Arbitration is an alternative method of dispute resolution in which the parties agree to submit a dispute to the decision of one or more arbitrator judges. In an increasingly globalised world and with more complex commercial relations, arbitration is becoming an ideal alternative for resolving disputes in an efficient and confidential manner, compared to what can be offered by ordinary or state justice.

Chile stands out as an early adopter of arbitration and for having a long tradition in the use of domestic arbitration. However, Chilean legislation regulating national or domestic arbitration is somewhat outdated, which contrasts with the modern legal framework governing international arbitration. This outdatedness, however, has been largely alleviated by the regulation of the most recognised arbitration centres operating in the country, both in terms of their internal administrative procedures, as well as in terms of their procedures themselves.

In the following sections, we will briefly explore the benefits of arbitration in Chile, its procedure and the reasons why companies should consider it as an advisable alternative for the resolution of disputes, especially of a commercial nature (resolution or termination of contracts, damages, forced performance of contracts, interpretation of contracts of all kinds, application and/or breach of non-competition or confidentiality clauses, declarations of mere certainty about situations, interests or contractual rights, etc.).

In Chile, arbitration is classified into three main types according to the nature of the arbitral decision and the powers of the arbitrator, by virtue of the provisions of Article 223 of the COT (Código Orgánico de Tribunales).

• Arbitration in law: In this type of arbitration, the arbitrator is obliged to resolve the dispute by strictly applying the legal rules provided by domestic law. His or her decision must be based on positive law and follow the procedures established for ordinary judges. The legal arbitrator does not have the power to deviate from the law in order to render an equitable solution, but must adhere to what the law provides. In practice, this type of arbitration is less used, as the parties precisely seek to submit their disputes to the The Commission's proposal for the European Court of Human Rights is not a case for this type of dispute resolution given the procedural flexibility, which in this case, is forbidden.

• Arbitration in equity or arbitrator: In contrast to arbitration at law, in arbitration in equity the arbitrator has more discretion in resolving the dispute. He is not limited to applying legal rules, but may base his decision on principles of fairness, equity and good faith. The equity arbitrator may, for example, consider the particular circumstances of the case, the relations between the parties and the interests at stake in order to arrive at a solution that he or she considers fair and reasonable. As for the procedure, the legislator gives flexibility to the arbitrator and the parties to modify it, the limits being respect for the basic guarantees of any judicial procedure such as the principle of contradiction, bilateralism and equality of the parties.

• Mixed arbitration: The latter combines elements of the two previous types. In this case, the arbitrator applies legal rules in preference, without prejudice to being able to base his decisions on principles of equity when faced with legal loopholes or situations that justify it. In terms of procedure, the arbitrator may follow a more flexible arbitration procedure, typical of the arbitration in equity described above.

The choice of the type of arbitration will of course depend on the circumstances of the case and the will of the parties.. In some cases, the parties may expressly agree on the type of arbitration they want, while in other cases, the law or the rules of the arbitral institution may establish the type of arbitration applicable. Ultimately, these agreements, which are the result of the will of the parties (Art. 1545 of the Civil Code), establish that one or more arbitrators, and not the state courts, will resolve their disputes. Notwithstanding this, for this to be valid, it must meet certain legal requirements, such as the capacity of the parties and a lawful object.

However, arbitration does not always arise from the free will of the parties.

The compulsory or legal arbitration is an exception to this principle and is expressly found in Chilean law. In this case, the law imposes on the parties the obligation to submit their disputes to arbitration, thus limiting their right to go to the ordinary courts. Although this figure exists in some legislations, it is criticised for violating fundamental principles such as access to justice and equality before the law. However, Forced arbitration is justified for reasons of efficiency or specialisation, seeking a quicker and more specialised resolution of certain types of disputes.

An example of forced arbitration in Chile are the specific matters provided for in Article 227 of the Organic Code of Courts, such as the winding-up of a partnership or limited partnership and of communities in general; the partition of property; questions arising out of the presentation of the account of the manager or liquidator of commercial companies and other suits on accounts; disputes between partners in a partnership or limited partnership, or partners in a partnership or limited partnership, or partners in an interestin addition to those specifically determined by other laws.

However, whether it is because of thehe existence of a arbitration clause (agreed by the parties in a contract or legal act) or by express legal provision imposing arbitration, entitles the parties, if they deem it appropriate, to start the arbitration procedure. Once the decision to initiate arbitration has been taken, it is necessary to determine whether or not the arbitral tribunal has been previously constituted. If it has not, an institutional or ad hoc arbitration should be chosen. In the former, the parties will turn to the arbitration institution for the appointment of the arbitrator or arbitral tribunal; in the latter, they will request the state court to perform this function. Once the arbitrator has been appointed, he or she must accept the position and take an oath before a minister of faith. This act marks the formal commencement of the arbitration proceedings, according to some positions, although others consider that the commencement occurs with the issuance of the first decision of the arbitral tribunal.

Be that as it may, what is certain is that as far as institutional arbitration is concerned, there are important arbitration centres in Chile: the Arbitration and Mediation Centre of the Chamber of Commerce of Santiago (CAM Santiago https://www.camsantiago.cl ) and the National Arbitration Centre (NAC). https://www.cna.cl/).

Once the arbitrator who has been appointed has been determined, a first hearing (primer comparendo) takes place, the parties usually lay down the specific grounds on which the arbitration proceedings are to be conducted, always respecting the legal limits and the previous agreements, especially those related to the characteristics of the chosen arbitrator, so that if he/she is in law in the procedure, the procedure stipulated in the Law must be followed according to the matter that has been submitted to him/her. Otherwise, in this basic hearing, the procedure to be followed will be determined. For example, in CAM Santiago, generally in the hearing on the grounds, an express reference to the "Rules of Procedure for National Arbitration of CAM Santiago" is determined in the hearing on the grounds.

(available at https://www.camsantiago.cl/wp-content/uploads/2023/08/REGLAMENTO- NATIONAL-ARBITRATION-ARBITRATION-LAWS OF-CAM-SANTIAGO-10.08-1.pdf).

In addition, this hearing commonly determines: (i) the notification regimeotherwise the provisions of Art. 629 of the Code of Civil Procedure apply, i.e. in person or by writ of summons; (ii) the presence of a minister of faith(ii) the court, which is compulsory and is usually a receiver, court clerk or notary; (iii) pleadings, deadlines and evidenceThis also depends on the nature of the arbitration: in mixed or equity arbitrations, the parties are free to set the rules of procedure, including the time limits for the presentation of evidence, the number of witnesses and the admissibility of certain evidence. Unlike in arbitration at law, where the arbitrator is more constrained by legal rules, in these cases, the parties can tailor the procedure to their needs. However, there are also limits. In order to take witness statements under oath or to apply interim measures, arbitrators often request the support of the ordinary courts. The assessment of evidence also differs: in arbitration at law, the rules of legal evidence are followed, whereas in other types of arbitration, the arbitrator has more discretion in assessing evidence; and, (iv) the determination of arbitration fees.

With regard to the development of the arbitration process, there are important aspects to be taken into account in arbitration in Chile.

• Interim Measures in Chilean ArbitrationAlthough there is no express rule granting arbitrators the power to issue interim measures, the doctrine and the majority of case law recognise this implicit competence. The justification lies in the need to guarantee the effectiveness of the arbitration process and to protect the rights of the parties. The processing of an application for an interim measure in arbitration is usually more agile than in the judicial process, as the arbitrators have greater flexibility to adapt the procedure to the needs of the case. However, it is important to note that the decision to grant or deny an interim measure is discretionary and depends on the specific circumstances of each case. Regarding the enforcement of interim measures issued by an arbitrator, However, the intervention of the ordinary or state courts must be required, since arbitrators lack the power of empire or coercive powers.

1. Weighting of the test: the assessment of evidence will depend on the type of arbitration. In the Chilean judicial system, we can distinguish between the system of assessed legal evidence (used in ordinary proceedings and regulated in the procedural code) and the system of legal evidence (used in the ordinary proceedings and regulated in the procedural code). civil) and of free conviction. Within the systems of free conviction, there are various alternatives such as free assessment, conscientious assessment or sound criticism. In the case of arbitration, especially when the arbitrator is mixed, the assessment of evidence is generally framed within the system of sound criticism. This system, intermediate between legal evidence and free conviction, allows the arbitrator to assess the evidence with greater flexibility, as long as his decision is based on logic, the maxims of experience and established scientific knowledge.

Once the evidentiary stage has been completed and the time limit for submitting observations has expired, the arbitrator shall summon the parties to issue the award or "arbitral award". The arbitrator shall decide the matter within the established time limit, which may be extended if necessary.

1. Final judgementIn arbitration, the final decision is called an arbitral award. The form and content of this award will depend on the type of arbitrator hearing the case. If the arbitrator is a law arbitrator, the award must comply with the requirements set out in article 170 of the Code of Civil Procedure. On the other hand, if the arbitrator is an arbitrator (equity), the award must be explicit in mentioning the criteria of prudence and equity on which it is based. It is important to note that arbitral awards, like judicial awards, may suffer from certain defects that could lead to their annulment. Among these defects are inconsistency, which can manifest itself as an omission of pronouncement, a decision that exceeds what was requested (ultra petita) or that pronounces on issues that were not raised (extra petita). In the case of legal arbitration, these defects may be grounds for an appeal in cassation. However, in equity arbitrations, the remedies available to challenge the award are more limited and will depend on what the parties have agreed, or ultimately, only the unwaivable remedies of our system will be available.

1. Challenging the judgment or appeal systemIn this case, particular attention should be paid to the arbitration clause of the parties in case they have waived the remedies and to which ones. In the legal and mixed arbitration, There is a wide range of remedies, including appeal, cassation on the form and on the merits, reconsideration, clarification, review and, in exceptional cases, complaint. An appeal in cassation in form always proceeds on grounds of incompetence or ultra petita, even if the parties have waived other remedies. However, in arbitrations carried out by arbitrators (equity), the remedies are more limited and depend on what has been agreed by the parties. Generally, the only remedy available is an appeal to another arbitral tribunal, if so agreed. In addition, an appeal may be lodged, which in this case acts as a substantive appeal, and not only as a disciplinary mechanism. The remedy of cassation in form is also The appeal may proceed on grounds of ultra petita or incompetence, and an appeal for reconsideration and clarification is admissible if the arbitrator still has time to resolve it. However, the appeal on the merits does not proceed, in accordance with Article 239 of the Organic Code of Courts.

1. Enforcement of the judgmentThe award pronounced by an arbitrator has the value of an enforceable title (art. 434 Nº1 CPC) and is protected under the effect of res judicata. The enforceability of the award is direct and does not require judicial approval as a requirement prior to its enforcement, except for the exceptions linked to the protection of the incapable, as already mentioned (arts. 400 and 1342 of the Chilean Civil Code). Enforcement can be requested before the arbitrator who issued the award, if he still has time to do so or if the parties so agree, or before the ordinary courts, distinguishing whether the award is declaratory, constitutive or condemnatory. However, compulsory compliance, insofar as it requires the application of forceful measures, must be enforced with the assistance of the ordinary or state courts.

1. Duration of arbitration proceedings: It is not possible to anticipate a priori the total duration of an arbitration, as it will depend on various factors such as the type of arbitrator (the fastest being usually the arbitrator under arbitration), the complexity of the matter at issue, the efforts of the parties to accelerate or delay the process in accordance with their strategy, imponderables, etc. Without prejudice to the above, a reasonable expectation for the resolution of a dispute of a commercial nature, of medium complexity, submitted to the knowledge and decision of an arbitrator, is of the order of one (1) year.until the arbitral award is obtained. It will be a different story if the parties lodge appeals against the award before the Court of Appeals in Santiago, in which case the final resolution of the case could take up to two additional years.

1. Arbitration values in Chile: There is no general mandatory regulation for the collection of arbitration fees. However, as a reference, it is possible to indicate that the Arbitration and Mediation Centre of Santiago, one of the most recognised and used by medium and large companies in Chile, has a table or index of minimum and maximum fees, of a binding nature for the arbitrators attached to the Centre, available on its website. https://www.camsantiago.cl/indice-de-tarifas/

As a mere reference, with respect to a The national arbitration centre states that a dispute of an amount in the order of USD$80,000 has a minimum value of USD$5,400 and a maximum fee of USD$6,300.including all fees administrative costs of the centre and the fees of one (1) arbitrator. Processing costs and legal advice from lawyers are not included in the example.

In the event that the parties decide to agree on the name of one or more ad hoc arbitrators, either because of their recognised expertise in the field or for other reasons, it is not possible to anticipate the fee rate that the same arbitrator may apply unilaterally. The same applies in the event that the ad hoc arbitrator is appointed by an Ordinary or State Court, given the lack of agreement of the parties to the dispute on the name of the arbitrator(s). In the latter case, it should be noted that every two years, the respective Courts of Appeal of each region of Chile, fix the name of the arbitrator or arbitrators. official lists of arbitrators who can be appointed by the ordinary courts according to the different subject mattersThe Court of Appeals may only appoint those lawyers included in this list, which can be consulted on the institutional page of each Court of Appeals.

If you have any questions or need further information on these topics, please contact our partner in Chile, Ovalle/ Legal Adviserswith the attention of lawyer Josefina Escobar Martínez, Partner expert in Commercial Negotiation, Litigation and Arbitration.