The Miami Herald runs a story today about the failure of Salvadoran courts to enforce a US court judgment against an influential Salvadoran family:
More than a year after a Miami judge ordered companies owned by one of El Salvador's wealthiest families to repay a loan of nearly $30 million, the judgment remains unpaid - buried in the bowels of El Salvador's supreme court.
Valat International Holdings Ltd., which owns the loan, is aggressively seeking its money from textile and telecommunications magnate Oscar Safie Zacarias and his family. Valat attorney Leoncio de la Pena says it is a test case to see whether El Salvador's business elites are above their country's law. A Safie first-cousin is that country's attorney general.
"The reason that the Salvadoran court isn't acting is because they are acting on the influence by Safie," de la Pena said. "You would assume a country that wants favorable trade with the U.S. would want to deal with this as quickly as possible."
The Safies' attorneys declined to discuss details of the lawsuit but maintain the case should have been tried in El Salvador, not Miami. In court papers, they also allege Ireland-based Valat, which has no employees, is merely a front for a failed Guatemalan bank that previously held the loans.(more)
It may not appear obvious to some, but having an effective judicial system which acts promptly, consistently, and without corruption is very important to making economic growth possible. Take this case as an example. Millions of dollars were invested in Salvadoran business in the form of a loan. The borrowers default. The lenders want to collect on the guarantees made by a powerful Salvadoran family, but the judicial system allows the family to avoid honoring their commitments. You can be sure that such precedents make international lenders more leery of making commercial loans to Salvadoran businesses in the future. That stifles economic growth in the country. Strengthening the judicial system in El Salvador must be a goal not just to protect the rights of its citizens, but also to permit economic progress.