Retention of Title in Cross-Border Transactions in Dominican Republic

The sale of goods in the Dominican Republic is primarily governed by Articles 1582 and following of the Dominican Civil Code. According to Article 1583, a sale is considered perfected once the parties reach an agreement on both the price and the object of the transaction. This means that, under default rules, ownership typically transfers to the buyer upon agreement and delivery, unless the contract states otherwise. 

One such contractual exception is the retention of title clause (reserva de dominio), which is recognized under Dominican law. This clause allows the seller to retain ownership of the goods until the buyer has paid the full purchase price. Its legal basis lies in the principles of freedom of contract and property law, and it is enforceable between the parties if clearly and explicitly included in the sales agreement. Notably, Dominican case law supports this principle; for example, in a 2013 decision, the Supreme Court held that a seller is not required to deliver the goods if the buyer has not fulfilled their payment obligations (SCJ, Chambers Reunited, Oct. 30, 2013, No. 16, B.J. 1235). 

However, the enforceability of a retention of title clause against third parties, particularly in the context of insolvency or bankruptcy, involves additional requirements. The clause’s effectiveness may depend on whether the goods are identifiable and separable and whether the agreement has been properly registered. If the goods have been resold, consumed, or transformed, the seller may lose the right to reclaim them and instead become an unsecured creditor. 

In this regard, the Dominican Republic adopted Law No. 45-20 on Movable Guarantees in 2020, which modernizes secured transactions law and provides a framework for registering these arrangements as movable guarantees. When properly registered, these clauses can be treated similarly to secured credit, granting the seller priority rights over other creditors in case of default or insolvency. 

In conclusion, while retention of title clauses are valid and recognized in the Dominican Republic, their practical enforceability depends on proper contractual drafting, clear identification of the goods, and registration.

If the buyer enters bankruptcy or insolvency proceedings, the seller may assert their ownership rights over the goods under retention of title. However, the effectiveness of such claims depends on whether the agreement was properly executed and whether the goods can be clearly identified. If not duly registered, the seller may be treated as an unsecured creditor. All claims against the debtor's estate must follow formal procedures through the bankruptcy proceedings. In other words, if the buyer becomes insolvent, the seller does not automatically regain possession of the goods unless certain conditions are met. 

The seller must be able to prove ownership was retained until full payment. If title has already been transferred to the buyer without a lien filed on his behalf, the seller becomes an unsecured creditor and loses the right to repossess.

In the Dominican Republic, for a retention of title clause to be effective, particularly against third parties or in the event of the buyer's bankruptcy, it must be clearly stated in writing. Notarization of the agreement and its registration with the corresponding authorities is strongly recommended, as it grants the document executory force and enhances its evidentiary value.

In the Dominican Republic, a retention of title clause can be validly included in a framework contract between the parties. However, for the clause to be enforceable, particularly against third parties or in insolvency proceedings, the specific goods subject to the retention of title must be clearly identified in each individual transaction.  

Under Law No. 45-20 on Movable Guarantees, a retention of title clause is not enforceable against third parties (such as other creditors or a bankruptcy estate) unless it is registered in the Movable Guarantee Registry. Unregistered clauses are only valid between the contracting parties. 

If the goods subject to the retention of title are not specifically identifiable, the clause may be unenforceable. Third parties acting in good faith may rely on the buyer’s possession of the goods to assume ownership. This could limit the seller’s ability to recover the goods, especially if they were not registered. 

Courts may scrutinize retention of title clauses if they are deemed abusive or if third parties have acquired rights in good faith. Additionally, if the goods are transformed or incorporated into other products, enforcing retention of title may become more complex.