Contributed By JJR Abogados y Corresponsales
The legislative framework for shipping in Chile is constructed from various regulations and laws, for which the main sources are as follows:
Under Chilean practice the common maritime and shipping claims that are filed are related to cargo claims under the Chilean adoption of the Hamburg Rules. Arrest petitions are also common.
As regards competent courts, Article 1203 of the Code of Commerce establishes the general principle that the resolution of all maritime disputes, including those relating to marine insurance, is subject to mandatory arbitration. However, the ordinary civil courts may hear maritime disputes in certain cases, including:
In addition, specific petitions for the appointment of an arbitrator, ship arrest and constitution of limitation funds are heard by ordinary civil courts.
The government agency responsible for port state control is the General Directorate of Maritime Territory and Merchant Marine (also known as DIRECTEMAR). Its main powers can be summarised as follows:
Any type of vessel, whether constructed or under construction, or naval device can be registered at the following registries kept by the General Administration of the Maritime Territory and Merchant Marine:
The rules relevant to the organisation and operation of registries, and the procedures, formalities and requirements of registration, are contained in the Navigation Law and the Regulations for Registration of Vessels and Naval Artifacts (Decree 163 of 1981).
Regarding merchant vessels, they can be registered by Chilean nationals or citizens. If the owner is a corporation, it must meet the following requirements to be deemed Chilean:
Regarding special vessels (eg, tugboats, dredgers, scientific or recreational vessels), they can be registered in Chile by foreign natural persons as long as they are domiciled in the country or their main place of business is located locally (this rule does not apply to fishing vessels).
Although not regulated in depth, according to the Navigation Law, dual registration of national merchant vessels would be acceptable when, for reasons of obvious convenience to domestic interests, the President of Chile authorises the bareboat charter of national vessels for a certain period. In such cases, the vessel must fly a foreign flag, although her Chilean registration will continue in effect.
The registration of mortgages is kept by the General Administration of the Maritime Territory and Merchant Marine. As regards documentary requirements, mortgages, liens and prohibitions related to vessels over 50 gross tons must be registered, for their validity, in the Mortgage, Liens and Prohibitions Registry mentioned in 1.3 Domestic Legislation Applicable to Ship Registration.
The naval mortgage must be granted by public deed. The mortgage deed and the contract to which it refers may be the same. When the mortgage is granted abroad, it shall be governed by the law of the place of its granting. For registration in Chile, the mortgage shall be recorded, at least, in a written document whose signatures are authorised by a minister of faith or by a Chilean consul.
Registries are available to the public.
The key legislation, rules and conventions in force in Chile for regulating sea pollution are as follows:
Wreck removal is regulated under the Chilean Navigation Law. In general, the Chilean Maritime Authority can order the pertinent proprietor, owner or operator to adopt all necessary measures, at their own cost, to proceed with removal of the wreck within a specified term. In February 2018, the Navigation Law was subject to an important amendment to strengthen marine environment preservation and navigation safety (Amended by Law No 21,066, which introduced new wreck removal provisions).
Articles 1,116 to 1125 of the Code of Commerce set out the main regulations applicable to collisions. The Navigation Law and the Convention on the International Regulations for Preventing Collisions at Sea (COLREGs) also apply.
Chilean collision regulations apply to damage that arises, for example, from a collision between two or more vessels or from waves caused by the movement of a vessel resulting in damage to other vessels, cargo or people on board, even if an actual collision does not occur (Under Chilean law, “vessel ”is a maritime device that can move either on its own or by external means).
These rules also apply to events occurring in fluvial waters, lakes and any other navigable waterway. In addition, Chilean collision regulations apply to collision damage that arises between vessels under the same ownership or administration.
Salvage is regulated in Articles 1,128 to 1157 of the Code of Commerce (Services rendered to a vessel or other property in damage). These rules are based on the Comité Maritime International’s draft International Convention (Montreal 1981) and the International Convention on Salvage 1989.
Chilean regulations that refer to tonnage limitation (ie, Articles 889 to 904 of the Code of Commerce) are inspired by both the International Convention relating to the Limitation of the Liability of Owners of Sea-Going Ships, and Protocol of Signature 1957 and the Convention on Limitation of Liability for Maritime Claims 1976 (the “LLMC Convention 1976”). With respect to the tonnage limitation figures, the Code of Commerce follows the LLMC Convention 1976. In addition, the Code of Commerce establishes a specific set of procedural provisions in connection with the constitution and distribution of the corresponding limitation fund.
The types of claims subject to limitation are as follows:
The people entitled to limit liability pursuant to this regime are as follows:
The procedure for establishing a limitation fund in connection to general civil liability is regulated in the Code of Commerce (Article 1,210 et seq). Its main features are as follows.
Persons Entitled to Commence Limitation Proceedings
Any of the persons listed in 2.3 1976 Convention on Limitation of Liability for Maritime Claims, who consider themselves entitled to limit liability under the Chilean general limitation regime, may come before any of the courts mentioned below and ask that a procedure be initiated, aimed at constituting the fund and verifying and settling credits and distribution in accordance with the priorities provided by law.
It will be up to an appropriate court to investigate all the matters referred to in 2.3 1976 Convention on Limitation of Liability for Maritime Claims and any that are an accessory or of consequence to them.
When the limitation of liability refers to a vessel registered in Chile, it will be the civil court that lies within the jurisdiction of the port of registration of the vessel that has competence.
If dealing with a foreign vessel, the appropriate Chilean civil court of the port where the accident occurred or the first Chilean port of call after the accident or, failing either of these, whatever court has jurisdiction in the place where the vessel was first retained or where a guarantee for the vessel had first been granted has competence.
When such a procedure has still not been brought in any of the courts mentioned above and the limitation of liability is filed in a plea, the same court before which it is being pleaded will be able to hear the case on limitation so long as it is an ordinary one. If dealing with a court of arbitration, copies of the pertinent background information will be sent to the court that is able to hear the case in accordance with the preceding points so that, before this court, the action aimed at constituting and distributing the limitation of liability fund can be brought.
In these cases, the plea for limitation of liability by constituting the fund may only be made when answering the lawsuit action.
Term for Exercising Limitation of Liability by Constituting a Fund
Except in the case discussed above, where the court before which limitation of liability is being pleaded hears the case, limitation of liability by constituting a fund may be exercised up to the expiry of the deadline for filing defences within foreclosure proceedings or within the deadline of the summons referred to in article 233 of the Chilean Code of Civil Procedure (the “Code of Civil Procedure”) in court-ordered enforcement proceedings.
Resolution Declaring Commencement of Proceedings
The court, after examining whether the applicant’s calculations of the amount of the fund fall into line with the pertinent provisions, will issue a rule in which it will declare that proceedings have begun. At the same time, it will rule on the options offered for the constitution of the fund, ordering them to be complied with, if it approves them. In the same resolution, it will mention the sum that the petitioner shall place at the disposal of the court to cover all costs of proceedings and it will appoint a receiver plus a deputy to conduct and carry out all the acts and operations that they are entrusted with in this capacity. These appointments shall fall upon persons who are on the list of receivers mentioned in the Chilean Bankruptcy Law and it will not be necessary for their appointment to be ratified at a later date by the board of creditors.
Rules Regarding Cash and Guarantees
When money is handed over for the constitution of the fund, the court will deposit it in a bank, with the knowledge of the receiver and the interested parties. Any readjustments and interest obtained therefrom will be added to the fund to the benefit of the creditors. If the fund has been constituted by means of a guarantee, its amount will accrue current interest wherever the court sits, and it will be left on record in the document establishing the guarantee.
Limitation of Civil Liability for Damage From Spillage of Hydrocarbons and Other Hazardous Substances
Spillage of hydrocarbons from seagoing vessels carrying oil in bulk as cargo is subject to the CLC 1992.
Spillage of hydrocarbons from vessels not carrying oil in bulk as cargo or spillage of other hazardous substances is subject to the terms of the CLC 1969 and supplementary norms set forth by the Chilean Navigation Law, including those for fund constitution and distribution.
In 1982, Chile ratified the Hamburg Rules and then included them in the Code of Commerce in 1988 (paragraph 3, Title V, Book III), with minimal changes (the “Chilean adoption of the Hamburg Rules”).
Under the Chilean adoption of the Hamburg Rules a “contract of carriage by sea” means “any contract whereby the carrier undertakes against payment of freight to carry goods by sea from one port to another”. In this respect, a contract which involves carriage by sea and also carriage by some other means is, for the purposes of Chilean law, deemed to be a contract of carriage by sea only in so far as it relates to the carriage by sea.
In turn, the Chilean adoption of the Hamburg Rules provides that the bill of lading “is a document which establishes the existence of a contract of maritime transport and verifies that the carrier has taken charge or has loaded the goods and has undertaken to deliver them against presentation of that document to a determined person to his order or to the bearer.”
In this respect, under the Chilean adoption of the Hamburg Rules “shipper” means “ any person by whom or in whose name or on whose behalf a contract of carriage of goods by sea has been concluded with a carrier, and  any person by whom or in whose name or on whose behalf the goods are actually delivered to the carrier in relation to the contract of carriage by sea.”
In addition, under the Chilean adoption of the Hamburg Rules by “consignee” it is meant “the person entitled by a document of title to take delivery of the goods”.
Notwithstanding that there is some debate among local scholars as regards the nature of the contract of carriage by sea, under Chilean practice title to sue will usually be associated to the lawful holder of the bill of lading, which includes the shipper, consignee, endorsees and subrogated insurers, as the case may be.
The Chilean adoption of the Hamburg Rules law recognises a basic distinction between the “carrier” (also known as the “contractual carrier’) and the “actual carrier”. The former is defined as “any person by whom or in whose name a contract of carriage of goods by sea has been concluded with a shipper” and the latter as “any person to whom the performance of the carriage of the goods, or part of the carriage, has been entrusted by the carrier, and includes any other person to whom such performance has been entrusted”.
The above distinction has simplified the identity of the carrier problem, as anyone who issues a bill of lading as a principal may be treated as a contractual carrier. This applies even to freight forwarders if they issue their own “house” bill of lading and, as a matter of Chilean practice, many cargo claims are normally based on these documents alone.
In this respect, where the performance of the carriage or part thereof has been entrusted to an actual carrier, the carrier nevertheless remains responsible for the entire carriage. The carrier is jointly and severally responsible, in relation to the carriage performed by the actual carrier, for the acts and omissions of the actual carrier and of their staff and agents acting within the scope of their employment. Additionally, all the provisions governing the responsibility of the carrier also apply to the responsibility of the actual carrier for the carriage performed by them.
Under the Chilean adoption of the Hamburg Rules the main principle is that the liability of the carrier is based on presumed fault or neglect. Accordingly, the carrier is liable for loss resulting from loss or damage to the goods, as well as from delay in delivery, if the occurrence that caused the loss, damage or delay took place while the goods were in the carrier’s charge. If the shipowner is deemed an actual carrier (as opposed to a carrier as defined above) and damage occurs during their custody period, such shipowner would be liable. However, in Chile a carrier may avoid liability if they discharge the burden of proving that they, their staff or their agents adopted all measures that could reasonably be required to avoid the cause of loss or damage, and consequences thereof.
Regarding limitation in connection with contracts of carriage of goods by sea, Chilean law draws a distinction between lost or damaged goods and delayed goods. In the former case, the carrier’s liability is limited to an amount equal to 835 SDR per package or other shipping unit, or 2.5 SDR per kilogram of gross weight, if the latter is higher. In the case of delayed goods, the carrier’s liability is limited to an amount equivalent to 2.5 times the freight payable for the goods delayed, but not exceeding the total sum of the freight payable under the respective contract of carriage by sea. It is worth noting that the above rules do not compromise either the interests arising from the value of the damaged goods or the judicial costs.
Under the Chilean adoption of the Hamburg Rules, the shipper is subject to a general rule that they are not liable for loss sustained by the carrier or the actual carrier, or for damage sustained by the ship, unless such loss or damage was caused by the fault or neglect of the shipper, their staff or agents. Nor is any servant or agent of the shipper liable for such loss or damage unless the loss or damage was caused by fault or neglect on their part. In addition, the shipper is subject to further special rules on dangerous goods.
Under Chilean maritime law the general principle is that any action relating to maritime disputes is time-barred after two years. Actions relating to passage contracts, freight, general average and contributions are time-barred within six months. In addition, in the case of collision actions, the two-year period is extended to three years if the responsible vessel was not arrested or detained while in Chilean jurisdictional waters, provided that the vessel abandoned them without calling at a Chilean port after the collision.
As to time extensions, under Chilean maritime law the running of the corresponding limitation period can be interrupted by a declaration in writing to the claimant by the person to whom the limitation period applies. This can be done successively but the corresponding period shall run again as of the date of the last declaration.
Chile has not ratified any international convention regarding the arrest of ships. However, the fundamental regulations applicable to ship arrest that are found in Book III, Title VIII, paragraph 5 of the Code of Commerce, About the Procedure to Arrest Vessels and Their Release (Article 1,231 et seq) are loosely based on the principles set forth under the International Convention Relating to the Arrest of Seagoing Ships (Brussels, 10 May 1952).
Under Chilean law, a vessel may be arrested if the requesting party has a credit that entitles it to do so. These credits may be of two types, namely:
Under Chilean law, there is no statutory definition for privileged credits. However, they may be defined as those that give rise to a maritime lien and allow for requesting an arrest as per the special rules set forth by Book III, Title VIII, paragraph 5 of the Code of Commerce (Article 1,231 et seq). Articles 844, 845 and 846 of the Code of Commerce establish and distinguish the following groups of privileged credits.
Credits Under Article 844 of the Code of Commerce
Credits Under Article 845 of the Code of Commerce
These include mortgage credits on large vessels (ie, vessels over 50 GT) and secured credits on minor vessels (ie, vessels up to 50 GT).
Credits Under Article 846 of the Code of Commerce
The privileged credits of Article 844 enjoy privilege over the vessel in the order enumerated in Article 844, with preference over mortgage credits and the privileged credits of Article 846. Mortgage credits are preferred to those of Article 846, which in turn follow the rank indicated under Article 846.
In this respect, it is worth noting that the privileged credits established by the aforementioned provisions have preference and exclude all other general or specific privileges regulated by other legal bodies, when referring to the same goods and rights. However, the rules regarding priorities and privileges in matters of pollution or for avoiding damages from spills of hazardous substances, which are established in international treaties in force in Chile and in the Navigation Law, have preference over the provisions of Book III, Title III of the Code of Commerce, About Privileges and Naval Mortgage in the specific matters to which they refer.
See 4.1 Ship Arrests.
The Chilean system does not contemplate “in rem” actions. However, it is wort noting that the maritime privileges also confer upon the creditor the right to pursue the vessel in whosoever’s possession she may be. In addition, the lien on the ship granted by a privileged credit can be exercised not only against the actual ship to which the privileged credit relates, but also against a ship in the same ownership or a ship in the same administration or operated by the same person. In this respect, according to Article 882 of the Code of Commerce, the shipowner (armador) is the “person or corporation, whether or not the proprietor of the vessel, who trades or dispatches it under their name”. The same article defines the operator as “the person who is not the owner but who executes transport and other vessel exploitation contracts according to a power of attorney granted by the former, assuming liability therefrom” (under Chilean law a bareboat charterer has the status of a shipowner with same rights and obligations).
On the other hand, the concepts of ship administration or management are not expressly defined in the Code of Commerce.
As pointed out in 4.1 Ship Arrests, Chilean maritime privileges include those arising from credits in respect of supply of products or materials that are indispensable for the trading or conservation of the vessel, which includes the supply of bunkers. For these purposes, Chilean law does not distinguish between contractual or actual suppliers. It does not matter if the bunkers were supplied to a chartered vessel and if the bunkers were ordered by the charterer and not by the owner.
Under Chilean law the general rule is that either individuals or corporations are required to be represented by a counsel when arresting a vessel, which means granting a power of attorney (POA) with judicial faculties. The POA must follow Chilean law and practice and the quickest way to produce it is via the local ship agent assisting the vessel at the pertinent Chilean port (they are entitled to do so on behalf of the owner).
Regarding security, if the court considers that the supporting documents provided by the arrest petitioner are not sufficient, or the petitioner states that they are not yet available to them, the court may require that counter security be provided for the potential damages that may result if, subsequently, it is found that the petition lacked basis. As to the form and amount of damages, there are no specific rules, so it is up to the court.
As regards specific regulations for arresting bunkers and freight, there are no such regulations in Chile. This could be achieved by means of the general rules set forth by the Code of Civil Procedure regarding pre-judicial and precautionary measures, but it is not an easy exercise because of formalities and timing restrictions.
As pointed out in 4.3 Liability in Personam for Owners or Demise Charterers, a lien on a ship granted by a privileged credit can be exercised not only against the actual ship to which the privileged credit relates, but also on a ship in the same ownership or a ship in the same administration or operated by the same person.
An arrest requested by invoking a credit other than privileged ones, namely, a credit not covered under Articles 844, 845 and 846 of the Code of Commerce (see 4.1 Ship Arrests), is subject to the general rules set forth by the Code of Civil Procedure regarding pre-judicial and precautionary measures. This being said, in Chilean practice it is unusual to petition an arrest in accordance with the general rules of the Code of Civil Procedure.
As regards security for lifting an arrest, the amount of security is usually established by the court based on the petition of the arresting party. The amount cannot exceed the value of the arrested vessel and can be reviewed subsequently through incidental proceedings. Regarding the form of security, there are no specific rules, and it will depend on the court’s resolution, but the security most usually requested and granted is a bank guarantee issued by order of the court. As soon as the security is provided, the court shall lift the vessel arrest without delay.
For a long time, protection and indemnity insurance (P&I) club letters of undertaking were accepted only if agreed by the arrest petitioner, mainly because of the fact that the Chilean courts were not accustomed to them. However, in a case of an arrest following a pollution incident, the court hearing the arrest accepted a letter of undertaking with no prior approval from the arrest petitioner.
In accordance with the Code of Commerce, the judicial sale of a vessel, whether voluntary or forced, must observe the rules and formalities set forth by the Code of Civil Procedure for the judicial sale of real estate. The procedure may take between a couple of months and one or two years depending on the debtor’s behaviour towards the proceedings. Court costs are usually minor but other costs might be generated, such as those relating to the administration of the attached property (incumbent on a depositary who has to render account for their administration before the pertinent court).
In Chile there is no scheme of insolvency laws analogous to Chapter 11 of the United States Bankruptcy Code.
Under Chilean law, the arresting party must attach antecedents that constitute presumption of the right being claimed. If the court considers that the supporting documents are not sufficient or the petitioner states they are not yet available to them, the court may require that counter security be provided for the potential damage that may be caused if, subsequently, it is found that the petition lacked basis.
In addition, when an arrest has been decreed a pre-judicial precautionary measure (ie, a measure to secure the outcome of a subsequent substantive action), the petitioner is obliged to file its complaint requesting that the decreed arrest remain in force within a period that, in principle, is ten days but that may be extended for up to a total of 30 days, provided there is a sound basis for doing so. The non-fulfilment of this obligation will result in cancellation of the arrest and liability for the damage that may have been caused, on the irrefutable presumption that the grounds for the arrest were fraudulent. In addition, if the arrest was wrongful, fraudulent or lacked basis, the defendant may claim damages in separate ordinary proceedings subject to the general rules set forth by the Code of Civil Procedure.
The Athens Convention on the Carriage of Passengers and their Luggage by Sea 1974 (the “Athens Convention”) is not applicable in Chile. However, passengers’ rights and the liability of the carrier are regulated by the Code of Commerce (Articles 1,044 to 1,078), which is based on the Athens Convention. In addition, if a travel agent is involved, the Chilean Consumer Protection Act may also apply.
As regards charterparties, Chilean law applies the principle of freedom of contract. Accordingly, the law and jurisdiction clauses stated in bills of lading should be recognise and enforced by Chilean courts.
As regards carriage of goods by sea, the provisions of the Chilean adoption of the Hamburg Rules are compulsorily applicable regardless of the nationality of the ship, carrier, actual carrier, shipper, consignee or any other interested person if:
Accordingly, and as opposed to charterparties, foreign law and jurisdiction clauses stated in bills of lading issued under a contract of carriage of goods by sea should not be recognised and enforced by Chilean courts. In this respect it is worth noting that paramount clauses have, on occasion, been held as unwritten by the Chilean Supreme Court where they would be contrary to public order rules of law.
Courts in Chile recognise and enforce law and arbitration clauses of charterparties incorporated into the relevant bill of lading. Nonetheless, a bill of lading issued in compliance with a charterparty is covered under the Chilean adoption of the Hamburg Rules if it governs the relation between the carrier and the holder of the bill of lading other than the charterer.
Chile is a party to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958 (the “New York Convention”). In this respect, foreign judgments and arbitral awards are enforced through the exequatur process. This is considered in the Code of Civil Procedure, under which judgments issued in a foreign country shall be given force in Chile by existing treaties. For a foreign judgment to be enforced, the procedures set out in Chilean law shall be followed unless they have been modified by existing treaties. If there are no treaties concerning the matter in question, Chile shall grant to the judgment the same force as granted to Chilean judgments by the jurisdiction in which the judgment was made. If the judgment comes from a jurisdiction that does not enforce Chilean judgments, it shall not be enforced in Chile. If none of the previous rules may be applied, foreign judgments shall be enforced in Chile provided that:
Procedure for Enforcement of a Foreign Judgment
A duly legalised copy of the judgment – officially translated into Spanish, if necessary – must be presented to the Chilean Supreme Court to begin the exequatur process. In the case of an arbitral award, its authenticity must be certified by attestation of a high court of the originating jurisdiction.
Notice of the enforcement request must be served on the party against whom it is sought. That party must respond within 15 days (which may be extended depending on where the party is domiciled). An opinion from an independent court official is also requested by the Supreme Court.
The Supreme Court considers the matter in a hearing at which the parties may make oral statements.
After enforcement is allowed, the judgment must be presented to the competent civil court to commence an executive proceeding (under which the defendant’s assets can be foreclosed, if applicable).
In respect of foreign arbitral awards, the Law on International Commercial Arbitration (Law No 19,971) – based on the UNCITRAL Model Law – was passed in 2004. Article 35 of that Law regulates the recognition and enforcement of foreign arbitral awards and Article 36 lists the defences that can be asserted against enforcement and regulates orders of stay. In addition, Article 9 of the Law makes it possible to request from a local court any of the interim measures set forth under Chilean procedural regulations, such as attachments or goods retention, to protect the outcome of a foreign arbitration award. This criterion has already been tested in the context of international arbitration proceedings relating to a shipping dispute.
Chilean procedural regulations are silent on this matter. However, when an arrest is decreed as a prejudicial precautionary measure (ie, a measure to secure the outcome of a subsequent substantive action), it would be possible to arrest to obtain security and then pursue proceedings on the merits elsewhere. Note that the procedural obligations established must be met, namely filing the petitioner’s complaint requesting that the decreed arrest remains in force for a period that, in principle, is ten days but may be extended for up to a total of 30 days provided there is sound basis to do so (see 4.12 Damages in the Event of Wrongful Arrest of a Vessel). However, this is an option that has to be further tested in Chilean courts.
As pointed out in 1.1 Domestic Laws Establishing the Authorities of the Maritime and Shipping Courts, Article 1203 of the Code of Commerce establishes the general principle that the resolution of all maritime disputes, including those relating to marine insurance, is subject to mandatory arbitration.
Although Chile has well-known arbitration centres, including the Santiago Arbitration and Mediation Centre (CAM), that provide maritime arbitrators, most cases are handled through ad hoc arbitration.
Under Chilean law, the defendant can oppose a specific defence based on lack of jurisdiction.
The Chilean Merchant Navy Law (Decree Law 3059/79) contains certain special tax regulations, subsidies, and tax cuts. Among others, owners that carry out cargo and passenger transport from abroad to Chile and vice versa, can recover VAT charged when purchasing goods or using services intended for their activity.
Generally, during the pandemic, crew changes were not affected by the temporary measures set by the Ministry of Interior and Public Affairs.
That being said, faced with the need to establish guidelines for the timely detection of suspected COVID-19 cases in ports, limit the virus’s spread and establish measures to be taken to identify suspected cases among passengers and crew transported by sea, the Chilean Sub-secretariat of Public Health developed the so-called Protocol for the Detection of Suspected Cases of COVID-19 in Ports, contained in the Ministry of Health Regulation 962 and published in the Official Gazette on 19 November 2020.
The protocol aims to define actions for vessels requesting entry into the country or carrying out cabotage, establish guidelines for the timely detection of COVID-19 in ports, and determine the action to be taken in the face of suspected COVID-19 cases detected at ports.
Under Chilean law, force majeure or fortuitous act is defined as “the unexpected that it is not possible to resist, such as a sinking, an earthquake, the taking of enemies, the acts of authority performed by a public official, etc” (Article 45 of the Chilean Civil Code).
Generally, in Chilean practice, to sustain force majeure as an exception to liability three cumulative conditions must be met: (i) irresistibility, (ii) unpredictability, and (iii) unimputability.
As regards force majeure defences based on the pandemic, they have yet to be tested by Chilean high courts.
The cap on the sulphur content of fuel oil used in Chilean domestic territorial waters is that established in the MARPOL Convention. The enforcement of these requirements is carried out by the local representative of the vessel’s flag state authority and the sulphur content is verified according to the bunker delivery note certificates for the bunker’s supply.
Generally, Chile has recognised several UN resolutions on trade sanctions. In this respect, Article 38 of Law 19,913, which created the so-called “Financial Analysis Unit” and modified several provisions related to money laundering (Law 19,913), states that all natural and legal persons indicated in Article 3 of Law 19,913 (ie, banks and financial institutions, factoring companies, leasing companies, securitisation companies, etc) are required to inform the Financial Analysis Unit of all acts, transactions or operations carried out or attempted by any of the natural or legal persons identified in the lists drawn up by the Committees established in the UN’s Security Council Resolutions 1267 of 1999, 1333 of 2000, 1373 of 2001, 1390 of 2002, 1718 of 2006, 1737 of 2006, 1747 of 2007, 1803 of 2008, 1929 of 2010, 1988 of 2011, 1989 of 2011, 2253 of 2015, 2356 of 2017 and 2371 of 2017 and subsequent resolutions or any other resolutions that add to or replace them, and that are contained in supreme decrees published in the Chilean Official Gazette.
In addition, the aforementioned Article 38 establishes a brief legal procedure whereby the Financial Analysis Unit must request, without prior notice to the affected party and for a specific period, that a Minister of the Court of Appeals of Santiago adopt one or more measures to avoid the use or exploitation of goods, values or money subject to the act, transaction or operation and ensure that sanctioned parties do not benefit from such goods or come to ultimately possess them.
The provision also states an appeal remedy for the review of the measures in favour of the affected party.
As regards other regulations enacted as part of US, UK or any other country’s law, Chilean law does not recognise them, but sound Chilean compliance practice considers them, particularly their extraterritorial effects.
Law 21,132 came into force on 31 January 2019 with the aim of modernising and strengthening the Chilean National Fishing Service (SERNAPESCA). Among other things, the law amended the General Fisheries and Aquaculture Law (Law 18,892 or the Fishing Law) and the Corporate Criminal Liability Law (Law 20,393) in connection with the criminal consequences of water spills.
Law 21,132 introduced new definitions of criminal offences in connection with marine biological resources, including the exploitation of banned natural resources or products extracted from the seabed and overfishing.
As regards water spills, Article 136 of the Fishing Law was amended to penalise not only malicious acts, but also negligence. The new wording of Article 136 of the Fishing Law reads as follows (first and second paragraphs):
Anyone who without authority or in contravention of its conditions or in breach of the applicable rules, brings or orders the placing of chemical, biological or physical polluting agents into the sea, rivers, lakes or any other body of water that causes damage to hydro-biological resources shall be punished with minor imprisonment from medium to maximum degree and sanctions of 100 to 10,000 Chilean UTM (approximately USD7,300–730,000).
If the above conduct is committed with recklessness or mere negligence, the penalty shall be minor imprisonment in its minimum degree and sanctions from 50 to 5,000 Chilean UTM (approximately USD3,650–365,000) without prejudice to the administrative penalties.
The Corporate Criminal Liability Law
The Corporate Criminal Liability Law (Law 20,393) regulates the criminal liability of companies and other legal persons. Generally, it punishes terrorism financing, bribery, money laundering and disloyal administration (also known as base crimes). The companies are penalised if the offences are committed by their employees or representatives to the benefit or in furtherance of the direct interest of the relevant company, provided that the commission of the crime is the consequence of the company’s breach of its direction and oversight duties.
Law 21,132 extended criminal liability for the above-mentioned offences under the Fishing Law to legal entities. Accordingly, the list of base crimes under Law 20,393 now comprises those relating to water spills and damage to marine biological resources.
Under Law 20,393, to be exempted from corporate criminal liability, companies must adopt a base crime prevention model comprising:
Law 21,132 has introduced important changes which must be followed carefully. In the case of spills that cause damage to hydro-biological resources, shipowners operating in Chile are now subject to greater contingencies – not only in terms of administrative penalties, but also in connection with criminal liability. Due to the penalisation of recklessness and mere negligence and the inclusion of the water spill offence on the list of offences that trigger corporate criminal liability, an increase of criminal proceedings against shipowners and/or masters and crew is likely. In this respect, shipowners should review their internal protocols and crime prevention models even though precisely how Chilean courts will consider such models has yet to be tested.