I INTRODUCTION TO DISPUTE RESOLUTION FRAMEWORK
Since the mid 19th century, particularly with the issuance of the Chilean Civil Code, Chile has had one of the most developed and influential legal systems in Latin America. In fact, several other countries in the region that adopted the Chilean Civil Code have followed other more recent regulations such as the Antitrust Law, Concession of Public Works Law, pension laws and banking laws, among others, and regularly cite Chilean authors as well as court decisions.
Those modern regulations contrast with the Chilean Civil Procedure Code, which has ruled Chile's civil and commercial litigation for over a century, and the Chilean Organic Court's Code, which has ruled the Chilean court structure since 1943. As an alternative to the outdated proceedings established in the Chilean Civil Procedure Code, arbitration and alternative dispute resolution (ADR) proceedings have gained popularity during the past two decades.
Chilean law supports both domestic and international arbitration proceedings, and ADR mechanisms. Domestic arbitration and ADR mechanisms are mandatory for some disputes, such as those regarding public works concessions or energy law.
Regarding international arbitration awards, their execution in Chile can be challenged by the Chilean set-aside procedure; and domestic arbitration awards can be challenged according to general Chilean rules, unless the judicial recourses have been waived by the parties. However, some specific judicial recourses cannot be waived by the parties.
Chilean courts have a hierarchical structure. The Supreme Court is at the top of the pyramid, then there are 17 courts of appeal throughout the Chilean territory and they have jurisdiction over several lower civil courts, which in turn have jurisdiction over different matters. While the courts of appeal are in charge of ruling over appeals and other judicial recourses filed against decisions issued by lower civil courts, the Supreme Court is in charge of ruling cassation appeals and disciplinary recourses filed against the rulings of the courts of appeal. The Supreme Court also supervises the administrative, economic and disciplinary aspects of lower courts, with the exception of some specialised courts (e.g., the Constitutional Court).
II THE YEAR IN REVIEW
During the past months, two significant developments have taken place in the context of dispute resolution. One of them relates to the recognition of the loss of chance as a cause of action in torts litigation, and the other one to the grounds for setting aside an international arbitral award.
The loss of chance, when admitted, allows the plaintiff to obtain compensation from a defendant for losing the opportunity to avoid damage or gain certain benefit, even if the plaintiff cannot prove beyond any doubt that the suffered damage or lost benefit was directly and necessarily caused by the defendant's negligence.
As in other legislation, for a person to be held liable for damages that are wrongfully caused, Chilean law requires both but-for causation and proximate causation to be proven. The traditional rule for determining but-for causation requires proof that the damages would not have occurred without the defendant's conduct. As causation in loss of chance is essentially uncertain and merely based in the probabilities of obtaining a benefit or avoiding a loss without the defendant's conduct, for years it has been uncertain if Chilean law should support the loss of chance as cause of action. Although Chilean authors and some arbitrators have recognised the loss of chance as a cause of action, courts have been historically reluctant to accept it until a few years ago, with a few notable exceptions.2
In 2014,3 a new trend slowly started developing when the Supreme Court began to expressly recognise the loss of chance as a cause of action in public hospitals' medical malpractice cases and – to a limited extent – in governmental authorities' negligence. This trend has been more consistent during the past two years, with the Chilean Supreme Court developing a detailed basis for its application in tort disputes.4
In all these cases, the Supreme Court has only considered the loss of chance as a cause of action to hold the government liable for the public hospital's medical malpractice under governmental administration when the plaintiff's chance of early recovery, complete recovery or survival has been lowered or lost; as well as in governmental authorities' negligence in two cases where a tsunami alert was not given in time so that people could take emergency measures to avoid the damages caused by the tsunami.
As loss of chance cannot be compensated as direct damage under the Chilean Civil Code, and the Supreme Court's decisions are strictly limited; its application will rarely be extended to other cases, such as contract breaches or cases with defendants other than the government.
With regard to the grounds for setting aside an international arbitration award, although it has been generally accepted that Chilean law and international treaties only allow annulment recourses against international arbitration awards, time and again domestic arbitrations' recourses have been filed against those awards (such as complaint recourses and cassation appeals). Those recourses were always immediately dismissed during the admissibility test, until a case regarding the International Chamber of Commerce (ICC) sole arbitrator of an international arbitration proceeding, Ms Valeria Galíndez.5
One of the parties challenged Valeria Galíndez's arbitration award before the Santiago Court of Appeal by recourse of a disciplinary nature (complaint recourses), which is only admissible in domestic arbitration, as the Court of Appeal has ruled time and again. Consequently, the petitioner asserted that this arbitration was not international but domestic, arguing that the arbitration proceeding involved Chilean parties that were domiciled in Chile, and that the place of the arbitration and the place of contract's execution was also in Chile.
In this regard, it is not unusual for a losing party of an international arbitration to try to change to a domestic arbitration, so the award can be challenged under the Chilean general rules (including complaint recourses) instead of the limited rules available for international arbitration awards.
Unexpectedly, and for the first time ever, the Court of Appeal agreed to admit the complaint recourses; however, after a public hearing on the merits of the case – instead of during the previous admissibility test – the Court considered the complaint recourses to be inadmissible. The Court argued that it was not possible to deem this international arbitration to be domestic because the judge was a foreign national and the proceeding was held in English and subjected to the rules of the International Arbitration Court, whose terms and conditions were accepted by the parties before the initiation of the proceeding.
The Court of Appeal's ruling sets an important precedent regarding the nature of international arbitration proceedings, taking in more elements than those usually considered.
III COURT PROCEDURE
i Overview of court procedure
Civil and commercial procedures are mainly carried out in writing, and the judges have almost no personal interaction with the parties to the dispute. The proceeding moves forward based upon the parties' written presentations, and the courts' jurisdiction is limited by the petitions, arguments and evidence provided by them. In such regard, civil and commercial courts have minimal ex officio powers.
In connection with the rules of evidence, civil courts have to weigh the evidence submitted by the parties according to special rules established in the Chilean Civil Code and Civil Procedure Code. If these rules are breached by the court, its final judgment may be challenged by an appeal or a cassation appeal, and amended by the Court of Appeals or annulled by the Supreme Court.
In the event a court's resolution or final judgment is deemed to be unfair or irregular, the legal system provides for set of judicial recourses based either on procedural mistakes (wrongful interpretation and application of procedural rules) or substantive mistakes, regarding the governing law or its scope.
Appeals, cassation appeals and complaint recourses fall within the jurisdiction of the Court of Appeals and the Supreme Court. Also, there are special judicial recourses that fall within the jurisdiction of the lower courts, which will decide on a challenge made to their own judicial resolution.
All the above results in a very slow civil procedure, currently unable to fulfil the practical needs of Chilean society. This problem was identified years ago and a commission was formed to draft the guidelines for a new civil procedure system and a new Civil Procedure Code. This new Code will most likely vest the courts with a more active role, and make the procedure orally based.
ii Procedures and time frames
The Chilean Civil Procedure Code establishes a proceeding that has a long discussion phase that ends with a mandatory mediation hearing. If the parties fail to reach an agreement to end the dispute, the court will issue a resolution identifying the main facts in dispute that need to be proven. Once this resolution is served to the parties, the evidentiary phase begins. Once the evidentiary phase finishes, the court will issue its final judgment.
The discussion phase includes the lawsuit, the defendant's reply, the plaintiff's replication and the defendant's rejoinder. A counter lawsuit is also allowed in the same proceeding.
From filing, it may take up to six years to conclude the lawsuit, including the judicial recourses to which the parties are entitled.
Also, Chile's legal system provides for an exceptional special procedure for certain lawsuits, which are shorter, faster, have fewer stages or phases and are orally based, admitting only the plaintiff's lawsuit and defendant's reply. Generally, there is no space for a counter lawsuit.
In order to ensure the effective enforcement of a court's final judgment, Chile's legal system provides for emergency or preliminary interim measures that may be granted whenever the fomus boni iuris and periculum in mora requirements are met. The plaintiff must also prove that the interim measures are appropriate and proportionate to the requests made to the court. This means (1) evidence must be submitted about the claimed right; (2) specific requirements for the requested interim measures must be met, according to the law; and (3) collateral security must be given whenever applicable.
iii Class actions
Class actions can be filed in connection with breaches of the Consumer Rights' Law (Law No. 19,496), the Antitrust Law (Law No. 20,169) and the laws governing construction defects (Decree with Force of Law No. 458).
iv Representation in proceedings
Most of the proceedings require lawyers to appear before courts. Only under limited circumstances may a party appear without legal representation, for example, before ex aequo et bono arbitrators and the Court of Appeals when filing the special constitutional actions such as habeas corpus. Also, in some circumstances, a party may be represented by the court's legal officer, a law school student or a recently graduated law school student who has not been admitted to practise yet.
v Service out of the jurisdiction
To serve natural persons or corporations outside the Chilean jurisdiction, the principle lex locus regit actum applies. This means that Chilean courts will require the assistance of the court of the country where the person or corporation is domiciled, to whom the documents to be served will be sent by means of a letter rogatory.
vi Enforcement of foreign judgments
For the recognition and enforcement of a foreign judgment, the Chilean Civil Procedure Code provides for an exequatur proceeding. First, if an international treaty regarding the recognition and enforcement of foreign judgments has been agreed with the foreign judgment's country of origin, the foreign judgment will need to comply with the specific requirements of that treaty. Second, in the absence of any of those treaties, the recognition of the foreign judgment will depend upon reciprocity. Chilean law establishes that foreign judgments will be recognised and executed with the same terms and conditions as Chilean judgments in that country.
Even when there is no treaty or reciprocity, the foreign judgment will be recognised in Chile if four minimum requirements are met (this is known as international regularity or the minimum international due process standard):
- not being contrary to Chilean law (with the exception of the procedural laws under which the judgment would have been issued in Chile);
- not being in conflict with the Chilean courts;
- the foreign judgment should have been duly served to the losing party. Even in that case, the losing party may challenge the exequatur proving that, among other reasons, it was prevented from presenting a defence; and
- the foreign judgment should be final and irrevocable in accordance with the laws of the country in which it was issued.
Regarding international commercial arbitration awards, Law No. 19,971 provides limited grounds for refusing recognition or enforcement of the international arbitral award, which are included in the 1985 UNCITRAL Model Law.
If the exequatur is governed by an international treaty, such as the New York Convention, the defendant will be entitled to file only the defences allowed by the treaty to challenge the recognition of the foreign judgment or foreign award. With regard to the recognition of international arbitration awards, the defendant will be able to challenge the recognition based upon the grounds indicated in Chapter VIII, Law No. 19,971, which are those of the 1985 UNCITRAL Model Law. The Supreme Court has sustained, regarding the exequatur proceeding of an arbitral award, that is not possible to discuss legal and factual issues that were discussed before the tribunal that issued the award, or to discuss defences that can be filed in the enforcement proceeding, but only to review the legal requirements established by Law No. 19,971 to determine whether to recognise the award. The purpose of the exequatur proceeding is limited to determining whether or not to authorise the enforcement of awards rendered in foreign countries.6
In general terms, when enforcing foreign judgments in Chilean courts, the defendant's defences are limited to those established in Article 464 of the Chilean Civil Procedure Code, if no more than three years have passed since the judgment became final. If more than three years have passed, the defendant will be entitled to all Chilean legal defences against the enforcement.
vii Assistance to foreign courts
The Bustamante Code regulates communications and mutual cooperation between foreign courts. Thereby, foreign courts require the assistance of Chilean courts by means of letters rogatory, or any other agreed form of transmission in civil or criminal matters.
Chile has also ratified the Inter-American Convention on Letters and Letters Rogatory from 1975, applicable in civil or commercial matters whose purpose is:
- the performance of procedural acts of mere procedure, such as notifications, summonses or placements abroad; and
- the receipt and obtaining of evidence abroad.
According to the Convention, these letters rogatory are processed according to the laws of the requested state. The Chilean Procedure Code provides for a specific procedure for the processing of requests made by foreign courts.
Additionally, Chile has ratified the Inter-American Convention on the Taking of Evidence Abroad from 1975 and the cooperation and jurisdictional assistance agreement on civil, commercial, labour and administrative matters between the states party to MERCOSUR and the Republic of Bolivia and the Republic of Chile from 2002.
Considering all the international conventions ratified by Chile, the protocol for processing communications between international courts was recently modified to speed up the process, which is now the responsibility of a specialised Supreme Court's office called the Central Authority.
viii Access to court files
Generally, all case files are kept in electronic dockets that are available to the parties and the public through the internet. There are some exceptions established by law, based on privacy as in family law cases, preliminary interim measures and cases where secrecy is needed for criminal investigations to succeed.
ix Litigation funding
Chile does not have any regulation to allow or prohibit a third disinterested party to fund litigation, and third-party funding is not common. On top of that, it would be hard to know whether a case has been funded by a third party, as it is generally agreed under a private agreement.
Nevertheless, the Chilean Civil Code regulates the transfer of rights subjected to a judicial dispute, called derechos litigiosos. This is, however, different from third-party funding since the buyer of the right in dispute publicly replaces the seller in the proceeding (Article 1911 and subsequent Articles of the Civil Code). Also, the Civil Code establishes that the debtor is not obliged to pay the buyer more than the adjusted value paid by the buyer to the seller. This limitation substantially reduces any interest in profiting from buying rights subject to a judicial dispute.
Even though it is not strictly litigation funding, only lawyers are allowed to charge fees contingent on the outcome of the litigation (cuota litis). Its only limitation is provided by the Code of Ethics issued by the Chilean Bar Association (Article 36), which states that the contingent fee cannot be larger than the amount to be received by the client. During the litigation, however, the lawyer cannot provide financial assistance to the client (Article 76).
IV LEGAL PRACTICE
i Conflicts of interest and Chinese walls
The only legal provisions dealing specifically with conflicts of interest regarding law practitioners are established in the Criminal Code. According to such provisions, it is a crime to assume simultaneously the defence of two parties with opposing interests in a dispute. More generally, it is also a crime to wilfully harm the interests of a client or to disclose privileged information of a client (e.g., to another client).
However, the Code of Ethics of the Chilean Bar Association contains more specific provisions regulating the possible conflicts of interest of lawyers and law firms. Notwithstanding that such provisions are only enforceable against lawyers who voluntarily join the Bar Association, they are generally applied by Chilean courts as general principles or standards in cases where lawyer's compliance with his or her duties is judicially challenged.
According to the Code of Ethics, there is a conflict of interest whenever a lawyer's professional intervention in a matter adversely affects another client; or when there is a material risk of impairing the fulfilment of his or her duties of loyalty and independence owing to personal interest, or to the duties owed to another current or former client, or to third parties.
Chinese walls are not expressly regulated in the Code of Ethics. Nevertheless, the same code contains certain provisions regulating situations where a lawyer may represent two or more clients jointly, provided that all risks and disadvantages that may arise throughout his work are explained in writing, and all clients agree in writing to hire the same lawyer.
Likewise, if lawyers should represent two or more clients in the same or different matters, they may not take part in negotiations where they are on opposing sides without their prior written authorisation, after giving them detailed and complete information about all interests involved in the negotiation. In any case, the Code of Ethics forbids any negotiation that involves waiving the rights of one client in favour of another without the written and informed consent of the affected party.
According to the Code of Ethics, conflicts of interests that affect a lawyer also apply to the other members of his or her firm.
To summarise, in the absence of regulations on Chinese walls, the Code of Ethics allows lawyers (or law firms) to take part in a matter where there is a conflict of interest, provided that there is no breach of the confidentiality and loyalty duties owed to clients, and the interested clients give their express and informed consent. In any case, Chinese walls, at least in connection with disputes, are not very common in Chilean legal practice.
ii Money laundering, proceeds of crime and funds related to terrorism
The regulations issued by the Financial Analysis Unit, the governmental agency that seeks to prevent the use of the financial system and other economic sectors for money laundering and financing of terrorism, requires from certain persons and entities (e.g., banks and other financial institutions) certain due diligence, 'know-your-client' and the report of suspicious activities that may result in money laundering.
Lawyers and law firms are not among the persons and entities who are subject to these reporting duties. In any case, lawyers who take part in their clients' illegal activities may also be held liable for such actions.
In this regard, the Chilean Bar Association, in line with the recommendations of the Financial Action Task Force on Money Laundering, issued some guidelines and recommendations in 2014, with the purpose of providing lawyers with a tool to help them to assess the risks associated with certain clients and activities, preventing them from engaging in money laundering. These recommendations are limited to certain activities, including purchase and sale of real estate, managing assets for a client, managing a bank account for a client, and incorporation, management and transfer of companies.
iii Data protection
From a legal practice perspective, data protection obligations arise from the interaction of Law No. 19,628 on the Protection of Personal Data, and the provisions of the Code of Ethics.
Law No. 19,628 imposes a confidentiality or secrecy obligation on all those people working (or who have worked) in personal data processes, when this information comes from or has been collected from sources not available to the public, as well as in connection with all other data related to the data bank.
The Code of Ethics contains provisions regarding the use of the information provided by the client7 as well as the handling of documents that belong to the client. The information provided by the client may only be used in his interest, and confidential information may not be used for the benefit of the lawyer or third parties without the express permission of the client. Lawyers must keep custody of all documents handed to them by their clients, and they must be ready to give the originals or copies back to them if they wish so.
In addition, the Code of Ethics makes partners or directors of law firms responsible for ensuring that all members of the firm (whether administrative staff, other lawyers, interns and others) abide to its rules.8 Lawyers are also responsible for adopting all reasonable measures to ensure that their working staff are aligned with the professional obligations of those practising law,9 as wells as delegates or third parties that are hired.10
V DOCUMENTS AND THE PROTECTION OF PRIVILEGE
In Chile, the violation of attorney–client privilege is considered a crime, but there are no legal provisions dealing with the specific content and scope of privilege. However, according to a ruling issued by the Supreme Court in 2012, the rules on privilege emanate from the Constitution, as they are part of the due process constitutional guarantees, and they are specified in the Code of Ethics issued by the Chilean Bar Association. The Supreme Court held that although the Code of Ethics is not law in a formal sense, it is in a material sense, as it imposes general, permanent, abstract and mandatory conduct requirements to all lawyers in Chile, irrespective of the fact of being a member of the Bar (which is voluntary), and that they represent the minimum ethical requirement that may be expected from those who have received a professional title enabling them to practise law.
According to the provisions of the Code of Ethics, privilege covers all the information related to the client matter received by the lawyers during their legal assistance. A lawyer must refrain from revealing any information covered by privilege, as well as from delivering, revealing or facilitating the access to any device or storage device under his or her custody containing such information.
Whenever a lawyer is required by law or by any authority to report or declare on a matter subjected to privilege, the lawyer must enforce the privilege. In this regard, a lawyer must defend himself or herself based upon constitutional and legal provisions trying to free him or her from the obligation to report or declare it, guaranteeing the fulfilment of his or her duty regarding privilege.
In this regard, the lawyer must limit himself or herself to express that the information requested is covered by privilege and refrain from giving further explanations. In general, lawyers must challenge all decisions issued by authorities when they order them to declare on matters covered by privilege.
There are no legal provisions nor case law dealing with how privilege should apply to in-house lawyers. The lack of legal culture in this area and the absence of precedents have led, in some cases, to agencies and prosecutors seizing documents produced within the scope of internal investigations.
ii Production of documents
Chilean law distinguishes between two kinds of documents: public and private.11
According to the Chilean Civil Code a public document is 'one that has been issued in accordance to legal formalities by a competent public officer'.12 Any other document that does not comply with those requirements is considered to be a private document (e.g., contracts privately signed by the parties).
The rules regarding the production of documents are mainly contained in Title XI of the Chilean Civil Procedure Code.
During trial (and exceptionally before one) parties are entitled to obtain relevant documents that they do not currently possess, by means of a 'documents exhibition' process. In this regard, parties can request the court to order the opposing party or third parties to produce certain documents and submit them to the court. The court will accept this request under two conditions:13 the documents must be directly related to the dispute; and the documents should not be confidential. If the requested party fails to comply with the court's order, sanctions may be imposed.14
Since the text of the law only enables the 'exhibition' of the requested documents, when asking the court to order the documents exhibition it is advisable to explicitly request copies, as permitted by Article 283 of the Chilean Civil Procedure Code.
The documents exhibition may also be requested from the court before the trial, in order to prepare any future litigation.
Notwithstanding the latter, the sanctions contained in the Chilean Civil Procedure Code for the parties or third parties that fail to comply with the exhibition are deemed to be immaterial, and, hence, unhelpful for the interested party.
VI ALTERNATIVES TO LITIGATION
i Overview of alternatives to litigation
Chile has a long-established tradition of domestic arbitration. In recent years, as a consequence of different legal reforms, the use of other ADR mechanisms, such as mediation and dispute boards, have become widespread.
On the other hand, while the legal framework for domestic arbitration has remained relatively unchanged in the Chilean Civil Procedure Code, the legal framework for international arbitration – primarily based on Law No. 19,971 issued in 2004 – is relatively new.
In connection with this regulation, the relevance of Chile as a seat of international arbitration has increased in the past decade, after local courts have consistently supported the new legal framework governing international arbitration, by rejecting several challenges to the recognition and enforcement of international arbitral awards, confirming the limited scope of the annulment grounds set out in the law governing international arbitration.
Chile has a dual arbitration system. International and domestic arbitrations are governed by different legislation and subject to different standards.
Domestic arbitration has a long history in Chile (the first legislation dates back to 1875), and the current regulation has been in force since 1902 (the Chilean Civil Procedure Code) and 1943 (the Chilean Organic Courts' Code). As proof of the consolidation of arbitration as an ADR mechanism in Chile, Chilean law provides for mandatory arbitration in certain types of commercial disputes.
The majority of complex commercial agreements entered into in Chile have arbitration clauses. This led the Santiago Chamber of Commerce to create a specialised Arbitration and Mediation Centre (CAM) in 1992, which is the most important arbitration centre in the country, having dealt with thousands of cases since its creation.
Chilean law allows the parties to determine by themselves the proceeding rules in arbitration, the governing law and an ex aequo et bono arbitrator, with only certain limitations based upon Chilean public policy.
International arbitration is governed by Law No. 19,971, which is an almost identical transcription of the 1985 version of the UNCITRAL Model Law, the New York Convention of 1958, ratified by Chile in 1975, and the Panama Convention from 1975, ratified by Chile in 1976, all applicable to the enforcement of foreign arbitral awards.
The request for recognition of a foreign arbitral award must be brought before the Supreme Court through an outdated proceeding governed by the Chilean Civil Procedure Code called exequatur. However, the substantive review will follow the rules set forth under Law No. 19,971, which provides for exclusive grounds to refuse the recognition of an arbitral award, following the standard of the New York Convention.
If an international award has been rendered in Chile, the only recourse available to the parties is the set-aside procedure established in Article 34 of Law No. 19,971, which mirrors the grounds to for refusing recognition of a foreign award.
Since Law No. 19,971 was passed, the Supreme Court has consistently enforced certain foreign awards and rejected certain challenges, confirming the limited scope of the review allowed by the law and the New York Convention.
There are no legal rules governing mediation in the context of civil and commercial disputes. Nevertheless, mediation has become more widespread in those areas, thanks to the efforts of Chilean arbitral centres and the cultural changes, leading to recent legal reforms providing for mandatory mediation in different areas.
In this regard, in 2000, CAM issued the Mediation Procedural Rules so those interested in submitting a national or international commercial dispute to mediation in this centre may request its services.
However, CAM also promotes staggered clauses that combine mediation and arbitration, avoiding arbitration in cases where mediation yields a favourable result, which saves time and money for the parties involved.
These trends follow what has been happening in labour law, family law and health law. In 2001, in compliance with Law No. 19,759, the Labour Directorate established a mediation centre, which has been involved in more than 15,000 cases at a national level. In family law, mediation became mandatory in 2004 and between 2009 and 2015, the number of cases subject to mediation increased from 79,707 to 242,905.
Finally, in health law, claims related to damage suffered by a patient of a public institutional provider (hospitals, emergency rooms and others) can be subject to mediation conducted by a specialised team of the state's defence council. In 2007, 827 claims requesting a mediation procedure were filed at a national level. In 2017, the national total was 1,298, and during the first semester of 2018 it was 730.
iv Other forms of alternative dispute resolution
Dispute boards have been in use in Chile since 2004 in connection with conflicts arising between companies and other entities subject to energy law, and, since 2010, in connection with conflicts arising in contracts for the construction, maintenance and operation of public works concessions.
These two dispute resolution boards operate on a short and concentrated procedure basis. Both panels must issue a decision within 30 days of a public hearing, where the parties orally explain their arguments. Only the energy law dispute board issues a binding recommendation.
In 2014, CAM entered into a Cooperation Agreement with the Chilean Chamber of Construction with the purpose of implementing panels of experts to solve construction disputes. It also entered into a collaboration agreement in 2014 with the International Dispute Board Federation, becoming the first South American institution to do so.
Considering that dispute boards are composed of impartial professionals with technical knowledge, they are a highly efficient alternative for the early resolution of disputes; especially when the parties are entitled to request assistance from the dispute board in any disagreements or conflicts, which can be treated in a flexible and appropriate manner, with greater possibilities of solving the potential conflict and restoring the trust of the parties involved.
Finally, in January 2018, CAM entered into an agreement with the ICC to manage ICC arbitrations and other ICC ADR mechanisms.
VII Outlook and Conclusions
One of the main complaints against the Chilean judicial system is the length of time the civil courts take to issue final decisions, owing to the outdated procedures established by the Chilean Civil Procedure Code. As a temporary response to this problem, in 2016, Law 20,886 (the Digital Proceedings Law) was issued, which amended the Chilean Civil Procedure Code and the Chilean Organic Courts' Code. The Digital Proceedings Law completely changed all the rules that, since 1902, only allowed paper-based presentations from the parties to the courts, as well as paper-based courts decisions.
The new law requires the parties, as well as the courts, to use digital documents (such as pdfs) during the proceedings, leaving the requirement for paper-based documents only in exceptional cases (e.g., original signed documents). As a consequence, many of the outdated trial rules established by the Chilean Civil Procedure Code have changed, for example, now there is no obligation to pay for copies of files in order to appeal a certain court decision.
Although other civil procedure rules were not changed by the Digital Proceedings Law, its practical impact was tremendous. For instance, there is no longer a physical trial file but a digital one, which not only saves space in courtrooms, but eases and speeds up the review process. As a consequence, proceedings at first instance courts that would typically last up to three years before a final decision is issued, may take less than two years. As a result, it is not uncommon to find proceedings before the lower court that started under the Digital Proceedings Law in early 2017 that are about to end less than two years later.
In spite of the many difficulties faced during the implementation of the Digital Proceedings Law, it has become a positive change to the judicial system.
There are still several issues that need to be solved. Indeed, the digital proceedings software has certain glitches that need to be amended, and there is not yet uniform criteria for applying all the rules of this law, creating great legal uncertainty, as every court is construing these rules in their own way. The law specifically gives the Supreme Court enough power to fill these loopholes with instructions to the lower courts, but since the implementation of the Digital Proceedings Law, those instructions are few and still not enough.
One important pending issue to be solved by the Supreme Court refers to the parties' legal right to combine a paper-based case with a digital one when meeting the legal requirements established by the Chilean Civil Procedure Code, so they can be judged by only one court, avoiding the risk of contradictory final decisions that could be issued by different courts when referring to a same issue. This procedural institution is mainly used in tort proceedings, where there are multiple plaintiffs that sue the defendant in multiple different proceedings (e.g., transit accidents where several pedestrians are injured, and each one of them files a lawsuit against the responsible party).
As an example, in April 2016, the main river in Santiago overflowed and flooded multiple properties near to the riverbed, leading to the most important massive tort case of the century. Two companies and the state of Chile have been held responsible for this incident, and several lawsuits have been filed against them under different courts. Some of these lawsuits were filed before the implementation of the Digital Proceedings Law – hence, they are paper-based – but most of them were, or still are, being filed according to the new rules.
All of these proceedings are substantially the same, and the plaintiffs are claiming damages caused by the river overflow, but as a consequence of the Digital Proceedings Law some of them have a paper-based file and others a digital file. This has been used by some courts to deny the fusion of several proceedings that otherwise would be fused.
Recently, the Santiago Court of Appeals decided that paper-based cases can be combined with digital cases by printing the documents of the latter and applying the old rules to them.15 This decision was a breakthrough. Hopefully the issue will be solved by the Supreme Court in a definitive fashion.
Although Chile has been taking steps to improve its dispute resolution system, creating new specialised venues to solve technical matters, rules for civil and commercial litigation have room to improve. The Chilean Civil Procedure Code was enacted more than a century ago, and it has not been properly updated to match the public's needs.
For years, Congress has been debating a new and modern Civil Procedure Code, but the authorities have been reluctant to embrace it as a priority, which is in contrast to the approach taken with the new Criminal Procedure Code and the Labour Code (that established new and modern litigation proceedings). The Digital Proceedings Law is just a small improvement on the outdated civil and commercial procedure rules that have encouraged people to choose arbitration over going to the ordinary courts, even when the costs are much higher, as arbitration gives the opportunity to establish modern procedural rules and a faster resolution time.
1 Francisco Aninat is a partner and Carlos Hafemann is an associate at Bofill Escobar Silva Abogados.
2 Such as in Causa n° 7326/2009, de Corte Suprema de Chile - Sala Tercera (Constitucional), 31 September 2009.
3 Segura v. Fisco de Chile Case No. 12.530-2013, Supreme Court, 15 April 2014.
4 Such as in Méndez con Corporación Municipal de Salud Case No. 35.721-2017, Supreme Court, 29 June 2018; or Catalán v. Servicio de Salud Metropolitano Central Case No. 41.890-2017, Supreme Court, 2 October 2018; and dozens of other cases.
5 Fundación Chile and others v. Valeria Galíndez Case No. 13.472-2015, Santiago Court of Appeals, 20 July 2017.
6 Qisheng Resources Limited Case No. 7.854-2013, Supreme Court, 21 April 2016.
7 Code of Ethics, Article 42.
8 Code of Ethics, Article 113.
9 Code of Ethics, Article 115.
10 Code of Ethics, Article 116.
11 Chilean Civil Procedure Code, Title XI.
12 Chilean Civil Code, Article 1699.
13 Chilean Civil Procedure Code, Article 349.
14 Chilean Civil Procedure Code, Article 277.
15 Comercializadora Sal De Tiendas Limitada v. Soc. Concesionaria Constaneranorte S.A. and other Case No. 5.911-2018, Santiago's Court of Appeals, 4 December 2018; and Constructora E Inmobiliaria Ofiplace Limitada v. Soc. Concesionaria Constanera Norte S.A. Case No. 5.625-2018, Santiago's Court of Appeals, 21 December 2018.