Commercial Arbitration in Chile
When to use it and how it works in business disputes
Commercial Arbitration in Chile: When to Use It and How It Works in Business Disputes
When a company faces a dispute with a supplier, client, or partner, the first thing that comes to mind is a long and expensive lawsuit before the ordinary courts. However, there is an alternative that in many cases is faster, more specialized, and more private: commercial arbitration.
This guide explains what arbitration is in Chile, when it makes sense to use it, and what role specialized legal representation plays in the process.
📌 Direct answer: Commercial arbitration is a private dispute resolution mechanism for business conflicts that can be faster, more specialized, and more confidential than the ordinary justice system. It is activated by an arbitration clause in the contract or by a subsequent agreement between the parties. |
1. What Is Commercial Arbitration?
Arbitration is a dispute resolution mechanism in which the parties submit their disagreement to one or more arbitrators —private individuals with specialized expertise— instead of going to the ordinary courts. The arbitrator’s decision (called an award or arbitral ruling) is binding and enforceable just like a court judgment.
If you have a shareholder dispute or a breach of contract, arbitration may be the most efficient way to resolve it. It is also relevant when drafting contracts for your company: including a well-designed arbitration clause can save you years of litigation.
2. How to Access Arbitration
There are two ways to access arbitration:
Arbitration clause in the contract
The most common route. The parties include a clause in their contract stating that any dispute arising from the agreement will be resolved through arbitration. If a conflict arises, either party can activate the process. This clause is especially important in business-to-business contracts and in shareholder agreements.
Post-dispute arbitration agreement
Even without a prior clause, the parties can agree to submit their dispute to arbitration once the conflict already exists. This requires the consent of both parties.
3. Types of Arbitrators in Chile
Chilean law recognizes three types of arbitrators:
- Arbitrator of law (árbitro de derecho): resolves disputes in accordance with applicable legal rules, just like an ordinary judge. Rulings must meet the same formal standards as a court judgment.
- Equity arbitrator (árbitro arbitrador or amigable componedor): resolves disputes based on fairness and good judgment, without being bound by strict legal rules. More flexible, but less predictable.
- Mixed arbitrator (árbitro mixto): conducts proceedings freely but rules in accordance with law.
4. When Does Commercial Arbitration Make Sense?
Arbitration is particularly well-suited when:
- The dispute involves significant amounts where the speed of the process matters.
- A technically expert arbitrator is needed (technology contracts, intellectual property, construction).
- The parties value confidentiality: unlike ordinary court proceedings, arbitration is not public.
- The contract already includes an arbitration clause and the rules of an arbitration center.
- The parties are in different countries and want to avoid the uncertainty of national courts.
In contexts involving unfair competition or breach of distribution contracts, arbitration can also be an effective tool for obtaining a fast and specialized resolution.
5. Duration, Costs, and Arbitration Centers in Chile
A well-designed arbitration process can resolve a dispute in 6 to 18 months, compared to the 3 to 5 years a civil lawsuit before ordinary courts can take. However, it has its own costs: arbitrator fees (or arbitration center fees), plus each party’s attorney fees.
The cost-benefit balance depends on the case. In high-value disputes, the time savings typically far outweigh the additional cost of arbitration.
Commercial disputes in Chile can be submitted to institutions such as the Santiago Arbitration and Mediation Center (CAM Santiago), or handled through ad hoc arbitration with an arbitrator chosen by the parties.
For a comprehensive view of the legal protection of your company, including the corporate structure that facilitates dispute resolution, see our full guide.
6. Frequently Asked Questions
Is a lawyer required in an arbitration?
It is not always legally required, but it is highly recommended. Drafting the arbitral claim, preparing the defense strategy, selecting and presenting evidence, and pleading before the arbitrator all require specific technical skills that make a significant difference in the outcome.
Can an arbitral award be appealed?
It depends on the type of arbitrator. Rulings by an arbitrator of law may be appealed to the Court of Appeals, unless the parties have expressly waived that right. Rulings by an equity arbitrator, on the other hand, are generally not subject to appeal except for serious procedural defects.
Can I agree to arbitration in a contract with an individual (not a company)?
Yes. Arbitration is not exclusive to business-to-business relationships. It can be agreed upon in any civil or commercial contract, except for matters that the law declares non-arbitrable (such as certain family law or labor matters).
Conclusion
Commercial arbitration is a powerful tool for resolving business disputes with greater speed, expertise, and privacy than the ordinary justice system. The key is to draft the arbitration clause well from the outset and to have adequate legal representation when the process is activated.
If you have an active commercial dispute or want to review the dispute resolution clauses in your contracts, contact us. You may also want to review how to structure your shareholder agreement to prevent disputes before they arise.
Do You Have an Active Commercial Dispute?
At von Marttens Torres we analyze your case and recommend the most appropriate protection strategy.
Contact us at vonmarttens.cl
AI usage disclosure: This article was written by members of our team; however, AI tools were used to improve readability and structure the content for search engines.
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