The Merchant Navy Law, which includes a cabotage reservation system, implies that only Chilean vessels are permitted to provide maritime or fluvial transport services (of cargo or passengers) within Chile or its exclusive economic zone. However, Law 21,138 recently came into force, allowing passenger cabotage on foreign cruise vessels provided that certain conditions are met.
Law 21,132 recently came into force and 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. In the case of spills that cause damage to hydro-biological resources, shipowners operating in Chile are now subject to greater contingency – not only in terms of administrative penalties, but also in connection with criminal liability.
The owners of a Chilean tugboat constituted a limitation fund to respond to damages suffered by different parties in connection with the sinking of a towed vessel following a salvage and towage operation. The plaintiffs opposed the fund's constitution, arguing that 'personal acts' committed by the tug's owners exempted them from the right to limit liability. The Supreme Court recently rejected the opposition; its decision should provide future certainty regarding the interpretation and scope of shipowners' personal acts.
Law 21,066 recently came into force and amended the Navigation Law in connection with the extraction of sunk or stranded vessels and harmful materials contained therein. The changes strengthen marine environment preservation and navigation safety, and the new faculties granted to the Maritime Authority in respect of ships or craft whose condition poses a risk or danger represent a positive change.
A limitation fund was recently constituted in the context of a salvage and towage operation. The plaintiffs opposed the fund's constitution, arguing that, under Chilean law, salvors are not entitled to limit their liability. The Valparaiso Second Civil Court rejected the opposition and upheld the limitation fund. The decision is one of the most relevant substantive decisions in this regard and should provide future certainty in the safeguarding salvors' rights to limit their liability.
A recent Valparaiso Court of Appeal decision restricts the application of criminal liability for spills that cause damage to hydro-biological resources to cases associated with malicious acts. Although the first-instance court held that the provision covered negligence, as the introduction of polluting agents could be the result of an accident, the Valparaiso Court of Appeal reversed that decision and held that, under the Constitution, no law establishes penalties if the conduct is not expressly described therein.
Chile is a party to the 1992 Civil Liability Convention. Approval of the amendments to the limitation amounts contained in the convention has been a positive step towards harmonisation with the international community. However, the adoption of the 1992 Fund Convention and the Supplementary Fund Protocol continue to be important missing parts of the international compensation regime, exposing Chile to the pollution contingency above its 89.7 million special drawing rights cap.
The Maritime Authority is authorised to initiate a maritime enquiry into accidents and losses involving vessels or persons in Chilean territorial waters, channels, lakes or navigable rivers to determine the causes and the parties responsible. When civil liability arising from a collision is sought at trial, the causes set out in the Maritime Authority's resolution are deemed to be true, unless proven otherwise.
There are no specific regulations in Chile regarding the nature of security that may be requested by claimants on the arrest of a vessel. Protection and indemnity insurance club letters of undertaking were previously accepted only if agreed by the arrest petitioner. However, in a recent case the court hearing the arrest accepted a letter of undertaking with no prior approval from the arrest petitioner.
Article 1203 of the Commerce Code establishes that maritime disputes must be resolved through arbitral proceedings. However, some parties seek to override this mandatory provision. The Valparaiso Court of Appeal recently confirmed that shipping disputes must go through arbitration and held that an ordinary court had no competence to hear a shipping dispute.
The Tribunal for the Defence of Free Competition has recently ruled on a request that the Merchant Navy Law be modified to annul a competition exemption enjoyed by shipping conferences, pool agreements and consortiums. The tribunal ruled that the requested abrogation of the law is unnecessary, provided that antitrust authorities can still investigate and punish conduct that may attempt to impede free competition.
A new law was recently enacted to replace the provisions on general and non-marine insurance contained in the Code of Commerce, so that Chilean insurance law could be updated in line with current trends and market practice. The law contains a number of amendments to the existing marine insurance provisions, all of which have been in force since 1988.
The Tribunal for the Defence of Free Competition is in the process of reviewing a request from the National Economic Office of the Public Prosecutor that the Merchant Navy Law be modified, annulling a competition exemption enjoyed by shipping conferences, pool agreements and consortiums. The proposed amendment aims to harmonise the industry's regulations with the principles of free competition.
Mooring facilities in the Valparaiso region are subject to a number of rules and restrictions in order to ensure that free competition is maintained. A recent decision of the Court for the Defence of Free Competition has detailed the conditions that should apply in relation to the tender for Terminal 2 at Valparaiso port, in order to make the process more flexible and successful.
Article 1203 of the Commercial Code establishes the general principle that the resolution of any maritime dispute, including those relating to marine insurance, is subject to arbitration. However, in certain cases the ordinary civil courts may hear maritime disputes. The Supreme Court of Justice has recently confirmed the correct interpretation criteria and held that mandatory arbitration applies for shipping disputes.
In 2011 the government promoted a draft amendment of the regulation that applies to casinos based on cruise vessels, in order to increase economic competitiveness in this market and to bring Chile into line with other significant economic activities. However, the enacted Casino Law, in all matters regarding cruise vessels, kept only partially to the draft amendment.
The Chamber of Deputies of the Chilean National Congress has recently approved a bill to replace the provisions on general and non-marine insurance. Under the bill, in addition to relating directly to ships, marine insurance will now apply to facilities and machinery used for loading, unloading and stevedoring operations, and will cover other goods or assets that the parties consider to be exposed to marine risks.
The number of cruise vessels calling at Chilean ports has decreased dramatically since 2008, a trend partly caused by the current prohibition on the functioning of game casinos in territorial waters. However, under a proposed draft amendment to the Casinos Law, the excessively onerous requirements currently in force for the exploitation of casino games in cruising vessels will be at least partially eliminated.
Under the Merchant Navy Law, only Chilean vessels are permitted to provide maritime or fluvial transport services (of cargo or passengers) within the national territory or in the exclusive economic zone. Under a recent modification proposal, foreign vessels will now be permitted to undertake cabotage, subject to restrictions. Local shipping companies fear that this may result in potential loss of labour for Chilean crews.
A Santiago City court has confirmed the court's jurisdiction to grant interim protection measures in connection with ongoing arbitral proceedings conducted in New York. This was the first time that this criterion had been tested in the context of international arbitration proceedings relating to a shipping dispute.
A minister of a Chilean court of appeal recently issued a first instance judgment confirming the court's jurisdiction to handle proceedings relating to the constitution of a limitation fund. The proceedings were commenced by a Chilean owner in regard to alleged pollution liability arising from a collision with a foreign vessel that resulted in spilled bunkers.
It is well known that arbitration clauses are the general rule when dealing with bills of lading, time or voyage charters or contracts of affreightment. Unfortunately, the parties to these agreements are not always aware of the real scope of these clauses and the steps required to enforce an arbitral award, particularly when the enforcement is requested in a different jurisdiction to that which resolved the dispute.
The Customs Authority recently issued Resolution 4730/2009, which amended Chapter III of the Compendium of Customs Regulations. The deconsolidation of a container can now be requested whenever the goods cannot be cleared during or after the legal storage period, or whenever the dispatch has been suspended. It is hoped that these changes will expedite the turnaround time for container use.
The Iquique Court of Appeal recently issued a second instance judgment confirming a recent arbitration award which held that in Chile, the carrier and its agents and servants are not liable for failure to notify the consignee of the arrival of the vessel and goods.
A recently issued first instance arbitration award has confirmed that in Chile, a carrier and its agents and servants are not liable for failure to notify the consignee of the arrival of the vessel and goods. Any previous notices given by the carrier to the consignee do not constitute a binding practice and thus do not oblige the carrier or its agents and servants to do the same every time.
Under Chilean law, four categories of agent are involved in shipping activities: general agents; ship agents; stowage and unstowage agents (also known as wharfage companies); and protecting agents. This update looks at some of the common and specific rules which apply to each category.
Chilean collision regulations apply to damages that arise, 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 onboard, even if an actual collision does not occur.
The regulations regarding naval mortgages are contained in Book 3, Title 3 of the Chilean Code of Commerce. The naval mortgage can be defined as a real right that may be established on large vessels and naval devices (under Chilean regulations, those with a gross registered tonnage of more than 50 tons), built or under construction, provided they are duly registered in the respective Chilean licence register.
A Supreme Court decision has confirmed that cargo claims against ocean carriers are now subject to a higher test, as the presumption of fault or negligence on the part of the carrier for loss of or damage to the goods or for delay in delivery will not be triggered if it cannot be shown that the damage, loss or delay in delivery occurred during the carrier's period of responsibility.
The Chilean Code of Commerce regulates 'salvage', which is defined as any act or activity undertaken to assist a vessel, naval device or property in danger, regardless of the waters where the act occurs or the activity is performed. The salvage regulations apply to all salvage operations unless the relevant contract expressly or implicitly stipulates otherwise.
A recent first-instance judgment of the Court of Rotterdam questioned conclusions reached in two English shipping decisions. The Dutch case concerned the question of whether a carrier is relieved of its obligations under a bill of lading when it has delivered goods to a customs authority when obliged to do so by local regulations.
The Customs Authority has issued a report clarifying that sea waybills are valid documents for evidencing the consignment of goods in the context of customs clearance proceedings. This resolution overrides the authority's earlier Decision 1460/03, which drew the opposite conclusion.
Towage is regulated under Title V, Paragraph 6 of the Code of Commerce. In this respect, Chilean regulations distinguish between two different types of towage operation: transport towage and manoeuvres towage. The code also sets out various requirements for the tug to be used in both types of towage.
The Customs Authority has issued a resolution implementing modifications to the cargo delivery procedures relating to Chilean free trade zones. The new resolution complements rules introduced in 2005 to overcome the problem of cargo delivery at Chilean ports without surrender of the original bill of lading.
The Customs Authority has issued Resolution 3505/05, which refers to additional procedures for the clearance of oil bulk cargoes. The resolution sets out an exception relating to the circumstances in which a copy of the original bill of lading can be provided instead of using the original.
Under the Chilean Commerce Code, all maritime disputes must be resolved by an arbitrator. However, in certain cases the ordinary civil courts may hear maritime disputes, including if the parties mutually agree to this either by including it in the contract from which the dispute arises or by prior written agreement.
A resolution recently issued by the Customs Authority has finally overcome the problem of cargo delivery at Chilean ports without surrender of the original bill of lading. As a result, ocean carriers are now directly involved in cargo delivery procedures, both in practice and from a legal point of view, for the first time.
The maritime privileges on cargo are regulated by the Commercial Code. Although there is no statutory definition of 'privileges on cargo', such privileges are preferred and preclude the enforcement of any other privileges set out by the law if these apply to the same goods or rights.