Chile is currently considering a new Constitution-due to be put to a referendum in September-and foreign investors should be aware of its potential impact on their investments in the country. The proposed changes in the draft Constitution could reduce compensation awards for expropriated property, alter water rights, and freeze mining concessions. The draft would also grant wide discretion to the country's courts by allowing judges to decide on the amount of compensation owed for expropriated property. As to changes in the regulation of natural resources-if the draft is approved, the government would authorize only noncommercial water use and could institute a freeze on the granting of new mining concessions.

Given this uncertainty, foreign investors should prepare for potential litigation, build political capital with local communities, and consider available international treaty protections to safeguard their assets.

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