By: Rodrigo Díaz de Valdés1Rodrigo Díaz de Valdés is a principal in the Santiago office of Baker & McKenzie and a member of the Dispute Resolution and Antitrust Practice Groups. He is widely experienced in civil, commercial and constitutional litigation as well as in arbitration. He also serves as arbitrator at the Centre of Arbitration of the Chamber of Commerce of Santiago.
A. Legislation, Trends and Tendencies
A.1 Legislation
Arbitration in Chile is primarily governed by the Organic Code of Courts (OCC), the Code of Civil Procedure (CCP) and Law 19.971 on International Commercial Arbitration (the “ICA Law”),2The ICA Law is entirely based on the UNCITRAL Model Law. to which no significant amendments were made in 2015. Chile is also a signatory to the New York Convention, the Panama Convention and the ICSID Convention. Additionally, most of the free trade agreements as well as the BITs that Chile has entered into provide for specific arbitration mechanisms to settle disputes arising from their application.
B. Cases
B.1 Complaint Against Judges Inadmissible
Rio Bonito S.A. (“Rio Bonito”) presented before the First Chamber of the Court of Appeal of Santiago a Request for Annulment of an arbitral award. The Court of Appeal found that the arbitral award was duly pronounced, since all legal requirements were met. Therefore, the Request for Annulment was denied by the Court. Subsequently, Rio Bonito presented a complaint against the judges of the Fifth Chamber of the Court of Appeal of Santiago, arguing that they had executed their functions in a “wrongful or abusive” manner.
The Supreme Court declared that in conformity with the ICA Law, the action for annulment is the only legal remedy against an arbitral award (ICA Law, Article 34). Therefore, the Supreme Court found the complaint inadmissible, because it asked the Supreme Court to determine a matter that had already been considered and resolved by an arbitral court.
The Supreme Court also noted that Article 63 of the OCC establishes that in cases of extraordinary appeals directed against arbitrators and their decisions, a Court of Appeal is the only court capable of delivering a decision. The Supreme Court therefore declared inadmissible the Request filed by Rio Bonito.3Supreme Court, Docket No. 30967-2015
C. Costs In International Arbitration
C.1 Allocation of Costs
The two largest arbitration institutions in Chile are the Arbitration and Mediation Center of the Santiago Chamber of Commerce (the AMC) and the National Center of Arbitration of Chile (NCA).
The rules of the AMC Santiago provide that the costs of the arbitration are to be borne by the losing party unless the tribunal decides to pro-rate them between the parties, considering the circumstances. However, the parties may establish at the outset of the arbitration that costs will be paid in equal shares.
The rules of the NCA provide that in the final award, the arbitrator will determine which party has to bear the costs of the process. A party that has been defeated without having a plausible reason for litigating will always be required to bear the entire costs.
C.2 Security for Costs
After the arbitration tribunal has been established, the AMC Santiago may request each of the parties to deposit an equal sum as a security for costs payment. If the requested deposits have not been made within 30 days after the request by the AMC Santiago, the Center will advise the parties to make the required deposit. If the payment is not made, the AMC Santiago may order the suspension or conclusion of the arbitration procedure.
The AMC Santiago will use the deposits made by the parties to pay the costs of the arbitration procedure, as ordered in the award. The Centre may occasionally request additional deposits by the parties, depending on the progress of the procedure.
C.3 Recovery of Costs
The costs that the winning party may be able to recover in an AMC arbitration procedure are:
• the fees of the arbitration tribunal;
• travelling or other expenses incurred by the arbitration tribunal;
• the fees and expenses of an expert appointed by the arbitration tribunal;
• the fees and expenses of the witnesses approved by the arbitration tribunal;
• the fee or other charges of the AMC Santiago for administrative or other services provided to the parties in relation to the arbitration procedure; and
• other expenses determined by the arbitration tribunal that were reasonably incurred by the winning party and claimed in the arbitration procedure.