Chilean Court Annuls First International Arbitration Award Under Modern Statute
Cross-border deal teams using common-law R&W drafting in civil-law jurisdictions must reassess remedy framing after Chile's first-ever LACI annulment.
The Santiago Court of Appeals annulled a USD 217 million award in Food Investment SpA v. Asesorías e Inversiones Benjamín, marking the first set-aside under Chile's 2004 international arbitration statute (Law 19,971). The tribunal granted a price-reduction remedy drawn from the Chilean Civil Code's hidden-defects provisions, even though buyers had only requested termination or damages. The court held this was extra petita under Article 34(2)(a)(iii), which mirrors the UNCITRAL Model Law. The decision does not signal hostility to arbitration—Chile's courts had rejected all prior annulment petitions since 2007—but it does enforce strict adherence to the scope of submission. Practitioners should ensure SPA dispute-resolution clauses expressly enumerate available remedies, including price reduction, when drafting for civil-law jurisdictions.