CHILE Law and Practice Contributed by: Pablo Méndez, Christian Rojas, Pablo Neupert and Vicente Huidobro, TM Abogados
Following the enactment of Law No 21,595 on Eco- nomic and Environmental Crimes, the due diligence standard has been strengthened by the incorporation of new criminal offences that may trigger criminal lia- bility for legal persons under Law No 20,393. Conse- quently, buyers and investors now conduct a deeper assessment of potential environmental breaches with criminal relevance, and the existence and effective- ness of corporate compliance programmes imple- mented by the target company. This means that environmental due diligence is no longer limited to verifying permits and sanctions, but also includes reviewing the following: • environmental and criminal compliance systems; • internal traceability and control mechanisms; • staff and contractor training; and • the existence of risk matrices and response proto- cols for environmental incidents. 17.2 Disclosure of Environmental Information In the Chilean legal system, there is no general legal obligation requiring a seller to disclose environmental information to the buyer. Disclosure is usually gov- erned by contractual representations and warranties clauses, which are tailored to the type of transaction and the level of environmental risk associated with the asset or project. However, as noted in 16.2 Public Environmental Infor- mation and 17.1 Environmental Due Diligence , much of the relevant environmental information is publicly accessible through official platforms, such as the Environmental Impact Assessment System (e-SEIA), the SNIFA or through requests for information under Law No 20,285 on Access to Public Information. Gen- erally, buyers often verify the information provided by the seller against these public records and, where appropriate, conduct site inspections and technical reviews to assess actual environmental compliance and the existence of liabilities or contingencies. A notable example illustrating the importance of ade- quate environmental disclosure is the Australis Sea- foods case ( Joyvio v Quiroga ) before the Santiago Arbitration and Mediation Centre (CAM). The arbitral
tribunal ordered the sellers to return approximately USD300 million to the Chinese buyer Joyvio, finding that material information was not adequately revealed in the transaction documents. This case also gave rise to an ongoing criminal complaint for alleged fraud, and the environmental aspects are currently being pursued before the SMA, where sanctions and the approval of a compliance plan are expected. 17.3 Key Issues in Environmental Due Diligence In Chile, the most common contingencies identified during an environmental due diligence relate to com- pliance with the applicable regulatory and permitting framework governing a specific project or activity. This includes reviewing: • RCAs and their amendments; • outstanding mitigation or compensation obliga- tions; and • any environmental enforcement actions or adminis- trative proceedings before SMA. A key issue often encountered is the existence of non- compliance that may trigger sanctioning procedures, which can result in significant fines or even partial or total closure of operations. In addition, for assets with potential environmental legacies, the review typically extends to historical liabilities and potential environmental damage claims under Article 53 of Law No 19,300, as well as related civil or criminal proceedings. As noted in 17.2 Disclosure of Environmental Infor- mation , purchasers usually cross-check the sell- er’s disclosures against public records and, where necessary, conduct site inspections and technical assessments to verify actual compliance and identify potential risks or contingencies. Consequently, envi- ronmental due diligence in Chile requires a high level of rigour and scrutiny, with a strong focus on regula- tory, enforcement and reputational risks.
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