Investment conduct, risks, and business judgment rule: Commentary on ruling rol number 537-2018 of the Court of Appeals of Santiago

Abstract

The objective of this commentary is to analyze the judgment rendered by the Court of Appeals of Santiago in case number 537-2018, which rejects with costs the liability actions brought by Inversiones Ranco Tres S. A. against Latam Airlines Group S. A., its controlling group, three of its directors, and two senior executives of the company, based on the financial loss caused by the forced liquidation of shares held by the plaintiff in the defendant’s company. These ruling addresses, among other relevant aspects of corporate liability, the manner in which the business judgment rule interacts with fault as a basis of liability and with the judge’s powers. It also highlights the application of the doctrines of estoppel and assumption of risk as delimiting factors of the responsibility of the parties in the case. In this context, using a doctrinal methodology, the application of this rule will be critically examined, as well as the invocation of the aforementioned theory and the reference to the assumption of risk in view of their place within the framework of tort liability and the effects they produce.