CHILE Law and Practice Contributed by: Pablo Méndez, Christian Rojas, Pablo Neupert and Vicente Huidobro, TM Abogados
hensive environmental liability regime encompassing civil, criminal and administrative spheres, thereby strengthening the requirement of diligence and over- sight at the managerial level of companies. In the criminal sphere, under Law No 21,595 on Eco- nomic and Environmental Crimes, Article 48 intro- duced new provisions into the Criminal Code estab- lishing criminal liability for natural persons who, acting on behalf of or for the benefit of a legal entity, com- mit environmental crimes or allow their commission through a lack of diligence in fulfilling their duties. In this regard, Article 2 of Law No 21,595 classifies environmental crimes as second-category economic crimes, meaning that, for criminal liability to be attrib- uted, one of the following connection factors must be present: • the act was committed in the exercise of a posi- tion, function or role within a company; or • the crime was committed for the company’s eco- nomic or other benefit. Consequently, liability may fall upon both natural per- sons (directors, managers, executives) and legal enti- ties, depending on their degree of participation or the benefit obtained. Penalties The penalties applicable to directors and officers depend on the type of liability involved. In the admin- istrative sphere, under Law No 20,417, the SMA may impose fines, revoke permits or even order the closure of facilities. Although sanctions are primarily imposed on the company, the SMA may refer cases to the pub- lic prosecutor’s office when there are indications of criminal liability by natural persons. Likewise, under Article 45 of the same law, legal representatives are secondarily liable for the payment of fines imposed. In the criminal sphere, the Chilean Criminal Code pro- vides for environmental crimes in Articles 305 to 309, introduced by Law No 21,595 on Economic and Envi- ronmental Crimes, without prejudice to other offences established in special laws. Directors or managers who order, consent to or fail to prevent unlawful acts when they could have done so may be sanctioned
with imprisonment and fines, depending on the sever- ity of the harm caused. Insurance Coverage for Liabilities or Penalties Directors and senior executives may take out civil liability insurance (known as directors’ and officers’ liability insurance, or D&O), which may cover defence costs and certain indemnities arising from infractions committed in the course of their duties. However, such coverage cannot extend to criminal sanctions. In practical terms, these insurance policies gener- ally cover negligent or unintentional acts but exclude intentional crimes and wilful environmental damage. Therefore, obtaining such insurance does not elimi- nate the need to implement internal compliance pro- grammes and control mechanisms, such as regular reporting to the board of directors or the establish- ment of positions like Chief Compliance Officer (CCO). On the contrary, this need has been reinforced follow- ing the enactment of the Economic Crimes Law, which expanded criminal responsibilities and heightened the duty of diligence of senior executives and directors. In Chile, environmental insurance is available on the market through pollution liability policies and environ- mental damage insurance, offered mainly by inter- national companies and specialised local brokers. These policies have evolved in recent years alongside increasing regulatory requirements and public con- cern regarding environmental compliance, particularly in sectors such as mining, energy, industry and real estate projects. Although there is no uniform state scheme, private insurers have developed products tailored to the risks arising from environmental inci- dents and the need to demonstrate financial solvency before authorities or affected third parties. Mandatory Aspects Under Chilean law, there is no general mandatory environmental insurance. However, sectoral legisla- tion has established financial guarantee mechanisms 8. Insurance 8.1 Environmental Insurance Availability and Scope
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