Procedural Regime of the civil action for loss of ownership

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Executive Decree No. 62/2019

On January 22, 2019, the Official Gazette published Executive Decree No. 62/2019 ("DNU" in its Spanish acronym) approving the "Procedural regime of the civil action for loss of ownership". Likewise, it modifies Section 1907 of the National Civil and Commercial Code, Section 21 of Law No. 24,522 (Bankruptcy Law) and Sections 5 and 22 of Law No. 27,148 (Organic Law of the Public Prosecutor's Office).

The new regime was promoted by the Argentine Ministry of Justice and Human Rights within the framework of the Programa Justicia 2020, with the purpose of regulating the extinction of the right over the assets that have been ill-gotten as a result of acts of corruption or organized crime, in order to recover them for the benefit of society.

To that end, the law sets forth an autonomous civil action of a patrimonial nature, through which the State may question the ownership of an asset in cases where there is a well-founded suspicion it comes directly or indirectly from the commission of the crimes detailed in Section 6 of the new regime, for example, money laundering, bribing and concealment.

The most important issues of the regime approved through the DNU are the following:

• A Procurator's Office for the Loss of Ownership is created within the Public Prosecutor’s Office, with powers to carry out ex officio investigations, collaborate with the identification and location of the assets, as well as to initiate and promote the actions of loss of ownership and reach agreements, which will have the effect of res judicata after judicial approval.

• The loss of ownership action will process through the summary proceeding provided for in Section 498 of the National Civil and Commercial Procedural Code, with the exception of the term for filing the statement of answer to the complaint, which is extended to 15 days.

• The standing to sue corresponds to the Argentine Public Prosecutor's Office and the competent courts will be the federal civil and commercial ones. In the event of reorganization proceedings of the defendant, the processes of loss of ownership will not be heard by the court that deals with the reorganization proceedings.

• For the admissibility of the claim, the sole issuance of a precautionary measure on the asset by a competent criminal judge will be enough. The existence of a final criminal judgment is not necessary.

• The defendant has the burden of proving that the asset or assets or rights subject to the action of loss of ownership were incorporated into his/her patrimony prior to the date of alleged commission of the crime investigated or the legal origin of the funds with which they were acquired.

• The Public Prosecutor's Office will tend to reach loss of ownership agreements, as long as the assets involved are adequate to offset the patrimonial detriment of the National State or the damage caused to society. Likewise, it may also develop collaborative programs with people who provide relevant information, being able to grant compensation not exceeding 10% of the assets whose ownership is declared lost as a result of the information provided by the collaborator.

• The final judgment will be res judicata regarding the assets or rights involved, regardless of the outcome of any other judicial action.

• In the event of dismissal or acquittal in a criminal court based on the non-existence of the fact under investigation or if said fact does not fit into a criminal offense, the National State must restore the asset or right to its previous owner holder or, if not possible, deliver an equivalent value in money.

• The statute of limitations of the new action is 20 years from the date on which the assets have been acquired by the owners or holders and, in cases where it cannot be determined, the time limit must start from the date of the alleged commission of the crime investigated by criminal courts.

In line with the above, the DNU modifies the Civil and Commercial Code and incorporates as a means of extinction of real property rights the judgment that so provides in a loss of ownership process.

The new regulation came into force on January 22, 2019.

To access the DNU and its annex, please click on the link below (available only in Spanish):

Decreto de Necesidad y Urgencia Nº 62/2019

For further information, do not hesitate to contact María Inés Corrá, Federico Campolieti or Martín Torres Girotti.