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General

Development

Describe the areas of energy development in the country.

The development of the fossil fuel industry in Chile is very limited. The country has a few oil and natural gas fields in the Magallanes region (southern Chile), operated by ENAP (a state-owned oil company). However, production from those fields provides for only a small portion of the national consumption. Regarding electricity, 57 per cent of all generation capacity is powered from fossil fuel, mainly oil and coal.

Chile does not have any nuclear energy generation. As to renewable energy resources, hydropower (including both reservoir and run-of-the-river generation) is the largest source, accounting for 32 per cent of total installed capacity. Wind farm generation, for its part, represents almost 5 per cent of the renewable energy generation capacity, solar photovoltaic 4.6 per cent and biomass 2.2 per cent.

Role of government

Describe the government’s role in the ownership and development of energy resources. Outline the current energy policy.

According to article 19, No. 24 of the Chilean Constitution, liquid and gaseous hydrocarbons are owned by the state and can only be exploited directly by the state, by state-owned companies or by administrative concessions or through production sharing contracts.

The energy policy developed by the Chilean government, through the Ministry of Energy, focuses mainly on public policies and the regulatory framework for the electricity sector. In June 2014, the government released its Energy Agenda, a comprehensive document seeking to achieve the following goals:

  • to cut down the marginal cost of electricity by 30 per cent before March 2018;
  • to reduce by 20 per cent during the next decade the auction prices for residential, businesses and small industries power supply, as compared with the prices of the last public auction supply;
  • to boost investment and development of non-conventional renewable energy sources to comply with the 20 per cent target of renewable generation by 2025;
  • to encourage and develop the efficient use of energy to reduce the foreseen demand for 2025 by 20 per cent;
  • to strengthen the role of the national oil company (ENAP) in the country’s energy challenges by providing the company with a solid corporate government; and
  • to develop, with the participation of all social sectors, an energy development strategy for 2035 and 2050, to achieve a sustainable development of the energy industry.

Commercial/civil law – substantive

Rules and industry standards

Describe any industry-standard form contracts used in the energy sector in your jurisdiction.

Regarding the electricity sector in Chile, contracts are governed by different rules according to the specific segment of the market in which companies operate. The regulatory framework offers three markets in which energy companies are allowed to participate.

The spot market

Generating companies can trade electricity and capacity with other generating companies through the system operator, which operates the power grid based on the marginal cost of producing electricity. The electricity wholesale market is formed by generation companies that trade energy and capacity between them, based on supply contracts they have entered into. If a company’s electricity generation exceeds the volume of energy they have committed in contracts, those companies, called ‘surplus companies’, can sell to other companies, called ‘deficitaries companies’, whose electricity generation is below what they have contracted with their customers. In the spot market, transactions between generators are mandatory by law based on the marginal cost of electricity determined by the system operator.

The market of contracts

Generators can enter into an agreement with consumers who are not subject to price-regulation by the authority, through private contracts freely agreed between the parties. Consumers with a connected capacity above 5,000kW (typically large industrial facilities) are considered by the law as ‘non-price-regulated’ consumers, therefore they can freely negotiate prices and conditions for the supply of electricity with generators or distribution companies through a power purchase agreement (PPA). The law also provides the same option for price-regulated consumers (consumers with connected capacity below 5,000kW) located within the concession area of a distribution company, whose connected capacity is between 500kW and 5,000kW, to choose to become non-price-regulated customers.

Public auctions

Finally, public auctions for supplying electricity to price-regulated consumers. For consumers with connected capacity equal to or less than 5,000kW (typically residential consumers and small businesses), the law treats them as ‘price-regulated’ consumers. In this case, for those consumers electricity is provided by distribution companies whose electricity supply is contracted with generation companies through public auctions in which the distributor auctions off different blocks of electricity to be supplied by generators, usually for periods of 20 years. In this case the National Energy Commission, the regulatory body in charge of conducting the auction process, determines the terms and conditions of the respective contracts.

Another specific form of contract used in the liquefied natural gas (LNG) industry in Chile are ‘take-or-pay’ contracts, consisting of the obligation assumed by the buyer to purchase a minimum volume of natural gas during a particular period and pay the agreed price whether it takes that volume or not. The purpose of the deal is to guarantee the seller with a revenue ensuring an adequate return on the significant investment and risks taken.

What rules govern contractual interpretation in (non-consumer) contracts in general? Do these rules apply to energy contracts?

Our civil law system embraces the ‘subjective method of contractual interpretation’ based on the principle of subjective good faith, by which, the intention or real will of the parties has to be preferred over the literal meaning of the words used to express it or what has been declared. The key principle is given in article 1560 of the Chilean Civil Code, which reads, ‘When the intention of the contracting parties is clearly known, this intention shall prevail over the literal expressions or words used to convey it’. If, when executing the contract it is not possible to clearly establish this intention, either because the parties have not foreseen a particular situation (silence) or because the written expressions used are unclear, the interpretation must be done using ‘objective good faith’ parameters, looking for the parties’ intentions in their conduct, the average man standard and the law.

Describe any commonly recognised industry standards for establishing liability.

In the Chilean civil law system, fault is the main element for the existence of civil liability whether for contracts or torts.

In contracts, our law recognises three degrees of fault or negligence a party can be liable for: slight fault, ordinary fault and serious fault (a concept akin to gross negligence). The legal degree applicable to a particular breach will depend on the benefit the non-compliant party derives from the contract (an application of the Roman principle utilitas contrahentium). Nevertheless, the principle has proven to be difficult to apply in practice and our courts have instead adopted the principle of average diligence. For fault to be proven, there is no need to look into the non-compliant party’s state of mind; it is enough to contrast the actual conduct of the party at fault with the expected conduct of a ‘reasonable and prudent man’ (objective test), unless the parties themselves or the law have provided a different standard. Thus, in Chile, the establishment of contractual fault is based on the abstract method.

Regarding proof of fault, our law presumes fault if breach of contract has been proven; the burden of proof is on the non-compliant party to rebut that presumption.

Performance mitigation

Are concepts of force majeure, commercial impracticability or frustration, or other concepts that would excuse performance during periods of commodity price or supply volatility, recognised in your jurisdiction?

The only true legal excuse - unless parties have provided otherwise - for fulfilment of a contractual obligation under Chilean law is the principle of force majeure, understood as an unforeseeable event impossible to resist or avoid. In general, damage caused by an unforeseeable event does free the party from its contractual obligations. For a fact to constitute force majeure and free the obliged party from all liability it is necessary, first of all, for the event to be totally unforeseeable and unexpected; secondly, for the obliged party to have used all means at his or her disposal to avoid the unforeseeable event and to diminish its consequences (ie, to have used all due diligence (this is why there can be no force majeure if the party was in arrears)); thirdly, it is necessary that the event takes place under circumstances absolutely independent from the debtor’s will.

Even if all the above premises are met, it is always necessary for the party asserting the force majeure to have acted with all due diligence, without fault, because in Chile liability (save in cases of obligations of result) is subjective, which means even a force majeure event will not free the party from liability if there has been negligence. So it is not enough for a causal link to a force majeure event to exist, the lack of fault or negligence is also required to exempt from liability.

In the cases in point, like an excuse of performance during periods of commodity price or supply volatility, these events will not constitute a true force majeure under Chilean law as both events can be regarded as expected occurrences in the industry and part of the underlying risks of trade, and even if they were to be construed as true force majeure events, due diligence must be established before the principle can be invoked successfully to avoid liability.

Nuisance

What are the rules on claims of nuisance to obstruct energy development? May operators be subject to nuisance and negligence claims from third parties?

Within the Chilean civil law tradition, nuisance is not recognised as an action to obstruct development of projects or other activities. Public agencies may apply sanctions indirectly if the activity that is causing the nuisance constitutes a violation to specific regulations or permits.

Notwithstanding the above, there is an institution called a ‘preliminary injunction for new construction’ that may be used by third parties as a nuisance claim. This institution was created to protect the possessor of certain land or easement from third parties that may affect their domain or possession by starting a construction within their property or easement. Moreover, if the new construction takes place over a public land, any individual from the local community may file the injunction. The purpose of the injunction is to temporarily stop the construction and to compensate the plaintiff for any damages caused. In order to prevent the misuse of the injunction by land owners or mining rights owners in such land, the Electric Services Act has been recently amended by providing that in cases where the plaintiff obtains the temporary delay of the construction, the court may suspend such decision subject to an escrow deposit performed by the energy project developer (who may be the owner of an electric concession or a non-conventional renewable energy developer). This escrow deposit must cover the eventual expenses of the eventual demolition of the works already made on the land, or the amount of damages that the court may impose to the developer in the final decision of the injunction.

Liability and limitations

How may parties limit remedies by agreement?

As mentioned in question 5, it is usual practice for the parties to anticipate the consequences of a breach of contract by agreeing to the payment of a fixed or determinable amount of money in case of actual breach, regardless of its causes. These clauses are, in fact, an anticipated liquidation of damages, which will avoid the need to prove them (the damages) as a requirement to obtain compensation for breach of contract.

Likewise, parties can choose a lesser standard of liability than the one the law affords them. Such clauses are perfectly legal as our civil law system recognises the principle of contractual freedom where the parties can choose the terms and conditions, with the only limitation being respect for the law applicable to the particular contract.

Is strict liability applicable for damage resulting from any activities in the energy sector?

Strict liability for damages in the energy sector is, of course, the exception and there are only two instances in which there can be liability regardless of fault. Firstly, in the nuclear energy sector and secondly when dealing with hydrocarbon pollution. We will briefly explain both situations.

Strict civil liability for nuclear accidents

The national regime is established in Law No. 18.302 published in 1984 and by the 1963 Vienna Convention on Civil Liability for Nuclear Damage, ratified by Chile in 1990. Both legal bodies provide that operators of nuclear power plants are liable for any damage caused by them, regardless of fault and even in cases of force majeure. This norm simplifies and speeds up any eventual civil liability claim for damages, which is a significant benefit to potential victims, who will have certainty about whom to claim against. Also in order to benefit any potential victims, the law defines the expression ‘nuclear accident’ as ‘any event or succession of events that, having the same origin or cause, have caused nuclear damage’.

The operator’s liability is limited in time and amount. Although the Vienna convention allows each nation to determine for the pecuniary liability limit (although not below US$5 million), Chilean law has fixed this amount to not less than US$75 million. The time bar to demand for damages is 10 years following the nuclear accident.

Strict civil liability for hydrocarbon pollution damage to the sea

The national regime is established in Law Decree No. 2,222 published in 1978 and by the 1969 International Convention on Civil Liability for Oil Pollution Damage, ratified by Chile in 1977. Both protect against pollution caused to seawater subject to Chilean jurisdiction.

The Civil Liability Convention was adopted to ensure that adequate compensation is available to persons who suffer oil pollution damage resulting from maritime casualties involving oil-carrying ships. The Convention places the liability for such damage on the owner of the ship from which the polluting oil escaped or was discharged and as such, it is restricted to pollution from hydrocarbons. Subject to a number of specific exceptions, this liability is strict.

Law Decree No. 2,222 makes clear the same strict civil liability regime regarding pollution from any toxic substances or residues, not only hydrocarbons, occurring within the territorial waters, whether this pollution comes from ships or naval artifacts and regardless of the activity that was being performed at the time of the incident.

Commercial/civil law – procedural

Enforcement

How do courts in your jurisdiction resolve competing clauses in multiple contracts relating to a single transaction, lease, licence or concession, with respect to choice of forum, choice of law or mode of dispute resolution?

The issue of conflict of laws or choice of forum can only arise in Chile if there is an international element surrounding the contract. In fact, although there is no constitutional prohibition for the contractual parties to elect the forum (exceptionally, the choice of a foreign forum is forbidden on matters relating to the extinction or forfeiture of mining property), article 5 of the Courts Organisation Code provides that any judicial matter arising within the Chilean territory shall be referred to the ordinary Chilean courts. It contains no provision regarding the election of a foreign forum when there is an international aspect involved.

Regarding international contracts agreed by public entities (the Chilean state or its organs, institutions or companies), Decree Law No. 2,349 recognises the validity of contract clauses extending jurisdiction to foreign courts if these contracts have been agreed with international institutions, organisations or foreign companies whose principal business seat is abroad.

Likewise, for private contracts with an international element the general rule regarding validity of contractual clauses extending jurisdiction is in article 318 of the Private International Law Code, ratified by Chile in 1934, which establishes that the competent court for all civil and commercial matters arising out of an international contract is that one the parties have expressly chosen, provided always that at least one of them is a national of the court’s country or has its domicile there, unless there is a national provision against it. Thus, our legal system recognises the parties’ autonomy to decide on the forum.

Are stepped and split dispute clauses common? Are they enforceable under the law of your jurisdiction?

In Chile, tiered or stepped escalation clauses are not uncommon in commercial contracts in general and energy contracts in particular, being just an expression of the legal principle in contract law of party autonomy or free will. As a general rule, parties will include in their contracts a more or less formal negotiation stage phase as a necessary step before recourse to any formal dispute resolution. Nevertheless, the enforceability of such clauses is largely left to the parties’ good faith, as there is not a legal mechanism to compel them to follow the process if one of the parties chooses to immediately trigger the dispute resolution mechanism of last resort, whether arbitration or ordinary courts, because any such contractual breach will in fact create a dispute that will in turn need to be resolved.

As for split dispute clauses, these are rather less common in Chile, although not unseen, particularly as ‘unilateral hybrid jurisdiction clauses’ granting the right to choose jurisdiction to one of the parties while the other contracting party only retains the ability to bring an action before a single jurisdiction.

How is expert evidence used in your courts? What are the rules on engagement and use of experts?

Expert evidence may be mandatory by law in some cases; it can be freely requested by the parties in others; or it can also be ordered by the court when it believes it to be convenient.

Courts can order for expert evidence to be provided at any stage during proceedings or even after proceedings have finished and before a decision has been made. The parties, on the contrary, must request any expert evidence they wish to provide at the appropriate opportunity prescribed by the law (evidence stage of trial or at a preliminary stage). Usually, expert evidence will be admitted by court when the correct and accurate appreciation of the facts at stake depends on knowledge of a particular art or science, which can only be provided to the court by an expert or a professional.

Chilean courts shall weigh expert evidence according to the rules of the ‘reasoned judgment’ standard, understood as a set of common sense and logic rules the judge must use to assess and ponder the evidence. It is a non-legal criterion that the judge shall use from the perspective of the average person with a prudent and objective attitude.

What interim and emergency relief may a court in your jurisdiction grant for energy disputes?

The Chilean Civil Procedure Code enables parties to apply for interim reliefs in any stage of trial, or even before the filing of the complaint. To grant interim reliefs, two requisites are always needed: the demonstrated plausibility of the relief sought and the existence of the emergency.

What is the enforcement process for foreign judgments and foreign arbitral awards in energy disputes in your jurisdiction?

For a foreign judgment or arbitral award to be enforceable in Chile, it is necessary to gain prior authorisation from the Chilean Supreme Court. This process is called ‘exequatur’.

The general rule regarding exequatur is reciprocity, meaning that in the absence of treaties governing the matter, foreign judicial decisions shall have in Chile the same enforceability afforded to Chilean judicial decisions in the corresponding jurisdictions.

In all other cases, foreign judicial decisions will have in Chile the same enforceability as if they would have been pronounced in Chile as long as the following conditions are met:

  • that they do not contain anything against Chilean laws, although the procedural rules to which the case would have had to comply under Chilean law will not be taken into account;
  • that they are not contrary to national jurisdiction;
  • that the party against whom the judicial decision is being invoked has been properly notified of the proceedings. Even so, evidence that such party was unable to defend himself or herself will be allowed; and
  • for such judicial decisions to be final according to the laws of the issuing country.

Regarding arbitral awards in particular, article 246 of the Chilean Procedural Code provides that the abovementioned rules are applicable to final judicial decisions issued by arbitral tribunals as long as the authenticity and efficacy of the award has been vetted or approved by a superior ordinary court of the country where the award was granted.

Alternative dispute resolution

Are there any arbitration institutions that specifically administer energy disputes in your jurisdiction?

Since 2004, Chile has had a specialised court called Panel of Experts, devoted to resolving disputes in the energy sector. The panel exercises its jurisdictions over three areas:

  • disputes arisen between the CDEC (the operator of electric systems) and the energy companies subject to the coordination of the operator;
  • matters in which the law requires the Panel of Experts to intervene, such as disputes resulting from the approval of the expansion plan for transmission infrastructure (high voltage power lines and substations); and
  • any conflict that energy companies decide to submit before the Panel of Experts regarding the application and interpretation of the electric law and its regulations.

On that basis, in the first two fields, the Panel of Experts acts as an ordinary court established by law for resolving energy disputes, whereas in the latter case, the Panel of Experts plays the role of an arbitration court.

Is there any general preference for litigation over arbitration or vice versa in the energy sector in your jurisdiction?

As we previously explained, energy disputes in the Chilean energy sector are resolved by the Panel of Experts, which plays the role of an ordinary court or arbitration entity, depending on the type of conflict.

Are statements made in settlement discussions (including mediation) confidential, discoverable or without prejudice?

Statements made in settlement discussions, as well as the settlements themselves, reached outside a courthouse or arbitration procedure, are treated as a regular contract between the parties. Therefore, they are admissible as evidence in court, notwithstanding the breach of the contract if a confidentiality clause was violated.

Moreover, if the statements are made within trial or within an arbitration, or if the settlement agreements are filed in front of a courthouse or an arbitrator, they are understood to be public.

Privacy and privilege

Are there any data protection, trade secret or other privacy issues for the purposes of e-disclosure/e-discovery in a proceeding?

Within a civil trial, parties are not entitled to request e-disclosure or e-discovery. During a Civil Procedure, parties may request the judge to order the exhibition of certain written or signed (including advance electronic signature) instruments in possession of the other party or of a third party. The approval of the exhibition request is subject to the decision of the court based on their direct relation and relevance for the resolution of the controversy and the judgment by the court that they are not considered private or secret.

Moreover, during a civil trial, parties may also request the exhibition of accounting books in possession of the other party. For this purpose, courts may grant the exhibition provided it is considered relevant for the preparation of the lawsuit or its direct relation and relevance with the resolution of the controversy, limited to the specific sections of the books that are considered relevant by the court.

What are the rules in your jurisdiction regarding attorney-client privilege and work product privileges?

There are legal and ethical obligations for lawyers regarding attorney-client privilege. According to our Civil Procedure Code, lawyers are exempt from the obligation to testify during a civil trial. This exemption covers only confidential facts that were communicated to the lawyer under consideration of his or her profession. There is no special protection under Chilean law to work product privileges.

The ethical obligation of confidentiality for attorneys is broader, and covers all the information that was provided to the lawyer by the client. It also includes a prohibition of disclosure to any third party and a duty to protect the information provided by his or her client, including the information revealed to her or his collaborators. Notwithstanding this, ethical obligations are only applicable to the members of the Chilean Bar Association and affiliation is not mandatory.

Jurisdiction

Must some energy disputes, as a matter of jurisdiction, first be heard before an administrative agency?

The different sanctions that the Superintendency of Electricity and Fuel (SEC) may issue to any of the companies under its supervision may be appealed before the SEC. Notwithstanding, this administrative appeal is not mandatory, giving the sanctioned party the right to appeal directly before the corresponding Court of Appeals. The administrative appeal, however, interrupts the statute of limitation of the jurisdictional appeal and its decision is also subject to appeal.

Regulatory

Relevant agencies

Identify the principal agencies that regulate the energy sector and briefly describe their general jurisdiction.

There are four institutions responsible for governing the energy sector in Chile.

National Energy Commission

In 1978, the National Energy Commission was established to perform four main functions:

  • to carry out technical analyses of prices and tariffs on energy-related goods and services, according to formulas mandated by law;
  • to set technical standards for the operation of electrical facilities and the power grid;
  • to monitor and prepare forecasts regarding the current and future functioning of the energy sector, making policy recommendations based on those analyses; and
  • to be in charge of advising the government on all matters relating to the energy sector.

Economic Dispatch Load Centres

The Economic Dispatch Load Centres (CDEC) are entities responsible for coordinating and operating the electric systems with more than 200MW of installed capacity. Chile’s power grid is divided into four main electric systems with a CDEC for the first two. The CDEC’s main role is to bring together power generation to consumers, determining which power plants must start operating at a particular moment based on their marginal costs, thus instantaneously matching generation with demand.

Electricity and Fuels Superintendence

The Electricity and Fuels Superintendence (known as the SEC) is the main entity responsible for ensuring companies’ compliance with electricity law and technical regulations regarding the generation, production, storage and distribution of all fuels and electricity. Law 19,613 strengthened the SEC’s supervisory authority by allowing it to impose companies with fines and penalties for non-compliance with legal and technical obligations. It can also suspend licences temporarily or permanently.

Ministry of Energy

Finally, the Ministry of Energy is the primary public institution in the energy sector, working directly with the President of the Republic. Its main objective is to draft and implement plans, policies and regulations for the functioning and development of the energy sector, coordinating its actions with all other energy institutions, ensuring the observance of these policies and advising the government on all issues relating to the energy sector.

Access to infrastructure

Do new entrants to the market have rights to access infrastructure? If so, may the regulator intervene to facilitate access?

Chile has two LNG terminals, LNG Quinteros and LNG Mejillones, which import natural gas from international markets in order to supply mining operations in northern Chile and residential and industrial costumers throughout the country. Natural gas infrastructure is governed by an open-access regime, which means that gas transport companies must provide access to third parties to pipelines based on equal financial and technical terms.

In the power sector, transmission infrastructure is also subject to an open-access regime based on non-discriminatory technical and financial terms upon payment of transmission fees.

Judicial review

What is the mechanism for judicial review of decisions relating to the sector taken by administrative agencies and other public bodies? Are non-judicial procedures to challenge the decisions of the energy regulator available?

Decisions taken by administrative agencies are subject to two types of review.

Administrative review

When an administrative agency issues an order, the affected party can challenge such decision before the same agency through an administrative appeal.

Judicial review

If the administrative challenge is dismissed, the affected party can request judicial review before the Court of Appeals in order to overturn the order issued by the administrative agency.

Fracking

What is the legal and regulatory position on hydraulic fracturing in your jurisdiction?

As explained in question 1, the development of Chile’s oil and gas industry is very limited, therefore the country does not have any regulatory instrument regarding hydraulic fracturing.

Other regulatory issues

Describe any statutory or regulatory protection for indigenous groups.

International Labour Organization Convention No. 169 (ILO 169) has been in effect in Chile since 15 September 2009, and grants the right to free, prior and informed consent regarding actions taken by the Chilean government that affect rights.

In 2013 the government decided to address the indigenous consultation during the drafting of the new regulation of the environmental impact assessment system. The idea behind the approach taken by the government was to cover the indigenous consultation within the process of citizen participation of the environmental impact assessment system to assure effective participation from indigenous groups. In this way, the new regulation was enacted on 12 August 2013, requiring the Environmental Assessment Agency to adopt specific measures to consult the indigenous communities affected by the execution of a project subject to environmental approval. However, the regulation stated that if no agreement is reached between the holder of the project and the indigenous communities, or no consent is obtained from them, the consultation process would not be voided.

In 2014, Decree No. 66 established a second regulation in order to address the indigenous consultation process in the implementation of administrative or legislative measures by the Chilean government that undermine indigenous rights. In this case, the regulation established that the indigenous consultation process was a means to guarantee the right to free, prior and informed consent regarding actions taken by the Chilean government, to enable public participation from indigenous groups. Nonetheless, Decree No. 66 also declared that the opinions expressed by indigenous communities through the consultation process were not legally binding for governmental agencies.

Describe any legal or regulatory barriers to entry for foreign companies looking to participate in energy development in your jurisdiction.

There are no legal barriers for foreign companies in order to enter the Chilean energy market. The only restrictions are those related to the specific nature of the regulatory regime of the generation, transmission and distribution segments of the energy industry. In this regard, the generation sector is a competitive market with no legal barriers to the entry of new actors. The transmission sector is regulated as a ‘natural monopoly’ and the construction and development of new infrastructure is based on public auctions where there is no restriction on foreign companies participating. Finally, the distribution segment is also recognised by the legislation as a ‘natural monopoly’, where distribution companies must obtain an electric concession from the Ministry of Energy to supply electricity in an exclusive geographic area.

What criminal, health and safety, and environmental liability do companies in the energy sector most commonly face, and what are the associated penalties?

There are no specific criminal offences set for the energy industry in Chilean legislation. Moreover, environmental crimes are not specifically regulated, which is a deficiency of our environmental regulation according to an OECD report issued in 2016.

Regarding health and safety liabilities, companies under the control of SEC may face different penalties depending on the severity of the violation of the law and on the severity of the damages caused. The determination of the penalties ranges from written reprehensions to the termination of the concession or closure of the plant. For reparation purposes, there are no specific provisions for damage caused to third parties during operations.

Moreover, there are no specific environmental liabilities set for energy companies. Therefore, energy companies may face the generally applicable sanctions for environmental damages. The system is similar to the previously described for the SEC, where the Environmental Superintendency may apply a sanction based on the severity of the violation of the environmental regulation. Sanctions go from fines to the revocation of environmental permits. Also, public action is granted for the recovery of the environment that suffered the damages and individuals may sue for the compensation of any damages directly suffered.

Other

Sovereign boundary disputes

Describe any actual or anticipated sovereign boundary disputes involving your jurisdiction that could affect the energy sector.

Currently, Chile and Bolivia are facing a boundary dispute before the Hague tribunal. The conflict hinges over the right of Bolivia to obtain sovereign access to the Pacific Ocean. However, there is no specification to the territory that may be affected by the decision. In light of the above, it is very hard to estimate how a decision in favour of Bolivia may affect the energy sector in Chile.

Energy treaties

Is your jurisdiction party to the Energy Charter Treaty or any other energy treaty?

On 20 May 2015, Chile signed the International Energy Charter as an Observer of the treaty. Since 1991, Chile as also been part of a bilateral agreement with Argentina for cross-border gas trade.

Investment protection

Describe any available measures for protecting investors in the energy industry in your jurisdiction.

Regarding domestic investors, there are no specific regulations for the energy sector.

For foreign investors in any industry, in 1991 Chile ratified the Washington Convention of 1965, establishing the International Center for Settlement of Investment Disputes (ICSID), which is an international arbitration institution for resolving disputes that may arise between states and foreign investors. As of 2016, Chile has signed 54 bilateral investment treaties, of which 37 are in force. Most treaties provide an alternative dispute resolution mechanism whereby investors have the right of recourse to the ICSID, rather than suing the host state in its own courts.

In 2016, Congress enacted Law No. 20,848, which established a new foreign investment regime that included the creation of a new national investment promotion agency, called Promotion Agency for Foreign Investment, which provides assistance to overseas companies in the establishment, development and ongoing operation of their businesses in Chile and also promotes engagement of foreign companies in the Chilean regulatory environment.

Cybersecurity

Describe any legal standards or best practices regarding cybersecurity relevant to the energy industry in your jurisdiction, including those related to the applicable standard of care.

There are no currently relevant legal standards or best practices regarding cybersecurity relevant to the energy industry in Chile.

Update and trends

Update and trends

List any major developments (case law, statute or regulation) that are anticipated to affect the energy sector in your jurisdiction in the next 12 months, including any developments related to the taxation of energy projects. What is the anticipated impact of climate change regulations, treaties and public opinion on energy disputes?

No updates at this time.