International Private Investment and the Practice of Law
Written By: José Miguel Olivares, Esq.
Grupo Vial Abogados
Las Condes, Santiago, Chile
Memoirs of the Past
Until the early 1970s, the majority of Latin American legal systems were very restrictive to foreign investment, from and towards private entities.
The average Latin American law student had little or no interest in studying or working abroad, since the chances of achieving an international law practice were few, and the majority of them were tied to public law, governmental banks or entities, or to international diplomatic organizations.
The average private entrepreneur from the northern hemisphere was used to associating our continent with red tape, bureaucratic sluggishness, discretional powers of the authority, restrictive licenses required for foreign trade, discriminatory access to tax rates or foreign exchange rates, etc.
Growth of International Private Investment
Since those days, our countries (and many other nations on other continents as well) have been learning to welcome, foster and protect foreign private investment, and to encourage cost efficient foreign trade. The countries have adapted their economic systems consequentially.
Speaking as a layman in economics, these private equity investments in Latin America have been positive for our countries and hopefully will remain such in the future.
As for Latin American lawyers, this trend has strongly increased the importance of international law practice, and the number of potential clients for Latin American law firms has also experienced substantial growth.
Master of Laws studies in American universities, or equivalent programs in relevant European countries, have become a standard for those Latin American law graduates wishing to develop a fruitful career in private law. Practicing for some time at a foreign law firm has become an important goal.
All the above implies improvement of the legal profession in our countries that is obviously welcome.
The Contribution of the Legal Profession
There is another contribution to this process which would help both the host countries and the incoming foreign investors. The desks and computer screens of any businessperson in the northern hemisphere are constantly flooded with much economic information about our countries. Figures, statistics, graphics and reports on GBP, bond yields, interest rates, inflation rates, stock markets, exchange rates and many other economic facts, abound. Universities, thinks tanks and investment bankers, strive to keep that information updated. Thus, lawyers should focus on the Rule of Law, its present accomplishment and the improvement thereof, as our most relevant contribution to strengthen the benefits and to reduce the imperfect effects of foreign private investment in our countries.
Since their early days in university, lawyers learn that the law aims to provide certainty and safety for human relationships. Relationships between our authorities or governments, our local industrialists, financiers or businesspeopl and our foreign investors should not be excluded from this.
Validity of economic or financial analysis of foreign investments will also depend on the capability of the respective legal system to provide certainty and safety to those entrepreneurial endeavors, especially in the longer term.
This is the distinctive advice that we lawyers should always provide to our clients when assessing the capabilities of our countries to serve as hosts of foreign investments.
This approach goes beyond the detailed descriptions of laws and regulations available in as many “How to do business” booklets and reports. Obviously, we shall never disregard knowledge and efficient management of the tax and customs laws, of the foreign investment statutes, of the foreign exchange rules and of all other legal tools that a foreign investor needs to learn. This knowledge is necessary, but not enough to achieve a relevant professional performance.
The valuable analysis that only we lawyers may primarily provide to our foreign clients, is the accurate and honest assessment of the actual abidance of the law in our local institutions, governments, courts, entrepreneurs, etc. This analysis must be based upon objective parameters leading to professional conclusions. Lawyers’ concern over these matters is not only a service for foreign clients, but also an ethical duty towards our national communities.
This contribution to the growth of international private investment is part of the essence of our professional training and furthers the prestige and dignity of the practice of law. I hope these ideas become another distinctive characteristic of Primerus lawyers, who share a commitment to the Six Pillars that mark the collective aims of this institution.
The Case of Chile
Chile has been subject to a thorough review in these regards, by the World Justice Project, while preparing their 2011 Rule of Law Index, released on June 13, 2011.
I encourage you to visit the website of the World Justice Project1 and study this very important document. The methods and criteria of this report are certainly a solid benchmark in regard to recording and informing adherence to the Rule of Law on a worldwide prospective.
There are three new institutions that are specifically meant to reinforce the Rule of Law in Chile, in addition to the traditional courts and governmental control agencies, which are granted full legal recognition and operation in Chile.
The Court of Public Contracts (Tribunal de Contratación Pública).
This was created in 2003 by Law N° 19.8862, as part of a general review and update of the Chilean state. This special court has free rein from all state dependency and is not part of the ordinary Chilean courts of justice. Nevertheless it remains submitted to the disciplinary authority of the Chilean Supreme Court.
Its purpose is to reinforce the guarantees of law abidance and transparency within the contractual activity of the state of Chile.
It has authority to learn and resolve accusations or complaints against illegal or arbitrary acts or omissions incurred by state entities throughout tenders and or related to the rejection or admittance of State contractors in the respective Official Registry.
The Council for Transparency (Consejo para la Transparencia).
This is a nonprofit legal entity, submitted to Public Law, created by Law N° 20.285 in 2008. Its purpose is to promote transparency and grant access to all citizens to state information, in order to foster public trust in the state authorities. One of the main legal tools available to the Council is the General Instructions that it may issue, including requirements of publicity and accessibility that are mandatory for all governmental entities.
The Code of Ethics of the Chilean Bar Association
The new Code of Ethics and the Discipline Rules of the Chilean Bar Association (Colegio de Abogados de Chile A.G.) came into effect on August 1, 2011. They regulate the practice of law in Chile and grant effective means for complaints of the citizens in this regard.
Essentially, these rules establish a Secretary Counsel who keeps initial records of all complaints and supports claimants with the preparation and submission of written complaints. An instructing lawyer who verifies admissibility thereof, conducts the investigation and, eventually, raises the charges against the defendants. At the top of the system there is a Court of Ethics, whose members include the Board of the National Bar Association, plus 10 to 50 independent lawyers, all of whom serve their positions pro bono. This court works and resolves each complaint through committees of up to five members each.
Membership in the National Bar Association of Chile is voluntary. Precisely for this reason, membership therein and submission to the authority of the new Court of Ethics are an important guideline to confirm professional trust in Chilean lawyers.
Grupo Vial Abogados is proud that one of its partners has been elected as a member of the Court of Ethics of the National Bar Association of Chile.
For more information on Grupo Vial Abogados, please visit grupovial.cl or the International Society of Primerus Law Firms.
1 Botero, J and Ponce. A.(2011) “The World Justice Project Rule of Law Index,” available online at: www.worldjusticeproject.org
2 Ley de Bases sobre Contratos Administrativos de Suministro y Prestación de Servicios