Arbitration

Last verified on Tuesday 8th June 2021

Arbitration: Costa Rica

Andrea Hulbert V.

Hulbert Volio Montero

Legislation

1. Which legislation governs the enforcement of international commercial arbitration awards and arbitral agreements in international business contracts, and international commercial arbitration proceedings?

Costa Rica

The New York Convention on the Recognition and enforcement of Foreign Arbitral Awards governs the enforcement of international commercial arbitration awards. It was adopted by Costa Rica in Law No. 6157, enacted on 26 October 1987.

The Inter-American Convention on International Commercial Arbitration, also known as the Panama Convention, was also adopted by Costa Rica in Law No. 6165 enacted 2 December 1977. This multilateral agreement regulates the conduct of international commercial arbitration and the enforcement of arbitral awards.

Arbitral agreements and international commercial arbitration proceedings are regulated by the Law on International Commercial Arbitration based on the UNCITRAL Model Law (Law No. 8937 from 27 April 2011), referred to in this document as the Law. Costa Rica has a dual arbitration system, which sets forth different rules for domestic arbitration and international arbitration.

The norms about the efficacy of foreign arbitral awards are in the Law and the conventions on international arbitration.

Besides, since October 2018, Costa Rica has a new Civil Procedure Code, Law No. 9342; very innovative because it introduces orality, replacing our former written process, and other modern regulations.

Answer contributed by Andrea Hulbert V.

2. Has the UNCITRAL model arbitration law been adopted in your jurisdiction?

Costa Rica

Yes, Costa Rica adopted the UNCITRAL Model Law, with the following variations:

  • When defining terms, the law provides a rather broad definition as to what should be considered as a commercial dispute. According to article 2(g), the concept “commercial dispute” includes the exchange of goods and services, distribution, commercial representation, credit transfers, factoring, leasing transactions, banking and insurance operations, construction of real-estate projects, mergers and acquisitions, consulting services, transportation of goods and, in general, any form of commercial cooperation. 
  • The law does not include Option II, article 7 of the UNCITRAL Model Law about the definition of the arbitration agreement.
  • It includes two additional articles in relation with matters subject to arbitration and confidentiality. On the one hand, article 37 provides that all matters subject to the free will of the parties according to civil and commercial dispositions are subject to arbitration. On the other hand, in relation to confidentiality, article 38 provides that the arbitral proceeding is confidential. The arbitral award is public unless the parties decide otherwise.

Answer contributed by Andrea Hulbert V.

Conventions

3. Is your jurisdiction a party to both the New York Convention and the Panama Convention? Is it a party to any other conventions or treaties governing international commercial arbitration agreements, awards or proceedings?

Costa Rica

Yes, Costa Rica is a party to the following conventions: 

  • Code of Private International Law (Law No. 50, 6 February 1930);
  • New York Convention on the Recognition and enforcement of Foreign Arbitral Awards (Law No. 6157, 26 October 1987);
  • Inter-American Convention on international commercial arbitration, 1975 (also known as the Panama Convention) (Law 6165, 2 December 1977); and
  • the General Agreement on Tariffs and Trade (GATT) covers international trade in goods (Law No. 7475, 26 December 1994).

Article 7 of our political Constitution states that: “Public treaties, international agreements and those agreed upon, duly approved by the Legislature, shall have, since their promulgation or from the day they designate superior authority to the laws.” (free translation).

Answer contributed by Andrea Hulbert V.

4. Is your jurisdiction a party to the ICSID Convention? Have steps been taken to renounce the Convention or withdraw from ICSID?

Costa Rica

Yes. Costa Rice signed the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (the ICSID Convention) on 29 September 1981. Law No. 7332 of 30 March 1993 ratified it, and the Convention entered into force on 27 May 1993. Costa Rica has not taken any steps to withdraw from ICSID. The grounds to set aside an award are established in article 34.

Answer contributed by Andrea Hulbert V.

5. Is your jurisdiction a party to other conventions that directly affect the enforceability of arbitration agreements, rights or awards?

Costa Rica

No.

Answer contributed by Andrea Hulbert V.

Commercial arbitral agreements and arbitrability

6. Some jurisdictions have permitted parties to compel resolution of a dispute by means of arbitration only if the agreement to arbitrate was entered into after a dispute has arisen. Is a pre-dispute arbitration clause to resolve international commercial disputes by arbitration enforceable?

Costa Rica

No, “compromise” or post-dispute is not needed. The right to arbitrate is in article 43 of the Constitution, we have absolute respect for party autonomy to waive the national jurisdiction at any time.

Answer contributed by Andrea Hulbert V.

7. What are the requirements for an enforceable arbitral agreement?

Costa Rica

Article 7 of the UNCITRAL Model Law in Costa Rica clearly defines the requirements for an enforceable arbitral agreement: 

ARTICLE 7. Definition and form of the arbitration agreement 1) The "arbitration agreement" is an agreement by which the parties decide to submit to arbitration all disputes or certain disputes that have arisen or may arise between them concerning a particular legal, contractual or non-contractual relationship. The arbitration agreement may take the form of an arbitration clause included in a contract or the form of an independent agreement. 2) The arbitration agreement must be in writing. 3) It will be understood that the arbitration agreement is written when there is evidence of its content in any form, whether the arbitration agreement or contract has been concluded verbally, by the execution of certain acts or by any other means. 4) The requirement that an arbitration agreement be recorded in writing shall be fulfilled with an electronic communication, if the information entered in it is accessible for further consultation. "Electronic communication" means any communication that the parties make through data messages. "Data message" means information generated, sent, received or archived by electronic, magnetic, optical, or similar means, such as, among others, electronic data exchange, electronic mail, telegram, telex or the telefax. 5) It will be understood that the arbitration agreement is written when it is consigned in an exchange of writs of claim and answer, in which the existence of an agreement is affirmed by one party without being denied by the other. 6) The reference made in a contract to a document containing an arbitration clause constitutes a written arbitration agreement, provided that such reference implies that that clause forms part of the contract.

The arbitral agreement for international commercial arbitration in our jurisdiction can be in any form as long as it is in writing or agreed upon by both parties. It can likewise be in electronic form, as long as it is clear that both parties wanted to go to arbitration. It can also be part of an underlying contract or an independent document.

Answer contributed by Andrea Hulbert V.

8. Is there subject matter that is not legally subject to arbitration in the context of an international business transaction?

Costa Rica

International business transactions are subject to arbitration. Nonetheless, the difference between arbitrable and non-arbitrable disputes is defined in light of public policy considerations, as it is a sensitive matter of public interest. Article 2 of the Law on International Commercial Arbitration states that all relationships of commercial nature are arbitrable, including but not limited to:

…any trade transaction for the supply or exchange of goods or services, distribution agreement, commercial representation or agency, credit transfer for collection ("factoring"), leasing goods-purchase (leasing), construction of works, consulting, engineering, licensing, investment, finance, banking, insurance, agreement or exploitation concession, joint ventures and other forms of industrial or commercial cooperation, transport of goods or passengers by air, sea, rail or road and real estate transactions in general...

According to the First Chamber of the Supreme Court of Justice of Costa Rica, all disposable economic rights can be the subject matter of a possible arbitration; everything that is not against the public policy (or mandatory law), also known as public order.

The First Chamber of the Supreme Court of Justice in Costa Rica has defined national public policy as a matte:

  • of gross violation of due process (FCSCJ Resolution 664-F-S1-2010, 26 May 2010);
  • when any inequality or intolerable abuse of one of the parties is configured (FCSCJ Resolution 664-F-S1-2010, 26 May 2010); and
  • of a set of principles that inspire the legal system reflecting essential values of a society at a given time (FCSCJ Resolution 76-F-S1-2001, 19 January 2001).

Answer contributed by Andrea Hulbert V.

9. Are there any limits to the ability of a state or an instrumentality of the state to enter into an agreement to arbitrate in your jurisdiction? If so, under what circumstances may the state or its instrumentalities enter into such an agreement? Please describe the requirements that must be met for the state to enter into a binding arbitration agreement.

Costa Rica

No, there any no limits to the ability of the state or an instrumentality of the state to enter into an agreement to arbitrate in our jurisdiction.

The Public Administration Law provides the possibility of the state to submit an arbitration clause in the contracts for all disputes or claims that may arise from the contract, as long as they are related to commercial matters and disposable rights (provisions on articles 27.3 and 28.h) and article 18 of Law No.7727 Law on Alternative Dispute Resolution and Promotion of Social Peace (ADR Law).

The requisites for the clause are the same; it should be in writing and signed by the legitimate authority.

Answer contributed by Andrea Hulbert V.

10. Does the law specify whether an arbitration will be in equity or under law if the parties do not expressly specify the nature of the arbitration in the agreement?

Costa Rica

Yes, article 19 of our ADR Law states that arbitration will be under law unless otherwise agreed by the parties.

Answer contributed by Andrea Hulbert V.

11. How does the law limit party autonomy with respect to the terms of an arbitral agreement?

Costa Rica

There are no limits for party autonomy; they are free to choose all the terms and conditions for the resolution of a possible conflict: number of arbitrators, language, law, institution, seat and others.  

Answer contributed by Andrea Hulbert V.

12. Under what circumstances does the law allow a non-signatory to an arbitral agreement to pursue a claim in an international arbitration against a party that signed the arbitral agreement?

Costa Rica

The law does not address the issue, but our case law had; it is possible in our jurisdiction to include a non-signatory party in a domestic or international arbitration when that party is directly related to the contract or its execution. The case law of the First Chamber of the Supreme Court (FCSCJ):

  • As the plaintiff has stated in the appeal, quoting several precedents of this Court on this subject matter, it is possible to extend the arbitration clause to non-signatories, such as supervening third parties; and also, because there is an unquestionable link with the contract that contains it and with its performance. These aspects are evident in this specific case. (FCSCJ, Resolution 00112-F-S1-2018, 8 February 2018).
  • "In other words, the fact that a party is not a signatory to the arbitration clause is not an issue that the INS can use to question the competence of arbitrators as far as it is concerned. It is for the non-signatory to decide whether or not to object to the involvement that might be assigned to it in the matter, regardless of the control that the Arbitral Tribunal will exert over whether or not there is arbitrable matter. However, it is also not impossible for arbitration to be conducted and resolved with persons who, materially, have not executed the arbitration agreement, but who are affected by it due to special circumstances (FCSCJ, Resolution 00111-F-S1-2018, 8 February 2018).
  • If the arbitration clause is in a macro agreement it will be valid and applicable for every conflict raised during the execution of the business described in the document, even for new parties that intervene in the business after the agreement, unless otherwise agreed by the parties, (FCSCJ, Resolution No. 475-01, 27 June 2001, 746-C-2007, 19 October 2007).
  • If the arbitration agreement was contained in a letter of intent, a pre-contractual agreement or preparatory documents for the final contract and it was not revoked in the final agreement (FCSCJ, Resolution 703-00, 22 September 2000).
  • When in the preliminary agreement the participation of a third party related to one of the signatories is mentioned, for example, a subsidiary (FCSCJ, Resolution 703-A-00, 22 September 2000).
  • If a third party assumes the role of one of the original parties in the contract (FCSCJ, Resolution 200-A, 7 April 2006).
  • If the third party is part of the “economic group” or “group of economic interest” of one of the signatories (FCSCJ, 1565-A-S1-2000, 23 December 2010, 759-C-S1-2008, 11 November 2008).
  • If the third party has an important relation in the business (FCSCJ), 490-F-S1-2008, 24 July 2008).

Answer contributed by Andrea Hulbert V.

13. Under what circumstances does the law allow a signatory to an arbitral agreement to pursue a claim in an international arbitration against a party that did not sign the arbitral agreement?

Costa Rica

See the answer to question 12. 

Answer contributed by Andrea Hulbert V.

14. Under what circumstances may a non-signatory to an arbitral agreement compel arbitration of a claim asserted against it in a court of law by a signatory of the arbitral agreement?

Costa Rica

The non-signatory party that fulfils the characteristics explained in question 12 may claim the defence of lack of jurisdiction, alleging the existence of the arbitration clause and the relationship with the signatory party. We must make clear there is no record of a situation like this in our jurisdiction.

Answer contributed by Andrea Hulbert V.

15. Is there any law in your jurisdiction specifically governing the arbitrability of consumer or labour disputes?

Costa Rica

Yes, in both.

Consumers have recourse to the Promotion of Competition and Effective Consumer Protection Law, No. 7472, enacted 20 December 1994, which regulates the possibility of an arbitration on article 58 “…At any time by mutual agreement, the parties may submit their dispute, definitively, before an arbitrator or arbitral tribunal, they must cover the expenses incurred…”.

Employees have Law No. 9343, enacted 25 January 2016, applicable since the 25 of July 2017; and the rules set in the Decree No. 40875 MTSS-JJ of 20 February 2018. Both regulations are new, stipulate the arbitrability of labour conflicts and are very restrictive in term of what requisites for the arbitral institution and the arbitrators. The institution needs to be approved by the government and the arbitrators need to be approved and registered at the Labour Ministry.

Answer contributed by Andrea Hulbert V.

16. Does your jurisdiction provide for class-action arbitration or group arbitration? If so, are there any limitations to the arbitrability of such claims or requirements that must be met before such claims may be arbitrated?

Costa Rica

The Law does not contain an express provision regulating the matter. Additionally, there are no reported cases on this issue.

Answer contributed by Andrea Hulbert V.

17. Are contractual waivers precluding arbitration of claims on a class-wide basis enforceable? Under what circumstances have such waivers been upheld or set aside by the courts?

Costa Rica

The Law does not contain an express provision regulating the matter. Additionally, there are no reported cases on this issue.

Answer contributed by Andrea Hulbert V.

18. If the parties’ contract is silent on the issue of class-action arbitration, is class-action arbitration allowed under the law of your jurisdiction?

Costa Rica

The Law does not contain an express provision regulating the matter. Additionally, there are no reported cases on this issue.

Answer contributed by Andrea Hulbert V.

19. Are foreign arbitral institutions without a physical presence in your jurisdiction authorised to administer arbitrations in your jurisdiction? Does the law require that a foreign institution be licensed under local law to administer an arbitration seated there?

Costa Rica

The Law does not contain an express provision regulating the matter; but, foreign institutions are authorised to administer international arbitrations seated in Costa Rica, without any licence. If the foreign institution opens an office in the country the situation changes, and it will need to be authorised to work in Costa Rica.

Answer contributed by Andrea Hulbert V.

Arbitral institutions and arbitrators

20. Is an arbitral award issued in an arbitration seated in your jurisdiction under the auspices of a foreign institution (such as the ICC, ICDR, LCIA or similar institutions) vulnerable to challenge because it was issued under the auspices of a foreign institution?

Costa Rica

No, an award can be challenged for the reasons determined in the Law, but not because of the institution that was chosen by the parties to administer the procedure.

Answer contributed by Andrea Hulbert V.

21. Does the law require that arbitrators in international arbitrations be nationals or residents of your jurisdiction?

Costa Rica

No, article 11 of the law states that nationality is not an obstacle to be appointed as an arbitrator, unless otherwise agreed by the parties. Therefore, in Costa Rica foreigners can serve as international arbitrators.

Answer contributed by Andrea Hulbert V.

22. Does your law require that arbitrators in international cases be lawyers?

Costa Rica

The Law does not require the arbitrators to be lawyers; this should be addressed by the parties in their arbitration agreement or in the rules of the chosen arbitral institution.

Answer contributed by Andrea Hulbert V.

23. Does your jurisdiction provide immunity from civil lawsuit to arbitrators serving in an arbitration with its legal seat in your jurisdiction? Under what circumstances does such immunity apply or not apply?

Costa Rica

The Law does not contain an express provision regulating the matter, and we do not find any immunity that could be applicable to an arbitrator.

Answer contributed by Andrea Hulbert V.

24. Are the fees of foreign arbitrators serving in an arbitration seated in your jurisdiction subject to taxation?

Costa Rica

Foreign arbitrators serving in an arbitration seated in Costa Rica in an institutional case, meaning that the administration or the arbitration is done by a Costa Rican Centre, are subject to a taxation named “remittances abroad”. This tax is applicable when the arbitrator’s fees are paid from Costa Rica because they are working under the administration of that national entity (article 54 of the Income Tax Law/ ITL).

As from 1 July 2019, such tax is equivalent to a 25 per cent of the total amount paid to the arbitrator from Costa Rica, the tax should be collected and paid by the administration entity (56, 58 y 59 ITL); this means that the arbitrator will not have the obligation to declare or pay, the centre has to pay the arbitrator fees reducing the 25 per cent, and is obliged to pay such tax.

To clarify, if the arbitration is seated in Costa Rica, but the centre or institution in charge of the administration of the case is abroad, for example, the ICC in Paris, neither the arbitrators nor party counsel are subject to any tax. Taxes and their interpretation are in constant change, so this is something that should be reviewed, case by case, with an expert in the field.

Answer contributed by Andrea Hulbert V.

25. Must arbitrators in international arbitrations be independent and impartial? What is the legal standard governing conflicts of interest and disclosure by arbitrators in international arbitrations?

Costa Rica

Yes, pursuant to article 12 of the Law, international arbitrators must be independent and impartial; they shall disclose any circumstances likely to give rise to justifiable doubts as to his impartiality or independence. These are the main grounds to challenge an arbitrator.

The standards for disclosure and disqualification are high.

Answer contributed by Andrea Hulbert V.

26. Will courts entertain requests to disqualify an arbitrator before the conclusion of an award?

Costa Rica

Yes. The proceeding to disqualify an arbitrator is set in article 13.3 of the Law on International Arbitration, a literal copy of the UNCITRAL Model Law. Article 13.3 expressly permits the party to request the court to decide on the challenge:

 … (3) If a challenge under any procedure agreed upon by the parties or under the procedure of paragraph (2) of this article is not successful, the challenging party may request, within thirty days after having received notice of the decision rejecting the challenge, the court or other authority specified in article 6 to decide on the challenge, which decision shall be subject to no appeal; while such a request is pending, the arbitral tribunal, including the challenged arbitrator, may continue the arbitral proceedings and make an award…

Answer contributed by Andrea Hulbert V.

Arbitral proceedings

27. Discuss the public perception of the reliability of arbitration as a dispute resolution method in your jurisdiction.

Costa Rica

Arbitral proceedings are perceived as very reliable, professional and rapid solution to conflicts. There has been an increase in the number of arbitrations.

Answer contributed by Andrea Hulbert V.

28. Does the law require that arbitral proceedings seated in your jurisdiction be held in a specific language?

Costa Rica

No, the parties are free to determine the language of the proceedings (article 22 of the Law).

Answer contributed by Andrea Hulbert V.

29. Can foreign lawyers serve as advocates in arbitral proceedings in your jurisdiction? If so, can they do so alone or must a local lawyer serve as co-counsel?

Costa Rica

Yes, foreign lawyers can serve as advocates in arbitral proceedings. A local lawyer does not need to serve as co-counsel in such cases.

Answer contributed by Andrea Hulbert V.

30. Are the fees of foreign lawyers earned for services rendered in connection with an arbitration seated in your jurisdiction subject to local taxation?

Costa Rica

No, as long as they do not have their residence in Costa Rica for more than six months.

Answer contributed by Andrea Hulbert V.

31. In what circumstances, if any, does your law allow the consolidation of multiple arbitral proceedings into a single proceeding?

Costa Rica

In international arbitration, the parties are free to agree to the consolidation of multiple arbitral proceedings. Our local law will request the existence of a common cause.

Answer contributed by Andrea Hulbert V.

32. Please describe common practice and usage in international arbitrations seated in your jurisdiction with respect to a party’s right to require an opposing party to produce documents pertinent to the dispute.

Costa Rica

Costa Rica has a civil law system and we do not have discovery as understood under common law. The general rule will be that arbitrators will respect the agreement of the parties regarding the production of documents. Our country has applied the principle of the availability of the evidence to compel the other party to produce documents. Nevertheless, it is common for parties to agree to use the IBA Rules on the Taking of Evidence.

Answer contributed by Andrea Hulbert V.

33. Does the law impose a duty of confidentiality in arbitration? If so, on whom?

Costa Rica

Yes, article 38 of the Law states the confidentiality of the international arbitration process. This confidentiality is mandatory for both arbitrators and counsel. When the arbitration file needs to go to court, only the parties and their counsel will have access to it. Unless otherwise agreed by the parties, the final award will be public, the names of the arbitrators and lawyers will be published, but the parties can only be identified with their initials.

Answer contributed by Andrea Hulbert V.

34. Does the law authorise third-party funding for international arbitration? Are there any ethical limitations imposed upon counsel to the parties that restricts the use of such funding?

Costa Rica

The Law does not contain an express provision regulating the matter. Additionally, there are no reported cases on this issue.

Answer contributed by Andrea Hulbert V.

35. Are there any mandatory national rules of professional ethics that apply to counsel in an international arbitration in your jurisdiction? If so, are those rules applicable to counsel from another jurisdiction participating in an arbitration in your jurisdiction?

Costa Rica

No. Costa Rica does not have a set of mandatory national rules of professional ethics that apply to counsellors in international arbitration; the applicable rules will be the ethic regulations from the arbitral institution, or from the IBA rules if agreed by the parties; and if there is none, and the arbitration is held here, we have the Code of Ethics of the Costa Rican Bar association.

Answer contributed by Andrea Hulbert V.

36. Are there any mandatory rules on oath or affirmation for witnesses testifying in an arbitration in your jurisdiction that have to be administered prior to their testimony? If so, what are they?

Costa Rica

In Costa Rica witnesses and experts are required to take an oath prior to their declaration, but this is not applicable for international arbitration; unless the tribunal decides to apply article 27 of the Law and request the assistance of a national court in taking evidence, in this case national rules will be applicable.

Answer contributed by Andrea Hulbert V.

Court support for arbitration

37. Are there restrictions in your jurisdiction on the interviewing of witnesses in anticipation of hearings or giving of testimony?

Costa Rica

No. The applicable rules to interview witnesses are normally issued by the arbitral institution in charge of the international arbitration. Costa Rica does not have restrictions. 

Answer contributed by Andrea Hulbert V.

38. Can arbitrators decide on their own jurisdiction? Is the principle of ‘Kompentenz-Kompetenz’ followed in the courts?

Costa Rica

Yes. Article 16 of the Law addresses the issue of the arbitral tribunal's competence to rule on its jurisdiction. This principle is also followed by the courts in domestic and international arbitration.

Answer contributed by Andrea Hulbert V.

39. Do the courts follow the principle of the independence and separability of the arbitration clause?

Costa Rica

Yes. Article 7 of the Law regulates the arbitration clause and our courts have repeatedly ruled on the separability of the arbitration cause.

Answer contributed by Andrea Hulbert V.

40. Are arbitral tribunals empowered to grant interim relief? If so, how is that relief enforced in the courts?

Costa Rica

Yes. The arbitrators may grant interim relief according to articles 9 and 17 of the Law, and they may request the assistance of the national courts to enforce them.

Answer contributed by Andrea Hulbert V.

41. Can arbitrators issue orders, subpoenas or use other legal processes to compel the production of evidence by a third party or compel a third-party witness to appear before them? If so, will a court lend its aid in enforcing such an order against a recalcitrant third party? Also, if arbitrators can issue orders, subpoenas or use other legal processes to compel the production of evidence by a third party or compel a third-party witness to appear before them, are there any limitations to their doing so?

Costa Rica

The law does not give such enforcement powers to the Tribunal, but the arbitrators may request assistance with the taking of evidence to a national court; in which case the court may execute the request within its competence and according to its rules on taking evidence. The judge has the power to compel a third-party witness to appear before them or order the production of documents (article 27 of the Law).

Answer contributed by Andrea Hulbert V.

42. Can a party to an arbitration seek relief from the court to obtain evidence in aid of an international arbitration? What is the scope of such relief?

Costa Rica

Yes. Article 27 of the Law allows the assistance of the Court on the taking of evidence, but national rules will apply for that evidence.

Answer contributed by Andrea Hulbert V.

43. Can a party in an international commercial arbitration seek interim or provisional relief from a court without first seeking relief from the arbitral tribunal?

Costa Rica

Yes, a party can request an interim or provisional relief from the court in Costa Rica, as well as preparatory evidence, as long as the court has jurisdiction over the parties and according to the norms of the Civil Procedure Code; for example, a preventive lien on a property or account (see, for example, articles 77, 78, 79, 80, 86, 90, 93 to 97 of the Civil Procedure Code).

Answer contributed by Andrea Hulbert V.

44. Have the courts issued injunctions enjoining arbitral proceedings from going forward?

Costa Rica

There are no reported cases on this matter and it does not happen in domestic arbitration.

Answer contributed by Andrea Hulbert V.

45. Does the law provide that post-award interest accrues on an unpaid arbitral award?

Costa Rica

Yes, it is possible under Costa Rican law. If the award provides the interest rate the Court will apply that; if not, in Costa Rica every debt has a “legal interest”, which is determined by the commercial law in article 497: 

When the parties have not expressly convened upon an interest rate, they will apply the legal interest rate, which is the same as the basic rate of the Central Costa Rican Bank in case the transaction is in colones, and the prime rate when it is in dollars….

Answer contributed by Andrea Hulbert V.

46. Is an arbitral tribunal empowered to award attorneys’ fees to the prevailing party or is that power reserved to the courts?

Costa Rica

Yes, the tribunal is empowered to grant the attorneys’ fees, unless otherwise agreed by the parties. In the case of interim or provisional measures, article 17.g of the law expressly provides that possibility.

Answer contributed by Andrea Hulbert V.

Awards - content

47. Is an arbitral tribunal empowered to award punitive or exemplary damages? Is the arbitral tribunal empowered to award interest?

Costa Rica

That will depend on the substantive applicable law, the contract and the parties’ agreement. The Costa Rican civil and commercial law does not allow punitive or exemplary damages, only compensatory. In either case the tribunal can award interest.

Answer contributed by Andrea Hulbert V.

48. What are the grounds for challenging or vacating an international award issued in an arbitration seated in your jurisdiction?

Costa Rica

The grounds for annulment are set forth in article 34 of the law (equal to article 34 of the UNCITRAL Model Law): The judicial authority may set aside an award by request of one of the parties or by its own initiative:     

(A) At the request of a party, if the party making the application furnishes proof that:       

  • A party to the arbitration agreement was under some incapacity; or the said agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under Costa Rican law; or   
  • The party making the application was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present his case; or   
  • The award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration, or contains decisions on matters beyond the scope of the submission to arbitration, provided that, if the decisions on matters submitted to arbitration can be separated from those not so submitted, only that part of the award that contains decisions on matters not submitted to arbitration may be set aside; or   
  • The composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties, unless such agreement was in conflict with a provision of this section from which the parties cannot derogate, or, failing such agreement, was not in accordance with this section.      

(B) By its own initiative, when the court finds that:       

  • The subject matter of the dispute is not capable of settlement by arbitration under Costa Rican law; or    
  • The award is in conflict with the international public policy of Costa Rica.      

Costa Rican courts have shown great deference for international arbitral awards. 

Answer contributed by Andrea Hulbert V.

49. Is “lack of reasonableness”, manifest disregard or a mistake in the application of the substantive law to the dispute of an international award grounds to vacate it?

Costa Rica

No, "lack of reasonableness", manifest disregard or a mistake in the application of the substantive law to the dispute of an international award are not grounds to vacate the award. The list of causes contained in article 34 of the Law is limited. But, in a court case, a public order violation can be manifest when an award is for lack of motivation.

Answer contributed by Andrea Hulbert V.

50. Have international awards rendered in your jurisdiction been vacated on the grounds of "public policy"? If so, how has the "public policy" ground for vacating an award been interpreted in your jurisdiction?

Costa Rica

No. We have annulments of domestic awards but not any record of an international ward been vacated.

Answer contributed by Andrea Hulbert V.

51. What is the period of time a party has to challenge such an award after its issuance?

Costa Rica

Three months is the term to challenge the award (article 34.3 of the Law).

Answer contributed by Andrea Hulbert V.

52. Please describe any recent significant experiences or cases that illustrate the attitude of your courts towards the annulment of international awards rendered in your jurisdiction.

Costa Rica

The Costa Rican Court has demonstrated a pro-arbitration attitude; the most recent case was an annulment action against an arbitration brought by SV SA against an ICC award rendered on 27 May 2014. The court denied the annulment action on 5 March 2015, Resolution No. 000280-F-S1-2015, in which a vast analysis of the law was made highlighting that the pillars of such law are liberty and party autonomy; it also refers to the importance in international arbitration of informality and flexibility, good faith, legal security, the waiver of the right to object as a manifestation of good faith. Concluding that the control from the court is limited to the examination of the arbitrability of the controversy and if the award is against the Costa Rican public order.

Answer contributed by Andrea Hulbert V.

Awards enforcement

53. Do the courts consider themselves empowered to vacate an arbitral award rendered in another jurisdiction?

Costa Rica

Articles 36 provides that the court may not enforce a foreign award it is goes against our public order; article 35 makes express recognition of the enforceability of a foreign award. Also, article 99.2 and 99.4 of the Code of Civil Procedure provides that a requirement of the enforceability of a foreign award cannot violate the national public order.

Answer contributed by Andrea Hulbert V.

54. May parties waive all court review of an arbitral award rendered in your jurisdiction (or restrict or expand the scope of that court review)?

Costa Rica

No.

Answer contributed by Andrea Hulbert V.

55. Please describe the process for enforcing an arbitral award rendered in another jurisdiction.

Costa Rica

Recognition of arbitral awards rendered in another jurisdiction must be submitted before the First Chamber of the Supreme Court of Justice.

In the past the New York Convention requisites were applied. We now have a new Civil Procedure Code, applicable since October 2019, that added some extra requisites for the enforcements of international arbitral awards:

The requesting party may submit the original award, or an authenticated copy issued by the arbitrators who rendered it in the country of origin. This document must demonstrate that the diplomatic requirements have been met, including an official translation into Spanish when applicable.

The other party will be granted a hearing for three days, following which the Court will deliberate for five days if there is no evidence to receive; should there be such evidence, it will fix a date for a hearing within the next 10 days, proceeding to resolve the matter at the end of the hearing.

This resolution has no recourse (articles 99 to 93 and 113 to 114 of the Civil Procedure Code). If the recognition of the resolution for enforcement is approved, enforcement procedures will be initiated in accordance with the rules established in the Code.

Answer contributed by Andrea Hulbert V.

56. Assuming that the award is covered by a convention applicable in your jurisdiction, how long does it take to obtain an order of enforcement in the first instance? How long does it take for the enforcement process to run its full course through to the last instance?

Costa Rica

The enforcement of the award in the first instance used to take from 12 to 18 months. The entire enforcement process can take from two to four years. With the new Code of Civil Procedure it appears to be faster, but we can’t give an accurate answer since there is no case law. 

Answer contributed by Andrea Hulbert V.

57. Please compare how long it takes to enforce an arbitral award rendered abroad with how long it takes to domesticate a foreign judgment.

Costa Rica

It is approximately the same time frame, because it follows a similar procedure in court.

Answer contributed by Andrea Hulbert V.

58. Please describe some significant recent experiences with the enforcement of foreign arbitral awards.

Costa Rica

Generally, one could say that awards have been successfully enforced. Tribunals are very respectful of arbitral procedures and once the foreign award is approved it goes directly for enforcement by the competent civil tribunal.

Answer contributed by Andrea Hulbert V.

The outlook

59. To what degree has “public policy” been a ground to refuse enforcement of an international award rendered abroad?

Costa Rica

There are no reported cases on the matter, but the court has set aside several domestic arbitral awards under the grounds of a violation of public policy.

…The imposing nature and its character as a matter of public order of the set of provisions that protect the principles and rights of the parties to proceedings, such as arbitration and, in particular, as regards the issuance of the award, are not only regulated in the instruments of international application, such as those mentioned. They are also pertinent internally, as contemplated in Article 5 of the Civil Procedure Code, which states that the procedural rules are of public order and, consequently, binding on the judge, the parties and any third parties. Judgment…

The juridical concept of Public Policy is undetermined, flexible, dynamic and of difficult definition. Nevertheless, it can be understood as the set of principles underlying a legal system that reflects the core values of a society at a given time… 

(..) …violation of the public order will occur when a non-arbitrable matter was known in an arbitration, because of its juridical nature as not disposable rights subject, but also when the action against the award is based on a subject matter excluded from the legislator…

(free translation/ First Chamber of the Supreme Court of Justice, No. 724, 24 June 2015, No. 76, 19 January 2001, also No. 766-F-01, 26 September 2001, No. 685-F-05, 22 September 2005; No. 690-F-2006, 27 September 2006).

Answer contributed by Andrea Hulbert V.

60. Can a foreign arbitral award be enforced if the award has been set aside by the courts at the seat of the arbitration?

Costa Rica

There are no reported cases on the matter. 

Answer contributed by Andrea Hulbert V.

61. Has your jurisdiction refused to pay an international arbitral award issued against the state or an instrumentality of the state in your jurisdiction? If so, please provide a brief explanation.

Costa Rica

No.

Answer contributed by Andrea Hulbert V.

62. What is your view of the future of international arbitration and is the trend positive in your jurisdiction? What advice do you have with respect to dispute resolution for a foreign lawyer advising a foreign client contemplating entering into a business deal with a company from your jurisdiction?

Costa Rica

The future of international arbitration in Costa Rica is very bright; we have the Law on International Commercial Arbitration based on the UNCITRAL model law, we have the New York Convention and an arbitration-friendly judicial system. Costa Rica has the three requisites to be the perfect place for international arbitration.

Answer contributed by Andrea Hulbert V.

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