The Anglo American Origin of the Latin American Fideicomiso (Trust): Reasons and Implications

Abstract

The Latin American fideicomiso (trust) is a very important legal institution in the region, since most commercial and financial transactions are entered into through this legal device. Two countries that provide strong evidence about the importance of this mechanism are Mexico and Colombia. By the end of 2015, the total value of assets managed under this legal device in Mexico and Colombia was about 55% and 47% of the GDP of these countries, respectively. Based on a comparative analysis of the Latin American fideicomiso, with particular focus on the Colombia experience, this paper argues that, unlike it has been traditional assumed, the Latin American fideicomiso does not have civil law origins. Indeed, we will provide arguments to support the Anglo American origin of this legal decide, despite the fact that Colombia (and most Latin American countries) has civil law origins. We support our statement on various relevant facts that shows that the features of the Latin American fideicomiso differ from those existing in civil law sources. First, the Anglo American notion of trust recognizes that the assets managed under this legal device are not part of the Trustee’s patrimony. They are independent. And this feature is not found in the fideicomiso existing in the civil law tradition. Second, most Latin American countries derive from the Napoleon Code. However, this institution is not found in this Code. Third, after analyzing the particular features of the trust, we find that, in addition to the notion of trust, other elements of this Anglo American institution are found in the Latin American fideicomiso, such as the structure of the agreement, the parties and the trustee’s duties. These findings may have two primary implications. First, even though most Latin American countries have always been classified as “civil law countries”, a deeper understanding of some Latin American legal institutions –such as the fideicomiso– may show that, in practice, these origins may be closer to the Anglo Saxon tradition than it seems. Second, if, as we argue, the Latin American fideicomiso has Anglo Saxon origins (rather than civil law origins), it could be changed the way courts and legal scholars have traditionally interpreted the Latin American trust. Therefore, when interpreting the features and origins of this legal device, instead of looking at the Roman-German tradition, Latin American courts and legal scholars should look at the Anglo Saxon trust.