“Maria1” is “Maria”, or Would AI promptly say otherwise?
Maria is not a statistical datum; she is a subject of rights. Categorized by algorithms yet not understood by them. Her resilience, her origins, her history; elements that should be recognized in all their complexity are often reduced to risk variables, exceptions, or noise. Rendered invisible in data, marginalized by patterns, Maria represents womanhood: strong, combative, and, often, misaligned with the predefined models of Artificial Intelligence (AI) and its multifaceted expressions. In these terms, if the legal universe were a stage, AI technologies would undoubtedly take center spot. It is common knowledge in this sphere that AI is and – spoiler alert! – will continue to be the protagonist when the discussion revolves around the triad of innovation, rights, and regulation. Maria is complex; Maria is multifaceted. However, so-called discriminatory biases bring to light a heated debate, fueling legal discourse on the matter. The increasing adoption of AI systems in sensitive areas, such as public safety, employment recruitment, criminal justice, credit approval, social benefits, among others, has revealed a concerning layer of technology: the reproduction and amplification of algorithmic biases that disproportionately affect historically marginalized groups. Despite being presented as advanced and objective tools, these systems are built on datasets often marked by structural inequalities, including racism, sexism, and socio-economic exclusion. Beforehand, it is worth noting that, according to the Department of Computer Science at Stanford University, AI is “the science and engineering of making intelligent machines, especially intelligent computer programs” (NATIONAL GEOGRAPHIC, 2023). In other words, these so-called “intelligent machines” or even “robots” aim to execute tasks and processes characteristic of human behavior, reproducing human intelligence through algorithmic learning from past experiences, known as “Machine Learning”. Given this context, it is necessary to promptly identify the various biases embedded in AI systems, many of which are considered discriminatory and directly impact fundamental human rights. These biases challenge the very structure of the internationally recognized and protected human rights framework, raising substantial regulatory challenges both globally and within Brazil’s emerging legal debate. In her book Weapons of Math Destruction: How Big Data Increases Inequality and Threatens Democracy (2016), Cathy O’Neil categorizes certain algorithms as “Weapons of Math Destruction” (WMDs) due to their opacity (“black box” nature), mass impact, and their potential to amplify social inequalities. Though seemingly neutral and objective, these systems are fed by biased historical data, which leads them to reproduce and reinforce racial, gender, and class prejudices, thereby violating fundamental rights. Operating from the premise that society itself is inherently biased, other scholars contribute enriching perspectives to this ongoing discussion. In the article Why Fairness Cannot Be Automated (Computer Law & Security Review, 2021), Sandra Wachter, Brent Mittel Stadt, and Chris Russell of the Oxford Internet Institute criticize attempts to address algorithmic bias solely through technical “fairness” metrics. For these authors, “fairness” is a legal and moral concept that cannot be automated by statistical measures such as equal opportunity or demographic parity. They highlight the tension with European anti-discrimination law, which is grounded in individualized treatment, and rejects the legitimization of discrimination through seemingly favorable aggregate statistics. Accordingly, while these metrics may be valuable in engineering contexts, they are legally insufficient within the European framework. However, it is worth noting that the ‘Old European Continent’ is not so old when it comes to addressing this issue, while it has proven anything but outdated in its approach. Quite the opposite, Europe Union’s AI Act (2024) and General Data Protection Regulation (GDPR, 2016) demonstrate advanced and innovative regulatory frameworks with growing concern for algorithmic bias and discrimination. The AI Act, for instance, mandates that data used to train AI systems must not reinforce historical discrimination. This requirement compels companies to reassess their models before entering the European market, with detailed provisions on bias, oversight, and potentially strong sanctions enforced by competent authorities. Moreover, the GDPR addresses automated individual decision-making, including profiling. Brazil, in contrast, still lacks a specific AI law. However, regulation is under debate through the proposed Bill No. 2,338/2023, drafted by a commission of jurists and currently under consideration in the Senate. The Bill outlines general principles such as non-discrimination, transparency, accountability and explain ability regarding algorithmic discrimination. It also includes provisions for risk analysis and impact assessments for high-risk systems, similar to the European standards. In the United States, regulation remains more fragmented and sector-specific, as there is no unified federal AI law. Instead, civil litigation and regulatory agency action, driven by strong civil society advocacy, guide the approach. Federal agencies are pressured to ensure greater algorithmic equity across sectors such as public services, employment practices, and facial recognition, seeking to mitigate the risks posed by discriminatory AI biases. Globally, there is a growing consensus on the need for ethical data treatment and human oversight, particularly in decisions that affect fundamental rights. This happens because the realm of human rights is breached when AI systems operate based on probabilities and generic patterns, triggering exclusionary automated decisions without considering individual context, relying solely on mathematical justifications that lack legal grounding from the perspective of fundamental rights frameworks. There are, unfortunately, numerous real-world examples across diverse domains, including criminal justice, education, labor markets, and police surveillance, which underscore issues such as racial bias, lack of explain ability, socio-economic inequality, privacy violations, and gender discrimination. One particularly emblematic case involves a major Tech Company that developed an AI system to automate résumé screening. The algorithm, however, began to reject female candidates, favoring male applicants because it had been trained on the company’s own historically male-dominated data. As a result, the system was internally scrapped in 2018 before public release, exemplifying how biased historical data can perpetuate discrimination. This historical context conveys important messages about social biases and distorted algorithmic forecasting, leading to stereotyped and discriminatory outcomes. One must then ask: How – and from whom – are these AI systems learning? The answer, though complex, is relatively straightforward: from people. And people are embedded in a society marked by inequality and bias, which inherently amplifies the risk of
DEMOCRACY AND JUSTICE
In democratic countries, their Constitutions are a series of first-order mandates. It is the will of the people translated into words with enough force to dynamite one Constituted Power and, in its place, form another, with the same name, but ultimately different. Constitutions should be constructed from the law, for the law, in protection of the law, and with the neutrality of the law. This latter task is impossible if their creators or reformers are not neutral jurists, but politicians with deeply rooted ideologies. Constitutions, although they are supreme laws, are loaded with political decisions, which, in itself, is not a bad thing; the problem begins when they are not conceived from the neutrality of a rule of law designed to achieve justice for the population. In Mexico, a reform to the Constitution was recently carried out, although it was publicly known within the institutions that it was necessary to force, through apparently undue pressure, key votes from senators from other political parties. The reform basically consisted of placing dynamite in the columns of a Constituted Branch, such as the Judiciary; the lighting of the dynamite was scheduled for June 2025 and was called “judicial elections.” Judicial elections are historic, but not positively historic. In Mexico, federal judges have been elected through competitive examinations for some time now. The competitive examinations are very rigorous and conducted in stages; therefore, many of the public servers who gained access to the position of judge, in addition to their vast experience, had also prepared themselves years before the examinations were held. These are known as career judges. While the competitive examination system for accessing the position of judge is not perfect, it did guarantee that the most qualified candidates were selected. Thus, the people, who operate within a democratic system, did not elect their judges by direct vote, which is not undemocratic and, furthermore, guarantees a trial by someone not only qualified but also knowledgeable in the intricacies of the courts and tribunals. But why the destruction of a constituted branch of government in Mexico? In early 2019, I had the opportunity to attend a national meeting of Federal Judges Coordinators (I was the coordinator for my area). The meeting was convened by the then Chief Justice of the Supreme Court of Justice of the Nation and the Federal Judiciary Council—the collegial body that administers the Federal Judicial Branch—Arturo Zaldívar Lelo de Larrea. Minister Zaldívar’s administration of the Federal Judicial Branch coincided with the first four years of the government of constitutional president Andrés Manuel López Obrador. Outside the chamber, our cell phones were confiscated; this level of secrecy drew attention. Already at the meeting, Justice Arturo Zaldívar told the magistrates and coordinating judges that the people had spoken in the last presidential and legislative elections, saying that the people wanted change, and therefore, he said, the Judiciary could not be exempt. He also mentioned that if the Judiciary was not reformed from within, it would be reformed from without, because the government had sufficient political power to achieve it. He also warned that within the government, there were radical groups seeking a reform that would truly affect the members of the Federal Judiciary. For his part, former President Andrés Manuel López Obrador, among his various campaign promises, had one in particular directed at the Federal Judiciary: to lower the salaries of Ministers, Councilors, Magistrates, and Judges. It was with the Federal Law on the Remuneration of Public Servants that an attempt was made to reduce the salaries of the Federal Judiciary. However, amparo lawsuits were filed by those affected. In Mexico, the amparo lawsuit is the preeminent means for the protection of human rights. As fate would have it, I was assigned to decide on the first amparo lawsuit against salary cuts. It was brought by a then-serving judge. I knew any decision would cause a stir for many reasons: 1. A federal judge ruling on an issue that was detrimental to him. 2. It was a campaign promise of the ruling political party. 3. The Constitution establishes that no public server can have a higher salary than the President of the Republic, but it also establishes that federal judges’ salaries cannot be reduced. The injunctions continued, and some federal judges, like myself, granted the injunction to prevent the salary of another colleague from being reduced. Legal action was presented in the Mexican Supreme Court, which ordered, for the time being, that the challenged law not be applied and, therefore, that salaries not be reduced. Also due to fate, when I was a judge in Mexico City, I was responsible for coordinating the Economic Competition judges (there are only three courts for the entire country). In my capacity as coordinator, I was invited to Justice Arturo Zaldívar’s last meeting, which took place at the end of 2022. It should be mentioned that Justice Arturo Zaldívar’s administration was highly criticized within the Federal Judicial Branch due to its closeness to the Executive Branch. At the meeting, Justice Arturo Zaldívar explained that during his tenure, the salaries of magistrates and judges had not been reduced by a single cent (in which he was right). This task was not easy, as it involved various negotiations with the ruling political force. He basically asked that this achievement be recognized. What is a fact is that during the entire term of former President Andrés Manuel López Obrador (December 1, 2018, to September 30, 2024), the salaries of federal judges were not reduced, which meant he failed to fulfill his campaign promise. Former President Andrés Manuel López Obrador felt attacked by the Federal Judiciary, which he openly expressed. In his morning press conferences, he projected the names of the federal judges who issued many decisions that, in his view, constituted an attack on his government. His emblematic projects, such as the cancellation of the new Mexico City airport, the construction of the new Santa Lucía airport, and the construction of the Maya Train, were delayed because some judges ordered
Non-litigious Litigation: Strengthening the Rule of Law through Judicial Review
Indonesia’s legal landscape is dynamic yet entangled. Beneath the surface of abundant legislation lies a persistent structural problem: overlapping, inconsistent, and linguistically obscure regulations. The consequence is uncertainty—where even public officials struggle to determine which rule governs and how it should be applied. As a practitioner in constitutional and administrative law, I have seen that one of the most effective ways to untangle this web is through judicial review—a form of non-litigious litigation. Judicial review before the Constitutional Court (Mahkamah Konstitusi) and the Supreme Court (Mahkamah Agung) allows the judiciary to restore order to Indonesia’s legal hierarchy without waiting for political compromise or the slow legislative process. Looking ahead, the system can be strengthened by improving transparency in the Supreme Court’s judicial review and introducing a constitutional-complaint mechanism at the Constitutional Court—creating a more balanced and responsive architecture of constitutional justice. Overlapping and Obscure Regulations Indonesia’s hierarchy of norms—from the 1945 Constitution to regional regulations—continues to produce 3 recurring forms of disorder: horizontal overlap, vertical inconsistency, and linguistic obscurity. Horizontal Overlap Conflicts often emerge between regulations of equal rank enacted by different sectors. A clear example appears between Law No. 12 of 2012 on Higher Education and Law No. 17 of 2023 on Health. Article 24 paragraph (2) jo. Article 1 point 2 of the Higher Education Law limits the organizer of professional programs—including medical-specialist education—to colleges (perguruan tinggi). In contrast, Article 187 paragraph (3) of the Health Law introduces hospitals, in cooperation with colleges, as organizers. This expansion generates uncertainty over the division of roles, accreditation, and supervision between universities and teaching hospitals. A similar overlap exists in defining “state finance (keuangan negara)”. Law No. 17 of 2003 on State Finance adopts an expansive concept covering assets of state-owned enterprises (SOEs), while Law No. 19 of 2003 on SOEs defines them as independent legal entities with separate assets. This tension has led to conflicting interpretations in corruption cases and audits, where the line between public and corporate assets remains contested. Together, these examples show how horizontal inconsistencies at the statutory level weaken legal certainty and blur institutional accountability. Vertical Inconsistency Vertical inconsistency arises when subordinate regulations deviate from their parent statutes. The Committee of State Receivables Management (PUPN), established under Government Regulation in lieu of Law No. 49 of 1960 on PUPN, saw its powers significantly expanded by Government Regulation No. 28 of 2022 on Management of State Receivables by PUPN, introducing enforcement mechanisms not contemplated in the 1960 framework. This raises ultra vires concerns and blurs the boundaries of lawful delegation. A further example appears in the regularization of forest areas (penertiban kawasan hutan). Articles 110A and 110B of Law No. 18 of 2013 on the Prevention and Eradication of Forest Destruction, as amended by Government Regulation in lieu of Law No. 2 of 2022 on Job Creation, establish mechanisms for administrative settlement of past land-use violations within forest zones. Yet Presidential Regulation No. 5 of 2025 on Forest Area Regularization goes further by introducing a new sanction—repossession (penguasaan kembali)—not envisaged by the parent law. This illustrates how lower level regulation can quietly expand state authority and alter the balance of rights and obligations originally set by laws. Linguistic Obscurity Even when hierarchy is respected, ambiguity in legislative language can still derail justice. A striking example is Article 14 of Law No. 31 of 1999 on the Eradication of Corruption Crime, as amended by Law No. 20 of 2001 (Anti-Corruption Law), which enables an expansive application of corruption offences beyond those originally defined. The provision’s vague syntax and circular logic have long caused confusion. In Circular Letter No. 7 of 2012, the Supreme Court acknowledged two competing interpretations and noted plans for internal revision. Yet the article remains unrevised, continuing to blur the boundary between general and sectoral criminal liability. I am currently contesting Article 14 before the Constitutional Court, seeking a definitive interpretation that restores the principle of legality and prevents indiscriminate extension of criminal liability. This uncertainty exemplifies how linguistic obscurity in legislative drafting can distort the reach of criminal law, threaten individual rights, and erode the credibility of anti-corruption enforcement. Judicial Review as Non-litigious Litigation Against this backdrop, judicial review functions as a disciplined, non-adversarial mechanism to correct defective norms. Petitioners do not seek compensation but legal coherence. At the Constitutional Court The Constitutional Court reviews laws (undang-undang) against the 1945 Constitution. It may annul, reinterpret, or conditionally uphold provisions. Through these powers, it acts as the guardian of constitutional supremacy, offering a rapid remedy to systemic uncertainty. A significant example is the judicial review of online-defamation and hate-speech provisions in the Electronic Information and Transactions Law, a case I had the privilege to lead. The Court narrowed the scope of those offences, emphasizing freedom of expression and proportionality in sanctions. This decision not only aligned Indonesia’s cyber-law enforcement with constitutional guarantees but also showed how judicial review refines legislative language to prevent misuse. Another landmark is Decision No. 62/PUU-XXII/2024, which eliminated the presidential threshold that had long restricted nominations for president and vice president to parties or coalitions commanding 20% of parliamentary seats or 25% of the vote. By striking down this limitation, the Court reaffirmed equal political participation and expanded democratic space for both voters and parties. The case illustrates judicial review’s role as a non-litigious instrument of structural reform, reshaping Indonesia’s political framework through legal reasoning rather than political bargaining. At the Supreme Court The Supreme Court reviews regulations below the law—government, ministerial, and regional—against higher-level regulations. Many regulatory conflicts occur here, where agencies exceed delegated authority. The Court’s annulments restore legal hierarchy and coherence. An illustrative case is the judicial review of the Minister of Industry’s Regulation on the Tobacco Production Roadmap 2015–2020, which I structured on behalf of public-health advocates. The regulation drastically increased production limits, reflecting regulatory capture by commercial interests. The Supreme Court granted the petition, annulling the regulation and affirming that industrial policy cannot override public health. The ruling reframed tobacco not merely as an economic commodity but as a constitutional concern, showing how judicial review can curb executive excess and safeguard public welfare. Yet a major institutional gap
CSDs Between the past and the future
Financial Market infrastructure entities (FMIs) like central securities depositories (CSDs) are at the core of the financial system and critical for financial stability. CSDs are essential for the proper functioning and security of financial instrument markets. They play a key role in maintaining the integrity of securities issues from fraud and loss. They provide three core services notary services, central securities accounts maintenance services, and security settlement systems. In addition to auxiliary services such as supporting the processing of corporate actions, tripartite collateral management, the organization of a securities lending mechanism between its participants, services to issuers. The CSDs are also active participants in the integration of financial markets by establishing links between CSDs as a way for participants in a given market to be able to access securities issued in other jurisdictions. In the second annual survey of the World Forum of CSDs (WFC) which is composed of the five regional Central Securities Depositories (CSD) associations, i.e., Asia- Pacific CSD Group (ACG), Americas’ Central Securities Depositories Association (ACSDA), Association of Eurasian Central Securities Depositories (AECSD), Africa & Middle East Depositories Association (AMEDA) and European Central Securities Depositories Association (ECSDA), in their Fact Book dated 2019, it cited that from the 100 CSDs responded to the survey, 56 CSDs mentioned that they have links with other CSDs. Those links to make cross-border trade and settlement and to create full interoperability between different domestic systems and to access systems outside the domestic market with respect to each party regulatory requirements and multiple legal regimes which are considered from the beginning in their memorandum of understanding and conventions. Recent technological innovation has made this integration process realistic as countries continue to adopt international standards and conventions (International Securities Identification Number (ISIN) standards or Bank Identification Codes (BIC)), and have considerably increased investments in straight through processing (STP) solutions (SWIFT or FIX (Financial Information eXchange) protocols). Because of the central role central securities depositories play, it is important that the intermediaries be structurally, financially and operationally sound. This requires proper supervision by the public sector, an adequate capital base, rigorous risk management tools and business recovery plans. CSDs can vastly improve the efficiency, transparency, and safety of financial systems but also concentrate systemic risk. If not properly managed, they can be sources of financial shocks, such as liquidity dislocations and credit losses, or a major channel through which shocks are transmitted across domestic and international financial markets. CSDs Traditional vs Disruptive business model The world of finance is evolving drastically. CSDs are required to find opportunities to grow and to have an effective impact on the market, start providing services beyond their conventional area of business, and seek to meet the expectations of their clients and regulators. Diversification is affecting financial metrics and service level, cost management, market needs, and the regulator’s mission to ensure evolution of the domestic market are among the crucial drivers of diversification. They need to ensure global integration, attract foreign investors, or provide more opportunities to local investors. They must seek to disrupt their current business model. Previously, it took them more than a decade to conduct the dematerialization of share certificates from physical state. Some of them were the monopolist of this industry relying on their current legislation. They had the time needed to invest and cope with technological changes and their repercussions to offer sustainable services to all stakeholders. In this era, technological innovation and digitization will be both challenges and opportunities for CSDs. Regulators and the infrastructure should maintain their competitiveness, including in front of FinTech businesses. Many competitors are facing CSDs and are creating a parallel financial market infrastructure using the internet of value. Fintech technologies like blockchain, Distributed Ledger Technology and tools like tokenization which are based on these new technologies are the next step in the evolution of the way securities are cleared, settled. In the European Union T+1 Industry Committee summit held in Brussels, 3 July 2025, the committee presented its high-level roadmap to guide market participants through the transition to a shorter securities settlement cycle, scheduled for implementation on 11 October 2027. It reflects their commitment towards innovation and aligning European markets with global best practices to attract international investors. The technological improvements needed to the core functions of traditional CSDs All the functions – settlement, registration, custody, and asset servicing- performed by a CSD in a transaction can now be performed using blockchain technology. And the aspect of blockchain technology that underpins these functions is the digitalization of securities, or tokenization. To remain relevant in this new era of finance, CSDs need to adapt to tokenization of securities. (Tokenization simply refers to the digitalization of securities. The ownership of the security is associated with a digital token on a distributed ledger, and the ownership can only be transferred with the transfer of the token, and vice-versa.) Tokenization is the next step in the evolution of securities are cleared and settled. The transparent nature of the distributed ledger technology (DLT), which powers DeFi (Decentralized Finance) and tokenization, ensures that transactions can be traded, cleared and settled directly between a buyer and seller. This facilitation of peer-to-peer transactions, without an intermediary to facilitate the exchange. The exchange is facilitated in real time, in the internet of value without the use of legacy technology that relied on SWIFT messages. The most impactful Fintech-led innovation on CSDs: Digital cash. Blockchain technology, a distributed ledger technology (DLT) that maintains records on a network of computers, but has no central ledger. Smart contracts, which utilize computer programs (often utilizing the blockchain) to automatically execute contracts between buyers and sellers. Open banking, a concept that leans on the blockchain and posits that third-parties should have access to bank data to build applications that create a connected network of financial institutions and third-party providers. Reg-tech, which seeks to help financial service firms meet industry compliance rules, especially those covering Anti-Money Laundering and Know Your Customer protocols which fight fraud. Cybersecurity, given the proliferation of cybercrime and the decentralized
Beyond Jurisdictions: How to Operationalize Extraterritoriality in AML/CFT and Sanctions
Extraterritoriality isn’t a conference theory—it travels with your payments, your partners, your data, and your supply chains. A flow that touches rails in another jurisdiction, a third party processing from abroad, a brand that embeds financial services across markets…and suddenly a local institution is being judged not only by its domestic law, but also by the reach of foreign regimes that can trigger obligations, restrictions, or expectations within days. The relevant question isn’t whether extraterritoriality “should” exist, but how to operate safely when the signals move and the business cannot stop. In plain language, extraterritoriality appears when a rule or authority crosses borders if certain triggers are present: currency (e.g., USD), counterparties involved, touchpoints with a foreign financial system, or facilitation by a covered person. In practice it shows up as reporting duties, prohibitions on specific transmittals of funds, lists and sanctions that “stick” to particular corridors or jurisdictions, or due-diligence standards that are expected even if your local rulebook doesn’t call them by that name. Three misunderstandings are worth avoiding: thinking that “not being on a list” equals safety; assuming this only applies to global banks; and betting on “waiting for the final verdict” to move controls that, day to day, are essential to manage risk. Preparing without panic requires discipline. First, decide with verified facts and current notices, not adjectives. Second, apply proportionality: the right control for the actual risk of a product, channel, geography, or counterparty. Third, leave traceability: if it isn’t documented, it didn’t happen. And finally, communicate calmly and respectfully; communication is also a control because it reduces rumor, error, and friction with customers. The roadmap starts with an exposure map that anyone in management can read. It doesn’t have to be perfect or encyclopedic; it has to be useful. List products and channels (retail vs. corporate, cross-border payments, trade finance, acquiring, wallets), sensitive corridors and currencies, critical counterparties and third parties (correspondents, processors, program managers, marketplaces), and—above all—the points in the process where things really happen: where screening occurs, who escalates, who decides, by what criteria, and within what time window. That map isn’t a slide for the board; it’s a living work tool. With exposure in sight, convert notices and rules into operational requirements. What is prohibited? What requires reporting? What merits escalation? That “operational dictionary” prevents each area from interpreting the same notice differently. Assign single-point ownership for each requirement (Policy, Operations, Legal, Tech) to reduce gaps and overlaps. If your organization belongs to a group, synchronizing policies across parent and subsidiaries avoids a decision in one country leaving another entity out of step with shared clients, channels, or vendors. Controls must go beyond name screening. Screening is necessary but insufficient if there aren’t contextual rules by transaction type, corridor, and client role; if escalation paths aren’t clear; or if time-to-decision isn’t measured. An alert that ages without resolution is real risk: it exposes customers, erodes partner trust, and, under supervision, becomes a finding. Assessing quality—what was escalated, why, with what evidence, and with what outcome—matters as much as counting alert volumes. The biggest exposure often hides in third parties. Contracts with explicit AML/sanctions clauses, audit rights, an operational kill-switch, data-sharing for investigations, and periodic effectiveness tests (walk-throughs, samples, evidence) separate “we comply on paper” from “we comply in practice.” Outsourcing processes does not outsource decision accountability: if your brand is on the front, your board owns the risk and must be able to demonstrate control. Evidence matters. Keep data hygiene (names, IDs, jurisdictions), version your lists, and maintain a decision log with facts considered, reasoning, approvals, and timestamps—this makes decisions explainable that might otherwise look discretionary from the outside. A small anonymized case library helps train teams, align criteria, and speed up future decisions. Traceability isn’t bureaucracy; it’s the institutional memory that protects you when the conversation gets demanding. Communication is also a control. Pre-approved customer messaging for common scenarios—delays due to review, enhanced due diligence, blocks—reduces friction and complaints. A stakeholder matrix clarifies who must be informed and when (board, regulators, key partners). Training spokespeople avoids promises that outpace the facts or silences that feed speculation. Well-managed calm is part of the internal control system. Business continuity completes the picture. Identify alternative rails or corridors in case one pathway is restricted, run table-top exercises for liquidity, client service, and operational rerouting, and time-box decisions: 48–72 hours. In a crunch, what you decide in the first three days defines downstream risk; better reasonable, documented decisions than perfect decisions that never happen. Measurement gives visibility. Coverage (what and who is screened and how often), effectiveness (time-to-decision, escalation quality, repeat findings), remediation velocity (how quickly fixes are implemented and verified), and culture signals (early issue reporting, training retention, first-line challenge) tell the operational story that boards and authorities expect to hear. A few anonymized examples help anchor this. A payments fintech processing indirect routes into sensitive jurisdictions via aggregators learned to segment by corridor, raise due diligence when in facilitation roles, and negotiate a kill-switch with its rails partner. A non-bank lender financing supply chains with potential dual-use goods mapped proliferation/sanctions exposure, added documentary verification of the commodity, and set up a rapid committee for justified holds. An embedded finance model with a multi-country marketplace reinforced contracts, implemented quarterly “proof-of-life” tests on the partner’s controls, and prepared clear messaging for preventive blocks. There’s no magic here—just method, discipline, and learning. If you need a practical sequence without turning this into a manual, consider this cadence. In the first thirty days, stabilize and see clearly: refresh the exposure map and gap list; freeze contradictory procedures; issue a plain-language memo with current facts and interim guidance; and confirm contractual levers with critical third parties (rights to information, audit, termination). Between days thirty and sixty, calibrate and document: update policies and define thresholds that trigger holds, EDD, or escalation; roll out decision logs and case templates; run a QA pass on recent escalations; align customer messaging and publish a brief FAQ for frontline teams. Between
Zweig’s dream: reforming Brazil for the future
In his last years of life, when Stefan Zweig published Brazil: Land of the Future, a feeling became so embedded in the Brazilian subconscious that paradoxically explains both national joy and melancholy: that prosperity is always just around the corner. Of course, today we are mature enough to recognize that Zweig’s book, although insightful, was like a love letter written by someone dazzled, always ready to turn a blind eye to problems. This does not mean we have stopped waiting for our promised land. Comprehensive reforms in Brazil are often presented by political leaders as our ultimate ticket to the future. In practice, the future is usually postponed to the next reform, but the quest for a utopian Brazil has undeniably led to political actions that have realigned the country economically and made us more open to foreign investment. I had the honor of contributing to Brazil’s first major step in this direction when, in 2019, we passed the Economic Freedom Act, which fostered the opening of new businesses as never before since the turn of the millennium. There is no doubt, however, that the most significant and controversial reform has come recently, with Constitutional Amendment No. 132/2023, known as the Tax Reform. Like any major reform, its impacts are still subject to debate, but it was marked by an attempt to simplify the previous tax system: by instituting the dual IVA (dual value-added tax), composed of the IBS (property and services tax) and the CBS (property and services contribution), it replaced a series of old taxes. It also created the IS (selective tax), an extrafiscal tax aimed at regulating the consumption of certain goods and services deemed harmful to health or the environment, rather than merely generating revenue. It is the IS that we need to clarify to the public. Its regulation came this year, through Complementary Law No. 214/2025, which defined its applicability to products and activities with negative externalities, e.g.: alcoholic beverages, sugary drinks, tobacco products, high-polluting vehicles, gambling, mineral resource extraction etc. The IS is a federal tax, levied once on the good or service, with no credit offsets allowed. The calculation base will vary depending on the type of transaction and may be: sale value, book value, or a reference value set by regulation, and it will not include amounts owed for IBS, CBS, or the IS itself. The taxpayers of the IS are producers, importers, and traders of goods and services subject to taxation. The tax is due at the following times: (1) first commercialization of the good; (2) auction acquisition; (3) non-onerous transfer of extracted or produced mineral goods; (4) incorporation of the good into the manufacturer’s fixed assets; (5) export of extracted mineral goods; (6) consumption of the good by the producer or manufacturer; or (7) service provision or payment, whichever occurs first. In this context, it is important to highlight that the Executive Branch vetoed the provision of Complementary Law No. 214/2025 that excluded IS from being levied on the export of mineral goods. The technical justification was that the exemption would violate Article 153, Paragraph 6, Item VII, of the Constitution, which requires taxation on mineral extraction regardless of whether the destination is domestic or international. At the time of writing this article, the decision on whether to uphold or overturn the veto is still pending before Congress. If upheld, IS will apply to mineral extraction even when destined for export. If overturned, exports of these goods will be exempt, with taxation limited to domestic operations. This latter scenario may make exports more attractive for oil and natural gas producers, potentially reducing the supply of raw materials for domestic refineries, which today face logistical obstacles and reliance on imports. IS rates will be defined by ordinary federal law and may vary depending on the nature of the good or service. For mineral extraction, for instance, the rate will be capped at 0.25%. For alcoholic beverages, the law may set differentiated rates by product category, applying progressive rates according to alcohol content. In the automotive sector, rates will be scaled based on environmental criteria related to pollutant emissions, encouraging the acquisition of electric and hybrid vehicles and promoting a more sustainable transportation matrix. As can be seen, the creation of the IS is an innovation in the Brazilian tax system, aligning with international practices for taxing harmful products. However, its implementation requires taxpayers to exercise extra care regarding compliance with new ancillary obligations, the correct classification of taxable goods and services, and the assessment of tax risks arising from potential interpretative divergences, especially in sectors with high regulatory complexity such as fuels and mining. Despite its narrower scope compared to the IBS and CBS, the economic effects of the IS may be significant, particularly in price formation and the competitiveness of companies subject to progressive rates based on environmental or health criteria. Companies in sectors sensitive to this tax should incorporate the potential tax impacts on their margins, market positioning, and investment decisions into their tax and strategic planning. That said, although it is a tax with specific reach, the IS has structural influence on the production chains subject to its incidence. Proper understanding and monitoring will be essential for taxpayers to adapt to the new tax model, mitigate risks, and seize opportunities within the regulatory logic ushered in by the Tax Reform. As can be seen, the IS is just one part of the broader reforms Brazil is currently undertaking; and the oil & gas sector still faces many challenges to ensure the sustainable development of Brazil’s private refining industry. A parallel issue, also of great impact, is the revision of the reference price calculation methodology for oil, set monthly by ANP (the Brazilian National Agency of Petroleum, Natural Gas, and Biofuels), which serves as the calculation base for the collection of royalties and profit-sharing for the Union, States, and Municipalities. Currently, the reference price lags behind actual market prices for oil, resulting in (1) lower royalty and profit-sharing
Deepfakes and Image Rights: Legal Challenges in the Age of Artificial Intelligence
In the digital era, technology evolves faster than the laws that attempt to regulate it. Among the most striking examples are deepfakes—realistic but entirely fabricated images, videos, or audio generated by artificial intelligence. While these tools can be used for satire, education, or entertainment, they also present new challenges to personal rights, particularly the right to one’s image. Deepfakes raise questions about consent, misuse, and legal liability. Across continents and legal systems, these synthetic creations have already prompted legislative debates, artistic controversy, and new concerns over how identity can be digitally rewritten without consent. This article explores the intersection between deepfake technology and image rights, highlighting the legal vacuum, the potential for abuse, and the need for effective legal and contractual safeguards. What Are Deepfakes and How Do They Work? Deepfakes are synthetic media generated using artificial intelligence. These neural networks train on large datasets to create hyper-realistic content that mimics real individuals’ faces, voices, and expressions. Common use cases include inserting a person’s face into a movie scene, creating fake news clips, or mimicking a celebrity’s voice. Initially a niche technology, deepfakes have now proliferated through apps and open-source tools, making their creation accessible to anyone with a smartphone and an internet connection. Their impact is significant. Viral videos of public figures making statements they never uttered or influencers appearing in fake promotional content illustrate how deepfakes can distort public perception and damage reputations. This is where the right to image comes into focus. Image Rights and the Deepfake Dilemma The right to image generally refers to a person’s control over the commercial and public use of their likeness, including their face, voice, or other identifying attributes. Deepfakes challenge this right in multiple ways. First, by simulating consent: a deepfake may appear as if someone has willingly participated in content they never approved. Second, by blurring the line between parody and defamation, as it becomes increasingly difficult to distinguish fiction from fact. A clear illustrative example of this dilemma appears in the popular TV series Black Mirror, in the episode where actress Salma Hayek portrays a version of herself. In the narrative, a streaming platform uses her digital likeness—via deepfake technology—to create fictional films that damage her reputation, without her consent. This dramatized yet eerily plausible scenario demonstrates the emotional and reputational toll of synthetic media, especially when image rights are not properly safeguarded. Legally, the situation is complex. In some jurisdictions, image rights are grounded in privacy law, while in others, they fall under intellectual property or tort law. What is clear, however, is that current frameworks often fail to adequately address the unique threats posed by synthetic media. There is also an enforcement gap: once a deepfake is posted and shared, removing it entirely from the internet is nearly impossible. Comparative Approaches and Legal Gaps Different regions have started to address deepfakes in their legislation. In the United States, states like California and Texas have introduced bills banning deepfakes in political campaigns and non-consensual adult content. These statutes reflect a growing recognition of the real-world harm deepfakes can cause, particularly when used to manipulate elections or spread false information. The European Union’s proposed AI Act includes provisions on transparency and accountability for synthetic content. Under this regulation, AI-generated media must disclose its artificial nature, which could help reduce confusion and misuse in public discourse. In Asia, countries like South Korea have criminalized the creation and distribution of certain types of deepfake content, especially those that involve sexual exploitation or impersonation. Meanwhile, China has implemented a rule that requires providers of deep synthesis services to notify users when content is generated using AI. Latin America is still developing its response to deepfake risks. Most countries rely on traditional legal frameworks, such as defamation and privacy laws, but lack tailored provisions for synthetic media. This presents both a challenge and an opportunity for legal innovation. Given the region’s growing digital influence, especially in content creation and influencer marketing, proactive legislation could help prevent future harms. In Mexico, legislators are already pushing to penalize deepfakes used to simulate explicit content without consent. Meanwhile, in Brazil, the Superior Electoral Court has explicitly banned the use of deepfakes in political campaigns and requires clear labeling of any AI-generated media in electoral content. These measures reflect growing institutional awareness in Latin America, not only of the reputational harm these tools can cause but also of their potential to mislead voters and undermine democratic processes. A notable real-world example of deepfake misuse occurred in 2018, when a video surfaced of former U.S. President Barack Obama apparently insulting then-President Donald Trump. Although it was later revealed to be a deepfake created for educational purposes, the clip demonstrated how easily synthetic content could mislead the public. Another high-profile case involved actress Scarlett Johansson, whose image and voice were digitally manipulated for adult content without her consent. Hypothetical Scenarios and Legal Implications The potential legal implications of deepfakes become even clearer when we look at how such content could play out in real-world scenarios grounded in plausible real-world contexts. Imagine a deepfake video featuring the CEO of a major corporation delivering a fabricated apology for financial fraud. Within hours, the company’s stock value collapses, investors panic, and the damage is done before the video is debunked. The legal consequences would involve not only reputational harm but also financial loss and potential securities fraud inquiries In another case, imagine that just days before a national election in Brazil, a deepfake video circulates showing a presidential candidate appearing to accept illicit funds from a foreign government. The video goes viral before fact-checkers can intervene, swaying public sentiment and influencing voting behavior. The consequences could include investigations for electoral manipulation and reputational damage. Consider also a marketing campaign where a beauty brand digitally inserts the likeness of a well-known influencer into an advertisement, promoting products the influencer has never used. Not only is this a clear case of commercial appropriation of image without consent, but it could also lead
Steps, not gaps: the case for intermediate banking licenses in Chile
In Chile’s financial system, the current regulatory framework forces a binary choice: one is either a non-bank issuer of payment cards with a minimum capital of 25,000 UF (Unidad de Fomento, a Chilean inflation-indexed unit of account, approximately USD 1,000,000 as of April 2025), or a fully licensed bank with a capital requirement of 800,000 UF (approximately USD 32,000,000 as of April 2025). There are no intermediate licenses that allow for a gradual progression in the provision of financial services. This regulatory gap presents a structural barrier to innovation, hinders the responsible growth of emerging players, and traps many firms in a legal and operational limbo. In an increasingly digital and financialized world—with consumers demanding personalized and accessible financial products—Chile urgently needs a scalable licensing regime, as seen in other jurisdictions. This article outlines the current regulatory limitations, highlights successful international models, and proposes potential reforms to enable a more inclusive, competitive, and modern financial ecosystem. II. The Chilean framework: two floors and no staircase Under Chilean law, non-bank issuers of payment cards operate under a regulatory framework established by Law No. 20.950 and detailed in the regulations issued by the Commission for the Financial Market (CMF), including capital requirements and operational restrictions. They are not authorized to take deposits in the banking sense—that is, they must fully safeguard user funds and cannot intermediate them or use them for lending purposes. Additionally, they are not authorized to offer credit services directly using their own funds or under conditions equivalent to those of licensed banks or financial institutions. Conversely, obtaining a full banking license requires a minimum capital of 800,000 UF and compliance with a complex set of prudential regulations, including governance, risk management, liquidity, solvency, and consumer protection standards. The leap from non-bank issuer to full bank is not just financial—it is institutional, technological, and organizational. As a result, Chile lacks a regulatory ladder that would allow firms to scale responsibly, test financial products under controlled conditions, and grow in proportion to their size and risk profile. The absence of proportionality limits competition, discourages innovation, and forces firms to contort their business models to fit unsuitable regulatory molds. III. What do other countries do? Scalable license models The concept of tiered or proportional licensing is not new. Multiple jurisdictions have implemented frameworks that allow financial entities to evolve gradually according to their business models, size, and systemic relevance. Key examples include: United Kingdom: The “restricted banking license” allows fintechs to operate under conditional authorization before becoming fully licensed banks. This “mobilization stage” gives startups time to develop operational capabilities and gradually meet prudential standards. The UK also provides several alternative license types for institutions to begin operating on a limited basis such as: Electronic Money Institutions (EMI) like Revolut – in its first stages – and Wise; Payment Institutions (PI) for money transfers, issuers of payment instruments, and electronic payments; or even using novel commercial approaches through Banking-as-a-Service structures like Railsr. Brazil: The Central Bank has created several new legal entities—Payment Institutions, Direct Credit Societies (SCDs), and Peer-to-Peer Lending Societies (SEPs)—with tailored regulatory frameworks. This has enabled many fintechs to evolve into more complex financial institutions. United States: Multiple state and federal licenses exist, and ongoing debate surrounds the creation of a “special purpose national bank charter” for fintechs, which would allow them to engage in specific financial activities without becoming full-service banks. Colombia: Financial companies can operate through alternative licenses such as “Sociedades Especializadas en Depósitos y Pagos Electrónicos” (SEDPEs) or as “Compañías de Financiamiento”. SEDPEs are authorized to offer electronic payment services, such as digital wallets and prepaid cards, but they are not allowed to provide loans or collect deposits directly from the public (i.e., Movii, the first fintech to operate as a SEDPE in Colombia). Compañías de Financiamiento can grant loans and offer credit products, subject to limitations when compared to full-service banks. An example of this model is Nu Colombia, a subsidiary of Nubank, which obtained its financing company license to expand its digital financial services in the country. These international experiences share a common vision: enabling innovation under proportional risk frameworks. While the legal vehicles vary, they all aim to offer supervised spaces for growth, experimentation, and market entry, reducing the cost of regulatory compliance for smaller players without compromising oversight. Chile, with its high digital adoption and strong institutional framework, is well-positioned to adapt these models to its financial ecosystem. IV. What could Chile do? Possible regulatory pathways Chile could adopt one or more of the following options to introduce proportional licensing: Digital Financial Institution License: A new license that permits the offering of basic deposit-like accounts (e.g., provisioned accounts), remunerated savings, and limited credit products, with lower capital requirements and proportionate risk controls. This license could cap the size of operations or restrict the types of clients served. Progressive Licensing Model: Inspired by the UK, a staged authorization model could allow firms to operate under predefined limitations before scaling up to a full license upon meeting operational and compliance benchmarks. Legislative Reform or Special Regulation: Chile could institutionalize intermediate licenses through amendments to the General Banking Law or a standalone regulation, empowering the CMF to define requirements and oversight mechanisms. Introducing scalable licenses does not mean deregulation. On the contrary, it means regulating smarter—tailoring oversight to each actor’s size, complexity, and systemic importance. A tiered model could improve monitoring and market transparency with the right safeguards. Regardless of the path chosen, the system should be guided by three principles: proportional regulation, consumer protection, and business scalability. It must also include clear rules on access to payment systems, interoperability, financial crime prevention, and effective supervision. V. Conclusion Chile’s lack of intermediate financial licenses is a regulatory blind spot that impedes the orderly development of new actors, stifles competition, and excludes potentially millions from innovative and secure financial services. This is not about weakening supervision. It is about acknowledging that not all financial models pose the same risks. A fintech offering remunerated accounts backed by central bank custody does not represent the same systemic threat as a universal bank with a diversified credit portfolio. Chile has an opportunity to build a
The New Supreme Court of Justice of the Nation: A Turning Point in the Mexican Judicial System
June 1, 2025, marked a significant milestone in Mexico’s constitutional history. For the first time, polls opened for citizens to directly elect the members of the Supreme Court of Justice of the Nation (SCJN), the country’s highest judicial tribunal, as well as the entire national judicial system at both local and federal levels. Consequently, popular elections now determine all branches of the State: Executive, Legislative, and for the first time, the Judiciary. This election day, a product of the constitutional judicial reform approved in 2024, modified the SCJN’s composition and sparked extensive debates regarding the suitability of this measure and its potential consequences. This article aims to analyze the key elements of this transformation, addressing the context that fostered it, the SCJN’s significance within the Mexican legal framework, its historical composition, and the changes imposed by the reform. I. The Context of the 2024 Judicial Reform: An Unprecedented Change The 2024 judicial reform emerged from a broad public debate concerning the Federal Judiciary. Aspects such as the perceived detachment from citizens, efficiency in justice administration, and the reliability of courts in judicial processes were questioned. Arguments in favor of the reform highlighted the necessity of a completely new judicial system aimed at eliminating the flaws that had accumulated over the years. In this manner, the Judicial Reform proposed that the popular election of judges, magistrates, and ministers could serve as a mechanism to reform the Judiciary, making it more transparent and effective in light of the public perception of the previous system’s inefficiency. The reform, approved and promulgated in late 2024, was presented as a response to the demand for more accessible justice with greater legitimacy of origin. While this might appear attractive, the cost of its implementation involved sidelining fundamental aspects such as the judicial career path, which aspiring judicial officials previously had to undergo, and simultaneously jeopardizing the most elemental principle of judicial independence. II. Importance and Function of the Supreme Court of Justice of the Nation in Mexico The SCJN is the highest tribunal in Mexico’s justice system and the supreme interpreter of the Political Constitution of the United Mexican States (CPEUM) and international treaties to which the country is a party. Its relevance is manifested through several crucial functions: Defense of the Constitution: The SCJN acts as the guarantor of the constitutional order. Through various control mechanisms, the SCJN seeks to ensure that acts of authority and laws adhere to the fundamental principles and rights enshrined in the CPEUM. Protection of Human Rights: One of the SCJN’s fundamental functions is the protection of human rights, established in both the CPEUM and the international treaties to which Mexico is a party. Issuance of Precedent (Jurisprudence): The SCJN engages in interpreting and integrating the national legal framework, thereby issuing criteria that are binding for all judicial authorities throughout the country. Constitutional and Conventional Review: It exercises control over the constitutionality of secondary laws to ensure they are interpreted in accordance with the CPEUM and the international treaties signed by Mexico. Court of Last Resort: At the national level, the SCJN acts as the final judicial instance for resolving disputes. Upon exhausting this instance, access to a new review stage would only be available before international bodies such as the Inter-American Court of Human Rights. Its significance is undeniable. The SCJN not only resolves cases but, through its criteria, shapes the interpretation of law, defines the scope of rights, and ultimately influences the daily lives of citizens. The autonomy of its decisions is considered a cornerstone for the separation of powers and for ensuring an effective counterbalance to the other two branches of the Union. III. Composition of the Court Prior to the Judicial Reform Prior to the 2024 reform, the SCJN was composed of eleven ministers operating in two chambers (salas). Their appointment followed a process established in the CPEUM, which sought a balance between the Executive and Legislative branches: Presidential Nomination: The President of the Republic submitted a slate of three candidates to the Senate. Senate Approval: The Senate, following appearances by the nominees, selected the minister to fill the vacancy from that slate, by a vote of two-thirds of its members present. Term of Office: Once appointed, ministers served for fifteen years and could only be removed for serious causes stipulated by law. IV. Composition of the Court According to the 2024 Judicial Reform The 2024 judicial reform significantly transformed the structure and selection process of the SCJN. The most relevant changes include: Reduction in the Number of Ministers: The SCJN will now be composed of nine ministers, down from the previous eleven, eliminating the chambers into which the tribunal was divided. Direct Popular Election: The most significant change is the election of ministers (as well as all judges nationwide) by popular vote. The process was established as follows: Candidate Nomination: Candidacies are proposed by the three branches of government: the Executive, the Legislative (Chambers of Deputies and Senators), and the Judiciary itself. Candidate Selection: The National Electoral Institute (INE) is responsible for reviewing profiles to ensure they meet constitutional requirements (nationality, age, academic degree, legal experience, good reputation, etc.) and compiling the lists of candidates. Campaign and Election: Candidates conduct electoral campaigns. Finally, they are elected by direct and secret vote of citizens on federal election day. Term of Office: Ministers elected by popular vote will serve for 12 years and can only be removed in accordance with the chapter on public servant responsibility for serious administrative offenses, acts of corruption, and patrimonial damage to the State. Rotation of the Presidency: The reform also establishes that the President of the SCJN will be the person who obtained the majority of votes in the citizen election and will rotate every 2 years. Start of Functions: The ministers who win the election on June 1, 2025, will begin their functions on September 1, 2025. V. June 2025 Judicial Election On June 1, 2025, the first popular election was held to choose not only the ministers who will form the new SCJN but also half of the total members of the judiciary at both local and federal levels; the second half will be elected in 2027. Citizen participation was certified at 13 million citizens who went to the polls to cast their
Unproven Payment in the Proceeding’s Evidentiary Phase under Mexican Commercial Law
Does a payment made but not proven during the appropriate procedural phase of trial render it ineffective? At first glance, this may seem an obvious question, but unfortunately under Mexican commercial law it is not. Normative Provision under Critique. Article 1397 of the Commercial Code provides as follows: “If the matter concerns a judgment, no defense other than payment may be admitted if enforcement is sought within one hundred and eighty days; if that period has elapsed but not more than one year, defenses of settlement, set-off and arbitration agreement shall also be admitted; and if more than one year has passed, defenses of novation—including forbearance, debt reduction, agreement not to sue, or any other arrangement modifying the obligation—and of falsity of the instrument shall also be admissible, provided that enforcement is not sought by virtue of a final judgment, agreement or pending proceeding in the record. All these defenses, except that of falsity, must be subsequent to the judgment, agreement or proceeding, and must be evidenced by public instrument, document judicially authenticated or by judicial confession.” Introduction: Issues under interpretation. The cited provision admits the defense of payment even at the enforcement stage of the judgment; however, its concluding clause restricts its application to payments made after the date of the judgment. In other words, under commercial law, even following a condemnatory judgment, the defendant may invoke payment as a defense at the enforcement stage—but only if the payment in question occurred after the judgment. This raises the question: what becomes of a payment that was in fact made but not proven during the evidentiary phase of a commercial trial? The language of the provision seems to treat it as though it never occurred. This article advocates for a broader interpretation of the admissibility requirement set forth in Article 1397 of the Commercial Code, recognizing that its true purpose is to avoid relitigating the same defense of payment already pleaded, not to strip validly and timely made payments of their efficacy. Implications of the Textual Application of the Cited Statutory Provision. Thus, under the text of the provision, picture the most extreme scenario: the plaintiff sues for non-payment (when in fact the debtor did pay), and the proceeding continues in default because the defendant neither pled nor proved payment during the evidentiary phase. In that situation, although payment was timely made, commercial law appears to privilege procedural form over substantive justice: once a final condemns payment that was not evidenced at trial, the defendant may not prove it at the enforcement stage. Accordingly, the text of Mexican commercial law does not favor a duly performed payment unless it is proven in the appropriate phase of the proceedings or unless the claim to enforce it has prescribed. Once enforcement proceedings are initiated, it is incumbent on the defendant to establish timely payment—and only during the trial’s evidentiary phase—otherwise the debtor will be condemned to pay despite having already fulfilled the obligation, effectively imposing a double payment. Correct interpretation in accordance with fundamental rights and the civil law concept of payment. Therefore, while the admissibility requirement in the final clause of Article 1397 serves the legitimate purpose of preventing the re-examination of an already pleaded defense, it must not be construed restrictively. To do so conflicts with the third paragraph of Article 17 of the Political Constitution of the United Mexican States, which forbids procedural formalism from prevailing over the substantive resolution of a dispute—namely, whether the obligation has been effectively discharged. Moreover, payment is, par excellence, the means of fulfilling an obligation and can be refused only for just cause, as set forth by Article 2098 of the Federal Civil Code. It is therefore inconceivable that, although the creditor may not lawfully refuse a proper payment, a mere procedural requirement could nullify a timely performance. Under this reasoning, Article 1397 limits the defenses available at the enforcement stage; yet its procedural admissibility requirement, again, must not be read restrictively but rather in favor of substantive justice, so as to avoid condemning a person to double payment when they have timely satisfied their obligation but failed to prove it at trial. To hold otherwise would amount to accepting that payment, as a mode of extinguishing obligations, does not actually discharge the debt but instead survives on condition that non-payment is plead and proven at trial—thereby distorting the civil law conception of payment. As Dr. Cortiñas Barajas observes, once a payment is made without lawful refusal, there is no rational basis—neither theoretical nor practical—to presume the obligation persists or a new obligation arises: “that payment extinguishes the debt and should not give rise to any further obligation, since the legal expectations and subjective rights of both parties have been satisfied,” underscoring the bilateral nature of the act. Conclusion. These considerations, intrinsic to the nature of payment and the effects of its performance, confirm that the procedural admissibility requirement in Article 1397 cannot be limited solely to defenses arising after the judgment. If a payment has not been examined due to lack of opportunity, it should be admissible at any stage of the proceedings; otherwise, procedural form would eclipse substantive justice, exposing the debtor to a double payment. To date, although the Supreme Court of Justice of the Nation has addressed Article 1397 in relation to certain fundamental rights, it has not analyzed it under Article 17 of the Constitution nor in terms of distorting the figure and consequences of payment as a form of extinguishing obligations. Nevertheless, the interpretation advanced here aligns with our judicial system and the fundamental rights enshrined in our Constitution.
