The First Chamber of the Santiago Court of Appeals, in a divided ruling dated June 24, 2026 (Civil Case No. 17,067-2025), annulled in full the arbitral award issued in CAM Santiago Case No. A-5,484-2023. The award had ordered a partial restitution of the price paid by the buyer in a share purchase transaction involving a Chilean salmon company.
The ruling granted the set-aside petition under Law No. 19,971 on International Commercial Arbitration. The majority of the Court held that the arbitral tribunal decided a claim that was different from the one actually brought and debated in the arbitration, thereby triggering the ground set out in Article 34(2)(a)(iii) of that law. The Court considered that the defect affected basic validity requirements of the arbitration, and therefore annulled the award in full. If your company has SPAs in force with limitation of liability clauses and arbitration as the dispute resolution mechanism, this ruling has direct implications.
The case in context
The transaction involved a Chilean salmon company. On February 28, 2019, its controllers sold all of their shares to a foreign buyer group under a Stock Purchase Agreement (SPA).
The salmon industry operates under harvest limits defined in environmental qualification resolutions (RCA). Each farming center has a maximum authorized harvest. In that context, the sellers made a representation in clause 4.2 of the SPA regarding substantial compliance with environmental regulations.
The dispute arose when the buyer alleged that this representation was false. According to the buyer:
- the company systematically operated above the limits authorized in the RCA, and its own internal projections reflected that;
- its executives had enough information to know that the regulatory authority could require production to be adjusted to the formal limits; and
- those contingencies were not disclosed to the buyer before or at the time the contract was signed.
The buyer filed an arbitration claim, bringing:
- an action for termination of the contract plus damages; and
- in the alternative, if the main claim was not granted, an autonomous damages claim. Specifically, it sought compensation for the overprice paid for the company and compensation for the opportunity cost of that overprice.
Both claims were based on the alleged granting of intentionally false representations and warranties by the sellers. The buyer also argued that, because the alleged breach was intentional, the contractual limitation of liability clauses should not apply.
The sellers defended themselves by denying that information had been concealed, that there had been deceit or fraud, and arguing that the company complied with the environmental legislation in force at the time of its acquisition by the buyers, with a later change in the regulator’s criteria occurring after closing.
The arbitral tribunal rejected fraud. It rejected the main claim. And then it still awarded relief, but on its own reasoning.
What happened
The arbitral tribunal found that the sellers had failed to expressly disclose the possibility of a change in the criteria of the fisheries or environmental authority, thereby breaching the representations and warranties made in the contract.
The arbitral tribunal issued an award that, according to the majority of the Court, changed the legal nature of the claim originally brought by the buyers. Specifically, the tribunal:
- Rejected the main claim (termination of the contract plus damages), after ruling out intentional breach by the sellers. As a result, the contract remained in force.
- Nevertheless, found that the sellers had failed to expressly disclose the possibility of a change in the criteria of the fisheries or environmental authority, thereby breaching the representations and warranties made in the contract.
- Replaced damages with a “price reduction.” Having rejected the main claim, the tribunal had to decide the alternative claim for “autonomous damages.” However, it decided not to award damages and instead recharacterized the claim, granting restitution through a “price reduction.”
- Declared the contractual limitations of liability inapplicable. The tribunal decided that the contractual limitation of liability clauses did not apply in this case. It reasoned that the established breach was of a different nature from the indemnity obligation regulated in clause 8.2, so neither that cap nor the conventional indemnity procedure applied.
The sellers — the respondents in the arbitration — challenged the arbitral award by filing a set-aside petition before the Santiago Court of Appeals. They argued that the arbitral tribunal had seriously breached the principle of procedural congruence by issuing what they described as a “surprise decision.”
They argued that the award ordered a partial restitution of the price paid that had never been requested by the claimants nor debated by the parties during the proceedings, which in practice left a valid and binding contract without effect. Since the tribunal had rejected the existence of fraud or deceit, the sellers argued that the contract had to be applied with all of its limitations, and that the arbitrators’ change in legal characterization justified setting aside the award.
To structure their challenge, they invoked three grounds under Article 34 of Law No. 19,971:
- Decisions exceeding the terms of the agreement (extra petita / excess of mandate)
- Inability to present their case
- Award contrary to Chilean public policy
By majority, the Court upheld only the extra petita ground, which applies when the award deals with a dispute not contemplated by the arbitration agreement or exceeds the terms of that agreement. In this case, the Court held that the tribunal substituted the “damages” claim — the claim actually brought and debated — with a restitutionary “price reduction” claim that had never been brought by the claimants. In doing so, the tribunal departed from the specific relief requested and built a decision outside the dispute.
The opinion was drafted by Justice Guillermo E. De La Barra Dunner. Justice Fernando Valderrama Martínez dissented and would have rejected the set-aside petition in full.
What this may mean for your company
The ruling has two dimensions that should be read separately.
The first is procedural. In international commercial arbitration, the principle of congruence operates strictly. The arbitral tribunal may only decide within the scope of what was requested. It cannot build its own solution — even if it considers that solution fairer — if that relief does not correspond to any of the actions brought by the parties. This is conceptually different from the power to legally characterize the facts (iura novit curia): the arbitral tribunal may give a different legal name to facts submitted to it, but it cannot grant relief that is substantively foreign to the parties’ claims.
If you act as a claimant in an arbitration (or in any dispute where the principle of congruence operates strongly) and formulate your claims or remedies imprecisely in the prayer for relief, the tribunal may be constrained. Even if it believes a different or broader solution is appropriate, if that relief was not requested, the decision may be exposed to challenge or annulment for excess of mandate (extra petita). If you act as a respondent, a poorly drafted prayer for relief by the counterparty may become a relevant argument in set-aside or challenge proceedings. In both cases, the final result may depend as much on how the prayer for relief and procedural strategy were designed as on how the case was proven.
The second dimension is contractual. If your company has contracts with limitation of liability clauses, the architecture of those clauses and their relationship with the representations and warranties in the contract should be reviewed in light of this ruling.
There is another angle that should not be ignored. Justice Valderrama’s dissent — reasoned, documented, and issued in a case of this magnitude — would have rejected the annulment. His view was that the buyer’s alternative claim sought restitution of the overprice, a matter on which both parties submitted expert evidence; the tribunal simply interpreted the contract by applying the principle of iura novit curia. That dissent suggests that the debate over the limits of set-aside review in international commercial arbitration will remain disputed. This ruling is not the final word on that discussion.
What you can do
- Audit your SPAs with representations and warranties. Review the relationship between each representation and warranty and the agreed liability regime. A limitation clause that does not clearly cover the type of breach that may occur creates ambiguity that the arbitrator — or the counterparty — may exploit. The time to correct it is before the dispute arises.
- Draft the arbitral prayer for relief precisely. If your company is facing or anticipating an arbitration arising from a contract, the way the claims are articulated is decisive.
- Review your arbitration clause before signing. The interaction between the arbitration clause, the prayer for relief, the claims brought, and the limitation of liability clauses defines the framework within which the arbitral tribunal may decide. That analysis should be done before signing the contract, not once the dispute has already arisen.
If you need to review your contracts, assess the architecture of your representations and warranties clauses, or prepare an arbitration strategy in light of this ruling, schedule a diagnostic meeting with our team.
This content is for informational purposes only and does not constitute legal advice.