Attorney in Costa Rica

Attorney at Law – Mediations and Arbitrations
in Costa Rica

As an attorney at law in Costa Rica, I have been involved in many mediations and arbitrations. Since people use both terms in the same context, is there a difference?  In short, what is the difference between arbitrations and mediations in Costa Rica? Both legal institutions spawned from the same law: number 7727, “Law for Alternate Conflict Resolutions and Social Peace.”  Hence, they have similarities but are different legal terms.

Mediations and arbitrations are alternate methods for conflict resolution. Why are they alternate?  Conflict resolution usually involves a lawsuit, with a final verdict from the common judge, at the end of a legal process. Unlike the traditional method, mediation and arbitration in Costa Rica are alternate routes to resolve a dispute.  As a result, they do not involve a lawsuit and a final resolution or ruling from a Judge as with the regular courts. In Costa Rica, alternate conflict resolution methods include mediation, conciliation, transaction, and arbitration.  I’m an attorney at law that focuses on mediations and arbitrations only. 

The conflict is whisked away from the traditional courts in mediation and arbitrations.  Although mediations and arbitrations in Costa Rica are alike in this way, they are two entirely different things. I will show the difference between the two and explain why I can´t recommend arbitrations in Costa Rica and why they should be avoided.

Mediations for family matters?

Mediations for family matters are highly recommended.  However, if an agreement is reached that involves divorce by mutual agreement, it’s recommended that it’s done by another notary public that is not the person mediating the conflict.  

Attorney at law ready for an arbitration or mediation in Costa Rica
attorney at law in costa rica for mediation
What is mediation in Costa Rica?

Mediation in Costa Rica is an alternate method for conflict resolution. Mediation is defined as the intervention by a third party to help resolve conflicts or disputes. The mediator procures conflict resolution by procuring a negotiation between both parties in conflict. The intervention of this third person (or mediator) is of a neutral nature and seeks negotiation and communication by parties in dispute.

Mediation is a form of communication and cooperation that tends toward conflict resolution. Even though it´s not required, it is always a good idea to hire an attorney at law to be there with you.  The idea is to avoid litigation in traditional courts. Mediation is a type of “assisted negotiation,” in which an impartial third-party act as a mediator and assists in communication. If conflict resolution is not achieved by mediation, both parties always retain the right to escalate to litigation. A Costa Rican attorney at law is required to represent you in mediation.

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What is arbitration in Costa Rica?

Arbitration in Costa Rica is another method of conflict resolution. Arbitration is a jurisdictional process in which both parties elect a “private judge” or “arbitrator” to resolve the conflict. What the arbitrator or arbitrators decide is final and becomes an enforceable verdict. The arbitration tribunal can consist of only one arbitrator or even three. Costa Rica has many “arbitration centers” that carry out arbitrations, like CICA. A Costa Rican attorney at law is required to represent you in arbitration.

What are arbitration clauses in contracts?

Most arbitrations occur because attorneys at law in Costa Rica recommend their use. They insert arbitration clauses in everything. An arbitration clause is a stipulation in a contract. By this clause, both parties agree to submit any conflict that arises into arbitration. If an arbitration clause is present, jurisdiction is removed from the ordinary courts, and both parties are obligated to go to arbitration. A Costa Rican attorney at law is required to represent you in arbitration clauses.

Arbitration Clauses are usually inserted in contracts called “Options to Purchase Agreements”:

This is a mistake. An Option to purchase is a precontract, in which the buyer of a property promises to buy it from the seller in the future. This contract is called a “precontract” because it anticipates a future one: the actual sale agreement. The option to purchase gives the buyer the exclusive right to buy the property in the specified time frame, preventing the seller from offering it to anyone else.
It’s customary for the promissory buyer to pay money as a token of goodwill and seriousness. It is usually convened that the buyer will lose the deposit if the rest of the price is not paid on the designated date. If the day comes and the buyer can´t come up with the rest of the price, he loses the deposit.
Many real estate options to purchase contracts like these usually contain arbitration clauses. They stipulate that arbitration in Costa Rica will be given jurisdiction in case of conflict. I do not recommend arbitration clauses in contracts at all. Arbitration law in Costa Rica is very lacking.

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As an attorney at law in Costa Rica, I can´t recommend arbitrations in this country:

1. ARBITRATION IN COSTA RICA IS QUICK BUT EXPENSIVE:

An arbitration process is speedy. It’s a private form of justice, while ordinary courts may take longer. As an attorney at law in Costa Rica, I know that the time frame has been drastically reduced with the new Civil Procedures Code. A process that used to take up to five years is now being decided in about a year. However, arbitration is expensive. Both parties must deposit the tribunal fees. So, you end up paying your attorney´s fees, the tribunal members´ fees, and the Arbitration Center´s cost. And if you lose, you also pay the counterparty´s attorney fees. All in all, arbitrations in Costa Rica are expensive, and this is my first reason not to recommend them.

2. ARBITRATION IN COSTA RICA LACKS JURISDICTION FOR LIENS:

Arbitration in Costa Rica has flaws regarding liens and annotations. You will run into trouble if you wish to place an embargo or a lien on properties and vehicles. Arbitration Tribunals do not have jurisdiction to order any liens and annotations on properties. They can´t call embargoes over bank accounts, either. If you want to get a lien or an embargo, as an attorney at law in Costa Rica, I recommend it must be requested separately requested to the common Judge. This can present a logistical problem if not done correctly.

3. CAN YOU TRUST ARBITRATORS TO BE TRULY IMPARTIAL?

Another issue is that arbitrators are usually private attorneys. They are everyday people that are not judges. This brings a problem with trusting in their objectivity and impartiality. Can you trust a “de facto” arbitrator with impartiality? If you have only one arbitrator solving your case, can you trust him to act with objectivity? As an attorney at law in Costa Rica, I tell you that in ordinary courts, you have a guarantee that judges are impartial.

4. THERE ARE NO APPEALS IN ARBITRATIONS:

I also find a structural problem with Costa Rican arbitrations. You can’t appeal the final resolution, which I find to violate the “Double Instance Principle.” The double instance principle is the right to appeal the final verdict. It’s the right to have another tribunal of superior hierarchy revise the final resolution.
There is no appeal in arbitration. As an attorney at law in Costa Rica, I tell you that the only legal recourse is a very technical one to the Supreme Court. This recourse can be filed for specific technical reasons of formality only. By formality, I mean that this recourse will not deal with the background issues. This recourse only deals with illegalities regarding due process. So basically, the arbitrator’s decision is final, and there is no appeal.

CONCLUSIONS

There is no need to have arbitration clauses in contracts. Avoid them if you wish to buy real estate in Costa Rica. I can only recommend arbitrations in Costa Rica once there is a change in the law for the better. If you include an arbitration clause in your contract, you can potentially shoot yourself in the foot. Ordinary civil courts work fine; you have impartial professional judges to ensure that your case -if argued correctly- will come to a proper conclusion. Do not gamble with your rights. This my recommendation, as your lawyer in Costa Rica.

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