CHILE Law and Practice Contributed by: Ricardo Rozas, Max Morgan and Stefano Perretta, JJR Abogados
9. Insurance Disputes 9.1 Insurance Disputes Over Coverage Under Chilean law, there is no strict need for dispute resolution clauses as insurance disputes are subject by default to arbitration. Nevertheless, an insured has the right to make a claim in the local courts where the sum in dispute is less than 10,000 Chilean UF. In this respect, the arbitrator must be appointed when the dispute arises. As regards limitation periods for starting proceedings in respect of (re)insurance claims, under Chilean law the general principle is that any action relating to (re) insurance is time-barred after four years. As stated in 6.5 Multiple Insured or Potential Benefi - ciaries , the insurance policy must identify beneficiar- ies or contain the mechanism for determining them. Other third parties may enforce an insurance through assignment of rights, as per Chilean regulations. 9.2 Insurance Disputes Over Jurisdiction and Choice of Law According to Article 29 of the Insurance Companies Act (DFL 251), any dispute arising from insurance and reinsurance contracts governed by the law shall come under the jurisdiction of the Chilean courts. This rule is mandatory and cannot be repealed by agreement of the parties. Therefore, although there is contractual freedom to agree on the applicable law, any dispute must be settled in principle in the Chilean courts. Nevertheless, once a reinsurance dispute effectively arises, the parties to the reinsurance policy are entitled to resolve disputes under Chile’s international com- mercial arbitration rules (Law 19971, which is based on the UNCITRAL Model Law on International Com- mercial Arbitration). 9.3 Litigation Process Stages of Litigation Generally, in Chile, civil and commercial disputes at first instance comprise three main phases: • discussion (exchange of pleadings); • evidence; and • judgment.
• In general, the provisions of Chilean insurance law are mandatory unless stated to the contrary. How- ever, if a clause is deemed to provide an insured with a greater benefit than is provided under the law generally, the specific terms of a policy will prevail over the Code of Commerce. • Chilean law considers it of paramount importance to determine the intentions of the parties at the time of contracting and to give effect to those intentions even if they are not reflected in the literal words of the contract. • A Chilean tribunal will strive to facilitate clauses in contracts with the goal of ensuring that the parties’ intentions are fulfilled. Actions can include amend- ing the contract if no provision is made for a given state of affairs. • Under Chilean law, it is permissible for a tribunal to ascertain the parties’ intention by looking outside the contract at, for example, the negotiations between the parties and market practice at the date of contracting. • In construing the intention of the parties to a rein- surance contract, Chilean law will consider interna- tional reinsurance practice. Under Chilean regulations, insurers must ensure that the contracted policies are drafted in a clear and understandable fashion. Where there is doubt regard- ing the meaning of a provision when using model poli- cies or clauses registered with the CMF (see 2.2 Writ- ing of Insurance and Reinsurance ), the interpretation that is more favourable to the insured prevails. 8.2 Warranties Under Chilean law, insurance warranties are defined as “the requirements aiming to confine or decrease the risk, which are stipulated in the insurance contract as conditions that must be met to allow payment of an indemnity after a loss”. 8.3 Conditions Precedent In Chile, conditions precedent are not regulated. However, the insurer or reinsurer can achieve similar effects if they are treated as essential conditions of the contract, which are defined by the Chilean Civil Code as those without which the contract does not produce effects at all or degenerates into a different contract.
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