Originally from Dispute Resolution Journal

The enactment of an arbitration bill is expected shortly in Chile based on the United Nations Commission on International Trade Law Model Law for International Commercial Arbitration.1 This enactment should give a significant boost to international commercial arbitration in Latin America. This article discusses Chile’s existing arbitration regime, in regime, the circumstances prompting its latest arbitration initiative, and the proposed new arbitration law.

Background

Chile’s arbitration law is quite old, having been in force since 1875. Inspired by old Spanish laws,2 it has been extremely effective in regulating domestic arbitration. But, like many other developing countries, Chile failed to appreciate the significance of international arbitration in encouraging international commercial transactions and foreign investment. This omission is inconsistent with Chile’s recent macroeconomic structural reforms, its broad liberalization of the economy, and its adoption of major international commercial and investment agreements. For example, in recent years, Chile has signed bilateral free trade agreements with Canada in 1997, Mexico in 1998, the European Union, Korea and the United States in 2003. In addition, Chile has signed bilateral investment protection treaties with most of the industrialized countries.3 Each of these agreements contains special arbitration mechanisms for settling disputes that may arise between the parties. Chile’s free trade agreements with Canada and the United States include a provision, identical to that of the North American Free Trade Agreement (NAFTA), requiring Chile to promote and facilitate mechanisms for the resolution of international commercial disputes.4

Chile has also ratified a number of international treaties that concern international arbitration, including the 1975 New York Convention for the Recognition and Enforcement of Foreign Arbitral Awards (the New York Convention); the 1976 Inter-American Commercial Arbitration Convention (Panama Convention or IACAC); and the 1975 Washington Convention, which established the International Centre for the Settlement of Investment Disputes (ICSID).