The Government’s Top Lawyer for a High-Stakes Constitutional Battle

The Chilean government has named constitutional law professor Arturo Fermandois as lead coordinator of the legal team that will defend key parts of the economic reactivation bill before the Constitutional Court. The opposition has filed three challenges targeting the bill’s provisions on tax invariability—a guarantee that certain tax conditions will not be altered for investors—and on the state’s obligation to compensate private parties when an environmental qualification resolution (RCA) is annulled.

The government’s pick, a 62-year-old UDI party member and former ambassador to the United States, is meant to match the caliber of the opposition’s high-profile attorneys, including Jorge Correa Sutil and former Justice Minister Jaime Gajardo. Fermandois, a partner at his own public law and constitutional litigation firm, has extensive experience before the Tribunal Constitucional and international arbitration bodies. The court will first decide on the admissibility of the three challenges, with hearings expected soon after. The outcome could redefine the balance between regulatory stability and environmental oversight in one of Latin America’s most attractive investment destinations.

Why Fermandois’s Appointment Matters for Business and Political Strategy

The Core of the Legal Clash: Tax Stability vs. Public Purse

At stake are two provisions inserted into the government’s reactivation package. Tax invariability clauses are routinely used in large investment contracts to shield firms from future tax increases, but opposition lawmakers argue they tie the state’s hands disproportionately. The indemnification mechanism—requiring the treasury to pay compensation for an annulled RCA—is seen by critics as a blank check that could reward projects whose environmental permits were revoked on legal or technical grounds. A ruling against these provisions could raise the effective cost of future projects, while a ruling in their favor would lock in a more investor-friendly framework.

What Fermandois Brings to the Table: Credentials and Political Signals

Arturo Fermandois is no stranger to high-profile constitutional litigation. He litigated for Chinese mining company Tianqi before the Constitutional Court in 2018 and has served as an international arbitrator. His background as a UDI militant, former student of Jaime Guzmán, and close associate of President José Antonio Kast and his chief advisor Alejandro Irarrázaval sends a clear signal: the government is treating this case as a cornerstone of its pro-business agenda. By selecting a figure with deep ties to the economic right and a track record in defending property rights and legal certainty, La Moneda aims to reassure domestic and foreign investors that the reactivation law’s guarantees will be vigorously defended.

Opposition’s Legal Front: A Broad Coalition with Constitutional Firepower

The challenging side is equally well-armed. Constitutional heavyweight Jorge Correa Sutil and former Justice Minister Jaime Gajardo (Communist Party) are leading the argument against tax invariability, while attorney Leslie Sánchez is spearheading the challenge over RCA indemnities. The presence of figures from the center-left to the far left highlights the political breadth of the opposition’s discomfort with the bill. The Constitutional Court will test whether this coalition can translate political disagreement into a coherent legal challenge under Chile’s charter.

What Companies and Investors Should Track as the Case Moves Forward

  • Watch the admissibility decision this Thursday. The Constitutional Court will rule on whether to admit the three challenges; a rejection would end the matter, while admission sets the stage for oral arguments.
  • Map your exposure. Any company with a tax stability agreement or an active RCA in Chile should assess how much of its project economics depends on the disputed provisions. If the indemnity for annulled RCAs is struck down, the state’s liability could vanish, leaving firms to absorb the loss of a permit without compensation.
  • Monitor the government’s next moves. The opposition has urged a presidential veto to remove certain provisions, but the administration has not signaled any intention to back down. A sudden concession would change the legal landscape before the court even rules.
  • Track the calendar for oral arguments. Once admissibility is confirmed, the court will set a date for hearings, likely within weeks. The quality of the legal presentations could influence the final ruling—and market expectations.

Risk & Opportunity Assessment

Commercial RiskMediumIf the challenges succeed, companies with tax invariability clauses may lose protection, increasing project costs and effective tax rates.
Competitive RiskLowThe ruling would apply uniformly across all affected firms, not shifting relative competitive positions.
Regulatory RiskHighThe court’s interpretation could eliminate or uphold the state’s obligation to indemnify for annulled environmental permits, directly affecting permit-dependent sectors like mining and energy.
Reputation RiskMediumA defeat for the government would signal policy instability, though Chile’s institutional framework remains robust.
Technology DisruptionLowNo technology factor is at play in this constitutional dispute.
Commercial OpportunityMediumA favorable ruling would cement legal certainty for investors, potentially accelerating project pipelines that have been on hold.