CONFIDENTIALITY AGREEMENTS: ITS VALIDITY AND ENFORCEABILITY UNDER CHILEAN LAW (ENGLISH VERSION)
| Jurisdiction | Derecho Internacional |
(Nov 1997)
CONFIDENTIALITY AGREEMENTS: ITS VALIDITY AND ENFORCEABILITY UNDER CHILEAN LAW (ENGLISH VERSION)
Carey, Allende, Medina & Quinzio
Santiago, Chile
Prepared for Delivery at the Rocky Mountain Mineral Law Foundation Institute on International Oil, Gas, and Mining in Latin America
November 3 and 4, 1997
at
Santiago, Chile
1. General Considerations
Confidentiality information and protected areas of interest agreements can be traced back to the Anglo-Saxon Law, in particular the United States of America. These agreements are intended to protect the disclosure of mining information (geological, metallurgical, etc.) to third parties so that such third parties may ponder over the convenience of acquiring an interest on mining rights as a result of such information. The execution of this kind of agreements takes place prior to entering into a purchase agreement or a joint venture agreement relating to the mining rights actually held by the individual who obtained such mining information.
Specifically, confidentiality information agreements are intended to establish conventions offering protection to the delivery of mining information by those who have obtained it; to establish restrictions to its use; to prohibit any subsequent delivery of such information to third parties, and to establish procedures that would apply in the case of a breach of such obligations.
On the other side, the agreements on the creation of protected areas of interest seek to establish or define an area in respect of which the parties will agree that nobody who receives information will acquire any mining rights, surface rights, water rights or any other rights and, in the case of an infringement, impose on the offender the obligation to transfer, upon the other party's request, the rights acquired by it on terms and conditions similar to the acquisition terms and conditions and, as a
[Page 18B-2]
general rule, agreeing to submit any potential conflicts to an arbitration award.
As for Chile, confidentiality information agreements or covenants on the use of mining information and the creation of areas of interest are not long-standing. Actually, this type of agreements gained importance following the mining investment boom that resulted from mining rules and regulations, the origin of which dates back to the Constitutional Organic Law on Mining Concessions of 1981 and the Mining Code of 1983, which laws and statutes have allowed the significant development of the mining industry. The significant participation of foreign investment, in particular, investments from the United States of America, Canada, Australia and South Africa, on the mining development takes on special importance in this period of our history. A direct consequence of the activity carried out in the country by said foreign investors is the use of confidentiality information and areas of interest agreements.
It must be pointed out here that Chilean mining legislation does not provide for any specific provisions regulating this type of agreements and, in the lack of it, the general rule established by article 167 of the Mining Code according to which contracts on mining concessions or mineral substances are to be governed by the rules of common law, that is to say, the civil law, except when amended by the Mining Code, will apply. In the case of confidentiality information and areas of interest agreements, with some exceptions in connection with the latter to which we will refer below, we find no provisions regulating them in our mining legislation and, therefore, common legislation, that is to say, civil legislation will entirely apply to them.
Confidentiality agreements constitute, according to the definition established by Article 1438 of the Chilean Civil Code, a contract. We may explain this by saying that a confidentiality agreement is in fact a bilateral juridical act, the purpose of which is to create rights and obligations for both contracting parties: One party, the party that delivers the information, undertakes to deliver such information, and the other party undertakes "not to do", i.e., to abstain from disclosing such information to third parties
Describing this type of agreements as a contract becomes singularly important as such description defines the effects, that is to say, the set of rights and obligations that arise therefrom; from the creditor's point of view, the effects of the obligation will be the set of rights to which creditor will be entitled to enforce compliance therewith; from the debtor's point of view, its juridical need to comply with it.
[Page 18B-3]
Chilean Civil Code contains two rules that basically refer to the effects of a contract: articles 1545 and 1546 to which we will refer below when discussing paragraph N| 3 of this report.
2. Autonomy of the Will Principle and its limitations
Our civil laws are based on the principle of the autonomy of the will, i.e., on the recognition that individuals are free to regulate their juridical relations without the lawmaker's intervention, with no limitations other than going against an imperative or prohibitive law, the public order and the good customs. These latter constitute the limits to the autonomy of the will according to our legislation. According to this principle, the parties are free to create any juridical relations they may deem appropriate, and this is precisely the origin of the "unnominated contracts" (contracts that are not specifically provided for by law). The parties are free to attribute any effects they may deem appropriate to the contracts entered into by them, as the lawmaker's rules are, in general, merely supplemental to their will and can be abolished by the contracting parties to their discretion. It is the parties' will what will determine the content of the contract and its interpretation will therefore basically abide by its intention. As a general rule, what has been agreed by the parties cannot be changed by legal or judicial proceedings.
As concerns the limits to the autonomy of the will, it must be borne in mind that the public order and good customs concepts are flexible concepts that allow the courts to control the excesses of an exaggerate contractual freedom.
As stated above, this type of agreements — confidentiality information and areas of interest agreements — are considered as "unnominated contracts" as they are not expressly provided for in our legislation. This type of contracts are the maximum expression of the autonomy of the will as they allow the parties to join together with all juridical links they are capable to imagine, as long as such links do not go...
To continue reading
Request your trial