INTERNATIONAL BUSINESS: CHILE

Chile is a long country of approximately 756.000 km2 located in the extreme southwest of Latin America with 15 milions of population. Most of the population is concretated in urban areas, especially in Santiago de Chile.

According to official data, Chile is the second highest GDP per capita in Latin America.

The summer time corresponds to January to February, offices and government administration take holidays mainly in February.

INFLUENCE USA IN CHILEAN LAW

Chilean legislation has been based on the influence of Continental Law, also calle civil law as opposed to common law.

In many business transactions, lawyers are adopting an Anglo-Saxon approach to resolve legal problems and to carry out transactions.

It is very difficult to predict what will be the position of Chilean court of justice toward this Americanization not only of Chile’s main business legal framework but also of legal practice. Chilean judges might not be well informed and prepared to construe contracts or transactions that have “imported” clauses and provisions from other jurisdictions that neither taught at local law schools nor covered by previous decisions of locals courts.

DIFFERENCES IN INTERORETATION OF CONTRACTS

It is also important to bear in mind that inclusion of common law terms and clauses in local contracts does not mean that those terms and clauses will be interpreted as expected in common law jurisdiction.

EXECUTION OF CONTRACTS

In Chile, execution of contracts tends to be very formal and legalistic. Agreements by e-mail or signature of contracts by fax  could be easily challenged before Chilean courts, because the value is weak.

It is recommended that foreign companies that will be entering into a contract that is governed by Chilean law and subject to Chilean jurisdiction should draft their contract in Spanish, in the form of a public deed, because under this formality the document will be authorized by a notary public.

THE CHILEAN BUSINESS COMMUNITY

Santiago de Chile is the center of Business, politics, academia and cultural events. Chile is extremely centralized, and Santigo is where all important decisions are made.

Santiago as a business center is relatively small, and it s not difficult to get to know most of the people. Chilean executives, bankers and lawyers know each other due to the rather small size of this business community.

JUDICIAL LITIGATIONS

Negotiations and transactions are commonly carried out smoothly a friendly environment. Chileans tend not to enter into judicial proceedings against other Chileans as a consequence of a breach or default of an international transaction executed in Chile.

There has been a recent trend toward local companies and businesspeople suing foreigners, and viceversa, and foreign investors bringing judicial proceedings against other foreign investors located in Chile. But is very unusual for a big Chilean company to sue another big Chilean company.

FOREIGN EXCHANGE RULES

Foreign currency can be brought into Chile under two legal regimes, as follows:

• Foreign Investment Statute. The foreign investor files a foreign investments application with the Foreign Investments Committee. Members of this Committee are of cabinet level and also include the chairman of the Chilean Central Bank.

The committee has discretion to approve or reject applications. If the application is approved, the foreign investor enters into a foreign investments contract with the state of Chile as mentioned above.

• Chapter XIV of the Compendium of Foreign Exchange Regulations of the Chilean Central Bank. This is a special regime applicable only to foreign currency (from 10.000 US) to be entered into Chile, whether as a foreign loan or as a capital contribution. Foreign currency must be brought through a commercial bank operating in Chile, unless the amount is less than 10.000 US.

Loans must be recorded at the Chilean Central Bank prior to the disbursement and arrival into Chile. Capital contributions must also be approved by the Chilean Central Bank.