What is the regime of challenges to arbitral awards in arbitrations seated in Chile?

Unlike other countries, Chile does not have a general arbitration law. Despite Chile’s long-standing and deeply rooted arbitration culture—which has progressively intensified and become more sophisticated as a result of the development of institutional arbitration and the integration of the Chilean market with major global economic centres and leading foreign arbitration hubs—the regime governing appeals against arbitral awards is scattered across different legal provisions, mainly within the Organic Code of the Judiciary System (“Código Orgánico de Tribunales”) and the Code of Civil Procedure (“Código de Procedimiento Civil”).

Party autonomy regarding the admissibility of appeals

Arbitration in Chile is, as a general rule, contractual in nature. Accordingly, appeals against arbitral awards may be waived, as provided in Article 239 of the Organic Code of the Judiciary System, enacted in 1943:

“Arbitral awards may be challenged through appeals and cassation before the court that would have heard them had they been brought in ordinary proceedings, unless the parties—being of legal age and having full capacity to manage their own assets—have waived such remedies or have agreed to submit them to arbitration as well in the arbitration agreement or in a subsequent act.”

Notwithstanding the above, certain remedies are non-waivable, even if the parties agree otherwise, as will be discussed throughout this article.

There are also matters subject to mandatory arbitration in Chile, governed by specific rules regarding their appeals regime. These special rules are not addressed in this article, which focuses solely on those applicable to voluntary or consensual arbitration.

Applicable remedies depending on the type of arbitrator

To determine the remedies available against an arbitral award, it is necessary first to consider the classification of arbitrators based on their powers.

Chilean law distinguishes three types of arbitrators:

• Arbitrators at law, who must strictly apply substantive and procedural law in both the conduct of proceedings and the issuance of the award, as if they were ordinary judges;
• Arbitrators ex aequo et bono, who may decide without strict adherence to substantive or procedural rules, and may instead be guided by their own judgement and principles of equity;
• Mixed arbitrators, who enjoy wide discretion in procedural matters but must apply the applicable law when deciding the merits of the dispute.

As a general rule, the parties will determine the scope of the arbitrator’s powers, except where mandatory legal provisions establish otherwise.

In the case of arbitrators at law, all remedies generally available against judgments of ordinary courts may be brought against the arbitral award. These include: appeal; cassation on procedural grounds -recurso de casación en la forma-; cassation on substantive grounds -recurso de casación en el fondo- (in the case of second-instance arbitrators); reconsideration (a request before the same tribunal to amend its decision); clarification (correction of clerical, transcription or purely formal errors); petition for leave to appeal(relating to the admissibility of an appeal); and review (revision of final judgments on highly exceptional grounds, for instance where the decision was based on false documents or testimony).

In contrast, awards issued by arbitrators ex aequo et bono are not subject to appeal, given the nature of such arbitration, which does not necessarily follow positive law—unless the arbitration agreement provides for a second-instance arbitral tribunal composed of arbitrators of the same type. For the same reason, cassation on substantive grounds is also unavailable.

However, the complaint remedy (recurso de queja) is always available and cannot be waived. This is an extraordinary and disciplinary remedy aimed at correcting serious misconduct or grave abuses in the issuance of the award, and is decided by the Court of Appeal of the place where the arbitration took place. The concept of “serious misconduct or grave abuse” implies a very high threshold: a mere breach of the law is insufficient. Rather, it requires manifest errors, violations of basic principles of logic, breaches of fundamental public policy rules, decisions clearly contrary to equity, lack of reasoning, etc. As this concept is not defined by statute, its content has been shaped by case law, making it a narrowly applied remedy highly dependent on the specific circumstances of each case.

Additionally, cassation on procedural grounds will always be available against awards rendered by arbitrators ex aequo et bono, based on the grounds of ultra petita and lack of jurisdiction.

Finally, in the case of mixed arbitrators, the appeals regime applicable to arbitrators at law  1  generally applies, subject to adjustments reflecting the nature of this type of arbitration. For example, cassation on procedural grounds is limited in terms of admissible grounds, given the broad procedural discretion granted to mixed arbitrators.

Mixed arbitration is the standard approach adopted by Chilean institutional arbitration centres, particularly the Arbitration and Mediation Centre of the Santiago Chamber of Commerce (“CAM Santiago”), the most prominent nationally and with significant 2  international connections. CAM Santiago’s standard domestic arbitration clause provides for mixed arbitration and a waiver of remedies against the award  3 . Accordingly, in practice, only the complaint remedy and cassation on procedural grounds (based on ultra petita and lack of jurisdiction) remain available, as they are non-waivable under Chilean law.

Courts competent to hear remedies

As a general rule, the court competent to hear challenges against an arbitral award is the Court of Appeal of the place where the arbitration was conducted. If the parties have agreed on a second-instance arbitral tribunal, appellate review will be heard by that tribunal.

Cassation on substantive grounds is always heard by the Supreme Court.

As for the complaint remedy, it is heard by the Court of Appeal of the place of arbitration. There has been extensive debate as to whether a complaint may be brought before the Supreme Court against a decision of a Court of Appeal resolving a complaint against an arbitral award. In principle, such a “complaint against a complaint” could be admissible, as it is theoretically possible for a Court of Appeal to commit serious misconduct or abuse when deciding a complaint. However, in recent years, case law has consolidated a trend limiting this possibility, generally declaring such further complaints inadmissible.

The case of international commercial arbitration

International commercial arbitration is specifically regulated by Law No. 19,971 (“ICAA”).

The annulment system established by the ICAA for arbitrations seated in Chile is autonomous, as it does not allow for any other form of challenge or review of the award and excludes other remedies 4 .

The ICAA only admits an application for annulment against the award, which is available solely on the grounds set out in Article 34 of the law:

1. Where the party making the application proves that: 
   1. a party to the arbitration agreement was under some incapacity, or that the agreement is not valid under the law to which the parties have subjected it, or, failing any indication, under Chilean law; 
   2. the party was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings, or was otherwise unable to present its case; 
   3. the award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration, or contains decisions beyond the scope of the submission (provided that, if decisions on matters submitted to arbitration can be separated, only those parts of the award may be set aside); 
   4. the composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties, unless such agreement conflicts with a non-derogable provision of the law, or, failing such agreement, was not in accordance with the law; or
2. where the court finds that: 
   1. under Chilean law, the subject matter of the dispute is not capable of settlement by arbitration; or
   2. the award is contrary to Chilean public policy.