{"id":104758,"date":"2025-04-24T11:11:38","date_gmt":"2025-04-24T11:11:38","guid":{"rendered":"https:\/\/my.legal500.com\/guides\/?post_type=comparative_guide&#038;p=104758"},"modified":"2025-08-29T15:53:12","modified_gmt":"2025-08-29T15:53:12","slug":"chile-construction","status":"publish","type":"comparative_guide","link":"https:\/\/my.legal500.com\/guides\/chapter\/chile-construction\/","title":{"rendered":"Chile: Construction"},"content":{"rendered":"","protected":false},"template":"","class_list":["post-104758","comparative_guide","type-comparative_guide","status-publish","hentry","guides-construction","jurisdictions-chile"],"acf":[],"appp":{"post_list":{"below_title":"<div class=\"guide-author-details\"><span class=\"guide-author\">Fleischmann &amp; Rom\u00e1n Abogados<\/span><span class=\"guide-author-logo\"><img src=\"https:\/\/my.legal500.com\/guides\/wp-content\/uploads\/sites\/1\/2025\/04\/fyr-n.jpg\"\/><\/span><\/div>"},"post_detail":{"above_title":"<div class=\"guide-author-details\"><span class=\"guide-author\">Fleischmann &amp; Rom\u00e1n Abogados<\/span><span class=\"guide-author-logo\"><img src=\"https:\/\/my.legal500.com\/guides\/wp-content\/uploads\/sites\/1\/2025\/04\/fyr-n.jpg\"\/><\/span><\/div>","below_title":"<span class=\"guide-intro\">This country specific Q&amp;A provides an overview of Construction laws and regulations applicable in Chile<\/span><div class=\"guide-content\"><div class=\"filter\">\r\n\r\n\t\t\t\t<input type=\"text\" placeholder=\"Search questions and answers...\" class=\"filter-container__search-field\">\r\n\t\t\t<\/div>\r\n\r\n\t\t\t\r\n\r\n\r\n\t\t\t<ol class=\"custom-counter\">\r\n\r\n\t\t\t\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Is your jurisdiction a common law or civil law jurisdiction?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Chile is a civil law jurisdiction.<\/p>\n<p>Following its independence at the beginning of the 19th century, Chile maintained the European regulations stemming from the Spanish colonization which, in turn, had their origin in the regulations from Roman civil law.<\/p>\n<p>Likewise, and during the course of the 19th century, Chile was influenced by French law, which resulted in a process of codification of laws, with the drafting of the Chilean Civil Code as its greatest exponent.<\/p>\n<p>In contrast to the above, in Chile common law is not a main source of obligations, which is why jurisprudential precedents are not assigned the same value as in an Anglo-Saxon jurisdiction.<\/p>\n<p>Notwithstanding the foregoing, case law precedents are becoming increasingly useful, as they often serve as a guide for the resolution of disputes in construction and engineering projects.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What are the key statutory\/legislative obligations relevant to construction and engineering projects?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>First of all, it is worth mentioning the Decree with Force of Law No. 458 of 1975, which contains the General Law of Urbanism and Construction (<a href=\"https:\/\/www.bcn.cl\/leychile\/navegar?idNorma=13560\"><em>link<\/em><\/a>) and its General Ordinance (<a href=\"https:\/\/www.bcn.cl\/leychile\/navegar?idNorma=13560\"><em>link<\/em><\/a>).<\/p>\n<p>These instruments regulate the general requirements -at an administrative level- that are demanded in Chile for any construction work, from the beginning of the project (<em>obtaining the building permit<\/em>) to its completion (<em>obtaining the final reception of the work<\/em>).<\/p>\n<p>The Municipalities (local public bodies), through each Municipal Works Directorate, are in charge of receiving and supervising the requests made by private parties and compliance with the requirements established in the General Urbanism and Construction Law and its General Ordinance.<\/p>\n<p>On the other hand, in order to determine the main legal and regulatory obligations relevant to construction and engineering projects, it is important to distinguish the type of parties involved and their purpose.<\/p>\n<p>A. In the case of a project between private parties, the obligations arise from the provisions of the respective private contract, which will be governed mainly by the provisions of the Chilean Civil Code (<a href=\"https:\/\/www.bcn.cl\/leychile\/navegar?idNorma=172986\"><em>link<\/em><\/a>) and the Chilean Commercial Code (<a href=\"https:\/\/www.bcn.cl\/leychile\/navegar?idNorma=172986\"><em>link<\/em><\/a>).<\/p>\n<p>B. In the case of a project for the execution of a public work (where one of the parties is a public entity), the main legal and regulatory obligations depend on the purpose of the contract.<\/p>\n<p>Thus, for example, Decree No. 900 of 1996 &#8211; Public Works Concessions Law (<a href=\"https:\/\/www.bcn.cl\/leychile\/navegar?idNorma=172986\"><em>link<\/em><\/a>) and its Regulations (<a href=\"https:\/\/www.bcn.cl\/leychile\/navegar?idNorma=172986\"><em>link<\/em><\/a>), regulate the general framework of public works concession contracts entered into by the Chilean Ministry of Public Works with private parties that are awarded a concessioned work.<\/p>\n<p>C. Decree No. 75-2004 &#8211; Regulations for Public Works Contracts (<a href=\"https:\/\/www.bcn.cl\/leychile\/navegar?idNorma=172986\"><em>link<\/em><\/a>), regulates in general the public works contracts -not subject to the Public Works Concessions Law- entered into by the Ministry of Public Works of Chile with a private party.<\/p>\n<p>Finally, it should be noted that regardless of the type of contract in question and the parties involved, in each particular case the special and sectorial regulations applicable to the scope of the contract (for example, mining, electricity, real estate, etc.) must be determined.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are there any specific requirements that parties should be aware of in relation to: (a) Health and safety; (b) Environmental; (c) Planning; (d) Employment; and (e) Anti-corruption and bribery.<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Yes, in each of the aforementioned matters there are sets of legal provisions that contemplate specific requirements that the parties must consider when developing and executing a project.<\/p>\n<p>For example, in Chile there is a Labor Code (<a href=\"https:\/\/www.bcn.cl\/leychile\/navegar?idNorma=5595\"><em>link<\/em><\/a>) and a Sanitary Code (<a href=\"https:\/\/www.bcn.cl\/leychile\/navegar?idNorma=5595\"><em>link<\/em><\/a>), which address the matters indicated in <strong>letters a) and d).<\/strong><\/p>\n<p>Law No. 19.300, which establishes the General Bases of the Environment (<a href=\"https:\/\/www.bcn.cl\/leychile\/navegar?idNorma=5595\"><em>link<\/em><\/a>), contains regulations related to the matters indicated in <strong>letter b).<\/strong><\/p>\n<p>Decree with Force of Law No. 458 of 1975 contains the General Law of Urbanism and Construction (<a href=\"https:\/\/www.bcn.cl\/leychile\/navegar?idNorma=5595\"><em>link<\/em><\/a>) and its General Ordinance (<a href=\"https:\/\/www.bcn.cl\/leychile\/navegar?idNorma=5595\"><em>link<\/em><\/a>), which establish the general rules related to the matter indicated in <strong>letter c).<\/strong><\/p>\n<p>Finally, Law No. 20.393 of 2009, which establishes the Criminal Liability of Legal Entities or Corporations (<a href=\"https:\/\/www.bcn.cl\/leychile\/navegar?idNorma=5595\"><em>link<\/em><\/a>) and Law No. 21.595 of 2023 or Economic Crimes Law (<a href=\"https:\/\/www.bcn.cl\/leychile\/navegar?idNorma=5595\"><em>link<\/em><\/a>), regulate and sanction the matters indicated in <strong>letter e).<\/strong><\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What permits, licences and\/or other documents do parties need before starting work, during work and after completion? Are there any penalties for non-compliance?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>In general, in order to start the construction of a project, a \u201c<em>construction permit<\/em>\u201d is required, which is granted by the Municipalities (local public agencies), through each Municipal Works Directorate, which is in charge of receiving -and supervising- the requests submitted by private parties.<\/p>\n<p>In addition, once the project is completed, it is the Municipality that issues the \u201c<em>final or definitive reception<\/em>\u201d of the project, an instrument that certifies the execution of the work in accordance with the regulations in force.<\/p>\n<p>The regulation of these instruments is found in the Decree with Force of Law No. 458 of 1975, which contains the General Law of Urbanism and Construction ((<a href=\"https:\/\/www.bcn.cl\/leychile\/navegar?idNorma=13560\"><em>link<\/em><\/a>) and its General Ordinance ((<a href=\"https:\/\/www.bcn.cl\/leychile\/navegar?idNorma=13560\"><em>link<\/em><\/a>).<\/p>\n<p>On the other hand, depending on the size and specific nature of each project, it will be necessary to obtain other permits, licenses or special and sectorial documents to carry out its execution. For example, prior to the start of the project, it is necessary to obtain a favorable Environmental Qualification Resolution for the project, regulated by Law No. 19.300 on General Bases of the Environment ((<a href=\"https:\/\/www.bcn.cl\/leychile\/navegar?idNorma=13560\"><em>link<\/em><\/a>).<\/p>\n<p>As for the penalties for violating this type of provisions, they are usually administrative penalties that entail monetary fines for tax benefit; and, depending on the nature of the infraction, the permit and\/or license could be suspended and\/or revoked.<\/p>\n<p>Additionally, in Chile there is Law No. 20.393 of 2009, which establishes the Criminal Liability of Legal Entities or Corporations (<a href=\"https:\/\/www.bcn.cl\/leychile\/navegar?idNorma=30667\"><em>link<\/em><\/a>), which was recently amended by Law No. 21.595 of 2023 or Economic Crimes Law (<a href=\"https:\/\/www.bcn.cl\/leychile\/navegar?idNorma=30667\"><em>link<\/em><\/a>), which established the liability of legal entities or corporations for environmental crimes (for example, contamination of water, soil or subsoil).<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Is tort law or a law of extra-contractual obligations recognised in your jurisdiction?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Yes, Chile recognizes tort liability and the duty to repair the damage caused through compensation for damages. The statute of tort liability is an essential pillar in the framework of Chilean civil law (governing the \u201c<em>principle of full reparation of damages<\/em>\u201d).<\/p>\n<p>In general terms, Article 2314 of the Chilean Civil Code (link) is the basic rule that regulates tort liability, providing that: <em>\u201c[w]hoever has committed a crime or unintentional crime that has caused damage to another is obliged to pay compensation, without prejudice to the penalty imposed by law for the crime or unintentional crime\u201d.<\/em><\/p>\n<p>For their part, the organs of the Chilean State also follow the same logic and, in accordance with Article 4 of the Law of General Bases of the State Administration (link), must repair the damages caused when they incur in \u201c<em>lack of service<\/em>\u201d, i.e., when the State acts wrongly, acts belatedly or does not act when it should have done so.<\/p>\n<p>At present, there are a series of other rules contained in special and sectorial laws that ratify the validity of tort liability.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Who are the typical parties involved in a construction and engineering project?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>In Chile, the usual parties to a construction project are the Employer or Principal, and the Contractor or Builder. Generally, both parties will designate a \u201c<em>Contract Administrator<\/em>\u201d, who will act as a coordinator between them.<\/p>\n<p>In addition, there is usually an Engineer or Technical Inspector of Works (called ITO) to supervise the technical and regulatory compliance of the project.<\/p>\n<p>In the case of public works projects, the Ministry of Public Works appoints a Fiscal Inspector of the Works (IFO), who will supervise the technical and regulatory compliance of the project.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What are the most popular methods of procurement?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>There is no particular method. However, in the case of larger private construction projects, the Employer or Principal will usually initiate a private bidding process before awarding the contract, and will define in advance the terms and conditions for its award.<\/p>\n<p>In the case of public works contracts, as a general rule, the Administrative Authority is required to initiate a bidding process (which is regulated by the administration) and then the public contract is awarded to a bidder through the issuance of a solemn administrative act (e.g., the Award Decree). This is also applied in the Chilean concession system.<\/p>\n<p>Conversely, only in very exceptional cases, direct contracting by a government agency is allowed.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What are the most popular standard forms of contract? Do parties commonly amend these standard forms?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>In Chile, the principles called \u201cautonomy of will\u201d and \u201crelative effect of contracts\u201d apply, which are set forth in articles 12 and 1545 of the Chilean Civil Code, among others.<\/p>\n<p>By virtue of such principles, the contracting parties are free to bind themselves as they see fit, as long as such obligations and agreements are only in their own interest and for their own equity, and do not affect the legal prohibitions, public order and good customs of the Chilean legal system.<\/p>\n<p>Therefore, in a contract entered into between private parties, the parties are free to determine the content of the contract.<\/p>\n<p>In Chile it is not common to use contractual forms such as, for example, FIDIC contracts (unless one of the parties is foreign), but it is usual to include typical clauses associated with limits of liability, contractual penalties, dispute resolution, among others.<\/p>\n<p>In any case, in Chile it is usual that the Principal of a private major or complex project calls for a private bidding and invites different bidders to submit their offers on the basis of a contract wording previously drawn up by the Employer or Principal of the Works.<\/p>\n<p>Regarding the execution of public works involving public contracts, these are highly regulated by the state agency acting as Employer or Principal of the works, and as anticipated, the general rule is the mandatory call for bids by the Administrative Authority, with a bidding process regulated by the administration and which ultimately ends in the award of the public contract to a bidder, through the issuance of a solemn administrative act (for example, the Awarding Decree).<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are there any restrictions or legislative regimes affecting procurement?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>As anticipated, and within the framework of private contracting, Chile is governed by the guiding principles of \u201cfree will\u201d and the \u201crelative effect of contracts\u201d, by virtue of which the contracting parties are free to bind themselves as they see fit, provided that they do not affect the legal prohibitions, public order and good customs of the Chilean legal system.<\/p>\n<p>As a result of the above, naturally the provisions of the private contract cannot violate regulations of public order such as, for example, those of a labor, environmental, tax, and free competition nature, among others.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Do parties typically engage consultants? What forms are used?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>In the case of a private contract, consultants are normally engaged by the Employer or Principal to supervise the technical and regulatory compliance of the work performed by the Contractor.<\/p>\n<p>This characterization is known as \u201cTechnical Inspector of Works\u201d (\u201cITO\u201d) who will not act in a neutral manner but, in general, will be aligned with the interests of the Employer or Principal.<\/p>\n<p>In the case of public works contracts, there is a public officer who performs a similar function as the ITO, known as the Fiscal Inspector of Works (\u201cIFO\u201d), who acts not only as the technical and regulatory supervisor of the contract but also as the representative of the public body on site.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Is subcontracting permitted?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Yes, in Chile it is permitted to subcontract all or part of the scope of a construction and\/or engineering contract. In addition, the parties are sovereign to define the contractual provisions they deem relevant for this purpose.<\/p>\n<p>On the other hand, in the case of public works contracts, the content of the bidding conditions and the wording of the contract must be taken into account to determine whether or not the administrative authority allows the subcontracting of all or part of the scope of the works in the specific case.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">How are projects typically financed?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Project costs are usually financed through the so-called \u201cfinancing sources\u201d, which may be, for example, stocks; banks and financial institutions; multilateral agencies; capital markets; host government; infrastructure funds; pension funds, insurance and sovereign wealth funds; hedging providers.<\/p>\n<p>In addition, financing through Private Investment Funds (\u201cPIFs\u201d) is also common. It consists of a group of private contributors who, managed by a third party, invest in a given project by requiring guarantees to back up the loan provided (e.g., insurance policies).<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What kind of security is available for employers, e.g. performance bonds, advance payment bonds, parent company guarantees? How long are these typically held for?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Normally in a private construction contract, the Employer or Principal will request the following guarantees from the Contractor: (i) advance payment guarantee, in order to guarantee the return of the advance payment made by the Principal to the Contractor; (ii) guarantee of faithful performance of the contract; and, (iii) guarantee of correct execution of the works or of quality.<\/p>\n<p>Aspects such as the term, amount and mechanism for return of the guarantee will be determined on a case-by-case basis between the parties.<\/p>\n<p>As to the type of guarantee, normally an immediate performance or first demand guarantee bond or a first demand insurance policy will be provided.<\/p>\n<p>In public construction contracts, the three types of guarantee indicated above will normally be required, although their terms will be previously defined by the Administrative Authority, with very little margin for the Contractor to negotiate and determine their validity, amount and return mechanism.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Is there any specific legislation relating to payment in the industry?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>There is no specific legislation related to payments in the sector.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are pay-when-paid clauses (i.e clauses permitting payment to be made by a contractor only when it has been paid by the employer) permitted? Are they commonly used?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Yes, this type of clause is common in larger construction contracts where the Employer or Principal enters into an EPC contract with the Contractor and the Contractor, in turn, enters into a \u201cback to back\u201d or mirror clause with the subcontractor to whom it delegates all or part of the main EPC contract.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Do your contracts contain retention provisions and, if so, how do they operate?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Yes, normally the parties to a private contract define the terms and operation of this type of clause. In the case of a public contract, this aspect will be previously determined unilaterally by the Administrative Authority.<\/p>\n<p>However, by virtue of a retention clause, the Employer or Principal shall be entitled to retain in its possession any sum of money that it assigns in favor of the Contractor if the latter is in default or delay in the performance of its obligations under the contract.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Do contracts commonly contain liquidated delay damages provisions and are these upheld by the courts?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Yes, it is normal that both in private contracts and in public contracts, penalty clauses for delays are agreed, where its imposition and collection may be optional or mandatory for the Employer or Principal, who may deduct the amount of the penalty from any concept or sum that it assigns in its favor with respect to the Contractor.<\/p>\n<p>In addition, in private contracting, in Chile this type of civil penalties is regulated in articles 1535 and following of the Civil Code, in relation to the so-called \u201c<em>penalty clause<\/em>\u201d, with special rules for late payment and compensatory penalties.<\/p>\n<p>For its part, in the case of a public works construction contract, the Administrative Authority will be legally obliged to impose and collect any penalty for delay, being able to deduct from any concept or sum that it assigns in its favor with respect to the Contractor.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are the parties able to exclude or limit liability?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Yes, in private contracts the parties may agree to exclude or limit their liability, with the prohibition of condoning future dolus.<\/p>\n<p>In addition, if liability is incurred, the parties may also exclude or limit the type of damage for which they may be liable.<\/p>\n<p>In the case of public works construction contracts, it is not usual to include clauses excluding or limiting liability.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are there any restrictions on termination? Can parties terminate for convenience? Force majeure?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>There are no restrictions on termination. In private contracts, the parties may freely agree on the termination of the contract and the events that will give rise to it, including the occurrence of an event amounting to force majeure.<\/p>\n<p>In the case of public works construction contracts this is not usual, notwithstanding the fact that there may be cases in which the power to terminate the contract due to an act of God or force majeure is contemplated.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What rights are commonly granted to third parties (e.g. funders, purchasers, renters) and, if so, how is this achieved?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>The answer will depend on the type of third party and whether or not it has a contractual relationship with any of the parties to the construction contract.<\/p>\n<p>In the case of the financiers of a project, they will normally have secured their loan by means of a mortgage on the land where the work is being executed, or they will have requested other types of insurance to protect the repayment of the money paid for the financing.<\/p>\n<p>Likewise, for the execution of a construction project it is usual for the parties involved to have liability and accident policies, which include as beneficiaries third parties that could be affected in any way as a result of the execution of the project.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Do contracts typically contain strict provisions governing notification of claims for additional time and money which act as conditions precedent to bringing claims? Does your jurisdiction recognise such notices as conditions precedent?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Yes, clauses are normally included in contracts by virtue of which the Contractor is granted a term to present any claim for higher costs and\/or deadlines to the Employer or Principal, under the sanction of forfeiting its right to subsequently claim compensation, or the right to do so is understood to have been waived.<\/p>\n<p>As we have indicated above, in Chile the principle of \u201cfree will\u201d applies and, in accordance with article 1545 of the Chilean Civil Code, the agreement between the parties is a law for the contracting parties.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What insurances are the parties required to hold? And how long for?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>In general, it is usual that in private construction contracts, as in public construction contracts, the Principal or Employer requires the Contractor to have a guarantee of faithful performance of the works, which is in force from the beginning of the work until its completion.<\/p>\n<p>It is also usual that, at the time the work is completed, the Contractor is required to provide a warranty for the quality of the works, which must be in force from 1 to 5 years after the completion of the work, depending on the entity and nature of the work.<\/p>\n<p>On the other hand, it is also usual that in public and private construction contracts, the Principal delivers a monetary advance to the Contractor and that, upon delivery, the latter is required to provide a guarantee to secure its repayment.<\/p>\n<p>In all the cases previously mentioned, the guarantee that will be required will be, as a general rule, a bank guarantee slip or a first demand insurance policy.<\/p>\n<p>Finally, the Contractor is also commonly required to have liability insurance and personal accident insurance, so that, in the event of any claim, such insurance operates as a first layer before the Employer or Principal (<em>in any case, there is a legal and mandatory labor insurance in favor of the workers<\/em>).<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">How are construction and engineering disputes typically resolved in your jurisdiction (e.g. arbitration, litigation, adjudication)? What alternatives are available?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>In Chilean commercial practice and in the case of private construction contracts, it is common to include an arbitration clause to resolve any dispute arising from the contract. In these cases, it is usual for the dispute to be settled by an arbitrator who rules in accordance with the law and where the parties are free to establish the applicable procedure.<\/p>\n<p>In this respect, the Arbitration and Mediation Center of the Santiago Chamber of Commerce A.G. (<a href=\"https:\/\/www.panelconcesiones.cl\/\"><em>link<\/em><\/a>), is the arbitration institution that by excellence assists and supports the parties in the resolution of conflicts of this nature in Chile.<\/p>\n<p>On the other hand, it is usual for the parties to include in their contracts the so-called \u201cstaggered dispute resolution clauses\u201d by virtue of which, before resorting directly to arbitration, a negotiation process must be initiated between the parties for a pre-established period of time.<\/p>\n<p>Notwithstanding the foregoing, if there is no arbitration clause or if the counterparty of the project is a state agency, the dispute must be resolved by the civil judge with common jurisdiction, before the state courts in a procedure that involves several stages and that will be governed by the provisions of the Chilean Code of Civil Procedure (<a href=\"https:\/\/www.panelconcesiones.cl\/\"><em>link<\/em><\/a>).<\/p>\n<p>Finally, it should be noted that in the Chilean system of public works concessions there is a special dispute resolution mechanism, which is regulated in articles 36 and 36 bis of the Public Works Concessions Law (<a href=\"https:\/\/www.panelconcesiones.cl\/\"><em>link<\/em><\/a>).<\/p>\n<p>In the latter case, the system considers that the Concessionaire must first present its claim before the Concessions Technical Panel (<a href=\"https:\/\/www.panelconcesiones.cl\/\"><em>link<\/em><\/a>), a body that will issue a technical (non-jurisdictional) opinion and, only after this process, the Concessionaire may present its claim before the Arbitration Commission of the respective concession contract or before the Court of Appeals of Santiago.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">How supportive are the local courts of arbitration (domestic and international)? How long does it typically take to enforce an award?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Arbitration awards are binding on the parties. In the event that it is necessary to enforce them under measures of compulsion, a state court must be resorted to.<\/p>\n<p>In Chile, the enforcement of foreign awards is governed by Law 19.971 on International Commercial Arbitration and by the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards.<\/p>\n<p>The above requires an exequatur issued by the Supreme Court, which could take no less than 6 months.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are there any limitation periods for commencing disputes in your jurisdiction?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Yes, as a general rule, actions to enforce contractual liability have a statute of limitations of 5 years, in accordance with article 2515 of the Chilean Civil Code.<\/p>\n<p>In addition, and for the matter under analysis, it is important to know that in Chile, actions arising from construction defects are subject to the general 5-year statute of limitations.<\/p>\n<p>However, in Article 18 of the General Law of Urbanism and Construction, there is a special statute of limitations in this regard that overlaps with the general regime of the Civil Code, which provides for the following rules:<\/p>\n<ul style=\"padding-left: 0\">\n<li>10-year statute of limitations period: in case of failures or defects affecting the supporting structure of the building.<\/li>\n<li>5-year statute of limitations period: in case of failures or defects of the construction elements or installations.<\/li>\n<li>3-year statute of limitations period: in case of failures or defects affecting finishing or finishing elements of the works.<\/li>\n<\/ul>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">How common are multi-party disputes? How is liability apportioned between multiple defendants? Does your jurisdiction recognise net contribution clauses (which limit the liability of a defaulting party to a \u201cfair and reasonable\u201d proportion of the innocent party\u2019s losses), and are these commonly used?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>In general, in construction contracts (both private and public), disputes generally originate between the Contractor and the Principal; the existence of disputes between multiple parties is not common.<\/p>\n<p>In Chile, in accordance with Article 1511 of the Civil Code, the general rule is that a party is liable to pay or indemnify in the proportion or part that is attributable to the breach or damage caused (which is in line with the principle of \u201c<em>full reparation of the damage<\/em>\u201d).<\/p>\n<p>On the other hand, joint and several liability in Chile is exceptional; and for one party to be jointly and severally liable with another, it must have been expressly stipulated in a clause of the contract, or be so provided by law.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What are the biggest challenges and opportunities facing the construction sector in your jurisdiction?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>A bill is currently being processed (&#8216;Sectorial Authorizations Framework Law&#8217;) which aims to create a Smart Permitting System and which will expedite in an integrated manner with the different State agencies, and in compliance with sectorial regulations, the obtaining of a series of permits to carry out construction projects, from some small to others of great importance in the energy or mining areas.<\/p>\n<p>Undoubtedly, this bill will substantially favor investment and promote the execution of more infrastructure projects in Chile.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What types of project are currently attracting the most investment in your jurisdiction (e.g. infrastructure, power, commercial property, offshore)?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Currently, the types of projects that are attracting the most investment are those associated with the exploitation of natural resources (mainly infrastructure works required by the mining and energy sector).<\/p>\n<p>Along the same lines, the public works concession bidding portfolio of the Chilean Ministry of Public Works is also attracting investment in the infrastructure area.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">How do you envisage technology affecting the construction and engineering industry in your jurisdiction over the next five years?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>It will have a positive impact by allowing the development of projects in a more efficient and safe manner, optimizing costs, which will surely translate into an increase in construction projects in Chile.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What do you anticipate to be the impact from ongoing supply chain issues and the escalation of material costs over the coming year?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>From an optimistic point of view, we believe that the possible problems in the supply chain and the increase in the cost of materials (which have been dragging on for some years now) have made it possible to reinforce the duties of collaboration owed by the parties in an increasingly complex global market, which will result in contracts with more flexible provisions that allow them to better distribute their risks and comply with their scope.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\r\n<div class=\"word-count-hidden\" style=\"display:none;\">Estimated word count: <span class=\"word-count\">4805<\/span><\/div>\r\n\r\n\t\t\t<\/ol>\r\n\r\n<script type=\"text\/javascript\" src=\"\/wp-content\/themes\/twentyseventeen\/src\/jquery\/components\/filter-guides.js\" async><\/script><\/div>"}},"_links":{"self":[{"href":"https:\/\/my.legal500.com\/guides\/wp-json\/wp\/v2\/comparative_guide\/104758","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/my.legal500.com\/guides\/wp-json\/wp\/v2\/comparative_guide"}],"about":[{"href":"https:\/\/my.legal500.com\/guides\/wp-json\/wp\/v2\/types\/comparative_guide"}],"wp:attachment":[{"href":"https:\/\/my.legal500.com\/guides\/wp-json\/wp\/v2\/media?parent=104758"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}