How do Chilean courts rule and what are your chances?
Quis custodiet ipsos custodes? (Who watches the watchmen?) – A question that goes all the way back to Platon and made famous by Roman poet Juvenal.
This leads to the question in modern times – Who supervises the judicial system considering that only they have the constitutional obligation and power to interpret and apply the law in the name of the state?
Firstly, it must be said that most systems, including the Chilean one, have several actions to review judicial rulings or sentences by an upper court. However, it useful to hear an outsiders perspective re-counting the way Judicial Courts are actually ruling.
In this regard, pro judicial reformers worldwide have recently emphasized the need to increase judicial accountability through oversight committees known as judicial councils.
In countries where the separation of powers is deep-seated in the political culture, attempts to establish judicial councils have caused debate between strict interpretationists who favor an internal control model (review only by judges) and those of liberal interpretationists who favor an external control model (review by judges but also representatives from other government institutions).
Recently in Chile, an independent think tank linked to the most conservative party of Chile, has created what is known as a “Judicial Observatory”.
This issue had already been on the agenda for both of the right-wing candidates, Evelyn Mathey and Sebastian Piñera. The latter is running for his second term (not consecutive).
The private sector, in particular, large companies, have reason to be concerned about how the judicial system is working for them.
The statistics speak for themselves. For instance, in Labour Courts, cases won by the employee against their employer have a win rate of over the 90%. In addition, recently it has been published that the “Consejo de Defensa del Estado”, this is the Council of State Defense, wins 92.7% of the cases when they go against private companies or individuals.
Lastly, and although this statistic goes beyond corporate business, in criminal cases, prosecutors win over 90% of the cases that reach an oral trial. Despite this fact, public opinion believes the judicial criminal court is not strong enough. Nevertheless, most cases do not reach an oral trial. Prosecutors and offenders often reach an agreement before it leads to court proceedings.
Chile has specialized Courts that only review tax cases. A recent study from PwC indicates that during 2012 and 2016, these courts sentenced in favour of the Chilean IRS (SII) in 69% of the cases, 27% ruled in favour of private companies or individuals and the remaining 4% had impartial results for each party.
The Supreme Court is no different, over the past 5 years, from a total of 1081 cases, it has ruled in favour of the SII in 62.9% of the tax lawsuits brought before it. The analysis concludes that only 21.2% of all the cases ruled in favour of the private party.
A judicial observatory could be good news despite the political inclination it may have. It could provide more statistical information and valuable insight into the ways that different judges rule on specific types of cases. In our opinion, it would probably incentivise accountability.
It is important to note that opponents of overview argue that watching how judges rule will jeopardize the independence of the Judiciary, a principle that the Constitution protects. In our opinion, a private institution providing statistical information, such as the Judicial Observatory, should have no impact on the independence of judges as they cannot apply sanctions.
The work that a Judicial Observatory would be doing is basically collecting and analyzing judicial sentences to improve public knowledge of this matter. This goes hand in hand with the transparency principle that the judiciary also embraces.
A Judicial Observatory that gathers all of this information will also be a good referent to support any business decision when judicial conflict rises.
Getting back to the overwhelming statistics, we generally recommend to seek an amicable arrangement rather than pursuing litigation. Depending on the situation, this is not always popular advice. People tend to be overly optimistic about their chances in court. Once faced with the reality of their chances, whether it be for Labour Court or cases against the Chilean State, trying to avoid litigation may probably be the smartest strategy that one could adopt.
For this matter, good negotiations usually carried out by an independent counsel is the best way to avoid a long, hard and in many occasions, disappointing result. Reaching a settlement, on most occasions, is the best manner to put an end to this kind of conflicts.
Harris Gomez Group is a Common Law firm, with offices in Santiago, Bogotá, and Sydney. We also have legal teams in Mexico, Peru, Brazil, and Argentina. Over the last 16 years, we have been supporting foreign companies with their growth in Latin America and Australia. Many of our clients are technology companies, service providers and engineering companies that focus on the mining, energy and infrastructure markets.
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