The private water provider and Suez-owned Empresa de Servicios Sanitarios de Los Lagos (ESSAL) was repeatedly criticized by the inspection body Superintendencia de Servicios Sanitarios (SISS), for a series of malfunctions and failures leading to an increased risk resulting from the company’s operations [2]. In the foregoing years, ESSAL’s operations resulted relatively costly for citizens whose tariffs increased meanwhile service quality and investment in infrastructure declined constantly [13]. During this particular crisis in July, ESSAL only provided delayed responses such as alternative water-supply points where large groups of people had to wait several hours to receive water. A clear and transparent strategy to the unfavorable situation was also missing.

Despite promising prompt and efficient solutions, the company postponed the return of water access several times [4]. Due to this, water supply services were not fully restored until 21 July 2019, leaving the citizens of Osorno without clean and sufficient drinking water for 10 days. Additionally, the health emergency had to be extended until 31 August 2019 [3]. 

During these times, the protest was articulated and led to rallies by local workers associations and citizen’s initiatives [4]. As a response to ESSAL’s failures and public pressure, government officials declared to fine the company with 2,720 UTA, equivalent to $1,640,878,080, which is the maximum penalty allowed by law according to the type of infraction [6]. Additionally, the National Consumer Service (SERNAC) referred to the Article 25 A of the Consumer Protection Law, which states that in case of unjustified suspension of basic services, the supplier must directly and automatically compensate the affected consumer. Due to this article, they demanded a compensation for the affected Osorno citizens, claiming at least 40 days of free drinking water for the citizens [5].

ESSALS international parent company Suez pressured the government of Chile by threatening arbitration at the World Bank's ICSID court [7]. This international commercial tribunal allows private investors to sue governments that take measures that are unfavourable to their interests [10]. This can result in a costly process since the above-mentioned court favours corporate interests and thus the case could lead to compensation payments for Suez [7]. 

The French multinational is known to aggressively engage in such lawsuits as it had a similar strategy in cases against the Republic of Argentina for water remunicipalization in Buenos Aires [11]. In the case of Chile, one of the few countries in the world with complete private water management (established during the dictatorship of Augusto Pinochet), Osorno could become the very first city to end a contract with a company to take over the management of the service directly. Due to this environment, Chile is a relatively large source of income for the French group, which holds numerous contracts there through a complicated web of holdings through its Spanish subsidiary AGBAR and its Chilean sub-subsidiary Aguas Andinas. After already losing important concessions in Argentina and Bolivia, Osorno seems like an indispensable asset for the company and its position in Chile [10]. 

Furthermore, Suez articulated plans to sell the subsidiary in order to avoid the fine and to disclaim responsibility for the Osorno water crisis [7]. As a result, over 100 international organizations wrote a letter to high-level politicians, highlighting the civil demands to hold the company accountable for the damage done and to end the contract transparently, regardless of Suez’s threats [8]