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24 July 2013
In early 2012 the National Congress proposed a bill to replace the provisions on general and non-marine insurance contained in the Code of Commerce, which were enacted almost 140 years ago, so that Chilean insurance law could be updated in line with current trends and market practice.
On May 9 2013 this bill was approved and become law (20,667). Its enforcement will become valid as of December 2013.
The law contains a number of amendments to the existing marine insurance provisions, all of which have been in force since 1988. Some of the main features of the law that affect the shipping industry are as follows:
Article 1203 of the Code of Commerce establishes the general principle that the resolution of any maritime dispute, including those relating to marine insurance, is subject to mandatory arbitration - that is, almost all maritime disputes must be resolved by an arbitrator. One exception concerns claims in which the amount at stake is less than 5,000 special drawing rights (SDR), as defined by the International Monetary Fund, provided that the claimant submits its claim before the ordinary courts.
Under the proposal for the new law, the quantum for triggering compulsory arbitration was intended to be determined according to the unidad de fomento (UF), a unit of indexation set monthly that varies according to Chilean inflation. An increase in the quantum from 5,000 SDR (equal to approximately $7,700) to UF10,000 (equal to approximately $460,000) was proposed. This would have affected all types of shipping dispute, not just those relating to marine insurance. However, this change has not been included in the new law.
In Chile, there are no specialised shipping courts and the introduction of the mandatory arbitration system for maritime disputes in 1988 was a positive step. Maritime disputes are now better understood and more fairly settled. However, the proposed change in the quantum for triggering mandatory arbitration in connection with shipping disputes would have represented a step backwards, as in practical terms it could have transferred the resolution of the majority of maritime disputes to the Chilean ordinary courts, which are not accustomed to hearing this type of dispute. Thankfully, the new law did not implement the above proposal and the system will continue as before.
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