This country-specific Q&A provides an overview of Litigation that may occur in Chile.
This Q&A is part of the global guide to Litigation. For a full list of jurisdictional Q&As visit http://www.inhouselawyer.co.uk/practice-areas/litigation-second-edition/
Published June 2019
What are the main methods of resolving commercial disputes in your jurisdiction?
Methods for resolving civil and commercial disputes under Chilean law may be adversarial or non-adversarial.
In fact, Chilean law contemplates and even promotes in some cases the possibility that the parties to the conflict will reach an agreement to solve it. These settlement-oriented methods, called in general as "alternative dispute resolution" devices, may take place before litigation formally commences, or during the course of this.
The typical method by which the parties put a mutual ending on their disputes is the so-called settlement contract (transacción), stated in article 2446 of the Chilean Civil Code (CHCC), which allows an end to a pending litigation or to prevent eventual litigation. This contract is usually included in a document called "settlement”, which, as its name says, serves to finalize or terminate all outstanding disputes that may exist between the parts of a contract.
However, these bilateral conflict-resolution methods can also take place during a process. In fact, the Chilean Civil Procedure Code (CHCPC) establishes a hearing to for the parties to entertain prospective “settlement” talks as a compulsory stage within the civil trial. Here the judge must propose to the parties the basis for a settlement and to reach an agreement.
If the parties fail to agree on an amicable disposition of the conflict, they will have then to start or continue, depending on the timing, with the trial as the sole mean of solving their differences, either before the ordinary courts of justice or in arbitration.
What are the main procedural rules governing commercial litigation?
The legal basis of the Chilean judicial proceedings is to be found in the Chilean Civil Procedure Code. The general rule is that there are no special procedures or tribunals for commercial matters, so these are generally subject to similar procedural rules than civil matters.
The Chilean Code of Civil Procedure contemplates the so-called “ordinary trial”, which is a procedure that applies in the absence of a special procedure. The ordinary trial is a written procedure, which includes the submission of various kinds of writings and motions for the judge to acquire knowledge of the facts and the applicable law, followed by an extensive evidentiary production stage. The proceedings end with the issuance of the final judgement which typically can subject to an appeal.
Another important procedure regulated in the CHCPC is the one for the "attachment of assets" which is intended to obtain the enforcement of an obligation that is stated in a judgement or in certain written deeds. This procedure is generally shorter than the ordinary trial, with shorter deadlines and less defense possibilities for the defendant. It is widely used for the collection of invoices or debt titles.
Finally, it should also be borne in mind that parties can always subtract a civil or commercial matter from the ordinary courts and bring it before an "arbitrator”. In this case, the parties to the dispute are allowed to freely establish the applicable procedure, provided that certain minimum requirements are met derived from the guarantee of due legal process. This is a good mechanism to expedite process.
What is the structure and organisation of local courts dealing with commercial claims? What is the final court of appeal?
As we have already pointed out, the first instance of civil and commercial disputes may be handled either by the Civil court, or by an arbitrator (the latter if all parties agree). The Civil courts are the competent ones to know of all the civil and commercial cases, unless the parties have agreed arbitration.
There are also the so-called Court of Appeals, which have the authority to review on appeal, both the facts and the law applied to the decision of the case. Upon their review, the court´s decision can be upheld or reversed (totally or partially). Both the final judgment and other types of interlocutory resolutions that are issued during the procedure can be revised by the Court of Appeals.
The direct hierarchical superior of all appellate courts is the Supreme Court, which is the highest court in the country. This court is the last resort to which the litigants can apply, and against its resolutions there are no further challenges. However, it should be borne in mind that not all judgments can reach the Supreme Court level of review, because only certain remedies against certain types of resolutions can be presented to the highest court.
Of course, it is very common for parties to waive, in advance, the possibility of appealing against the decisions of the arbitrators. It has been understood, however, that this waiver of appeals, annulments and complaints, does not produce full effects, as certain types of those are inalienable by litigants under due process provisions of the Constitution and the Chilean Courts Organization Code (typically disciplinary complaints and the annulment for certain causes).
How long does it typically take from commencing proceedings to get to trial?
In the Chilean civil and commercial system there is the possibility of directly filing a lawsuit before the ordinary courts of justice. Therefore, as a general rule, the "trial" commences with the filing and subsequent notification of the respective complaint, without requiring compliance with any prior requirements for the commencement of the trial (e.g. discovery).
In addition, ordinary courts are considered a public service in the sense that no fee or litigation fare can be charged on any party upon filing their complaint or answer.
However, there is also the possibility of trials starting with the so-called 'pretrial measures' (interim measures and injunctions are allowed but no formal discovery is contemplated before trial). In certain types of interim measures and injunctions the law establishes a time limit to present the respective complaint, which will never exceed 30 working days.
With respect to arbitrations, certain previous procedures must be fulfilled. If the parties specifically named the person who will be the arbitrator, it is necessary to notify him or her to accept the charge and swear to perform it faithfully and in the shortest possible time. Now, if the arbitrator is not named namely, it will be necessary to go to the ordinary justice, or to an arbitration institution (ICC type of institution), to designate the person who will play the role of arbitrator in the litigation.
Are hearings held in public and are documents filed at court available to the public? Are there any exceptions?
The general rule of the ChCPC is the publicity of the trial. Our legislation expressly recognizes that the acts of the courts are public, except for the exceptions expressly established by law.
In accordance with this, the file of civil and commercial litigation can be consulted by anyone even from the Internet official Judicial Branch Web Page. However, in other more sensitive matters (family law or criminal law) the files are confidential to anyone who is not part of the trial.
In practice, however, it is common for the courts of first instance not to allow the presence of foreign third parties in the few hearings that take place before the civil courts. Oral arguments before the courts of Appeal and the Supreme Court are freely accessible to the public.
What, if any, are the relevant limitation periods in your jurisdiction?
In Chile there is no general time limit for ordinary courts to exercise their jurisdiction, and consequently the procedures in place before these tribunals have no duration limits.
The foregoing is without prejudice to the existence of several different statutes of limitations depending on the nature of the claim or the cause of action. As a general rule, the legal actions can only be exercised within a specific period of time, because at the expiration of the said statutes of limitations. Once expired, these actions can be brought to trial but they will probably be dismissed promptly under certain defenses the defendant can raise.
The general statute of limitations for civil actions is 5 years (from the date the obligation was enforceable) and 4 years for the commercial actions.
What, if any, are the pre-action conduct requirements in your jurisdiction and what, if any, are the consequences of non-compliance?
As stated before, there are no procedural step or prerequisites to institute an action in court. Also, the general rule in Chile is that there are no "pre-action conduct requirements", because, as we explained, anyone has the possibility to go directly to the courts of justice by filing a complaint in a lawsuit.
There are exceptional cases where the law requires compliance with prerequisites to sue (typically in cases of compulsory mediation in family matters or in cases of medical liability). In these limited cases, the failure to comply with the previous procedures prevents the respective Tribunal from getting to know the conflict.
How are commercial proceedings commenced? Is service necessary and, if so, is this done by the court (or its agent) or by the parties?
Commercial procedures in Chile can start directly on a complaint, or through the so-called "pretrial measures" (interim measures and injunctions). In both cases, the first decision issued in the procedure must be personally notified to the defendant. This notification is usually made by an assistant official of the administration of justice. While this official is a minister of public faith (like a Notary Public), the general rule is that the parties must pay him to make the notifications that proceed.
How does the court determine whether it has jurisdiction over a claim?
In order to determine whether or not a court is competent (has jurisdiction), it must go to the so-called "rules of competence” (jurisdiction and venue rules). Rules of Competence (jurisdiction), include three main factors, being the first one the subject matter of the action, the value of the claims, and the special position of any of the parties (in case some of them is a high ranking official, or judge, or religious leader, etc. the level of the trial court is elevated to assure more independence for the other party). These are called “Absolute Rules of Jurisdiction”. They cannot be waived by the parties and if violated, the entire process is void.
Regarding the subject matter, there are courts of special jurisdiction (civil, labor, family, etc.) and courts that will handle al kind of cases (they are called courts of common competence and are typically located in large rural areas).
In relation to venue, the criteria is territory. The general rule of venue depends on what the object of the action is. If it is a real estate, the competent court well be the one where the real estate is located. If the action is for money or any other object or right, then the competent court will be the one where the defendant has its domicile.
The courts of Appeals and the Supreme Court have common competence over all kinds of subjects but limited to a very broad territory (usually a Region). The Supreme Court is divided into four specialized chambers that exercise their jurisdiction over the entire Chilean territory. Civil and commercial matters are decide by the First Chamber.
How does the court determine what law will apply to the claims?
In Chile there is one legislation applicable to all its territory, and therefore the same law will always apply.
It can happen, however, that in a certain situation the foreign law must be applied. In this case, there are a few rules of referral in our legislation. The general rules of the so-called "private international Law" have been expressly accepted for certain issues (e.g. international sales of goods).
In what circumstances, if any, can claims be disposed of without a full trial?
There are several mechanisms that allow the end of a trial without the existence of a final judgement.
In fact, the termination can be produced, firstly, by a unilateral act of the complaining party, through which it can withdraw from its action (before service of process). After notification of the complaint the plaintiff can “desist of demand". Here the court's needs to accept it and there are times in which the court will reject it and the trial will continue. Actually, the defendant can oppose to the unilateral termination.
If desist of complaint is accepted by the court the decision forbids the same party from bringing the same action against the same party.
In addition, litigants can, in common agreement, put an end to an ongoing trial. This may occur within the trial, through an agreement reached at the mandatory “settlement talks”, or out of court, by holding a settlement agreement to be submitted to the respective court to terminate the proceedings.
What, if any, are the main types of interim remedies available in your jurisdiction?
In Chile there are “pretrial measures", which are proceedings that are initiated prior to the filing of the complaint and that may be intended to prepare the entry into trial, obtain proof that for some reason may not be surrender during the trial, or ensure the result of the action that is going to be tried (e.g. an injunction over the defendants assets).
The latter are the so-called preliminary injunction measures. Of course, the general rule is that, among those measures, only conservative measures are granted in Chile, which seek to prevent the current factual situation from being altered. Thus, prohibitions to hold contracts on certain goods are very common, or the withholding and seizure of the defendant´s goods.
Measures that seek to anticipate the effects of the final judgement are rather rare. There are certain specific cases that allow it (for example, courts are allowed to grant provisional food, or to grant the claim in case of defendants default or nonappearance in court). However, these measures are far from constituting the general rule in our system.
However, the legislation leaves the door open for the provision of other “unnamed” preliminary injunctive measures which are not expressly regulated (Art. 298 CHCPC).
After a claim has been commenced, what written documents must (or can) the parties submit and what is the usual timetable?
In the Chilean legal system documentary proof is quite important. Documents may be submitted from the beginning of the trial to the expiration of the so-called "probatory term" (a term in which parties need to submit and produce all the documents and most evidence). At the trial court level this term lasts 20 working days, and, at the appellate court level, it lasts until delivery of the oral arguments (although the Appellate Courts seldom allow evidence to be produce before them).
As a general rule, there is no obligation to file specific documents, beyond the obvious advantages of submitting those favorable to the position of the party. Only certain procedures require the submission of specific documents. Also, later on, parties can force the production of documents in possession of the other party or even in the control of third parties.
In fact, in civil and commercial matters it is not even an obligation to present, along with the complaint, the founding documents in conjunction with it, and its submission may be reserved for a later trial stage.
What, if any, are the rules for disclosure of documents? Are there any exceptions (e.g. on grounds of privilege, confidentiality or public interest)?
Even though our civil procedure does not contemplate the existence of Discovery. The Chilean legislation provides for some procedural mechanisms to obtain the exhibition and production of certain documents relevant to a trial, before and during the same.
A first possibility is to go to the civil court before the trial commences, asking to order a person to produce a document that will serve as a basis for the complaint to be presented later. This is what we have called a “pretrial interim measure”.
However, there is also the possibility of requesting, in the course of litigation, the display of documents held by the counterpart or even third parties.
In these cases, the requested person may refuse to exhibit or produce the requested document, wielding mainly 3 arguments: not to exist the requested document or not to have it in its possession; Be the requested document confidential; Not having the document direct relationship with what is discussed in the trial.
How is witness evidence dealt with in commercial litigation in your jurisdiction (and in particular, do witnesses give oral and/or written evidence and what, if any, are the rules on cross-examination)? Are depositions permitted?
The witness examination is expressly recognized in Chilean law and is admitted both in the ordinary courts and in arbitration. The declaration is provided orally, despite the written record of the declaration in the case file.
There is no discovery in the Chilean civil procedure, but parties can request, as a pretrial interim measure, the deposition of the witnesses and even a request to admit by the other party. It is possible to questioning witnesses prior to the beginning of the trial, provided that there is a reasonable fear that the witness´ statement might not be available in a timely manner during trial because of serious impediment.
Back in the trial, it is also common for an "expert witness" to write a report and then appear in the process to recognize and explain it.
The party who calls the witness can direct questions to him. Also, during the examination of the witness, there is a possibility for the counterpart to, first, cross examine the witness as to his impartiality to eventually impeach the witness for certain specific causes stated in the law (e.g. being a close relative). In addition, the counterpart is allowed to generally cross examine the witness after direct examination.
It should be noted that in Chile witnesses can only be deposed within the 20 days legal term for the production of the evidence. These 20 day run from the issuance by the court of a resolution similar to the terms of reference which in this case are a list of the main relevant disputed issues of fact. Witnesses testimony, direct examination and cross examine must all be within the scope of the terms of reference.
Is expert evidence permitted and how is it dealt with? Is the expert appointed by the court or the parties and what duties do they owe?
The so-called "expert witness report" is very common in Chilean civil and commercial procedures. In fact, the CHCPC regulates this report which consists of the opinion made by a third-party expert on a subject requiring special knowledge of a science or art.
The parties can agree on the person or institution that will be in charge of the elaboration of the report. If there is no agreement, it is the court who must appoint the expert. The expert must swear to perform the order faithfully, and must be an impartial person, being able to be disabled in case of verifying a circumstance that affects his impartiality.
In certain types of procedures the expert evidence is highly relevant, and in many cases it is the determining factor for the decision, although obviously it is not legally binding for the judge.
Can final and interim decisions be appealed? If so, to which court(s) and within what timescale?
In the Chilean procedural law the general rule is that the so-called "final Judgment" is always susceptible to appeal, so that it may be reviewed by the respective Court of Appeals. The same ruling can also be challenged by means of the so-called "cassation” (annulment which, at the Appeal Court level, is only allowed due to serious formal defects occurred during the trial, affecting its outcome).
Furthermore, the possibility of appealing on other types of resolutions (interim resolutions) is also recognized, when these are pronounced on side aspects of the dispute which require a special pronouncement of the Tribunal.
What are the rules governing enforcement of foreign judgments in your jurisdiction?
Chilean law permits the enforcement of resolutions and rulings pronounced by foreign courts. This must be requested before the Supreme Court, through a process called "exequatur", which is highly regulated in the Chilean Code of Civil Procedure.
In order to allow the enforcement of the foreign judgment, the first thing to be determined is whether there are treaties between Chile and the country from which the judgment proceeds and regulating the matter. If there are no treatises, the Supreme Court will look into whether there is reciprocity between the requesting country and Chile. Finally, if reciprocity can not be established, the Court will look into the judgment and will deny enforcement if the said award has been rendered in violation of the Chilean jurisdiction, or if it violates Chilean Public Policy, or if it has been issued by default (being the Chilean party denied the right to appear and defend himself before the foreign court).
Can the costs of litigation (e.g. court costs, as well as the parties’ costs of instructing lawyers, experts and other professionals) be recovered from the other side?
The Chilean Civil procedure Code regulates the so-called "coasts" (attorneys fees). This is the main mechanism regulating Chilean law for a litigant to recover what he has invested in a trial.
The general rule is that the litigator who is completely defeated in a trial must take charge of the costs that his counterpart experienced. However, the courts may exempt a fully-defeated litigant from the payment of the costs, if in his concept he has had "a plausible reason for litigating”.
It should be made aware that, as a general rule, the amount set as "personal costs" is considerably lower than the amount actually paid to lawyers.
What, if any, are the collective redress (e.g. class action) mechanisms in your jurisdiction?
In the Chilean legislation there is not a general regulation with regard to the so-called "class actions". There is a class action procedure in the Consumer Protection Law.
Nonetheless, the procedural law regulates the possibility that several people appear as plaintiffs in the same process and against the same person, but in this case all the plaintiffs are active part of the civil process individually, even though they act with a Common solicitor.
As we said, these actions are of great importance in the protection of consumers ' rights, an area where demands are allowed to be filed in the interests of the collective or diffuse interest of consumers.
What, if any, are the mechanism for joining third parties to ongoing proceedings and/or consolidating two sets of proceedings in your jurisdiction?
Chilean legislation admits the appearance of "third parties" to processes that are already initiated, as long as they have a current interest in the results of the trial. Also, a defendant can force other plaintiffs to join. What it is not allowed is that a defendant forces another defendant, or a plaintiff forces another plaintiff to appear in court.
It is also possible that two procedures that are being processed independently can constitute a single trial (similar to consolidation) and end with a single judgement. It's called "accumulation" In order for this accumulation to proceed, certain requirements (same parties, similar claims, etc.) must be met.
Are third parties allowed to fund litigation? If so, are there any restrictions on this and can third party funders be made liable for the costs incurred by the other side?
The Chilean legislation does not explicitly regulate the financing of disputes by third parties outside the conflict.
At first glance, there seems to be no objection to this figure, and there is no rule prohibiting or restricting it. The foregoing is without prejudice to any ethical questions regarding the lack of direct relationship between the client and his lawyer. Also there are some issues of conflict of interest between the financing party and the attorneys that might create some difficulties.
On the other hand, it can be said that there is no risk that the financiers will be responsible for the costs of the trial, because in our legal system only the name parties are responsible for the payment of the costs. There is no possibility that non-participating third parties will be responsible for the payment of costs; This would require a legal change.
What is the main advantage and the main disadvantage of litigating international commercial disputes in your jurisdiction?
The main advantage would be that Chile recognizes the application of foreign law in a civil or commercial dispute in Chile. The Court will apply foreign law if the parties agreed to, or there is foreign law or treatises that make the foreign law applicable in Chile. The only challenge will be to prove the foreign law which might require foreign experts’ legal reports and depositions.
What is the most likely growth area for disputes in your jurisdiction for the next 5 years?
We have witnessed an increase in caseload in various areas such as consumer protection, environmental disputes and energy and natural resources. Specially with respect to injunctions to stop or challenge energy or infrastructure projects.
Will be the impact of technology on commercial litigation in your jurisdiction in the next 5 years?
The judicial branch has done significant investment to go from paper filing to digital filing. Now the system allows the parties to file motions and all kind of requests online. The case progress can also be controlled online. There are still areas in which technology might help such as witnesses’ depositions via internet and communications among the different courts. But it is improving notoriously.