Nationalizing, nationalizing or putting an end to the regime of concessions to private parties, as proposed by the Constitutional Convention, entails great costs for the Treasury. Only what is related to the highways would imply costs between US$ 25 billion and US$ 30 billion, according to the Association of Public Infrastructure Works Concessionaires (Copsa).
By Andres Del Real V.
Santiago de Chile.- The right of property over concessions for infrastructure works such as highways, airports and ports, over mining projects, energy and others have been the subject of debate in recent days. Particularly, some commissions of the Constitutional Convention -such as the Justice System or the Environment- have proposed nationalizing, nationalizing or ending the regime of concessions to private parties.
These commission proposals entail large costs for the Treasury. Only what is related to the highways would imply costs between US$ 25 billion and US$ 30 billion, according to the Association of Public Infrastructure Works Concessionaires (Copsa).
In Chile, investment in these areas is largely carried out by foreign investors through contracts with the Chilean State.
Although the approval of the plenary is lacking for these ideas to become an integral part of the draft of the new Constitution, if these ideas of nationalization or others of expropriation of private property are executed without payment in cash, in cash and according to the market value, will be the object of complex and lengthy legal disputes, since foreign investors who are affected may resort to the dispute resolution channels contemplated in the respective bilateral investment treaties that Chile has signed, which contemplate arbitration between the investor and the State. From Chile.
These arbitrations are generally followed before the International Center for Settlement of Investment Disputes (ICSID) or the Permanent Court of Arbitration under the rules of the United Nations Commission for Trade Law (UNCITRAL). In both venues, today the trials against the State of Chile are counted on the fingers of the hand given the seriousness of our country, its institutional stability and the clarity of the rules of the game. This is not the case of other countries in the region that, following paths of nationalization or discrimination against foreign investors, are frequently sanctioned in said venues.
The norm that is finally approved by the plenary and if it is executed must be implemented in a very careful and fair manner. Otherwise, we could see Chile as a new relevant actor in matters of investor-State arbitration, with the consequent expenses in the defense of the State and with the unquestionable affectation to the image in the world of investments that means being a habitué in the referred venues.
It is the duty of the State of Chile to be responsible and take care of our position vis-à-vis the investor, a totally relevant and necessary actor in order to achieve, in a globalized world, a developed, more equitable and just society.
Andrés Del Real is a litigation and arbitration lawyer at Arteaga Gorziglia y Cía.