Chile Makes Progress in Becoming a Key Venue of Choice

Introduction

Chile’s success story has naturally resulted in a greater demand for top-quality dispute resolution mechanisms at all levels. Its political stability and sustained economic growth, coupled with strong institutions and relatively low corruption indexes, have steadily drawn international investors, increasing the need for international arbitration. However, as in other parts of the world, Chile’s stability is being tested. The country not only had to manage the covid-19 pandemic but also deal with increasing social unrest, including a violent outbreak during October 2019 that culminated in a constitutional assembly. Although the proposed constitution was rejected in September 2022, in May 2023, a new constitutional assembly was voted in and is currently working on a second proposal. This protracted constitutional process has put further stress on Chile’s international reputation as a stable environment for investment. In parallel with this constitutional reform, President Boric’s administration continues to push for reforms in the pension, private healthcare, mining and tax sectors. These reforms, if approved, would create profound changes to the legal and social framework of the past 30 years, including putting an end to private pension administrators, granting privileges to the public healthcare system (Fonasa) rather than private healthcare providers (Isapres), increasing tax rates and limiting tax benefits. It is reasonable to assume that these circumstances will further increase the need for commercial arbitration (both domestic and international) and investor-state dispute settlement mechanisms.

Chile has a long-standing arbitral tradition, a solid domestic practice and has made considerable progress with respect to international arbitration, furthering its goal of becoming a venue of choice within the region. The necessary conditions are certainly met: Chile is a party to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York Convention), it enacted the UNCITRAL Model Law in full almost 20 years ago and its judiciary has generally been supportive of arbitration. Further, international proceedings have consistently increased during the past decade and the Chilean legal community has become much more sophisticated, to the point that best international practices are permeating even domestic proceedings.

Legal framework

Chile has a dual arbitration framework. Domestic arbitration is not regulated in a comprehensive body but through scattered provisions in the Code of Civil Procedure enacted in 1902 (CCP)^[2] and the Judiciary Organisation Code of 1943 (JOC).^[3] In turn, international arbitration is governed by the International Commercial Arbitration Act of 2004 (ICAA).^[4]

Domestic arbitration

Chilean law defines arbitrators as ‘judges appointed by the parties, or by the courts absent their agreement, to adjudicate a dispute’.^[5] Authors usually rely on this provision to argue that Chilean law follows the jurisdictional theory of arbitration. Other legal provisions also import to domestic arbitration the same rules applicable to domestic courts in matters of independence and impartiality, conflicts of jurisdiction, and recourses, among other things.^[6] Case law has also accepted that arbitrators exercise jurisdiction similar to state courts,^[7] which lends much authority to their rulings.

Domestic arbitration can be classified in three categories, based on subject-matter arbitrability. Certain matters are non-arbitrable in light of the public interest involved (e.g., alimony and criminal matters).^[8] On the opposite end, a peculiar feature of arbitration in Chile is that others are mandatorily subject to arbitration (e.g., division of jointly owned assets and disputes between the partners of a corporation).^[9] Compulsory arbitration has spurred criticism, based on the fundamentally consensual nature of arbitration and the right to access to justice.^[10] The rejected constitutional draft included a provision forbidding compulsory arbitration but the current draft does not include a similar provision. Rather, it declares that the state will foster the use of mediation, arbitration and other alternative means of dispute settlement.^[11] Finally, matters that are arbitrable but not subject to compulsory arbitration can be voluntarily submitted to arbitration.

Domestic arbitration can also be classified based on the applicable procedural and substantive rules. Absent a specific agreement, domestic arbitration will be de jure, meaning that Chilean law (both substantive and procedural) will govern the arbitration.^[12] Parties may agree to grant the arbitrator the power to conduct the proceedings and to rule according to equity (ex aequo et bono). In such a case, except for basic due process guarantees,^[13] the arbitrator is free to set procedural rules acting as an amiable compositeur and shall issue an award according to equity and good conscience.^[14] As another particular feature of Chilean law, parties may also agree to have a ‘mixed arbitration’, whereby the arbitrator is free to set the procedure but must rule according to Chilean substantive law.^[15] De jure and mixed arbitrations are the most common forms of arbitration; although not rare, equity arbitration is used less frequenly.

These forms of arbitrations are exclusive to domestic proceedings. Under the ICAA, the arbitrator’s powers will be defined by the arbitration agreement and applicable arbitration rules.

Domestic arbitration was traditionally ad hoc until 1992, when the Santiago Chamber of Commerce founded the Arbitration and Mediation Centre (CAM Santiago). CAM Santiago quickly gained a reputation as the main arbitral institution in Chile. Its model arbitration clauses^[16] and rules^[17] are predominantly adopted in domestic arbitration. However, ad hoc arbitration still has a relevant role in Chile, owing to the existence of compulsory arbitration (where courts directly appoint arbitrators).

International arbitration

Before the enactment of the ICAA, international arbitration was only subject to specific regulation contained in international treaties.^[18] The ICAA is an almost verbatim adoption of the 1985 Model Law on International Commercial Arbitration of the United Nations Commission on International Trade Law^[19] (the Model Law). Its goal was to position Chile as a hub for international commercial arbitration.^[20] Unlike domestic arbitration, the ICAA does not expressly characterise international arbitrators as ‘judges’, and as is discussed below, international arbitrators are subject to different rules from national arbitrators and state courts.

According to the ICAA, an arbitration is deemed international if:

• the parties to an arbitration agreement have, at the time of the conclusion of that agreement, their place of business in different states;
• one of the following places is situated outside the state in which the parties have their places of business:
  • the place of arbitration, if determined in, or pursuant to, the arbitration agreement; or
  • any place where a substantial part of the obligations of the commercial relationship is to be performed or the place with which the subject matter of the dispute is most closely connected; or
• the parties have expressly agreed that the subject matter of the arbitration agreement relates to more than one country.^[21]

While it may be argued that the ICAA allows parties to agree on the international nature of their dispute, traditional doctrine and case law in Chile require international connection factors beyond the parties’ agreement.^[22] One author proposes that the parties’ agreement may only be decisive when the other internationality factors are unclear (and therefore applies ex abundantia).^[23] For example, this may be the case of an arbitration seated in Chile, with respect to a contract executed and performed in Chile, where one of the parties is a wholly owned subsidiary of a foreign company, there is international financing and the parties have agreed on the international nature of the contract.

To the best of our knowledge, there are no reported decisions deeming international an otherwise domestic dispute solely based on the parties’ agreement.

The Arbitration Rules of the International Chamber of Commerce remain the most common choice of institutional procedural rules for international arbitrations. CAM Santiago published its own International Arbitration Rules in 2006, which are gradually gaining traction.^[24]

Arbitration involving state entities

It is frequent for state entities to participate in contracts with private companies and to bind themselves to arbitration, both domestic and international. State entities may agree to arbitrate domestic disputes, for example, under the Law on Public Concessions, which regulates public contracts between the Ministry of Public Works and private entities.^[25] Per its Article 36, the parties to a public concession contract can resort, first, to a technical panel that can issue non-binding technical recommendations regarding a specific dispute. Second, the law entitles the parties to resort to either an arbitral commission or the Santiago Court of Appeals, even after review by the technical panel.^[26]

In the international arbitration sphere, Decree Law No. 2349 is worth noting, since it regulates international contracts involving the public sector.^[27] Article 1 grants a broad authorisation to the Chilean state, its entities, institutions or companies, so that they may validly execute an international contract governed by foreign substantive law, and submit differences arising from those contracts to the jurisdiction of a foreign tribunal, including arbitral tribunals. Furthermore, Article 2 allows the state and its entities to waive their immunities from execution, with respect to a dispute arising from this type of contract.

The arbitral agreement

A cornerstone of arbitration, arbitral agreements allow the parties to exclude the jurisdiction of state courts and submit disputes before arbitral tribunals. As in other jurisdictions, the drafting of the arbitration agreement is of the essence to determine the scope of the arbitration and the powers of the arbitral tribunal.^[28]

Domestic arbitration agreement: submission agreements and arbitration clauses

As with any agreement, arbitral provisions are subject to general validity requirements set forth in the Chilean Civil Code.^[29] Chilean scholars and case law distinguish between submission agreements and arbitration clauses.^[30] Both are legally sufficient and binding: no further requirement is necessary to commence an arbitration proceeding once the conflict has arisen.

In the absence of specific regulation, there is some debate about the precise difference of the terms.^[31] The distinctive feature of submission agreements is that the parties submit their dispute to a specific arbitrator only,^[32] whereas arbitral clauses generally reflect the parties’ commitment to arbitrate without appointing a specific arbitrator.

A practical difference is the degree to which the parties waive their right to access local courts: if the arbitrator appointed by a submission agreement is ultimately unable or unwilling to serve, the aggravated party may only turn to state courts for redress. However, under an arbitration clause, the parties would have to appoint a new arbitrator insofar as they have opted for local jurisdiction.^[33]

Parties should be careful when drafting arbitration agreements subject to domestic law, particularly if they appoint a specific arbitrator. If the intention of the parties is unclear as to whether they wish to arbitrate even if the specified arbitrator is unwilling or unable to serve, it would be ultimately for the state courts to construe the clause.^[34]

International arbitration agreements

Unlike domestic laws, the ICAA defines the arbitration agreement as an agreement by the parties to submit all or certain disputes that have arisen or may arise between them in respect of a defined legal relationship, whether contractual or not. An arbitration agreement may take the form of an arbitration clause in a contract or a separate agreement.^[35]

Chilean courts have adopted a pro-arbitration stance in cases where the validity of an international arbitration agreement was called into question.^[36] For example, in a case involving the recognition of an award under the International Chamber of Commerce (ICC), the respondent contended that the arbitral tribunal lacked jurisdiction when issuing the award, arguing that the parties had settled the obligations that gave rise to the arbitration. The parties had allegedly terminated the contract that contained the arbitral clause on which the arbitral tribunal based its jurisdiction. The Supreme Court dismissed the respondent’s arguments, since it considered that the arbitral clause applied to any dispute pertaining to the extinction of the respondent’s obligations, and proceeded to enforce the award.^[37] In 2023, the Santiago Court of Appeals dismissed an annulment action premised, inter alia, on an alleged lack of consent to arbitrate as the arbitral agreement stated that the parties ‘may’ resort to arbitration. The party seeking the annulment averred that the language was not mandatory and that subsequent agreement of the parties was required to compel arbitration. The Court rejected this argument stating that the word ‘may’ shall be understood to mean that any of the parties is entitled to commence an arbitration, not that it may only do so if the counterparty agrees.^[38]

Effects of the arbitration agreement

Both domestic and international arbitration agreements have a positive and a negative effect. The positive effect is that either party has the right to arbitrate a dispute.^[39] The negative effect is that the parties are precluded from referring the dispute to domestic courts, unless otherwise agreed.^[40]

Autonomy of the arbitration agreement

Neither the CCP nor the JOC expressly provides for the autonomy and severability of the arbitration agreement. Nonetheless, case law has consistently recognised them. As stated by the Court of Appeals of Rancagua, deeming an arbitration agreement not independent would render it pointless, contravening the will of the parties, the contractual nature of arbitration and the purpose of the institution of arbitral tribunals.^[41]

By contrast, Article 16(1) of the ICAA expressly states that ‘an arbitration clause that forms part of a contract shall be treated as an agreement independent of the other terms of the contract. A decision by the arbitral tribunal that the contract is null and void shall not entail ipso jure the invalidity of the arbitration clause’.

Extension of the arbitration agreement to third parties

As a general principle, an arbitration agreement is only binding on the parties and does not affect third parties.^[42] However, this rule is not absolute and certain exceptions are recognised by law.^[43] For example, a submission agreement is not terminated because of the death of one the parties, and will continue with the party’s successors.^[44] In the same vein, after a business merger, the resulting firm shall assume the absorbed firm’s rights and duties,^[45] and insurance companies can subrogate themselves on their clients’ rights to pursue damages.^[46]

Theoretically, and depending on the facts of the case, other circumstances may justify extending the effects of an arbitration agreement, such as the lifting of the corporate veil, the group of companies doctrine,^[47] joint ventures and stipulations in favour of third parties.^[48] Regarding the latter, in one case the President of the Santiago Court of Appeals ruled that a third party that benefited from rights expressly established in its favour in an agreement to which it was not formally a party, could invoke the arbitration clause contained therein to claim such benefit pursuant to Article 1449 of the Civil Code.^[49]

Finally, in 2016, the Santiago Court of Appeals departed from the traditional notion that the arbitration agreement is only binding on the signatories and extended the effects of an arbitration agreement to a third party based, among other things, on the doctrine of joint and several liability.^[50] The Court was seized of a conflict of jurisdiction between an arbitral tribunal and a local court, with regard to a claim brought by a company against its counterparty in a contract (which included an arbitration agreement) and a third party that was not formally a party to the agreement. The Court noted that, although the respondent third party was not a signatory to the agreement and arbitration clause, it had prepared certain terms of reference that included an arbitration clause, and which were considered as part of the contract pursuant to its own provisions. According to the Court, this circumstance justified extending the arbitration clause to the third party. Additionally, and as an alternative argument, the Court also noted that the claimant had invoked the joint and several liability of the respondents. The Santiago Court of Appeals reasoned that if the arbitration agreement was not extended to the third party, it would force the claimant to pursue parallel proceedings against each respondent, which would frustrate the joint and several liability of the debtors.

Ambiguous and asymmetrical arbitration agreements

Chilean courts have upheld ambiguous or asymmetrical arbitration agreements, provided that the parties’ intent to arbitrate was clear. In one case, the defendant opposed the recognition and enforcement of an award claiming that the composition of the arbitral tribunal was not in accordance with the agreement of the parties. The dispute had been decided by an arbitral tribunal appointed by the Official Chamber of Commerce, Industry and Navigation of the City of Barcelona, whereas the arbitration agreement provided for appointment by the non-existent ‘Barcelona Chamber of Commerce’. The Supreme Court dismissed the opposition, finding that the reference should be understood as having been made to the Official Chamber of Commerce, Industry and Navigation of the City of Barcelona, as it is the only institution in Barcelona that usually performs these functions.^[51]

Chilean courts have also recognised the validity of asymmetric arbitration agreements. In one case, the agreement provided the unilateral option for one party to refer a dispute either to arbitration or to local courts. The Supreme Court upheld the validity of the entire clause, reasoning that arbitration is based on party autonomy and contractual freedom.^[52]

The arbitral tribunal

Domestic arbitration and the CAM Santiago Arbitration Rules

In domestic arbitrations, the arbitral tribunal shall be constituted by de jure arbitrators, mixed arbitrators or arbitrators in equity (ex aequo et bono), as agreed by the parties. Absent an agreement, the arbitrators shall act de jure.^[53] Since de jure arbitrators and mixed arbitrators must rule in accordance with Chilean substantive law, foreign lawyers are excluded (only Chilean-qualified lawyers may serve as these types of arbitrators).^[54] The exception is arbitration in equity, as non-lawyers (including foreign lawyers) may be appointed as arbitrators.

The constitution of the tribunal in domestic arbitration is subject to several rules:

• If arbitration is compulsory or there is an arbitral agreement in place,^[55] the parties may jointly nominate the arbitrator. Absent such agreement, either party may initiate a judicial nomination proceeding.
• If the parties have agreed on a submission agreement, no nomination process is required since the parties have already agreed on the arbitrator.^[56]
• An arbitrator may also be nominated in a will, for the process of dividing the estate between the heirs.^[57]

In order to serve, the arbitrators must accept to the appointment, regardless of how they were nominated.^[58] The arbitral tribunal shall be constituted once the arbitrators accept the appointment and swear or promise to fulfil the mandate faithfully and diligently.^[59] Should the oath be omitted, any decision by the tribunal would be null and void.^[60]

The CAM Santiago Arbitration Rules set forth a different procedure for the constitution of the arbitral tribunal, by which arbitrators shall be appointed in accordance with the procedure agreed by the parties, or in the absence of any agreement, by the Santiago Chamber of Commerce from a roster published by CAM Santiago.^[61] The arbitrators shall sign a statement of independence, impartiality and availability, and disclose any circumstance that could give rise to justifiable doubts as to their independence and impartiality.

International arbitration

Under the ICAA, the parties may freely agree on the appointment process. Unlike domestic arbitration, the ICAA expressly provides that nationality shall not be an obstacle for the appointment of an arbitrator.^[62]

If no consensus is reached and the agreement provides for a three-member panel, each party may nominate an arbitrator, and the party-appointed arbitrators will then agree on a third arbitrator to serve as president. If a party fails to appoint an arbitrator within 30 days of receipt of the request to do so, or if the two party-appointed arbitrators fail to agree on the third arbitrator within 30 days of their appointment, the appointment shall be made, upon request of a party, by the president of the competent court of appeals. In the case of a sole arbitrator, absent an agreement, any party may request the president of the competent court of appeals to nominate the arbitrator.^[63]

The CAM Santiago International Arbitration Rules provide for a similar appointment process where the parties’ agreement prevails. Absent agreement, it is for CAM Santiago to nominate the sole arbitrator (or the president in the case of a three-member panel).^[64] Notably, CAM Santiago does not have a roster of arbitrators for international arbitrations and, therefore, may select from a broader pool of candidates.

Conflicts of interest

There is stark contrast between domestic and international arbitration in matters of conflict of interest. Outdated early 20th-century civil litigation rules apply to ad hoc domestic arbitration.^[65] Conflicts of interest are regulated in the form of non-waivable implications (e.g., if the judge has a personal interest in the dispute or is a close relative – such as spouse or direct descendant – to the parties or their counsel) and waivable challenges (e.g., if the judge is the debtor or creditor of one the parties or their counsel), which consist of closed catalogues of conflicts of interest that must be declared by the arbitrators sua sponte or at the request of either party, depending on the specific conflict. By contrast, the CAM Santiago Arbitration Rules adopt modern standards, requiring arbitrators to disclose any circumstance that may give rise to reasonable doubts as to their independence or impartiality.

The ICAA imposes a similar duty on arbitrators to disclose any circumstances that may give rise to justifiable doubts as to their independence or impartiality.^[66]

Conduct of the proceedings

Overview

The conduct of domestic arbitration depends on the type of arbitration. Mixed arbitrators and arbitrators in equity shall follow the procedure agreed by the parties or the basic default legal procedure.^[67] De jure arbitrators shall apply domestic rules of civil procedure. This does not mean that de jure arbitrators must conduct the proceedings exactly like a judge but, rather, respect the essence of the procedure mandated by law.^[68] In this vein, the specific rules of procedure will ordinarily be defined in a preliminary hearing, with the CCP rules applying in the absence of agreement.^[69]

The ICAA allows the parties to define the procedure, based on the principles of equal treatment and equal opportunity to present their case.^[70] Absent an agreement, the arbitral tribunal shall conduct the arbitration in the manner it considers appropriate, including the power to rule on admissibility, pertinence and weight of evidence. The recognition of party autonomy allows parties to incorporate foreign practices, such as discovery-like production of documents, proceedings in languages other than Spanish, or party-appointed expert witnesses, within the boundaries of due process.^[71]

Kompetenz-Kompetenz

The principle of Kompentez-Kompetenz is well established both in domestic and international arbitration. Although there is no explicit provision in domestic arbitration law, case law has stated that the principle is ‘indirectly’ recognised.^[72] In contrast, the ICAA expressly recognises the power of the arbitral tribunal to rule on its own jurisdiction, either as a preliminary question or in an award on the merits.^[73] If dealt with as a preliminary matter on an award on jurisdiction, the parties may file a recourse within 30 days to the president of the competent court of appeals, whose decision is final.

Law applicable to the merits

When deciding the case, de jure arbitrators and mixed arbitrators must apply Chilean substantive law, whereas arbitrators in equity shall rule in accordance with equity and good conscience.^[74] In practice, arbitrators in equity will frequently resort to substantive Chilean law.

International arbitration leaves the choice of substantive law to the parties, who may refer to the laws of any given state or even soft law.^[75] If the arbitration agreement is silent on the matter, the arbitral tribunal shall apply the substantive law that results from the application of conflict of laws’ provisions. Additionally, the arbitral tribunal shall take into account the applicable usages of the trade.^[76]

Evidence

Regarding domestic arbitration, the production of evidence differs depending on the type of arbitration. De jure arbitration follows the CCP’s highly formalistic rules, including a closed catalogue of evidentiary means to which the parties may have recourse: documents, witness testimonies, confessions, tribunal inspections, expert reports and inferences.^[77], ^[78]

Moreover, these evidentiary means are further limited by other formal considerations; for example, not every person is admitted to testify,^[79] and testimony may only be oral (not written).^[80] As for expert reports, Chilean law only provides for independent experts mutually appointed by the parties, or by the arbitral tribunal absent an agreement.^[81]

In theory, mixed and in equity arbitrators are not bound by these rules and the parties are free to establish their own evidentiary rules.^[82] However, in practice, these types of proceedings are usually also formalistic when it comes to evidence.

Under the ICAA, the rules on evidence shall be defined by the parties or by the applicable arbitration rules; for example, it is common practice in Chile for the parties to refer to the International Bar Association Rules on the Taking of Evidence. In the absence of specific rules, the arbitral tribunal shall determine the admissibility and pertinence of the evidence submitted by the parties.^[83]

With regard to probative value, again domestic arbitration follows the outdated standards of Chilean civil procedure, fixing the weight to be given to each means of evidence.^[84] For example, a private document issued by one of the parties will only have evidentiary value when recognised by that party.^[85] In the case of witness testimony, the declaration of a single witness may serve as the basis for an inference by the tribunal, whereas the testimony of two witnesses who agree on the essential circumstances of the same fact may constitute full proof (plena prueba) of said fact.^[86] In the case of arbitrators in equity, the Santiago Court of Appeals has stated that they must weigh evidence in accordance with the rules of reasoned assessment, in addition to their prudence and good conscience.^[87] International arbitrators, on the other hand, must freely determine the weight to be given to the evidence.^[88]

Interim relief

Although the domestic arbitration system does not contain a general rule on interim relief, the power of arbitrators to order interim measures has been broadly accepted.^[89] However, the CCP provides that rulings that require compulsive measures or that may affect third parties must be enforced through domestic courts.^[90]

Chilean law is also silent on the issue of interim measures requested before the arbitral tribunal is constituted. Since the constitution of the arbitral tribunal is not immediate, it is accepted that the interested party may request an interim measure before state courts, which will remain competent until the arbitral tribunal is constituted.^[91]

In the case of interim measures issued by a foreign tribunal, Chilean courts have traditionally refused to enforce them, noting that, per Article 16 of the Civil Code,^[92] assets located in Chile are governed by Chilean law.^[93] Moreover, since interim measures are not traditionally considered final, the New York Convention does not apply.^[94]

The parties, however, may obtain interim measures in aid of international arbitral proceedings from Chilean courts.^[95] Article 9 of the ICAA recognises that requesting provisional relief to a domestic court is not incompatible with the arbitration agreement. Chilean courts have granted various forms of interim relief, such as a prohibition to execute bank guarantees^[96] and freezing orders.^[97] Courts have also understood that once the arbitral tribunal is constituted, the tribunal has jurisdiction to rule on pre-arbitration interim measures ordered by state courts.^[98]

On 1 September 2023, CAM Santiago’s rules on emergency arbitration came into effect, which are applicable to domestic arbitrations. Up until that date, there were no rules on emergency arbitration within the Chilean arbitration forum. One of the salient features of emergency arbitration under the CAM Santiago rules is that, at the request of a party, the emergency arbitrator may grant the requested measure ex parte,^[99] which is consistent with the rules on interim relief set forth by the CCP.^[100]

The award

Domestic arbitral tribunals in Chile may award various forms of relief, such as declaratory relief, specific performance, restitution and damages. In the case of de jure and mixed arbitrators, who apply Chilean substantive law, damages are limited to compensation for the actual harm suffered (including loss of profits) and do not extend to indirect or punitive damages.^[101]

The formalities of the award differ according to the type of arbitration. Mixed and de jure arbitrators must follow the same formalities as domestic courts, the omission of which may result in annulment,^[102] whereas arbitrators in equity are subject to fewer formalities.^[103]

In international arbitration, Article 31 of the ICAA requires the award to (1) be made in writing and signed by the arbitrators, (2) state the reasons on which it is based, unless otherwise agreed by the parties, and (3) state its date and the place of arbitration.

Although Chilean law does not expressly provide for partial awards in either domestic or international arbitration, they have been issued and authors support them.^[104]

Challenges to the award

One of the most salient differences between domestic and international arbitration is the possibility to challenge the arbitral award. Domestic arbitrations are subject to different recourses depending on the type of arbitration chosen by the parties, whereas international awards are only subject to set-aside proceedings under the ICAA.

De jure and mixed arbitration

Parties to a de jure arbitration may resort, in principle, to all recourses provided by law before state courts, that is, appeal, annulment for substantive or procedural deficiencies under the CCP (recurso de casación en el fondo and recurso de casación en la forma), and disciplinary complaint for serious misconduct or abuse in issuing an award (which may lead the court to set aside or reverse the award).^[105]

However, following the principle of party autonomy, the parties can waive the right to appeal or annulment or agree on an appeal before another arbitral tribunal.^[106]

Even if the parties have waived all remedies, Chilean courts have traditionally held that annulment for certain specific procedural defects – ultra petita and lack of jurisdiction of the arbitral tribunal – cannot be waived.^[107] Parties may also request the rectification, clarification or correction of the award^[108] or file a disciplinary complaint against the arbitrator before local courts.^[109]

Arbitration in equity

Remedies in arbitration in equity are limited. Appeal will only be possible when the parties have expressly included it in the arbitration agreement, before an appellate arbitral tribunal composed of arbitrators in equity. Annulment for substantive defects (i.e., incorrect application of the law) is excluded altogether by the JOC, since an arbitrator in equity does not adjudge based on substantive law.^[110]

Parties may file a disciplinary complaint and an annulment action for procedural defects,^[111] even if they have waived all procedural remedies – but in this case, annulment will only proceed in cases of ultra petita or lack of jurisdiction.

International arbitration

Aside from requesting the correction or interpretation of the award, the ICAA provides for set-aside proceedings before the competent court of appeals. The express wording of the ICAA^[112] has led to consistent case law rejecting any other form of remedy, including disciplinary complaints.^[113]

Notwithstanding the above, in 2020, the Supreme Court admitted an appeal against an international award.^[114] In their arbitration agreement, the parties had provided for appeal and annulment for procedural defects before domestic courts. The award was challenged before the Santiago Court of Appeals, which dismissed the appeal since the ICAA only allows for set-aside proceedings.^[115]

The Supreme Court reversed that decision, stating that the Court had to consider the will of the parties. Moreover, it noted that, when drafting the arbitration agreement, the parties did not state that their dispute would be solved in accordance with the ICAA. Only after new conflicts arose between the parties, which were different from the conflict decided by the award under review, did the parties modify the submission agreement to eliminate the possibility of an appeal. Based on the principles of party autonomy and venire contra factum proprium non valet, the Supreme Court declared the appeal admissible.

The grounds for setting aside an award are those of the Model Law.^[116] The most frequently invoked is violation of Chilean public policy. The Santiago Court of Appeals, however, has established that the concept of ‘public policy’ contained in the ICAA is international and, therefore, limited to the most serious violations of the principles and fundamental tenets of Chilean law.^[117]

Chilean courts have adopted a minimum-intervention approach when ruling on set-aside proceedings, emphasising the prohibition of de novo review: the competent court of appeals may only verify that certain minimum standards of legality have been met.^[118] Given this deference for international arbitration, to date, no international award has been annulled in Chile.

Recognition and enforcement of awards

In domestic arbitration, a party may request enforcement of an award to the arbitrator or to state courts.^[119] Nevertheless, when the enforcement procedure entails the use of public force or other compulsory measures, the party will have to resort to state courts.

As a general rule, foreign decisions, arbitral or not, are subject to leave to enforce (exequatur) from the Supreme Court, which traditionally applies the ‘cascade’ test contemplated in the CCP: foreign decisions shall have in Chile (1) the effect recognised by applicable treaties; (2) in the absence of a treaty, the same legal effect as decisions issued in Chile would have in that foreign state (reciprocity principle); or (3) alternatively, the same effect as a decision by a Chilean court, provided it complies with certain Chilean legal rules.^[120]

Although the Supreme Court usually recognises foreign decisions, it has on occasions refused enforcement, for example in the case of a precautionary measure (injunction) since it did not qualify as a final or interlocutory decision.^[121]

In 2021, the Supreme Court enforced an international award, highlighting that the exequatur procedure did not allow a broad review on the merits of the award, since its exclusive purpose is to verify the fulfilment of certain minimum procedural requirements that any award must comply with in order to be recognised.^[122]

Chapter VIII of the ICAA deals specifically with the recognition and enforcement of awards. Arbitral awards, irrespective of their country of origin, must be recognised as binding and enforced upon written application before the competent court. The Supreme Court has ruled that the grounds to oppose enforcement – which are identical as those set out in the New York Convention – are limited to those contained in the ICAA, and that it may not review the merits of the award.^[123]

Recent case law has highlighted the primacy of the ICAA and the New York Convention when dealing with the enforcement of foreign awards.^[124] However, the Supreme Court has still required that foreign decisions be ‘final’.^[125]

Conclusion

Arbitration in Chile has increased exponentially as a reflection of the country’s economic growth and political stability.^[126] The development of CAM Santiago, the enactment of laws such as the ICAA and the steady flow of foreign investment have allowed arbitration in Chile to flourish. Moreover, the courts have adopted a pro-arbitration stance, showing great respect for international awards and enforcing their decisions. Unfortunately, although international arbitration has been provided with a modern framework in line with international standards, national arbitration remains notoriously outdated. Legislative efforts should be made to modernise the national arbitration framework, to enable the adoption of the best international practices.

Although Chile remains open for transnational business and is respectful of international arbitration, it remains to be seen how the process of constitutional reform will change Chile’s legislative and business framework. We hope that the respect and deference to domestic and international arbitration continue to be the norm. Arbitration will continue to be key to address conflicts that are likely to arise in relevant economic sectors, such as mining, energy, infrastructure, public concessions, pension funds and healthcare.

Footnotes