CHILE Trends and Developments Contributed by: Ricardo Vásquez, Juan Araya Allende and Álvaro Jara Burotto, Vásquez Urra Abogados
• The composition of the arbitral tribunal or the pro - cedure did not comply with the parties’ agreement. • The award is contrary to Chilean public policy. The party alleging nullity bears the burden of prov - ing that one of these grounds applies. The Appellate Court does not apply them of its own motion, except in cases concerning arbitrability and public policy. What does it mean for an award to be contrary to “public policy”? The ground of public policy is the most frequently invoked and the one most often rejected by the Appel - late Courts. In the context of international arbitration, the concept of public policy has a more restricted scope than in domestic law: it does not encompass all mandatory rules of Chilean law, but only the most fundamental principles of the country’s legal system. Chilean courts have clarified that procedural public policy includes guarantees such as equal treatment of the parties, the right to be heard and the impar - tiality of the arbitrators. Substantive public policy, for its part, encompasses principles such as the prohibi - tion of abuse of rights or the protection of the state’s essential interests. What the courts do not accept as a ground for set- aside is mere dissatisfaction with the outcome of the award or errors in the interpretation of contracts or laws. If a company loses an arbitration and seeks to overturn it by arguing that the arbitrator(s misapplied a rule of civil law, that argument will not succeed before an Appellate Court, which sends a message of confi - dence and certainty regarding the decisions handed down by the Chilean courts. The most important development in international commercial arbitration in Chile In June 2026, the Santiago Appellate Court upheld – for the first time since Law 19,971 entered into force – an action for annulment on the ground that the arbi - tral tribunal had ruled beyond the scope of what the parties had requested (Case No. 17,067-2025). The decision of the Appellate Court has become one of the most closely studied Chilean arbitration devel - opments of the year. Sitting in set-aside proceedings
under Law No. 19,971, the Court set aside in full a CAM Santiago award arising from the sale of a major Chilean salmon and trout producing company (“Com - pany”). The case sits at the intersection of post-M&A warranty litigation, sophisticated Sale and Purchase Agreement (SPA) risk allocation and the outer limits of arbitral decision-making. For clients and deal teams, the judgment is less about the merits of an environmental overproduction dispute and more about a structural question: how far an arbi - tral tribunal may recharacterise the remedy sought by the parties. The majority of the members of the Court treated that issue as a jurisdictional and congruence problem. A dissenting judge treated it as an ordinary exercise of legal characterisation within the arbitral tribunal’s mandate. The underlying dispute The arbitration concerned a February 2019 SPA for the Company. The buyers alleged that the sellers had given false or incomplete representations and warran - ties, including as to environmental compliance, undis - closed contingencies and the sufficiency of operating permits. A central factual theme was alleged salmon overproduction beyond authorised limits and the risk of later regulatory scrutiny. The buyers advanced a principal claim for termination of the SPA with damages, and subsidiary stand-alone damages claim. Both routes were built on alleged wil - ful breach of the SPA warranties. That framing mat - tered commercially. If wilful misconduct were to be established, the buyers argued that contractual liabil - ity caps and related limitations in the indemnity regime should fall away. The arbitral tribunal rejected termination and found no wilful misconduct of the kind needed to support that primary case. It did, however, find that one warranty statement was false or incomplete. It then awarded what it described as “compensation” for an overprice paid for the shares, framed as a partial restitution of the purchase price, and declined to apply the SPA’s percentage liability cap. The resulting award exceed - ed USD217 million.
231 CHAMBERS.COM
Powered by FlippingBook