjunto es tan importante como cada una de las normas propuestas. Es trabajaren forma coordinada con una comisi6n legislativa que se encargue de precisar, articulo porarticulo, el impacto de cada norma sobre el resto del ordenamiento juridico boliviano.

135. El anteproyecto inicial, cuyas lineas directrices fundamentales deberan inspirarse en elArticulo 9 del UCC y las orientaciones establecidas por los estudios de UNCITRAL, debeespecificar la fuente de cada articulo e incluir un comentario explicando las razones de politicalegislativa y de tecnica juridica que fundamentan cada una de esas disposiciones. El anteproyectotambien debera incluir referencias especificas a toda norma de la legislaci6n vigente en Boliviaque se encuentra manifiestamente en conflicto, indirectamente implicada, o en plena conformidadcon el articulo propuesto.

136. Con posterioridad a la presentaci6n del borrador inicial del anteproyecto, el siguientepaso consistira en un en estudio detallado del anteproyecto por parte de la comisi6n local. A estaaltura del proyecto, es necesario que dicha comisi6n investigue y destaque todas lasramificaciones del anteproyecto en la legislaci6n vigente en Bolivia. Esta tarea posibilitara undebate amplio acerca de los aspectos mas controvertidos de la politica legislativa que inspira alanteproyecto y el enfoque tradicional que mantiene la ley boliviana sobre el tema de garantiasreales. Es de fundamental importancia que la comisi6n sea integrada no s6lo por jueces y juristasbolivianos, sino tambien por representantes de bancos, instituciones financieras y abogadosexperimentados en la defensa de los intereses de los deudores. Esta conjunci6n de fuerzas yrecursos facilitara la armonizaci6n de los intereses que pujan por su reconocimiento en una leyde garantias reales sobre bienes muebles. Estos intereses apuntan, sin embargo, a un objetivocomun: facilitar el acceso al credito a la pequefia y mediana empresa, reducir el riesgo y por lotanto el costo del financimiento basado en garantias sobre bienes muebles, otorgando al acreedorgarantizado la confiabilidad imprescindible para otorgar el credito y protegiendo al deudor contraeventuales abusos.

* * *

Appendix IV:

Legislacion sobre Acceso Piblico a los Registros,Bienes Inembargables y Contratos Modelos para el Credito Mobiiiario:

Terminos de Referencia

Estce documento ha sido redactado por Nuria A. de la Pefia, abogada, por encargo y para uso exclusivo delBanco Mundial. Todo otro uso, distribucion o cita de este documento debe requerir la autorizaci6n de su autor(Mayo 1993).

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TUmninos de ReferenciaAcceso PNiblico a los Registros de Bolivia

Antecedentes:

1. El Banco Mundial investig6 en Bolivia el problema de acceso al cr6dito y su relaci6n conel sistema juridico.'56 Esta investigaci6n estableci6 que los registros puiblicos cumplen dosfunciones econ6micas fundamentales. Por un lado, acreditan la propiedad de ciertos bienes; porel otro, son el lugar que la ley designa para la inscripci6n de gravamenes. Cuando losprestamistas exigen la constituci6n de garantias reales, como ocurre en el caso de prestamos porcantidades razonables, para proteger legaimente su cr6dito se requiere inscribir la garantia realen el registro designado por la ley. Los registros, asi, permiten establecer claramente la prioridadde garantias reales sobre un mismo bien. De tal modo, los registros facilitan la ejecuci6n degarantias, aseguran la recuperaci6n de pr6stamos, y promueven el otorgamiento de credito.

2. A pesar de la importancia del sistema registral, los registros en Bolivia aun presentan seriasdeficiencias. Entre ellas, se destacan principalmente problemas administrativos de archivo dedocumentos registrales. Con el apoyo del Banco Mundial el gobierno de Bolivia planea ejecutarvarias reformas en los registros. El 6xito de estas reformas dependera, fundamentalmente, delacceso a informacion que permitan los oficiales de los registros. El acceso a los registros, nos6lo facilita el conocimiento de informaci6n crediticia, sino que tambien ayuda a controlar elfuncionamiento de los mismos.

3. El C6digo Civil Boliviano sostiene el principio de acceso publico a los registros,estableciendo que la informaci6n registrada debera estar a disposici6n de cualquier interesado quedesee consultarla [C6digo Civil, Art. 15621. Sin embargo, en la practica, y contrariamente a loestablecido por la ley, los oficiales de los registros niegan el acceso a informaci6n a personas queellos consideren no interesadas.'57

4. Los terminos de referencia que se detallan a continuaci6n tienen por objeto: (i) verificar laposibilidadjuridica de crear un marco normativo de caracter regulatorio que ordene a los oficialesde los registros la ejecuci6n de las normas legales vigentes de acceso puiblico; y (ii) si el resultadode este analisis fuera positivo, redactar el proyecto de Decreto Supremo y/o resolucionesministeriales que correspondan.

Trrminos de Referencia:

5. El consultor verificara la posibilidad de que un Decreto Supremo regule el acceso publicoa los registros. Si el consultor deterniinara que el articulo 1562 del C6digo Civil, su doctrina

' Vr "Law, Legal Pro,2cdure aid dieI Economic Value ol Collaicral Fhe Case liol FbI Ili RI) Rcport No 10627-130 Sep , 1992

Ver, De la Pe6a-Macdoniald, 1 kisig, Nil11cr 'hupro, mig I cgal Regisiries cm IBoliv ac tc ic I cnding", Goherno de Bol via, Miiisierto de Exportacionesy Competitividad Econnisica, Juniio 1992

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o jurisprudencia o cualquier otra norma relacionada con el tema del acceso publico determinaraque lo necesario o aconsejable es una modificaci6n al C6digo o cualquier otra ley, el consultorinformara inmediatamente al Banco Mundial de dicho resultado para verificar si el resto deltrabajo debe realizarse. Si tal analisis demuestra que a pesar de lo dispuesto en el articulo 1562del C6digo Civil, es posible reglamentar el acceso p6blico a los registros, el consultor redactarael correspondiente Decreto Supremo y las resoluciones ministeriales que sean necesarias. ElDecreto Supremo debera ser consistente con la legislaci6n Boliviana vigente. Si el DecretoSupremo contradijera otras normas legales del mismo o inferior rango, debera citarespecificamente las normas que sean abolidas. Debera contener los capitulos que siguen ycualquier otra materia que el consultor considere necesaria para el cumplimiento de los objetivossefialados.

Aplicabilidad:

6. Este capitulo debera establecer claramente los registros que estaran sujetos a las normas delDecreto Supremo. En principio estos seran: todo registro de derechos reales, todo registro decomercio y de sociedades por acciones, todo registro nacional de automotores, el registro de lacomisi6n nacional de valores, todos los registros que contengan informaci6n catastral municipalo nacional urbanos y rurales, el registro de aeronaves, el registro de barcos, el registro de lapropiedad industrial, el registro civil de las personas, todos los registros municipales o nacionalesque otorguen licencias para ejercer actividades comerciales, todos los registros municipales delicencias de vehiculos, todos los registros impositivos, y cualquier otro registro existente, o queen el futuro se establezca, que contenga informaci6n necesaria para la constituci6n de garantiasreales sobre bienes muebles, instalaciones fijas o pertenencias, e inmuebles. Asimismo, estecapitulo deber5 establecer claramente, para cada registro, quienes seran los oficiales p6blicosresponsables de la ejecuci6n del Decreto Supremo.

Caracter Publico, Certificados y Testimonios:

7. Este capitulo debera definir el caracter puiblico de los registros [ver, C6digo Civil, articulo1562].

Penalidades:

8. Este capitulo debera establecer penalidades contra los oficiales de los registros encargadosde aplicar el Decreto Supremo que niegen el acceso a informacion que el decreto declare publica,o que permitan el acceso a la misma por medios distintos a los especificados por el DecretoSupremo.

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Deberes y Derechos de los Oficiales Registradores:

9. Entre los deberes de los oficiales registradores, el decreto debera explicar c6mo cadaregistro permitira el acceso del publico. Por ejemplo, este capitulo puede indicar que el accesop6blico debe permitirse diariamente en horarios de oficina y los oficiales del registro debenproveer una copia de toda la informacion registrada a un costo razonable para pagar la copia, opermitir que el publico examine directamente los libros en una sala de lectura, o proveer unaterminal de computadora.

Deberes y Derechos del publico a solicitar informaci6n:

10. Este capitulo debera establecer el derecho del publico a acceder a la informaci6n. Deberadefinir "p6blico" en su mas amplio sentido, no limitandolo solamente a oficiales, notarios oabogados, sino incluyendo todo individuo o persona juridica.

11. El decreto supremo debe distinguir entre, por un lado el derecho del puiblico en general, enel mas amplio sentido del termino, a solicitar y obtener informaci6n registral; y por otro lado,el art. 1546 del C6digo Civil que autoriza a solicitar la inscripci6n registral a quien tenga "intereslegitimo" en asegurar el derecho que se pretende inscribir. El decreto supremo debe clarificarque el articulo 1546 del C6digo Civil requiere interes legitimo para quien solicita una inscripcionpero no se extiende para quien desea obtener informacion acerca de lo inscripto.

12. En caso de que este derecho a solicitar informaci6n sea denegado en violaci6n a lo dispuestoen el Decreto Supremo, el decreto sostendra el derecho de cualquier individuo o persona juridicaa acudir a la justicia ordinaria para que un juez competente ordene su cumplimiento. Asi, estecapitulo regulara si fuera posible bajo la legislaci6n procesal actual, vigente, y aconsejable, elderecho de ser oido ante un juez civil de inmediato, sin citaci6n del registro demandado, para laobtenci6n de una orden judicial dirigida al director del registro, a efectos de que se le permitaal interesado el acceso directo a los documentos registrados. El capitulo establecera unprocedimiento sencillo para dictar la orden judicial y para la ejecuci6n de la misma, permitiendola asistencia policial cuando sea necesaria. Entre los deberes del publico, este capitulo deberadestacar el deber del puiblico de abonar los costos que correspondan solamente al acceso a lainformaci6n publica requerida.

13. El consultor redactara tambien las resoluciones ministeriales necesarias para darcumplimiento a este Decreto Supremo. Si fuera necesario, dichas resoluciones indicaranespecificamente cual debe ser el procedimiento practico, en cada registro, a efectos de permitirel acceso del puiblico.

14. El consultor dedicara en total 10 dias de trabajo para verificar la viabilidad juridica y, encuanto corresponda, para la redacci6n del Decreto Supremo y las resoluciones ministerialesnecesarias. Debera entregar un primer borrador el 7 de setiembre de 1993 y el documento finala los 15 dias siguientes de recibir los comentarios del Banco Mundial sobre el primer borrador.

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Bienes InembargablesTerninos de Referencia

Antecedentes:

1. El Banco Mundial investig6 en Bolivia el problema de acceso al credito y su relaci6n conel sistema juridico. 58 En el curso de dicha investigaci6n, se advirti6 la existencia de obstaculoslegales en la constitucion y ejecuci6n de garantias. Uno de los obstaculos identificados es elmarco normativo sobre bienes inembargables.

2. La legislaci6n Boliviana norma los bienes inembargables en el Art. 179 del C6digo deProcedimiento Civil y por remisi6n en los articulos 449 y 456 del C6digo de Comercio y 498 delC6digo de Procedimiento Civil. Asi como en otros paises, en Bolivia las disposiciones sobrebienes inembargables son disposiciones de orden puiblico. El objetivo de estas es protejer aldeudor, permitiendole exceptuar de la satisfacci6n de deudas ciertos bienes de su patrimonio.

3. El C6digo de Procedimiento Civil de Bolivia en su articulo 179 define once tipos de bienesinembargables. Sin embargo, esta norma presenta serias dificultades. En primer lugar, laclasificaci6n de bienes inembargables es sumamente amplia e incluye casi toda clase de bienesde la pequehia y la mediana empresa, asi como todo bien adquirido a credito. En segundo lugar,la ley y la jurisprudencia en la materia no han definido un monto maximo hasta el cual se puedareclamar la protecci6n de estas normas. Por 6ltimo, la ley omite cualquier regulaci6n especificapara el caso de bienes sujetos a intervenci6n: no se sabe si debera nombarse uno o variosadministradores judiciales, o un simple interventor o no tomar medida de garantia alguna.

4. Consecuentemente, las disposiciones de los C6digos Procesal Civil y Comercial determinanuna incertidumbre juridica que conlleva a evitar el uso de ciertos bienes como garantia.

5. El objetivo de los terminos de referencia que se detallan a continuaci6n, es crear un marconormativo que de mayor seguridad a las transacciones crediticias, con relaci6n a las disposicioneslegales sobre inembargabilidad de bienes.

Terninos de referencia:

6. El consultor estudiara las disposiciones legales aplicables y verificara la posibilidad dereglamentar por decreto supremo la aplicabilidad de los principios generales de inembargabilidadde bienes. En la medida de los posible el consultor redactara un cuerpo normativo, de caracterregulatorio, que debera enmarcarse en un Decreto Supremo. Este Decreto Supremo regulara losarticulos 498 y 179 del C6digo de Procedimiento Civil y los articulos 449 y 456 del C6digo deComercio, de acuerdo a las consideraciones siguientes:

'' Ver "law, Legal Procedure and die Economic Value of Collateral Tne Case of Bolivia", IBRD Report No 10627-BO

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7. Generalidades: El Decreto Supremo debera clarificar ciertos principios generalescorrespondientes a toda determinaci6n de inembargabilidad de bienes, siempre sujeto a la opini6ndel consultor sobre la factibilidad de hacerlo por medio de un decreto supremo:

a. que son inembargables, ademas de los bienes que sefiala el Art. 179 del C6digo Civil,aquellos otros exceptuados de embargo por leyes especiales, y debera hacer referenciaespecifica a todas aquellas leyes especiales que determinan la inembargabilidad de bienes.

b. que el embargo indebidamente trabado podrd ser levantado de oficio, a pedido del deudoro de su c6nyuge e hijos, aunque la resoluci6n que lo decret6 se hallare concedida, hastala venta efectiva del bien; y

c. que en razon de que el patrimonio del deudor es la garantia comun de los acreedores, lainembargabilidad es la excepci6n, por cuanto el quien solicita el desembargo tiene lacarga de probar que el bien es inembargable y debe apreciarse en cada caso supertinencia con criterio restrictivo.

8. Bienes de uso indispensable: Con respecto a los incisos 3, 5 y 7 del articulo 179 delC6digo de Procedimiento Civil el Decreto Supremo debe clarificar, nuevamente, siempre sujetoa la opini6n del consultor sobre la factibilidad de hacerlo por medio de un decreto supremo:

a. que los bienes de uso indispensable son inembargables s6lo cuando tienen el caracter de-inicos. Por lo tanto, si hay mas de uno, de la misma clase, y para satisfacer la mismafunci6n primaria, los otros pasan a ser embargables.

b. que debe atenderse a lo indispensable o no que resulte el uso de los bienes;

c. que el caracter de bien indispensable debe ser acreditado por quien pide el desembargo(siguiendo la politica general del C6digo de Procedimiento Civil y del C6digo Civil deBolivia de quien tiene el cargo de la prueba es el que solicita la misma);

9. Bienes sujetos a intervenci6n: Con respecto a las disposiciones del articulo 498 y el inciso9 del articulo 179 del C6digo de Procedimiento Civil, el Decreto Supremo debe aclarar, siempresujeto a la opini6n del consultor sobre la factibilidad de hacerlo por medio de un decretosupremo:

a. Que la interpretaci6n del Art. 179 (9) del C6digo de Procedimiento Civil debe limitar elcaracter de "inembargabables" a aquellos bienes (maquinarias, uitiles, herramientas, etc.)que el deudor acredite que son "indispensables" para el ejercicio de su profesi6n u oficio.En caso de que el deudor no pueda establecer dicho requisito, los bienes podran serembargados, aim cuando dichos bienes esten afectados al ejercicio de una actividadempresaria.

b. Que se permite el embargo de los bienes de una empresa, en forma aislada o conjunta,sin perjuicio de autorizar al juez para que nombre un "interventor" judicial que continuela explotaci6n de la empresa y no se comprometa el proceso de fabricaci6n ocomercializaci6n.

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10. Todas las disposiciones del Decreto Supremo deberan ser consistentes con las leyesBolivianas vigentes, a tal efecto se considerara que los decretos-leyes que sancionaron losC6digos Civil, Comercial, Penal, Procesal Civil y Procesal Penal tienen el rango de ley. ElDecreto Supremo podra abolir otras normas legales del mismo o inferior rango; para esto, deberacitar especificamente cada norma que sea abolida.

11. El consultor podra incluir cualquier otro tema necesario para clarificar el marco normativosobre bienes inembargables o no incluir en el decreto - con explicaci6n y justificaci6n juridica -los subtemas que considere no justificables legalmente.

12. El consultor dedicara en total 10 dias de trabajo para evaluar los aspectos de los parrafos7, 8 y 9, y segun corresponda, para la redacci6n del Decreto Supremo. Debera entregar unprimer borrador el 7 de setiembre de 1993 y el documento final a los 15 dias siguientes a larecepci6n de los comentarios del Banco Mundial sobre el primer borrador.

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Contratos Modelos para el Cr&dito MobiliarioTnrminos de Referencia

Antecedentes:

1. El Banco Mundial investig6 en Bolivia el problema de acceso al credito y su relaci6n conel sistema juridico. 159 En el curso de dicha investigaci6n, se advirti6 la existencia de obstaculoslegales al funcionamiento del sistema de garantias. Especialmente, la ejecuci6n de garantias sobrebienes muebles presenta serios problemas debido a la lentitud de los procesos legales para laliquidaci6n de deudas.

2. El C6digo de Procedimiento Civil de Bolivia contiene las disposiciones pertinentes a laejecuci6n de deudas. Principalmente en Bolivia se utiliza el proceso ejecutivo cuando en virtudde un titulo de fuerza ejecutiva se demandara al deudor moroso el pago o cumplimiento de unaobligaci6n exigible. Una vez obtenida la sentencia, y ante el persistente incumplimiento de lasentencia por parte del deudor, el jucio continua bajo el procedimiento de ejecuci6n de sentenciashasta la satisfacci6n definitiva de la deuda -- generalmente, mediante el embargo y remate debienes del deudor (C6digo de Procedimiento Civil, proceso ejecutivo, arts. 486 a 518 y procesode ejecuci6n de sentencias, arts. 514 a 561).

3. Los plazos procesales establecidos por el proceso ejecutivo y el proceso de ejecuci6n desentencias son cortos. A primera vista, la ejecuci6n de deudas bajo estos procedimientos requiereveinte a treinta dias aproximadamente. Sin embargo, de acuerdo a una investigaci6n estadisticaen las cortes de Bolivia sobre el tiempo promedio de resoluci6n de estos juicios, en la practica,la liquidaci6n de deudas require un tiempo promedio de dos ainos. Jueces y abogados en Boliviasostienen que el problema de retardo de justicia es un problema mayor: afecta toda otra clasede litigios. Asimismo, se determin6 que el problema justicial tiene sus raices en dos factores:por un lado, en las normas de procedimiento civil; por el otro, en deficiencias en laadministraci6n de justicia, incluyendo la falta de recursos. '

4. Analizando entonces el problema inmediato que nos ocupa, se hace evidente que lasgarantias sobre bienes muebles en Bolivia son ineficaces. El tiempo de ejecuci6n superaampliamente el tiempo de utilidad del bien mueble que se deprecie en su valor con el correr deltiempo (por ejemplo, maquinarias y productos agricolas).

5. El mejoramiento de la administraci6n de justicia, la revisi6n del C6digo de ProcedimientoCivil, o la implementaci6n de una nueva legislaci6n del sistema de garantias constituyensoluciones posibles a este problema. Sin embargo, son reformas que requeriran largo tiempo parallevar a cabo. En el corto plazo, es posible investigar la utilizaci6n de normas procesalesexistentes, cuya implementaci6n pueda acelerar la ejecuci6n de garantias sobre bienes muebles.

Ver: Law, Legal Procedure and the Economic Value of Collateral: The Case of Bolivia', IBRD Report No. 10627-HO.

Bolivi: Reestinituring for Growth. The Remaining Agenda for Public Enterprise Reform and Privatc Sector Developrnent, IBRD, Report No. 11075-BO.

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6. El C6digo de Procedimiento Civil de Bolivia ha contemplado la contingencia de que bienespendientes de ejecuci6n se deprecien en su valor, destruyendo asi la garantia de los acreedores.Dentro del capitulo sobre medidas precautorias, este C6digo permite medidas procesales queaseguren el cumplimiento de la sentencia (C6digo de Procedimiento Civil, Art. 156). Asi, conrepecto a los bienes muebles, el C6digo permite su secuestro y su venta en la forma masconveniente posible. Especificamente estos articulos dicen:

Art. 162. (Secuestro). l. Procedera el secuestro de bienes y semovientes en los casosque siguen: 1) cuando el embargo no asegurare por si s6lo el derecho invocado porel solicitante, y siempre que se presentare documento que hiciere verosimil el creditocuya efectifidad se quiere garantizar. 2) Con igual condici6n toda vez que fuereindispensable proceder a la guarda o conservaci6n de bienes para asegurar el resultadode la sentencia. 3) Cuando se tratare de cosas que el deudor ofreciere para sudescargo. II. El juez al disponer el secuestro, designara depositario con lasresponsabilidades que la ley sefiala.

Art. 169. (Otras Medidas Precautorias). Fuera de los casos previstos en losarticulos precedentes, quien tuviere fundado motivo para temer que, durante el tiempoanterior al reconocimiento judicial de su derecho, este puediera sufrir un perjuicioinminente o irreparable, podra solicitar las medidas urgentes que, segun lascircunstancias, fueren mas aptas para asegurar provisionalmente el cumplimiento de lasentencia.

Art. 171. (Peligro de Prdida o Desvalorizaci6n). Si hubiere peligro de perdida odesvalorizaci6n del los bienes muebles afectados o si su conservaci6n fuere gravosa odifIcil, el juez, a pedido de parte y previo traslado a la otra con un plazo que fijarasegun la urgencia del caso, podra ordenar la venta en la forma mas conveniente,abreviando los tramites y habilitando dias y horas.

7. Como puede observarse, es posible que acreedores, temerosos de perder su garantia, utilicenestas disposiciones legales para aseguarar su derecho, sin necesidad de esperar a la conclusiondefinitiva de la causa. Sin embargo, en Bolivia, los acreedores recuren escasamente a estasmedidas precautorias.

8. Existen varias razones que podrian explicar por que las medidas precautorias citadas seutilizan raramente. Principalmente, el recobro de posesi6n y la posterior venta inmediata (y hastaprivada) de bienes, como medidas de caracter precautorio, seran ordenadas por el juez s6locuando se pruebe fehacientemente su procedencia. Estos requisitos son sumamente amplios y noexiste jurispruencia, normas o regulaci6n procesal alguna en esta materia especifica, que guie elcriterio del juez. A6n, si se pudiese determinar claramente la procedencia de estas medidas, noexisten regulaciones mas especificas que determinen c6mo se presentara la prueba documental,c6mo se diligenciaran los oficios, c6mo la policia debe ejecutar una order judicial de secuestro,o cuales son los distintos standards para determinar la exigencia de contracautela y su cantidad.A diferencia de la mayoria de los paises latinoamericanos, Bolivia no ha dictado normas de lascortes que regulen detalladamente la ejecuci6n de pasos procesales. Todas estas consideracionesaumentan el riesgo del acreedor y explican, quizas, por que estas medidas nunca se han utilizado.

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9. El objetivo de los terminos de referencia que se detallan a continuaci6n es redactar contratosmodelos que formen parte de un Decreto Supremo. Estos contratos modelos tendran por objetoguiar a los comerciantes en el uso de las disposiciones Bolivianas sobre compra-ventas a creditosy garantias mobiliarias.

Trnminos de Referencia:

10. El consultor redactara contratos modelos (1)de compra-ventas a credito y/o de constituci6nde garantias reales, que financien la compra de bienes muebles. El fin sera crear un acuerdocierto con respecto a la naturaleza de los bienes objeto del contrato y a la posible ejecuci6n encaso de incumplimiento. Estas contratos modelos deberan enmarcarse en un Decreto Supremoy deberan ser consistentes con las leyes Bolivianas vigentes. A tal efecto, se considerara que losdecretos-leyes que sancionaron los C6digos Civil, Comercial, Penal, Procesal Civil y ProcesalPenal, tienen la jerarquia de ley.

11. El Decreto Supremo podra abolir toda norma contraria a las disposiciones del mismo quesean de rango igual o inferior. Debera citar especificamente cada norma que sea abolida.

12. Los contratos modelos podran explicar de que forma y bajo cuales circunstancias, ante elincumplimiento del deudor, el acreedor podria requerir judicialmente cualquiera de las medidasprecautorias del C6digo de Procedimiento Civil. Esta explicaci6n incluira fundamentalmente loscontratos de compra-venta a plazos, arrendamiento y prenda.

13. Si fuera posible, el decreto debera explicar c6mo se presentara informacion registrada enlos registros publicos a las cortes en caso de litigio. Por ejemplo, c6mo se procesara un oficiopor transferencia electr6nica, por telegrama o por facsimil para remitir informaci6n sobre bienesdesde El Registro de los Derechos Reales a una corte.

14. El Decreto Supremo debera establecer metas que determinen el periodo de resoluci6n de6rdenes judiciales de secuestro; y debera ordenar a las autoridades competentes la publicaci6ngratuita de un reporte anual que incluya el tiempo de procesamiento de estas ordenes judiciales.

15. El Decreto Supremo debera establecer metas del periodo de tiempo de ejecuci6n de 6rdenesjudiciales de secuestro por parte de la policia; debera ordenar a las autoridades policialescorrespondientes la publicaci6n de un reporte anual que incluya el tiempo requerido para laejecuci6n de estas 6rdenes.

16. Asimismo, el Decreto Supremo podra ordenar la recopilaci6n de estos datos por parte deotras organizaciones publicas.

17. Si fuera posible, el decreto supremo debera disponer sanciones contra oficiales publicos encaso de que incumplan las disposiciones del mismo.

18. El consultor dedicara en total 15 dias de trabajo para la redacci6n de este Decreto Supremo.Debera entregar un primer borrador el 15 de mayo de 1993 y el documento final los 15 diassiguientes a la recepci6n de los comentarios del Banco Mundial sobre el primer borrador.

Glossary:English/Spanish

- 119 -

Glossary'

English Spanish Explanation/Comments

* answer * contestaci6n de demanda Defendant's answer to thel _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ co m p lain t* antichresis * anticresis

* appeal * apelaci6n-- en efecto devolutivo -- does not suspend execution

-- does suspend execution-- en efecto suspensivo

* as a matter of law, de jure * de puro derecho Under civil law a motion todecide the case as a matter of lawis similar to a motion forjudgment or a motion forsummary judgment. If granted,the judge will immediately decidethe case because no material factis in controversy.

* at issue * en controversia The parties are at issue whencertain facts or points of law aredisputed between them at thelitigation.

* attachment * embargo

* bailee * depositario

* bailment agreement * contrato de dep6sito Agreement under which one party(bailor) will deliver personalproperty to another (bailee) totake care of it.

* banking law forclosure * proceso coactivo bancarioprocedure

* bearer paper * documento traspasable, al portador

* chattel mortgage * hipoteca mueble

* chattel mortgage without * prenda sin desplazamientoconveyance

* chattel mortgage with * prenda con desplazamientoconveyance

The translation and explanation of words relate specifically to their use in the text.

- 120-

* chattel, tangible personal * bienes muebles Excludes intangible personalproperty property.

* civil procedures * procedimientos:proceso ordinario

proceso sumarioproceso sumarisimoproceso ejecutivo

* collateral receipt * vale de prenda

* complaint * demanda The first pleading of the plaintiffsetting out the facts on which theclaim for relief is based.

* demurrer * excepciones previas In demurring the answering partyrequests a dismissal of the actionon the grounds of misjoinder ofparties, lack of jurisdiction, lackof venue, payment, statute oflimitation, etc.

* deposit in warehouse * contrato de dep6sito en almacenes The certificate issued by theagreement generales warehouse is the warehouse

receipt.

* discountable bill * letra negociable

* discovery * prueba In Civil Code countries there isno pre-trial discovery.

* draft, bill of exchange * letra de carnbio

* easement * servidumbre

* endorsement * endoso

* enjoyment of the property of * uso, usufructo Includes appropriation of theanother proceeds of the goods or property

as different from the mere right topossess: for example, a renterenjoys the use of the propertywhile a consignee does not.

* exchange * bolsa de valores

* final decision or final * sentencias pasadas en autoridad dejudgment cosa juzgada

* foreclosure procedure * public auction

* holder in due course * tenedor legitimo de buena fe

* homestead * bien de familia

- 121 -

* interlocutory decision * sentecias interlocutorias Intermediate, not final, decisionsin the case.

* judgment lien * embargo judicial When judgment has been enteredin a civil case, and the party liablefor the judgment fails to pay it,the judgment creditor may file alien against the property of theliable party to give notice that theproperty is subject to sale tosatisfy the judgment.

* legal acts * actos jurfdicos Any act of a human being that hasa legal effect, for example, tocontract.

* lien * gravamen A security interest in property.

* mortgage * hipoteca

* mortgage (includes both * pignoraci6n A secured interest on real ormortgage or chattel mortgage personal property. The termand antichresis) denotes both anticresis or prenda

agreements.

* motion * moci6n, peticion, recurso an application to the courtrequesting an order or ruling infavor of the applicant

* negotiable instrument * instrumento negociable o titulo-valor instruments including, but notlimited to:

bills of exchange, promissorynotes, checks, bonds, mortgagebonds, debentures, etc. Theycould be pledged withoutagreement or filing since thesecurity interest is perfectedwith the physical possession ofthe instrument.

* note, promissory note * pagare

* pawnbroker * casa de empeino, monte de piedad

* peremptory challenges, * excepciones perentorias -- Peremptory challenges againstdemurrer a complaint that, if accepted, will

dismiss the proceedings, e.g., ademurrer founded on statute oflimitation.

-- May only delay the proceedingexcepciones dilatorias until they are decided.

- 122 -

* perfected instrument * instrumento perfecto, documentoperfecto

* pledge of agricultural * prenda agraria It is a "prenda civil sinequipment, or chattel desplazamiento" under the Civilmortgage on farm machinery Code provisionsand livestock

* pledge, security interest or * prenda, (a type of gravamen) Different types exist: under thelien on personal property - prenda civil con desplazamiento Civil Code and the Commercial

- prenda civil sin desplazamiento Code; they can be with or without- prenda comercial con desplazamiento delivery of the goods to the- prenda comercial sin desplazamiento creditor in both cases.

* preservation of testimony * audiencia de testigos fuera del perfodo Depositions taken before trial inde prueba case the witness may not be

available later

* priority * prelaci6n, privilegio

* private sale * venta privada de bienes Sale of collateral by the creditorupon default, without judicialintervention.

* public policy provisions * leyes de orden publico Provisions that, under civil law,they may not be changed by thecontracting parties

* real estate * inmuebles

* sale with an option to * venta con pacto de retroventarepurchase

* security, bond, registered * titulo-valorsecurity,

* seizure * secuestro

* service of process * notificaci6n Court's communication of theprocess or the court papers to thedefendant.

* sheriff notice or receipt after * acta de embargohe has levied and soldproperty of the judgmentdebtor

* small claim procedure * proceso sumario o proceso sumarisimo

* statutory mortgage * hipoteca legal Mortgage established by law

* subpoena * c6du!a de notificaci6n court document that sets out acourt order

- 123 -

* suit for payment * proceso ejecutivo similar to a small claim procedureunder judgment affidavit.

* sum certain * suma cierta

* to perfect a security * perfeccionar un documentoagreement

* warehouse receipt * vale de prenda A negotiable instrument alwaysissued in connection to thewarehouse receipt and alwaysattached to it. This instrumentincorporates a security interest(prenda) against the goods of thewarehouse receipt (Cod. Com.,Art. 691)

* warehouse receipt * certificado de dep6sito en almacenes under the Civil Law system isgenerales o "warrant" considered a negotiable instrument

* writ * mandamiento, orden judicial a mandatory precept issued tocompel a person to do somethingtherein mentioned. It is issued bythe court and directed to thesheriff or other officer authorizedto execute it. It usually containsdirections as to what is requiredto be done.

* writ of execution to levy and * mandamiento de embargo in Bolivia, it will only establish asell judgment lien on the debtor's

property, a public auction willtake place latter

Glossary:Spanish/English

- 127 -

Glossary'

Spanish English Explanation/Comments

* acta de embargo * sheriff notice or receipt afterhe has levied and soldproperty of the judgmentdebtor

* actos juridicos * legal acts Any act of a human being that has alegal effect, for example, to contract.

* anticresis * antichresis

* apelaci6n * appeal-- en efecto devolutivo -- does not suspend execution

-- does suspend execution-- en efecto suspensivo

• audiencia de testigos fuera del * preservation of testimony Depositions taken before trial in caseperiodo de prueba the witness may not be available later

L bien de familia * homestead

* bienes muebles * chattel, tangible personal Excludes intangible personal property.property

* bolsa de valores * exchange

* casa de empefio, monte de piedad * pawnbroker

* cedula de notificaci6n * subpoena court document that sets out a courtorder

* certificado de dep6sito en * warehouse receipt under the Civil Law system isalmacenes generales o "warrant" considered a negotiable instrument

* contestaci6n de demanda * answer Defendant's answer to the complaint

* contrato de dep6sito * bailment agreement Agreement under which one party(bailor) will deliver personal propertyto another (bailee) to take care of it.

* contrato de dep6sito en almacenes * deposit in warehouse The certificate issued by thegenerales agreement warehouse is the warehouse receipt.

The translation and explanation of words relate specifically to their use in the text.

- 128 -

* de puro derecho * as a matter of law, de jure Under civil law a motion to decide thecase as a matter of law is similar to amotion for judgment or a motion forsummary judgment. If granted, thejudge will immediately decide the casebecause no material fact is incontroversy.

* demanda * complaint The first pleading of the plaintiffsetting out the facts on which theclaim for relief is based.

* depositario * bailee

* documento traspasable, al * bearer paperportador

* embargo * attachment

* embargo * judment lien When judgment has been entered in acivil case, and the party liable for thejudgment fails to pay it, the judgmentcreditor may file a lien against theproperty of the liable party to givenotice that the property is subject tosale to satisfy the judgment.

* en controversia * at issue The parties are at issue when certainfacts or points of law are disputedbetween them at the litigation.

* endoso * endorsement

* excepciones previas * demurrer In demurring the answering partyrequests a dismissal of the action onthe grounds of misjoinder of parties,lack of jurisdiction, lack of venue,payment, statute of limitation, etc.

* excepciones perentorias * peremptory challenges, -- Peremptory challenges against ademurrer complaint that, if accepted, will

dismiss the proceedings, e.g., ademurrer founded on statute oflimitation.

-- May only delay the proceeding untilexcepciones dilatorias they are decided.

* gravamen * lien A security interest in property.

* hipoteca mueble * chattel mortgage

* hipoteca * mortgage

- 129 -

* hipoteca legal * statutory mortgage Mortgage established by law

* inmuebles * real estate

* instrumento negociable o titulo- * negotiable instrument instruments including, but not limitedvalor to:

bills of exchange, promissorynotes, checks, bonds, mortgagebonds, debentures, etc. They couldbe pledged without agreement orfiling since the security interest isperfected with the physicalpossession of the instrument.

* instrumento perfecto, documento * perfected instrumentperfecto

* letra negociable * discountable bill

* letra de cambio * draft, bill of exchange

* leyes de orden puiblico * public policy provisions Provisions that, under civil law, theymay not be changed by thecontracting parties

* mandamiento de embargo * writ of execution to levy and in Bolivia, it will only establish asell judgment lien on the debtor's

property, a public auction will takeplace latter

* mandamiento, orden judicial * writ a mandatory precept issued to compela person to do something thereinmentioned. It is issued by the courtand directed to the sheriff or otherofficer authorized to execute it. Itusually contains directions as to whatis required to be done.

* moci6n, petici6n, recurso * motion an application to the court requestingan order or ruling in favor of the

.___ ____ ____ _ _ _applicant

* notificaci6n * service of process Court's communication of the processor the court papers to the defendant.

* pagare * note, promissory note

* perfeccionar un documento * to perfect a securityagreement

* pignoraci6n * mortgage (includes both A secured interest on real or personalmortgage or chattel mortgage property. The term denotes bothand antichresis) < < anticresis > > or

< <<prenda> > agreements.

- 130(-

* prelaci6n, privilegio * priority

* prenda con desplazamiento * chattel mortgage withconveyance

* prenda, (a type of gravamen) * pledge, security interest or Different types exist: under the Civil- prenda civil con lien on personal property Code and the Commercial Code; theydesplazamiento can be with or without delivery of the- prenda civil sin desplazamiento goods to the creditor in both cases.- prenda comercial condesplazamniento- prenda comercial sindesplazamiento

* prenda sin desplazamiento * chattel mortgage withoutconveyance

* prenda agraria * pledge of agricultural It is a "prenda civil sinequipment, or chattel desplazamiento" under the Civilmortgage on farm machinery Code provisionsand livestock

* procedimientos: * civil proceduresproceso ordinario

proceso sumarioproceso sumarisimoproceso ejecutivo

* proceso sumario o proceso * small claim proceduresumarisimo

* proceso coactivo bancario * banking law forclosureprocedure

* proceso ejecutivo * suit for payment similar to a small claim procedureunder judgment affidavit.

* prueba * discovery In Civil Code countries there is nopre-trial discovery.

* public auction * foreclosure procedure

* secuestro * seizure

* sentecias interlocutorias * interlocutory decision Intermediate, not final, decisions inthe case.

* sentencias pasadas en autoridad * final decision or finalde cosa juzgada judgment

* servidumbre * easement

* suma cierta * sum certain

* tenedor legitimo de buena fe * holder in due course

- 131 -

* titulo-valor * security, bond, registeredsecurity,

* uso, usufructo * enjoyment of the property of Includes appropriation of the proceedsanother of the goods or property as different

from the mere right to possess: forexample, a renter enjoys the use ofthe property while a consignee doesnot.

* vale de prenda * warehouse receipt A negotiable instrument always issuedin connection to the warehouse receiptand always attached to it. Thisinstrument incorporates a securityinterest, < < prenda > >, against thegoods of the warehouse receipt (Cod.Com., Art. 691)

* vale de prenda * collateral receipt

* venta con pacto de retroventa * sale with an option torepurchase

* venta privada de bienes * private sale Sale of collateral by the creditor upondefault, without judicial intervention.

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