CHILE Law and Practice Contributed by: Patrick Humphreys, Daniela Gazmuri Larraín, Paula Lühr, Ian Hinzpeter, Camila Leviante, Beatriz Riveros and José Luis Bravo, Garnham Abogados
1. Legal System 1.1 Legal System and Judicial Order
Finally, Chile also has a Constitutional Court, which safeguards the supremacy and respect of the Consti - tution by reviewing the constitutionality of laws. In practice, foreign companies should plan for a sys - tem that is formal and document driven. Early local advice is valuable when structuring transactions, obtaining permits, responding to regulators or choos - ing dispute resolution mechanisms. 2. Restrictions on Foreign Investments 2.1 Approval of Foreign Investments Chile is generally open to foreign investment and does not operate a broad foreign investment screen - ing regime. In most sectors, a foreign investor may incorporate a Chilean company, acquire shares or assets, capitalise a local subsidiary, or enter com - mercial arrangements without obtaining prior approval merely because the investor is foreign. The main statute is Law No 20,848 on Foreign Direct Investment in Chile. It is not an authorisation regime. Rather, it creates a framework to promote and facili - tate foreign investment and establishes InvestChile, the Foreign Investment Promotion Agency. InvestChile supports foreign investors by providing information, guidance and facilitation services, and by issuing cer - tificates that allow qualifying investors to access cer - tain statutory benefits. In general terms, the law cov - ers transfers of foreign capital or assets into Chile of at least USD5 million, as well as investments that give the foreign investor at least 10% of the voting rights or an equivalent equity interest in a Chilean entity. In practice, the InvestChile certificate is used to evi - dence the investor’s status and access certain statu - tory rights and benefits. Once the investor has com - plied with the applicable legal procedures and tax obligations, these benefits include the right to remit abroad the invested capital and the net profits gener - ated by the investment. They also include the right to access the formal foreign exchange market, made up of banks and authorised financial institutions, to con - vert the foreign currency used for the investment and to obtain the foreign currency needed to remit capital and net profits abroad.
Chile’s legal framework is built on a civil law tradition, where written legislation is the primary source of legal rules. The main sources of law are the Constitution, statutes enacted by Congress and regulations issued by the executive branch. Court decisions are impor - tant in practice, especially decisions of the Supreme Court and appellate courts, but they do not operate as binding precedent in the same way as in common law jurisdictions. This gives the Chilean system a strong emphasis on formal documents, statutory requirements and pro - cedural compliance. For foreign investors, contracts, corporate documents, permits and regulatory filings should be carefully prepared and consistently main - tained. In commercial practice, however, interpretation by regulators and courts can be highly relevant, par - ticularly in regulated sectors such as mining, energy, banking, insurance, telecoms, healthcare and envi - ronmental matters. The country has strong public institutions and sophis - ticated courts. Indeed, the ordinary court system is headed by the Supreme Court, which has national jurisdiction and supervises the administration of jus - tice. Below it are the Courts of Appeals, which operate regionally and hear appeals and certain constitutional or urgent remedies. At first instance, civil, criminal, labour, family and other courts hear disputes accord - ing to their subject matter and territorial jurisdiction. Separately, Chile has specialised courts for areas that require technical expertise. Many business disputes begin outside the ordinary courts, through regulators, administrative agencies or arbitration. Specialised venues include: • tax and customs courts • environmental courts • the Tribunal for the Defence of Free Competition • the Public Procurement Court, and • administrative and regulatory procedures before sector authorities.
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