Chilean Court Orders Government to Renegotiate Airport Contract with Nuevo Pudahuel
Ruling affirms pandemic disrupted the economic balance of Santiago Airport concession, triggering a contractual review.
The Chilean Ministry of Public Works (MOP) must begin negotiations with Nuevo Pudahuel, operator of Arturo Merino Benítez International Airport in Santiago, following a decision by the Santiago Court of Appeals. The court rejected a complaint filed by the ministry, thereby upholding an earlier ruling by an Arbitral Commission that ordered the restoration of the economic balance of the airport’s concession contract, which had been disrupted by the COVID-19 pandemic.
The Origin of the Dispute: Pandemic and Declining Demand
The conflict dates back to 2021, when mobility restrictions implemented under former President Sebastián Piñera during the health emergency caused a sharp drop in passenger traffic.
Nuevo Pudahuel argued that this situation severely impacted the economic equilibrium of the concession contract, resulting in a significant loss of revenue. The company claimed it was entitled to compensation or contractual adjustments, citing an extraordinary, unforeseen event—the pandemic—that went beyond the risks assumed when signing the agreement.
The MOP’s Position
The ministry rejected these arguments, stating that fluctuations in passenger demand are an inherent risk of the concession model. It added that public health measures during the pandemic were general in nature and not specific to the aviation industry.
As such, according to the MOP, no compensation was due under the Concessions Law, and the pandemic could not be considered a “fait du prince” (an act of the state justifying unilateral contract changes).
Arbitral Ruling and Government Response
In 2023, the Arbitral Commission dismissed Nuevo Pudahuel’s main and first subsidiary claims but partially upheld a second subsidiary claim, recognizing that the pandemic had indeed disrupted the commutativity of the contract. The commission ordered both parties to negotiate in good faith a revised agreement within six months.
The MOP challenged the ruling through a complaint to the Santiago Court of Appeals, accusing the arbitrators of “serious misconduct or abuse” and requesting that the arbitral decision be annulled.
Appeals Court Rejection and Final Ruling
The court rejected the MOP’s complaint, stating that the grievances stemmed from interpretational disagreements rather than any procedural violations. The ruling confirmed that the arbitral decision was made within the legal scope of the arbitrators’ authority, was neither irrational nor contradictory, and did not violate general legal principles.
As a result, the MOP is now legally obligated to enter negotiations with Nuevo Pudahuel to restore the economic balance of the contract, which was affected by the unforeseen global health crisis.
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