Chile has no comprehensive legislation which deals specifically with asset recovery. However, victims of fraud may use the general tools that are available under Chilean law to victims of crime that seek restoration. Similar to the laws of most countries, Chilean legislation provides for both civil and criminal remedies to achieve asset recovery. Moreover, it is common to file both criminal and civil actions, with the possibility to file civil actions within a criminal proceeding or after a criminal conviction has been obtained. Insolvency proceedings also play an important role, particularly after the revamp of Chile's regulatory framework in 2014 and in cases with multiple victims and cross-border components.
Precautionary measures are available in criminal and civil proceedings, although the criminal courts tend to focus on the determination of criminal liability rather than the economic restoration of the victim or a third party. The burden of proof lies with the party that states the occurrence of an act that has caused them harm.
In recent years, asset tracing and recovery have acquired a new dimension in the Chilean judicial and political agenda. Major financial scandals, particularly a series of Ponzi schemes that were unveiled in 2016, have put legislation and the actions of the Public Prosecutor's Office under the spotlight, as the compensation of all of the victims and the recovery of assets that where hidden abroad required putting all available tools to the test, including cooperation in cases of cross-border insolvency.
The current development of affairs in the financial system – especially those relating to fintech companies – will most likely force a much-needed institutional modernisation to effectively investigate and prosecute a thriving range of crimes that are often executed from one jurisdiction, but have effects on another, and where assets must be recovered in various jurisdictions.
Criminal cases cannot be subject to arbitration, although the civil liability derived from the crime may be submitted to the competence of an arbitration tribunal, as long as the parties involved or underlying facts of the crime are at the same time a breach of contract in which the parties have included an arbitration clause. Naturally, arbitration means faster proceedings than in the ordinary courts, but higher costs. It is not uncommon for parties in arbitration to argue that breaches by the other parties are due to fraud and start parallel criminal proceedings.
In Chile's legal system, arbitral tribunals lack the power to execute resolutions. In cases where force is required to comply with the judgment of an arbitral tribunal, the arbitrator must issue an order to the ordinary courts to execute the ruling. The ordinary courts cannot review the merits or form of the resolution when enforcing a ruling; thus, they are exclusively responsible for supervising the compulsory compliance with the sentence.
The Law on International Commercial Arbitration, which has been in force in Chile since 2004, authorises arbitral tribunals to order provisional precautionary measures at the request of one of the parties if they deem it necessary, unless the parties agreed otherwise beforehand. Therefore, a foreign arbitral tribunal could decree precautionary measures on assets located in Chile. However, it does not appear that there is any record of Chilean courts applying this provision or the Supreme Court ruling that such a request must be filed directly before the ordinary courts.
An earlier version of this article was published in The Law Reviews.
