The Plenary of the Constitutional Convention, with the vote and support of the right-wing Convention members, the majority of the PS, Frente Amplio and Non-Neutral Independents, has rejected the article that proposed the nationalisation of the large copper and lithium mining companies. In this New Constitution, there is no concept of reserving to the State, nationalisation or nationalisation. What was approved, as far as mining is concerned, is even a throwback to the Constitutional Reform of Law 16.615 of 1967 by President Frei Montalva, which added the following clause to N° 10 of article 10 of the 1925 Constitution, which reads:
“When the interests of the national community so require, the law may reserve to the State the exclusive domain of natural resources, productive or other assets, which it declares to be of pre-eminent importance for the economic, social or cultural life of the country.”
By Julián Alcayaga O. – Economist and lawyer.
By providing that the law may reserve to the State, it is providing for something similar to nationalisation, because if any asset is reserved to the State, this means that private parties will not have access to it. For example, now that the appetite of transnationals to exploit minerals in our seabed is growing, such exploitation could be reserved to the State, but it cannot be provided for in the New Constitution, because it does not provide for reservation to the State.
In 1971, with the Constitutional Reform of Nationalisation (Law 17.450 Transitory Provision XVI), President Allende kept the same provision of President Frei Montalva, and only added the concept “nationalise or” before “reserve to the State”. But then he added a clause stating: “The State has absolute, exclusive, inalienable and imprescriptible dominion over all mines”, and later another clause allowing the nationalisation of large copper mining companies, and in Transitory Provision XVII, the Nationalisation of these companies was directly provided for.
The Military Junta, with Constitutional Act No. 3 (DL 1.552) of 11 September 1976, completely repealed Article 10, No. 10 of the 1925 Constitution, and all provisions allowing the reservation or nationalisation of natural resources or productive assets disappeared, but left in force Transitory Provision XVII, which nationalised large-scale mining companies. Furthermore, in 1975, the Military Junta strictly opposed the privatisation project of large-scale mining proposed by Fernando Leniz, and on the contrary, by virtue of its constituent power on 27/02/1976, it issued DL 1. 167, entitled: “Consolidates the Nationalisation of Big Copper Mining”, which constitutionally prohibited the sale of the mining concessions (deposits) of the nationalised companies, and on 28/02/1976 issued DL 1.349 which created Cochilco and DL 1.350 which created the “Empresa Nacional del Cobre de Chile”, the current Codelco, grouping together the 5 companies which had been nationalised by President Allende.
But in those same years, the Constituent Commission that drafted the current Constitution was in operation, which completely removed from the permanent rules of the 1980 Constitution any reference to nationalisation or reservation to the State.
Only in the Third Transitory Provision does the word nationalised appear, leaving in force in the 1980 Constitution the Nationalisation of Big Mining, which states: “Big copper mining and the companies considered as such, nationalised by virtue of what is prescribed in the 17th transitory provision of the Political Constitution of 1925, will continue to be governed by the constitutional rules in force on the date of promulgation of this Constitution”. But this transitory provision only leaves in force what has already been nationalised since 1971. In the permanent norms of the 1980 Constitution, the concepts of nationalising or reserving to the State do not exist.
The intention to erase and hide the concept of nationalisation went so far that even in the Constitutional Organic Law 18.097 on Mining Concessions, drafted under the leadership of José Piñera, article 11.3 states that the mining concessionaire has the exclusive right: “3. – to be compensated, in case of expropriation of the concession, for the patrimonial damage effectively caused to him, which consists of the commercial value of the powers to initiate and continue the extraction and appropriation of the substances that are the object of the concession… The experts, for the purposes of determining the amount of compensation, will establish the commercial value of the concession, calculating, on the basis of the reserves of granted substances that the expropriated party demonstrates, the present value of the net cash flows of the concession”.
Following this issue, the great Radomiro Tomic elaborated the concept of full conception. But what I would now like to emphasise is the fact that the term nationalisation was not used here either, but expropriation, which is not the same thing in legal terms, as many legal scholars, and not only from the left, have argued.
“As a general rule, nationalisation refers to industrial, commercial or service enterprises or to a whole category of goods… However, expropriation, in contrast to nationalisation, concerns specific goods… Expropriation presupposes, in most countries (in the present case only in some cases), the prior payment of compensation; furthermore, compensation must always be complete, full, that is, commutative, proportional to the value of the thing that is taken away from the patrimony of the private individual. On the contrary, nationalisation results in the payment of compensation that does not need to be prior or equivalent to the total or full value of the affected companies or assets; it is sufficient that it be “adequate” to the circumstances and, consequently, its amount is regulated according to various factors, such as the excessive profit obtained by the private individual while exploiting the now nationalised asset, the expropriating State’s capacity to pay, etc.
Furthermore, the State has never, until now, expropriated a mining concession; the only thing that has been done is to nationalise, as our great President Salvador Allende did in 1971.
They tried so hard to hide the term nationalisation or nationalise in the 1980 Constitution, that nevertheless, by hiding it so much, they left the door open to nationalise not only large-scale mining, but also any other productive asset, as we are going to explain.
Article 32 of the current Constitution establishes the special powers of the President of the Republic, among which is the regulatory power, which in No. 6 of this article provides:
“6º.- Exercise regulatory power in all those matters that are not within the legal domain, without prejudice to the power to issue other regulations, decrees and instructions that he deems appropriate for the execution of the laws;”
This means that in everything that the Constitution itself does not order to be done by law, the President of the Republic can provide for it by supreme decree, by virtue of his extended or autonomous regulatory power.
Now, the matters that must be made mandatory by law are set out in the Constitution itself, particularly in Article 63, which lists the matters that must be the subject of a law, among them:
1) Those which by virtue of the Constitution must be the subject of constitutional organic laws;
2) Those which the Constitution requires to be regulated by a law; 3) Those which are the subject of codification;
3) Those which are subject to codification, whether civil, commercial, procedural, criminal or other;
4) Basic matters relating to labour, trade union, social security and social security law.
In total, there are 20 matters that the Constitution mandates to be done by law, and in none of these 20 matters does it say that nationalisation or reservation to the State must be done by law. Consequently, as they are outside the legal domain, the President of the Republic can reserve to the State or nationalise by virtue of the extended regulatory power granted to him by art. 32 of the current Constitution. Therefore, from Pinochet to Boric, all the Presidents of the Republic, as Heads of State, have had the power to reserve to the State or nationalise large-scale mining, or any other public or productive asset, or provide for any other matter that is not a matter of law, by simple supreme decree, in application of his extended or autonomous regulatory power that exists only in the 1980 Constitution, an autonomous power that has been substantiated by several Constitutional Law scholars, among them J. L. Cea Egaña and Kamel Cazor Aliste.
In synthesis, the examination of reliable history allows us to assert that the Constituent Power of 1980: “extended the regulatory power of the President of the Republic by incorporating into our fundamental order the so-called autonomous, independent or extended regulatory power, that is, which is not complete, develops or executes any previous law, but which arises outside any enabling law and which stands on its own, because it is exercised in any matter that is not proper to the legal domain”.
“Similarly, the autonomous or extended regulatory power, finding its basis directly from the Fundamental Charter, like the law, is of the first degree. It should also be noted that this autonomous power is generic, i.e., it may apply to any matter that does not fall within the legal domain”.
This new autonomous regulatory power did not exist in the Constitutions of 1833 and 1925, which only contemplated the President’s regulatory power to issue regulations for the execution of laws, and nothing else. For example, article 82 of the 1833 Constitution provided that the President may: “2. Issue the decrees, regulations and instructions that he deems convenient for the execution of the laws”, while article 72 of the 1925 Constitution provided that the President has special powers, including: “2ª to, issue the regulations, decrees and instructions that he deems convenient for the execution of the laws”.
The extended or autonomous regulatory power is not an original innovation of the 1980 Constitution, as something similar had already been created by President De Gaulle in the French Constitution of 1958 and the Spanish Constitution of 1978. It is possible that the French and Spanish Constitutions inspired the constituents of 1980, but I believe that the main reason for this new power of the President lies in the possibility that the Yes vote in the 1988 plebiscite would win, and that General Pinochet would have to govern until 1997, but with a Chamber of Deputies that would be mostly in opposition, which could stop the laws presented by the executive. The autonomous regulatory power would allow Pinochet to “legislate” in all those matters that the Constitution itself did not explicitly reserve to the law.
While Pinochet was President, he had no need to resort to the autonomous regulatory power, because the National Congress was the Junta de Gobierno, which approved any law submitted by the Executive.
So why haven’t the presidents we have had proceeded to nationalise any company in any activity, given that nationalisation is not one of the matters that must be done by law? Because the great obstacle to nationalisation is not the 1980 Constitution, but the President, and we have never elected a President with the will, courage and intelligence of President Allende.
In conclusion, the New Constitution that is being drafted does not allow nationalisation, and on the other hand, this New Constitution could remain in force for 50 years, after which there will be no copper or lithium left. Therefore, those of us who are in favour of the essential need to nationalise large-scale mining are only left with the possibility that the New Constitution will not be approved, but we are left with the great task of electing a President of the Republic in 3 or 7 years’ time, whose main measure in his programme will be the nationalisation by supreme decree of large-scale copper, lithium and gold mining, by virtue of the autonomous or extended regulatory power of N° 6 of article 32 of the 1980 Constitution.
