• Getting the Deal Through - Dispute Resolution 2012 - Chile
  • August 31, 2012 | Author: Florencio Bernales
  • Law Firm: Cariola Díez Pérez-Cotapos & Cia. Ltda. - Santiago Office
  • 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.

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    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

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    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;

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    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 [email protected]

    Raimundo Moreno [email protected]

    Avda Andrés Bello 2711, 19th Floor Tel: +56 2 360 4000

    Las Condes Fax: +56 2 360 4030

    Santiago www.cariola.cl