August 31, 2012
Previously published by Law Business Research Ltd on June 2012
Litigation 1 Court system What is the structure of the civil court system? The structure of the civil court system is as follows: • Supreme Court: according to the Chilean Court Organisation Code, the Supreme Court is composed of 21 members and operates in the capital of Chile. It works in specialised sessions or in full. The Supreme Court has jurisdiction throughout the country. • Courts of appeal: these courts have regional jurisdiction and currently there are 17 courts of appeal around the country. • Civil courts: these are the courts of first instance and are specialised by matter (tax, civil, criminal and labour) and they are distributed all over the country. 2 Judges and juries What is the role of the judge and the jury in civil proceedings? Chile does not have a jury system. The parties take the initiative in proceedings. Thus, in accordance with this principle, the parties have responsibility for the trial progress (mainly the plaintiff). Therefore the role of the judge in civil matters is rather passive. Once the parties have filed evidence in court, the judge must decide the case according to the evidence. 3 Limitation issues What are the time limits for bringing civil claims? The general rule is in article 2514 of the Civil Code (there are several exceptions and special cases): • ordinary actions: five years; and • enforcement actions: three years. The time limit also depends on the matter: • contractual liability: five years; and • tort: four years. There is also a commercial statute of limitations: four years. 4 Pre-action behaviour Are there any pre-action considerations the parties should take into account? The general rule is that there is no obligatory pre-action behaviour that the parties should take into account. Notwithstanding the foregoing, there are some cases provided in law whereby the parties could request pre-action measures to prepare the action, obtain evidence and guarantee the results of the trial. These situations are set forth in title IV of the second book of the Civil Procedural Code. Basically these measures seek to prepare the trial (eg, the exhibition of documents or recognition of signatures); obtain evidence in advance (eg, testimony of witnesses); and to guarantee the results of the trial (such as the prohibition to execute acts or contracts over certain assets). 5 Starting proceedings How are civil proceedings commenced? According to article 253 of the Civil Procedural Code the proceedings start when the plaintiff files its claim, notwithstanding the preaction measures mentioned above. These measures do not interrupt the statute of limitations set out in question 3. 6 Timetable What is the typical procedure and timetable for a civil claim? Chilean law establishes an ordinary proceeding (second book of the Civil Procedural Code) and some special proceedings. According to the ordinary proceeding (written proceeding), the main stages are discussion, evidence and judgment. Within these stages are: • Filing the claim: the place in which the claimant has to file the claim depends of the place where the court is located. • Response of the defendant: the defendant has 15 business days (general rule) to file the response and also file a counterclaim if appropriate against the claimant. • Reply and rejoinder: the claimant has six business days to file the reply against the response filed by the defendant and after that the defendant has the same period of time to file its rejoinder against the reply. • Conciliation stage: after the discussion stage and before the evidence period, there is an obligatory conciliation hearing. • Evidence stage: in this period the parties have to file all the proofs. It lasts 20 days and the parties may request an extraordinary extension. At the end of this period the parties could observe the evidence. • Judgment stage: according to Chilean law, the court has 60 days to render its decision (this deadline is not final). • Appeal and annulment: once the court has made its judgment, the parties can file an appeal or request for annulment before the court of first instance, which will be resolved by the respective court of appeal. The parties can further file an annulment before the court of appeal, which will be resolved by the Supreme Court of Justice. Considering all the stages of the trial (court of first instance, court of appeal and Supreme Court), an ordinary proceeding can exceed five years in total. Chile Cariola Diez Pérez-Cotapos 44 Getting the Deal Through ¿ Dispute Resolution 2012 7 Case management Can the parties control the procedure and the timetable? As noted in question 2, the parties take the initiative in the procedure, therefore if they do not make efforts to advance the trial, it will remain inactive or passive. Under this scenario the parties (principally the plaintiff) are responsible for the progress of the trial, and the law provides for the abandonment of proceedings after six months of inactivity. Pursuant to article 64 of the Civil Procedural Code, the parties can suspend the proceedings for up to 90 days. This right may be exercised only once in each instance. 8 Evidence ¿ documents Is there a duty to preserve documents and other evidence pending trial? Must parties share relevant documents (including those unhelpful to their case)? The parties do not have a duty to share relevant documents, but the parties have the right to request documents from the other party, unless the documents are confidential. In fact, according to Chilean law, one of the measures that the parties can request is the production of specific documents. This can be requested as a pre-action measure and also in the evidence period. Civil law does not impose a duty to preserve documents, but commercial and tax law does, pursuant to which certain documents must be kept at least for the time prescribed by law. 9 Evidence ¿ privilege Are any documents privileged? Would advice from an in-house lawyer (whether local or foreign) also be privileged? There is no obligation to produce confidential and reserved documents (general rule). In 2011, the Chilean Bar Association published a new code of ethics (which is not mandatory). According to this code lawyers have a duty of professional secrecy. Based on this duty and right, lawyers must maintain the confidentiality of all information that they have known. Also, lawyer¿client relationships and communications must be kept confidential and cannot be interfered with by the authorities or third parties. Professional secrecy is protected by the Constitution and Criminal Code. Nevertheless, there have been cases where public opinion has discussed the true scope of this protection. 10 Evidence ¿ pretrial Do parties exchange written evidence from witnesses and experts prior to trial? No. 11 Evidence ¿ trial How is evidence presented at trial? Do witnesses and experts give oral evidence? • Documents: this kind of evidence should be physically filed at court. • Witnesses: they should give oral testimony; however, the courts always keep a written record of the testimony. • Statements by the representatives of the parties (who are not witnesses): they give oral answers; however, the court must keep a written record of these answers. • Experts: they provide a written report for the court and they must acknowledge it and answer any questions that the parties may have. 12 Interim remedies What interim remedies are available? To guarantee the results of the trial, especially the effects of the judgment, the law provides precautionary measures. One goal of these measures is to avoid the transfer of any asset (for example, the prohibition to execute acts or contracts over certain assets). The measure will be conceded by the court if the requesting party complies with some requirements, such as submitting evidence showing at least serious presumption of the right claimed. All these measures are essentially provisional. Consequently, these should be halted if the danger disappears. 13 Remedies What substantive remedies are available? The prevailing party is entitled to recover direct damages including lost profit (loss of future earnings) and also moral damage. This moral damage could be defined as the suffering that the prevailing party experienced as a result of the behaviour of the counterparty. A money judgment could include money devaluation and interest. Punitive damages are not recognised in our legislation. 14 Enforcement What means of enforcement are available? If a court order is disobeyed the judge could impose any measure that he or she could deem reasonable to obtain the fulfilment of the court order. The law expressly gives the judge the power to impose fines and also to order the arrest of the person that is disobeying the court order. 15 Public access Are court hearings held in public? Are court documents available to the public? In civil matters, hearings, files and documents are public. 16 Costs Does the court have power to order costs? The final judgment should resolve the allocation of costs, if any, at the parties’ request. The court can only order the losing party to pay costs; in addition, the court can release the losing party from the duty to pay costs if the court considers that it was reasonable to bring the action. The judge will fix the costs according to the nature of the trial, and the parties are not allowed to ask for the real costs of the litigation. In civil matters the amount fixed by the court is usually much less than the real cost of the litigation. 17 Funding arrangements Are ‘no win, no fee’ agreements, or other types of contingency or conditional fee arrangements between lawyers and their clients, available to parties? May parties bring proceedings using third-party funding? If so, may the third party take a share of any proceeds of the claim? May a party to litigation share its risk with a third party? Contingency and conditional fees are available to the parties. Success fees are usually added to an hourly-based fee or a fixed fee. The ‘no win, no fee’ arrangement is not extensively used. Parties may bring proceedings using third-party funding, but according to the ethics rules (that are not binding), lawyers should not finance the parties. Once the litigation has started some rules that apply to the assignment of or investment in claims could affect the purpose of Cariola Diez Pérez-Cotapos Chile www.gettingthedealthrough.com 45 the investment. These rules are contained in article 1911 et seq of the Civil Code. 18 Insurance Is insurance available to cover all or part of a party’s legal costs? Liability insurance is usually available for companies and, depending of the type of coverage, the policy could cover legal costs. 19 Class action May litigants with similar claims bring a form of collective redress? In what circumstances is this permitted? Class actions are contemplated in the Consumer Protection Law. This law allows consumers’ associations, the Consumer Protection Agency and 50 or more consumers to bring a collective action in cases of an infringement of the Consumer Protection Law. In other cases, the Civil Procedural Code allows the filing of a lawsuit by several claimants, but the action must be the same or must be based in the same facts. 20 Appeal On what grounds and in what circumstances can the parties appeal? Is there a right of further appeal? In almost all civil proceedings there is a right of appeal against the judgment of the first-instance judge. The court of appeal could review the merits of the case and also any formal issues if they were queried by the parties. In most cases the court of appeal will issue a new judgment that could confirm, modify or reverse the first-instance judgment. As the court of appeal can review the merits of the case, the reasoning and the law applied by the lower court, the grounds for filing an appeal are very broad. Some non-final orders or resolutions of the first-instance court can also be appealed. 21 Foreign judgments What procedures exist for recognition and enforcement of foreign judgments? According to the Civil Procedural Code, a foreign judgment will be enforceable as set forth by the corresponding international treaty. If there is no treaty with a specific foreign country, the enforcement of the judgment is subject to reciprocity criteria. If there is no international treaty with the foreign country nor reciprocity, the foreign judgment will be considered enforceable in the following circumstances: • that the foreign judgment does not infringe Chilean law or jurisdiction; • that the action has been duly served on the losing party; • that the losing party had the opportunity to present its case; and • that the foreign judgment is final. 22 Foreign proceedings Are there any procedures for obtaining oral or documentary evidence for use in civil proceedings in other jurisdictions? Chile is a signatory of the Inter-American Convention on Letters Rogatory, applicable to letters rogatory, issued in conjunction with proceedings in civil and commercial matters held before the appropriate judicial or other adjudicatory authority of one of the parties of the convention, that have as their purpose: • the performance of procedural acts of a merely formal nature, such as service of process, summonses or subpoenas abroad; or • the taking of evidence and the obtaining of information abroad, unless a reservation is made in this respect. In our experience, the same kind of letter rogatory is applicable with countries which are not part of the convention. Arbitration 23 UNCITRAL Model Law Is the arbitration law based on the UNCITRAL Model Law? Yes, the International Arbitration Law issued in 2004 is based on the UNCITRAL Model Law. 24 Arbitration agreements What are the formal requirements for an enforceable arbitration agreement? The formal requirements for an arbitration agreement to be enforceable are established in article 7 of the International Arbitration Law and are the following: • the arbitration agreement must contain the agreement by the parties to submit to arbitration all or certain disputes which have arisen or which may arise between them in respect of a defined legal relationship, whether contractual or not; and • the arbitration agreement needs to be in writing and it may be in the form of an arbitration clause in a contract or in form of a separate agreement. 25 Choice of arbitrator If the arbitration agreement and any relevant rules are silent on the matter, how many arbitrators will be appointed and how will they be appointed? Are there restrictions on the right to challenge the appointment of an arbitrator? Under the International Arbitration Law, if the parties fail to determine the number of arbitrators, the arbitrators shall be three. In connection with the right to challenge the appointment of an arbitrator, article 12 of the International Arbitration Law states that an arbitrator may be challenged only if circumstances exist that give rise to justifiable doubts as to his or her impartiality or independence, or if he or she does not possess the qualifications agreed to by the parties. In the case of an arbitrator appointed by the party itself or with its participation, the arbitrator may be challenged only for reasons the party becomes aware of after the appointment has been made. 26 Arbitral procedure Does the domestic law contain substantive requirements for the procedure to be followed? Chilean law establishes a dual system in connection with arbitration. Therefore, all the substantive requirements to be observed in an international arbitration procedure are contained in the International Arbitration Law, not in the domestic law. 27 Court intervention On what grounds can the court intervene during an arbitration? As a general rule, article 5 of the International Arbitration Law states that ‘in matters governed by this law, no court shall intervene except where so provided in this law’. Under article 6 of this law, the court can intervene during arbitration for certain functions of assistance and supervision, namely: • appointment of the arbitrators when parties fail to do so or when the procedure of appointment agreed upon by the parties fails; Chile Cariola Diez Pérez-Cotapos 46 Getting the Deal Through ¿ Dispute Resolution 2012 • if a challenge under any procedure agreed upon by the parties or under the procedure established in the International Arbitration Law is not successful, the challenging party may request, within 30 days after having received notice of the decision rejecting the challenge, the court to decide on the challenge, which decision will not be subject to appeal; • if an arbitrator becomes de jure or de facto unable to perform his functions or for other reasons fails to act without undue delay and there is a controversy concerning any of these grounds, any party may request the court to decide on the termination of the mandate; • if the arbitral tribunal rules as a preliminary question that it has jurisdiction, any party may request the court to decide the matter; • the arbitral tribunal or a party with the approval of the arbitral tribunal may request from a competent court assistance in taking evidence; • the court can also intervene if any party requests an interim measure directly to the court during arbitration; and • last, the court can also intervene in matters of recognition and enforcement of the final award issued by the arbitral tribunal. 28 Interim relief Do arbitrators have powers to grant interim relief? The arbitral tribunal is entitled to grant interim relief. However, the decisions issued on this regard are not enforceable if any party is in contempt of the arbitrator’s order. 29 Award When and in what form must the award be delivered? There is not a specific term for the issuance of a final award. In connection with the form of the award, article 31 of the International Arbitration Law sets forth the following requirements: (1) The award shall be made in writing and shall be signed by the arbitrator or arbitrators. In arbitral proceedings with more than one arbitrator, the signatures of the majority of all members of the arbitral tribunal shall suffice, provided that the reason for any omitted signature is stated. (2) The award shall state the reasons upon which it is based, unless the parties have agreed that no reasons are to be given or the award is an award on agreed terms under article 30. (3) The award shall state its date and the place of arbitration as determined in accordance with article 20(1). The award shall be deemed to have been made at that place. (4) After the award is made, a copy signed by the arbitrators in accordance with paragraph (1) of this article shall be delivered to each party. 30 Appeal On what grounds can an award be appealed to the court? Article 34 of the International Arbitration Law establishes the ‘application for setting aside’ as the exclusive recourse against an arbitral award. There is no right of further appeal. 31 Enforcement What procedures exist for enforcement of foreign and domestic awards? The procedure to enforce a foreign award is the exequatur before the Supreme Court of Chile. It is important to point out that Chile is a signatory of the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards and also to the Panama Convention regarding the same matter. Domestic awards do not need any specific enforcing proceeding. 32 Costs Can a successful party recover its costs? According to our experience in Chilean domestic arbitration practice, even though not forbidden by law, it is not usual to recover actual costs and expenses incurred in arbitration, but a nominal amount per concept of arbitration expenses. In international arbitration, in principle, it would be feasible to recover actual costs and expenses as it is usual in this type of proceeding. However, to date we do not have enough information to give assurance that an arbitral tribunal composed of Chilean arbitrators would grant full relief to a party in connection with the costs of the arbitration. Alternative dispute resolution 33 Types of ADR What types of ADR process are commonly used? Is a particular ADR process popular? Even though domestic arbitration is frequently used in disputes between companies, other forms of ADR such as mediation are not yet extensively used in civil matters, but the trend is to increase the use of mediation before the initiation of arbitration or litigation proceedings. In civil proceedings courts are obliged to conduct a conciliation process among the parties (usually performed in one very brief hearing), but in practice it is not seen as a real opportunity to settle the case. Florencio Bernales fbernales@cariola.cl Raimundo Moreno rmoreno@cariola.cl Avda Andrés Bello 2711, 19th Floor Tel: +56 2 360 4000 Las Condes Fax: +56 2 360 4030 Santiago www.cariola.cl
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