Part Two: The Chilean fideicomiso and trusts in Latin America

By León Carmona Fontaine, Assistant Professor of Private Law at the Pontificia Universidad Católica de Chile.

In a previous entry published on this blog, I showed that there are compelling reasons to think that the fideicomiso provided for in the Chilean Civil Code of 1855 was influenced by English legal ideas. This second entry examines how the Chilean fideicomiso went on to play an important role in the introduction of trust instruments in Latin America, even though it never evolved into a fully fledged trust instrument capable of widespread use within Chile.

This entry argues that this development happened in two stages: First the Chilean fideicomiso was taken up by the Panamanian jurist Ricardo J. Alfaro, who relied on it when drafting the first trust legislation in Latin America in 1925. Subsequently, during the 20th century the Panamanian trust served as a model for trust legislation in several other jurisdictions in the region including Puerto Rico, Mexico, El Salvador, Venezuela, and Colombia.

Consequently, and in contrast to the dominant literature that typically emphasises solely the influence of the United States on the region,[1] this entry demonstrates that the Chilean fideicomiso also played a significant role in creating the necessary conditions for the emergence and development of trust law throughout Latin America.

1. The failure of the Chilean fideicomiso to become a fully developed trust

Before exploring this development it is important to examine why the fideicomiso never took hold in Chile. The way in which legal practitioners and legal scholars interpreted the institution, together with legislative reforms, help to explain why the fideicomiso came to be regarded as an institution that was inflexible and of limited practical use.

From the beginning, legal practitioners and legal scholars approached the fideicomiso with incomprehension and some of them even expressed a markedly negative view. Jacinto Chacón,[2] one of the first commentators on the Chilean Civil Code, considered it inadequate to conceptualise the fideicomiso as a form of fiduciary property and to regulate it in Book II, which is devoted to property and ownership. He argued that historically the fideicomiso had essentially consisted of a particular variety of testamentary disposition and that it should therefore have been regulated in Book III of the Code, which addresses succession and gifts. In other words, Chacón appears not to have fully appreciated the innovations that Bello’s fideicomiso represented compared with the earlier civilian tradition—a point explored in the previous entry. Others portrayed Bello’s fideicomiso as a vestige of an old and pernicious regime that promoted inequality. This was the case, for instance, of Eufrasio Valenzuela Muñoz,[3] who offered a strong critique—grounded in philosophical, political, and economic considerations—of the fideicomiso as an injurious legal instrument that ought to be eradicated from the legal system.

Against this background, it is understandable that the legislature was not keen to introduce reforms to render the fideicomiso more flexible and, consequently, more widely used. In particular, as mentioned in the previous blog entry, the legislature never permitted its extension beyond the original assets so as to include their traceable substitutes and proceeds. This limitation is significant. By attaching the obligation of restitution to specific assets, without allowing for real subrogation, the law hindered the efficient circulation of goods and significantly reduced the practical utility of the fideicomiso. The legislature did not introduce flexibility into its basic structure either. The obligation of restitution had to be subject to the occurrence of one or more conditions, rather than to other contingencies such as a term or successive conditions triggering different rights for the fideicomisarios.

Not only did the legislature fail to introduce reforms that might have made the fideicomiso a more flexible—and therefore useful—legal instrument; it actively introduced changes that rendered it even less useful. This was the case of Law No. 6162 of 1938 and Law No. 16952 of 1968[4] which progressively reduced the period within which the relevant condition had to occur, ultimately limiting it to five years and thereby making the institution even more rigid than originally devised. The bill accompanying the 1968 reform justified this reduction on the ground that extended time limits delayed the consolidation of important rights, which hindered the circulation of goods and brought uncertainty to the markets.[5] Even if this concern was well founded, the reduction from thirty to five years significantly diminished the practical usefulness of the fideicomiso.

In this respect, although by the mid-nineteenth century some elements of the English trust may be said to have migrated to Chile through Bello’s Code, they never developed into an operative trust mechanism within Chilean law. Yet, as we will see below, this did not stop the Chilean fideicomiso being influential elsewhere.

2. The Chilean fideicomiso found a second chance in Panama

Bello’s fideicomiso supplied a workable framework upon which trust devices could be constructed elsewhere in Latin America. This was at least the experience of the Panamanian jurist Ricardo J. Alfaro, ‘the initiator and advocate of the adoption of the trust in Latin America’,[6] who drafted the first trust legislation in the region in 1925.[7] . However, he still considered that it could work as a bridge between an ‘Anglo-Saxon trust’ and a legal system rooted in the civilian tradition.[9]

Alfaro recounts how he decided to draft trust legislation after observing, first, that many of his clients’ needs were much better satisfied by a trust than by the legal instruments provided by civilian civil codes at the time. He then acknowledged the difficulties of introducing a trust governed by ‘the principles of Anglo-Saxon law’[10] into a civil law system. However, after long consideration, he concluded that the trust could best be introduced into Panama by adapting Bello’s fideicomiso and aligning it more closely with the Anglo-Saxon trust. For Alfaro this solution ‘was so clear that, perhaps because of its very clarity, it clouded many people’s minds’.[11]

The Panamanian Trust Act thus introduced some significant innovations, two of which may be highlighted here. First, whereas the Chilean Code provided that an inter vivos fideicomiso could be constituted only over ‘one or more specific assets’, the Panamanian Trust Act provided that a fideicomiso might be constituted ‘over all kinds of property, whether movable or immovable, corporeal or incorporeal, present or future’. Expanding the assets that could be the subject matter of a fideicomiso, the legislation paved the way for the constitution of a fideicomiso over a pool of assets, rather than restricting it to specifically identified property. Secondly, instead of retaining the rigid structure of the Chilean fideicomiso, consisting of property subject to a conditional obligation, the Panamanian legislation provided for a much more flexible structure. It specified that the fiduciario (the trustee) is subject to the instructions set out in the instrument establishing the fideicomiso, and that the fideicomiso may be ‘particular or universal, absolute or conditional, for a fixed date, for a specified period, or for the lifetime of the fideicomitente (the settlor), the fiduciario (the trustee), or the fideicomisario (or beneficiary), all depending on the terms provided in the relevant fideicomiso. These innovations and others made the Panamanian fideicomiso a much more useful legal instrument in practice.

Before proceeding, it is important to note that when Alfaro referred to the need to adapt the Chilean fideicomiso so that it more closely resembled the ‘Anglo-Saxon’[12] trust, he was probably suggesting—albeit in vague terms—that the institution should be aligned not only with English law but also with U.S. trust law. Evidence of this can be found in his definition of the ‘Anglo-Saxon’ trust: alongside a definition attributed to Lord Coke, he cited several definitions from Volume 39 of the Cyclopedia of Law and Procedure, edited in 1912 by the American Book Company.[13]

All these innovations, however, were introduced primarily through the adaptation and transformation of Bello’s fideicomiso. In other words, the Chilean fideicomiso provided the basic structure for the Panamanian legislation. This is evident not only from Alfaro’s account of the drafting of the provisions that I mentioned above, but also from the similarities and parallels that one can identify between the relevant provisions of the Chilean Civil Code and those of the Panamanian Trust Act.

Some examples may illustrate this:

3. The trust spread all over Latin America

The influence of the Chilean fideicomiso on the introduction of trust instruments in Latin America did not end in Panama. The Panamanian Trust Act of 1925, in turn, exerted a considerable influence across the region.[14]

Trust legislation in Latin America can be grouped into three categories, depending on the extent to which they were influenced by the Panamanian Act. First, Puerto Rico (1928),[15] El Salvador (1937),[16] and, to some extent, Mexico (1926)[17] reproduced the Panamanian model, subject to marginal changes. However, in 1932 Mexico repealed this legislation and introduced a new trust regime[18] significantly influenced by the ideas of the French jurist M. Lepaulle. A second category includes Venezuela (1956)[19] and Colombia (1971).[20] The immediate source of Venezuelan trust legislation was a project developed by Professor Robert Goldschmidt, although Panamanian influence remains noticeable in several provisions, such as articles 5, 9, 13, and 26, which cannot be reproduced here due to space constraints. Colombian legislation, in turn, closely follows the Venezuelan Act and, through it, indirectly traces its origins back to Panama. Finally, a third category includes Argentina (1995),[21] and Uruguay (2003).[22] These regimes appear to be the least influenced by the Panamanian model. Nevertheless, comparative literature has identified several common features among trust regimes in Latin America, including those of Argentina and Uruguay, such as the establishment of a maximum duration, commonly set at 30 years.[23] Some of these shared features can ultimately be traced back to Panama and, through it, to Bello’s fideicomiso.

If this account is correct, the legal scholars who promoted the introduction of trust devices in Latin America did not simply ‘transplant’ trusts from common law jurisdictions (notably the United States), as the dominant literature suggests.[24] Nor did they proceed ex nihilo by relying solely on trust doctrines from those jurisdictions. Instead, they relied on the fideicomiso as regulated in Bello’s Civil Code as their starting point. The Chilean fideicomiso thus worked as a doctrinal bridge capable of mediating between common law trusts and civil law categories.

Seen in this light, the Chilean fideicomiso occupies a more significant place in the history of trusts than is usually acknowledged. It did not succeed domestically in developing into a fully-fledged trust. Yet, precisely because it is civilian in form but receptive to ideas associated with the trust, it facilitated the earlier and more effective reception of trust devices in Latin America. Bello’s decision to retain and reshape the fideicomiso—very likely influenced by his exposure to English legal ideas explored in my previous blog entry—thus proved to be not merely a doctrinal curiosity: it created the conditions for a distinctive Latin American trajectory in the development of trust law.

[1] Narcisco E. Garay Precaido, El trust anglosajón y el fideicomiso panameño (Universidad de Chile 1941) 64; Vanessa Villanueva Collao, ‘El fideicomiso en América Latina: reflexiones para la comparación jurídica’, Actualidad Civil 45 (2018) 315–337, 320; Roberto Goldschmidt and Phanor J. Eder, El fideicomiso (trust) en el derecho comparado (especialmente americano) (Olejnik 2023) 18.

[2] Jacinto Chacón Barrios, Esposición razonada y estudio comparativo del código civil chileno. Tomo 2 (2nd edn, 1881).

[3] Eufrasio Valenzuela Muñoz E., El fideicomiso y sus inconvenientes (1913).

[4] See Hernán Larraín Ríos, ‘Ley No 16.952 de 1º de octubre de 1968, por la cual se modifican los Códigos Civil, de Procedimiento Civil y de Comercio y las leyes de Quiebras y de Cuentas Corrientes Bancarias y Cheques, en lo referente a plazos de prescripción y otras materias’ (1968) 65 Revista de Derecho y Jurisprudencia 143; and Hugo Tapia Arqueros, ‘La Ley No 16.952, sobre Reducción de los Plazos de Prescripción’ (1973) 159 Revista de Derecho Universidad de Concepción 30.

[5] Mensaje Ley 16.952 of 1968, 3, available in https://www.bcn.cl/historiadelaley/fileadmin/file_ley/90/HLD_90_749a0d2dec7072ac83d52ebf0f2ff393.pdf. Last accessed Feb 15, 2026.

[6] Sergio Fuenzalida Puelma, El trust o fideicomiso angloamericano y sus adaptaciones latinoamericanas (1963) 111.

[7] Law No. 9 of 1925 published in the Official Gazette of the 29^th of January of 1925. See Maurizio Lupoi Trusts: A comparative study (Cambridge 2000) 185, fn 116, who observes that this legislation was limited compared to the Law of January 1984, no. 1, which introduced a new trust legislation in Panamá.

[8] Ricardo J. Alfaro ‘El fideicomiso. Estudio sobre la necesidad y conveniencia de introducir en la legislación de los pueblos latinos una institución civil nueva, semejante al Trust del derecho inglés’ in Voelkel G. Hanse (ed), El Fideicomiso en Panamá (1971) 31, 34.

[9] Ricardo J. Alfaro ‘Adaptación del Trust del Derecho Anglosajón al Derecho Civil’ in G Hanse Voelkel (ed), El Fideicomiso en Panamá (1971) 79. See also Ricardo J. Alfaro ‘The trust and the civil law with special reference to Panama’ (1951) 33 Journal of Comparative Legislation and International Law  25.

[10] Alfaro (n 9) 79.

[11] Alfaro (n 9) 79.

[12] This is the term Alfaro himself used.

[13] Alfaro (n 8) 46-47.

[14] For a general account of this influence see Fuenzalida Puelma (n 6). Garay Precaido (n 1), and Antonio Stempel Paris, Trust y Fideicomiso (1955). For a description of trust legislation in different jurisdictions, including Panama, Venezuela, and Colombia, see Lupoi (n 7) 273-292.

[15] Ley No. 41 of 1928.

[16] Decreto 197 published in the Official Gazette of the 1^st of December of 1937.

[17] Ley General de Instituciones de Crédito y Establecimientos Bancarios, published in the Official Gazette of the 29th of November of 1926.

[18] Ley General de Títulos y Operaciones de Crédito of 1932.

[19] Ley de Fideicomisos published in the Official Gazette N° 496 of the 17th of August of 1956.

[20] Decreto No. 410 of 1971.

[21] Ley 24441 published in the Official Gazette of the 16th of January of 1995.

[22] Ley 17.703 published in the Official Gazette of the 4th of November of 2003.

[23] Villanueva Collao (n 1) 326.

[24] Sergio Rodríguez-Azuero, ‘The Anglo American Origin of the Latin American Fideicomiso (Trust): Reasons and Implications’ (2017) IDF Working Paper Series 1; Milenka Villa Pozo, ‘El contrato de fideicomiso: una visión histórica de sus antecedentes y evolución normativa’ (2018) 23 Revista Direitos Fundamentais e Democracia 42; Dante Figueroa, ‘Civil law trusts in Latin America: is the lack of trust an impediment for expanding business opportunities in Latin America?’ (2007) 24 Arizona Journal of International and Comparative Law 701.