REGISTRY OF MANDATES

Powers of attorney may be registered in the commercial registry. As a matter of fact, as seen before in certain cases, their registration there is generally required by law in order that their provisions be binding upon third parties.

Law no. 3594 has created another registry, which is called the registry of mandates (registry of powers of attorney). The registration of a power of attorney in the registry of mandates is not obligatory, but in practice it is very advantageous, as such registration will suffice to establish the original power of attorney as well as any subsequently registered cancellation, revocation, resignation, suspension, or modification made thereto before the authorities in general as well as regards third persons.

SUMMARY

By way of summary, the following points should be borne in mind whenever a power of attorney is drawn in a foreign country for use in Argentina:

(1) If an individual is executing the power of attorney in behalf of a corporation, partnership, or another person, his authority to do so must appear in the body of the power of attorney as indicated hereinbefore.

(2) It will be good policy to be very specific in the enumeration and definition of the authority-that is, the powers desired to be conferred-in_order to avoid the complications suggested under the heading "Interpretation of clauses" of this chapter.

(3) If the power of attorney should be one which, under article 1184 of the Argentine Civil Code discussed hereinbefore, must be protocolized with an Argentine escribano (notary public) before it may serve to accomplish the purposes for which it was executed, it is advisable to have the same drawn in the Spanish language before an Argentine consul in the foreign country. This procedure is practical, because no further protocolization is necessary in Argentina, and because it renders unnecessary the procedure of authentication discussed herein before. In this case, as soon as the signature and seal of the consul are duly checked in Argentina at the ministry of foreign relations, the power of attorney will be ready for use.

When a power of attorney is drawn in a foreign country before a notary public other than an Argentine consul, authentication is then absolutely necessary, if the power is to be protocolized in Argentina with an escribano.

(4) When a power of attorney is not drawn before an Argentine consul acting as an escribano and the language of such is other than the Spanish language, a translation of it into the Spanish language should be made part thereto and should be duly certified as to its correctness by the consul. If the consul does not affix a certification as to the correctness of the translation, such translation will have to be made in Argentina by an official translator.

(5) It is sometimes advisable to insert clauses in a power of attorney fixing the duration of such and authorizing the attorney in fact to make substitutions in certain cases. Whether these should be included or not depends on the facts of each individual case.

(6) In form the power of attorney drawn by an Argentine escribano resembles that of a deposition, the notary stating at the outset that at a certain place and time the grantor appeared before him and, after being identified, granted the powers next set forth. It concludes with the notary's statement that the grantor read, ratified, and signed the foregoing together with the witnesses and the notary, followed by these signatures. It is advisable to follow the Argentine form as nearly as possible.

If grantor is granting the power of attorney in behalf of a corporation, partnership, or another individual, his authority to do so should be recited in the body of the power of attorney. The notary public must certify in such that the originals of the records or documents evidencing the authority of the grantor have been exhibited to him and that the transcriptions made thereof are correct.

The drawing of a power of attorney for use in a foreign country should always be intrusted to a lawyer familiar with the laws of the particular foreign country, in view of the many technical points which are always involved in the procedure.

FOREIGN JUDGMENTS

There is no treaty between the United States and Argentina providing for a reciprocal recognition of judgments pronounced either by Federal or State courts. In the absence of such a treaty, a judgment obtained in the United States will be enforced by Argentine courts on a basis of reciprocity. In the case of enforcement on a basis of reciprocity, the foreign judgment must fulfill the following requisites: First, it must not have been obtained in defiance of the rights or jurisdiction of the Argentine courts; second, the action must not have been brought on an obligation regarded as void in Argentine law; third, if the judgment was obtained by default, it must appear (a) that due personal service of the summons was made on defendant and (b) that defendant did not reside in Argentina during the course of the trial.

The foreign judgment must reach Argentina duly authenticated by an Argentine consular or diplomatic representative in the United States. Before presentation to the Argentine court, it must be translated by an official translator, and service of a citation to appear must be served on the defendant. The defendant is entitled to interpose an answer or objection, but should the court not sustain his contention the foreign judgment is forthwith homologated, or given the force of law, and execution issues as in the case of any domestic judgment.

BANKRUPTCY AND INSOLVENCY

By Mariano H. Ramírez, formerly of the Division of Commercial Laws

A new bankruptcy law was enacted in Argentina (law no. 11719) September 7, 1933. It introduces numerous changes in the previous law in order to correct certain practices which tended to delay bankruptcy proceedings and to obstruct the effective protection of creditor's rights. Among these several points the following are of particular importance.

(1) The mere fact that a debtor suspends payment of his obligations causes his state of bankruptcy and if he fails to seek and obtain a composition of creditors, bankruptcy proceedings are prosecuted against him as of course.

(2) Application for composition ranks as a conditional petition for bankruptcy (3) After the order opening the composition proceedings the receiver must notify the creditors of the application by registered mail.

(4) Claims against the estate come under much closer scrutiny,

(5) The Court of Commerce is given greater powers in the proceedings. (6) No appeals from rulings of the court are permitted except when so expressly stated (in very few cases).

(7) No one may represent more than five creditors when their claims exceed 500 pesos each. Nor may the power of attorney be given to a cocreditor. (8) The wife or husband of the bankrupt as well as other relatives or the assignees of their claims cannot participate in creditors' meetings.

(9) The judge may refuse to consent to any agreement which in his opinion should be nullified for certain given reasons or when the terms accepted by the majority are notoriously detrimental to the interests of the generality of creditors.

(10) Lack of funds sufficient to cover judicial expenses in the bankruptcy proceedings raises a presumption of fraud and leads to the transfer of the record to the criminal court for prosecution of the debtor.

(11) No creditor may be appointed liquidator in more than five liquidations or bankruptcies in 1 year within each judicial district.

(12) Receivers (sindicos) are selected from official lists of accountants by drawing lots instead of being appointed by the creditors.

(13) No relative of the bankrupt within the fourth degree of consanguinity or affinity may act as receiver or liquidator.

(14) Fees and judicial expenses are regulated by the law with the intention of keeping them as low as possible in proportion to the size of the estate. (15) Classification of the creditors is stated to be more equitable.

(16) No proposal for a composition under 30 percent or for more than 1 year is allowed.

(17) The declaration in bankruptcy may be sought by the debtor or his creditors.

(18) A settlement may be made between the bankrupt and the creditors at any time during the proceedings after the examination of claims and the bankruptcy proceedings will be abandoned.

(19) Applications for revocation and annulment of the declaration in bankruptcy for examination and ranking claims not submitted in time and for reconsideration of rulings admitting or rejecting claims which have been assailed will be dealt with as incidental proceedings (incidentes).

(20) The liquidator cannot make a submission to arbitration or settlement without authorization either from the board of supervisors, if one is appointed, or from the judge.

BRIEF OUTLINE OF THE LAW

The new law extensively regulates the procedure governing the composition of creditors. This may be demanded by a debtor in order to forestall his bankruptcy. The proper petition must be ac

companied by a general balance, a list of creditors, and certificate of inscription in the Registry of Commerce. The judge immediately appoints a receiver, fixes the time for presentation of claims, calls for a meeting of creditors and orders the examination of the books of the applicant. The composition must be approved by two-thirds of the creditors present at the meeting representing 75 percent of all the proved and admitted claims.

The declaration in bankruptcy must be made by a judge of commerce. It may be made when (1) the composition is not accomplished or is annulled, (2) the debtor does not appear at the meeting of creditors or fails to offer a composition, (3) the debtor or one of his creditors requests it. If the insolvent is of good faith, the judge may order the liquidation of his estate without declaring him in bankruptcy. In the first two cases the judge appoints the receiver and fixes the date of suspension of payments in the declaration of bankruptcy and orders the retention of all correspondence and property of the bankrupt and payment to the receiver of all claims due the bankrupt.

The debtors defined by the law who do not demand composition must state that they have suspended payments and request their declaration in bankruptcy. If such declaration is requested by a creditor he must present the evidence of the facts and circumstances indicative of the suspension of payments, and of inscription in the Mercantile Registry if the debtor is a nonmerchant. In this declaration of bankruptcy the judge must take the steps indicated under the first two cases.

After the declaration in bankruptcy the inventory and description of the property must be made and the number, class, and condition of the books of accounts stated. If the proceedings cannot go forward because of lack of assets to cover expenses, the bankruptcy is terminated and the bankrupt prosecuted criminally. By means of collateral proceedings (incidentes) the revocation or annulment of the declaration of bankruptcy may be sought; in like manner examination and ranking of claims not presented in time and reconsiderations of rulings admitting or refusing claims may be prosecuted.

The law defines in detail the effect of the declaration in bankruptcy by which the debtor is deprived of and disabled as regards the administration of his property. All gratuitous conveyances as well as payments of obligations not yet due and encumbrances to guarantee prior unsecured debts made after the date of suspension of payments and before the declaration in bankruptcy are null and void while others are declared voidable. The statute also establishes the order of payment of claims, and the recovery (reivindicación) of property whose title was not transferred to the bankrupt such as bills sent to him for collection and consignments.

The liquidation of the property of the bankrupt estate, distribution of the assets, the measures to be taken with respect to bankrupts and their accomplices in case of culpability or fraud, the discharge of the bankrupt by full payment or after 3 years following acquittal or dismissal of the action, or following the fulfillment of the penalty imposed, etc., and certain questions involving companies and partnerships are extensively regulated by the new law.

WHO CAN BE FORCED INTO BANRUPTCY

Merchants and commercial partnerships and companies may become bankrupts. Nonmerchants and noncommercial companies and partnerships conducting their business in the form of a commercial enterprise may likewise become bankrupts if they are registered in the Registry of Commerce, keep books of account and their correspondence, and render accounts according to law as prescribed by articles 26, 27, and 33 of the Code of Commerce. The bankruptcy of a deceased may be declared when his death caused suspension of payments; in this case the declaration cannot be sought by the creditors until 6 months after the date of the death. The person who ceases to be a merchant may be thrown into bankruptcy provided that the suspension of payments arises out of obligations contracted by him while engaged in commerce. This right must be availed of within a year after the date when the insolvent closed his business.

The declaration of bankruptcy of a general partnership or a partnership with limited silent partner causes the bankruptcy of all the joint and several partners (socios solidarios). The bankruptcy of a partner, on the contrary, does not cause that of the partnership. The partnership creditors have a preferential claim on the bankrupt's share in the partnership over his private creditors. The same provision applies when an individual is a member of two or more partnerships one of which is thrown into bankruptcy.

The bankruptcy declared in a foreign country cannot be relied on against domestic creditors of the bankrupt either to question rights claimed by them on the assets existing within Argentina or to annul any of their transactions with the bankrupt. It has been asserted in the past that where a debtor is thrown into bankruptcy in Argentina and nowhere else, foreign creditors share in the assets equally with local creditors; that the position of foreign creditors is diferent only in those cases where bankruptcy proceedings have been started in a foreign country at the same time or prior to the Argentine proceedings. According to both the old and the new law when a debtor is thrown into bankruptcy abroad and also within Argentina, the creditors in the foreign proceedings will not be considered in those which take place within Argentina except when an excess exists after the local creditors have been paid in full. It is said that the distinction between local and foreign creditors does not lie in nationality or domicile. Local creditors or "Creditors in the Republic" as the statute designates them, are those within Argentina as well as those who by special agreement with the bankrupt have chosen Argentina as the place for the fulfillment of the contract or the payment of an obligation. (Bankruptcy Law Arts. 1-7.)

SUSPENSION OF PAYMENTS

The suspension of payments is defined as the inability of a merchant to meet his commercial obligation in time. The failure to pay a negotiable instrument at maturity is evidence of this condition. It constitutes the state of bankruptcy. This, however, is not true when the suspension only extends to commitments of a noncommercial character or to those which do not relate to the nonmerchant's