Chile must compensate the Spanish owners of a newspaper confiscated by Pinochet with 520 million euros

The Spanish Justice sentenced the Chilean State to pay a millionaire compensation (551.77 million dollars, equivalent to 520 million euros) to the Spanish owners of the newspaper El Clarín, confiscated by the dictator Augusto Pinochet the same day he gave the government coup.

The resolution – advanced by elDiario.es – puts an end to a legal and juridical battle of more than 25 years. And it opens a political battle in the South American country due to the enormous public repeal that the presidency of Gabriel Boric, unrelated to this historic dispute, will have to face.

The successive delays of the previous Executives -especially that of Sebastián Piñera- generated that the updating of the compensation claimed by the plaintiffs reaches a record figure in an arbitration between the International Center for Settlement of Investment Disputes (ICSID) and Chile.

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The legal battle began in the late 1990s when the Spanish businessman Víctor Pey -a Republican exiled in Chile who died in 2018 at the age of 103- and the Fundación Presidente Allende, led by the lawyer Joan Garcés (former personal advisor to Salvador Allende) They sued Chile for the confiscation of the newspaper El Clarín -currently digital- that occurred in 1973.

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King Felipe VI with Gabriel Boric at the Chilean’s inauguration in March.

The current owners of the shares of the publishing companies are the Fundación Española Presidente Allende, with 90%, and Pey’s daughter, Coral Pey Grebe (10%).

Pey was a well-known Spanish republican leader who, after the victory of General Francisco Franco in the civil war, fled to Chile in Winnipeg, along with 2,200 other refugees.

Chile never acknowledged Pey having owned that newspaper. However, in 2008, the ICSID condemned the trans-Andean State to pay the plaintiffs 10 million dollars, on the grounds that Chile did not grant Pey fair treatment by not recognizing him, already in a democracy, as the owner of the newspaper.

The World Bank institution, however, did not grant the confiscation claimed by the plaintiffs. It dismissed that part of the claim because it was outside the scope of the investment protection treaty, since the expropriation occurred before 1994, the year in which the treaty between Chile and Spain entered into force. Chile dragged out the litigation and never paid the $10 million sentence.

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The ICSID reiterated on several occasions that the owners of El Clarín had the right to be compensated “for any damage that could be assessed financially” and that their 1972 investment is covered by the Foreign Investment Protection Agreement between Spain and Chili. And it fixed interest on arrears at 5% per year.

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The Spanish businessman Víctor Pey, legitimate owner of El Clarín (El Desconcierto)

ICSID rulings, whose job is to help solve economic differences between nations, or between companies and individuals with states, are mandatory. More than 140 countries recognize its jurisdiction.

“International law has found a way to do justice. Just as there were disappeared persons in Chile, this is the case of a detained-disappeared newspaper,” denounced Garcés, a lawyer who helped Judge Baltasar Garzón in his fight to capture former dictator Augusto Pinochet.

The sentence opens a political battle in the South American country for the enormous public repeal that the presidency of Gabriel Boric will have to face, oblivious to this historic dispute

In 2020, Garcés filed a request for continuation of the execution in Court 101 of Madrid, which historically specialized in arbitration matters. He attached with the lawsuit a quantification of the value of the shares prepared by the experts of Accuracy, an international consultancy based in Paris and one of the international references in arbitrations.

Now, the head of Court 101 in Madrid, Pedro José Puerta, ruled in favor of the plaintiffs and set the main amount of compensation at 429.797 million dollars (382.45 million euros). To this amount, add another 121.972 million dollars (108.53 million euros) for interest and estimated costs.

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The long-lived businessman Pey died without being able to enjoy a judicial sentence that he had been waiting for since 1973, when his assets were taken from him and he had to go into exile in Venezuela. He was a well-known Spanish republican leader who, after General Francisco Franco’s victory in the civil war, fled to Chile in Winnipeg, along with 2,200 other refugees. The Winnipeg was a ship chartered in 1939 at the initiative of, at that time the Chilean ambassador to France, the Nobel Prize for Literature Pablo Neruda.

The Chilean newspaper itself celebrated the ruling on its digital front page this Thursday: “Clarín opens the way to the future“, the newspaper headlined.

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Chile must compensate the Spanish owners of a newspaper confiscated by Pinochet with 520 million euros