- 1.Outline the court system in your jurisdiction.
Costa Rica has a structured, independent and impartial judicial system. Its legal system is based on civil law and, hence, precedents are not as important as the application of the written laws enacted.
- 2.What remedies are available to a party that is in a dispute with a foreign entity? Do the laws provide foreign entities the same rights afforded to local entities? Are there laws requiring foreign entities to post a bond or other security before they can defend a suit?
The court system does not make any difference between national and foreign entities regarding whether a national is able to sue a foreign or vice versa. Notwithstanding the matter shall refer to Costa Rican laws or jurisdiction. Both parties are allowed and have the same rights under the law. Considering the nature of the lawsuit, the judge may order precautionary measures as established by the Civil Procedure Code.
- 3.What is the most common type of litigation encountered in your jurisdiction by foreign entities (for example, claims for breach of contract, employment or some other issues)?
The most common types of litigation consist on labour lawsuits (resulting from layoffs or employment related matters) and civil claims (derived from breach of contract or ordinary debts).
- 4.How frequently do parties pursue criminal actions (eg, querellas) in the context of commercial disputes? May criminal trial evidence be adduced in follow-on civil litigation? May civil cases be brought concurrently or after criminal litigation?
If the dispute that generated a lawsuit is also sanctioned by criminal laws, the parties are able to file a claim seeking punishment. The evidence and rulings obtained in this kind of lawsuits could be used to support other claims.
- 5.Is there a right to a trial by jury in a commercial dispute?
No. Costa Rican laws do allow juries for any type of trial.
- 6.Do courts require or strongly encourage mediation before or during a litigation proceeding?
Costa Rican courts strongly encourage conciliation between the parties. This action is promoted in every litigation proceeding and takes place before evacuating the evidence offered by the parties.
- 7.Will choice of law and choice of forum provisions in a contract be enforceable recognised?
The parties are totally free to determine in a contract the law and forum provisions applicable for the solution of their disputes. Nevertheless, to ensure the proper implementation of such stipulations the parties should not make conflicting options (for example subject the resolution of a dispute to Costa Rican courts but under foreign laws, because the interpretation and scope of the law will not be properly handled by our judges).
Other options can be executed; however they will be more cumbersome for judges in theirs correct implementation and execution.
- 8.Does your jurisdiction have specific arbitration law? Are arbitration awards enforced by the courts? May courts enjoin or prohibit arbitration proceedings in matters that are also pending in a court proceeding?
Costa Rica allows the parties to resolve their disputes through the court system or arbitration proceedings. For this purpose, outside the civil provision as stated by the Civil Code and the Civil Procerdure Code there is also specific arbitration law and governance which was undertaken with regards to the UNCITRAL model in 2011 and subjects the Republic of Costa Rica to said precepts.
The arbitration awards rendered under these laws may be enforced in our courts and internationally.
- 9.Do the courts recognise attorney-client privilege? If so, is the privilege applicable to in-house lawyers?
Yes, the courts must recognise attorney-client privilege at all cases, regardless of whether it is independent or in-house lawyers.
- 10.Are legal proceedings public? In other words, can the general public observe hearings and review the filings of the parties?
Costa Rican laws have the following rules in this regard: in labour and civil lawsuits the proceeding and hearings are private, but at any point any lawyer can review the file; and in criminal lawsuits the proceeding and file are private (only accessed by the parties), but in principle the hearings are public, except for sexual offences or offences that involve minors. Family lawsuits are a mixture of these two categories, with private proceeding, file and hearings.
- 11.May a defendant join other potentially liable parties into the existing lawsuit?
Yes. Because our Civil Procedural Code provides a previous motion/objection for this situation. When the results of the process may affect other parties besides the defendant, after the filing of the motion, the judge can require to the plaintiff to extend the lawsuit against those other parties (joint litigation motion), who will be forced to join the process.
- 12.How may a party enforce a foreign judgment?
To obtain the authorisation to enforce a foreign judgment the party must file an ‘exequatur proceeding’. The proceeding is to meet the following requirements:
- It must be duly authenticated;
- that the defendant has been summoned, represented or declared in default, under the law of the country of origin, as well as legally notified of the sentence or award;
- that the claim does not be of exclusive jurisdiction of Costa Rican courts;
- there does not exist in Costa Rica a proceeding or a final ruling rendered by Costa Rican courts, regarding the same discussion matter;
- it must be enforceable in the country of origin; and
- it cannot be contrary to public order.
- 13.How much time does a party have to answer a complaint? Can a party extend this time?
The time given may vary depending on the nature of the lawsuit and whether the party is a national or foreign entity. Based on these circumstances, this time will lapse between 10 and 30 days if the defendant is a local person. Yet, if it is a foreign entity the law entitles the judge to give a maximum of four months to answer a complaint (extraordinary term).
- 14.How long does it take to obtain a first-instance judgment in a typical commercial litigation case?
A first-instance judgment can be both quick and easy, or a big headache for the interested parties. Depending on the nature of the process, complexity of the discussion, abundance of evidences and the penchant of the parties, a process could take from one to four years.
- 15.Is a party required to submit all facts, arguments and supporting evidence with its initial pleading?
That is correct. The Costa Rican legal system requires the parties to submit amongst its initial pleadings all facts, arguments and supporting evidence to the claim.
- 16.Does litigation provide a process for investigating claims or right to discovery of evidence prior to trial?
There is the possibility of filing for discovery prior to trial through which the interested party may obtain evidence to substantiate its claim (usually documents held by the counterparty or the confession of this party).
- 17.Does litigation provide a process to subpoena or obtain documents or testimony from third parties?
The Costa Rican court system established in terms of burden of proof that anyone who makes a claim is required to prove it. Thus, the plaintiff must provide all the evidence in support of his/her claim, minimising those cases where the judge should ask a third party the display or delivery of documents (usually this is limited to public records, because as it is known private entities rarely attend these calls).
- 18.Does the judge or opposing counsel examine witnesses?
When a party offers a witness in a lawsuit, that witness will constitute immediately common evidence. As a consequence, the judge, party or any other interested person of the lawsuit could examine the witness about the facts and take advance of his or her statement.
- 19.How may evidence be challenged? Are there specific rules of evidence?
The evidence filed by the parties is evaluated by the judge using his/her good judgment.
- 20.Do courts typically allow hearings at or before a trial? At what state may parties present expert witness testimony?
As a result of our court system, all hearings must be celebrated at a trial. Under no circumstances a hearing can take place before or without a trial.
Additionally, expert witness testimony must be offered by the party since the initial pleading, but usually the judge schedule their hearing after all evidences were received and disposed.
- 21.What must be demonstrated to collect a debt based on a written instrument?
Depending on the written instrument, the party may file an ordinary process or just an execution process.
- 22.What remedies are available in your jurisdiction to a minority shareholder of a corporation in a dispute with the corporation or the majority shareholders?
Our jurisdiction allows minority shareholders to initiate several legal actions to resolve any disputes arising against other shareholders or the company itself
- 23.What rights are available in the courts for someone holding a maritime lien interest in a vessel?
The person that holds a lien on a vessel is comparable with any other person that has the same right over any other vehicle. Thus, the breach of the agreement or non-compliance of the agreed terms will allow the complying party the enforcement of the security or lien through a proceso prendario, which consists of a simple enforcement process that allows the plaintiff to seize, capture and auction the asset.
- 24.What rights are available for a party holding a security interest in real property and personal property? Are there expedited proceedings to allow the recovery of property serving as security for debt obligations?
As mentioned above, the party holding a security interest in real property and personal property could file a number of processes.
Within these proceedings, the creditor could ask for the seizure, capture, foreclosure and auction of the assets.
- 25.Describe the types of employment disputes that frequently result in litigation.
Costa Rican labour courts most frequent litigations are of two types: those that pretend the collection of termination payment or indemnity (after resignation or dismiss of the employee), which usually includes notice, severance, vacation, Christmas bonus as well as any other labour right not recognised during the employment relationship, and those that pretend any payment or indemnity as a consequence of a labour accident or risk suffered by the employee.
- 26.Does your jurisdiction allow class actions or some form of collective litigation proceeding?
No, class actions are not allowed by our laws. However, different persons can join together to file a claim against the same defendant, but our laws ask for such cases to specify the identity of parties and the purpose and claims.
- 27.Do government-owned or controlled entities enjoy any privilege when they are engaged in commercial activity and involved in a commercial or administrative litigation?
Government-owned or controlled entities do not enjoy great privileges when they are involved in a commercial or administrative litigation. The most important privileges consist of the existence of a specialised court for the knowledge and resolution of administrative litigation as well as collection proceedings where such institutions are involved. Additionally, administrative litigation has special procedural law that contains different terms to answer the lawsuit, file motions and exercise other legal actions, contains different opportunities and limitations for evidence, the possibility to file some injunctive reliefs to avoid severe damages, characterised for oral and faster proceedings, among others features.
- 28.Is injunctive or other relief available on an emergency basis?
All kind of lawsuits (criminal, commercial, administrative and labour) allow the application of injunctive relief on an emergency basis. Injunctive relief can be requested by the party before the initial pleading as well as during the respective lawsuit, if applicable based on special circumstances. Those reliefs are usual in criminal and civil lawsuits.
- 29.Is injunctive relief or other relief available as part of a final award? If so, in what types of cases do courts usually provide injunctive relief?
Arbitration proceedings request that injunctive relief should be filed before courts at any time of the arbitration (before, during or after), because judges are the only entitled authorities to recognise them. However, when a final award has been rendered, injunctive reliefs are not necessary because the interested party could proceed immediately with a provisional execution of the award.
- 30.What are the typical court fees and costs required to file a civil lawsuit?
In order that the parties can file a claim and obtain a solution to their dispute, they do not have to pay any court fees, except for the tax stamps required by law in the initial pleading. Additionally, civil claims require the parties to have attorneys that represent them or certify the signature of the party in each pleading, which at the end represents a cost of the lawsuit.
Finally, other expenses such as fees for experts, executioners, publication of legal notices and others may arise during the process.
- 31.Is a bond required for non-residence? What is the amount of the bond?
Non-residents can file lawsuits without assuming additional costs or any particular bond. However, if the non-resident is the defendant, the judge can ask him or her to appoint a representative with sufficient power of attorney to continue with the process.
In labour matters, if the defendant is a non-resident the judge can also ask for a security that could satisfy the results of the lawsuit (to keep enough assets in the country, a bank deposit or any other guarantee).
- 32.What damages are available? How are damages quantified? Are punitive damages available?
Costa Rican law only recognises the compensation for any direct, immediate, predictable and measurable damages. In its initial pleading the party must quantify and detail the damages that were caused, but is at sole discretion of the judge its acceptance and determination.
Punitive damages are available, however judges usually reject them because they prefer to base their payments in material damages, defaulted debts, reduced earnings, etc.
- 33.Is the losing party liable for attorneys’ fees and costs? If so, how are attorneys’ fees and costs determined and proved?
According to article 221 of Civil Procedural Code, the losing party is liable for the legal fees and costs assumed by the counter-party.
Regarding the legal fees, these are determined by law, so depending on the nature of the lawsuit and its estimation, the judge will determine the amount to be reimbursed for this item. As for costs, these must be liquidated and proven by the interested party, otherwise they will be rejected by the judge.
However, article 221 of Civil Procedural Code has some exceptions, the most important being when the lawsuit contains exaggerated claims; both parties have lost in part the lawsuit or when they have litigated with good faith. If the judge considers one of these situations were in the lawsuit, he or she can order each party to assume and pay for their own legal fees and costs.
- 34.Will courts enforce a liquidated damages provision in a contract?
The parties may include provisions in their contracts that liquidate in advance any damages arising from its non-compliance. In such case, if the provision exists, is effective and the party demonstrate the failure or non-compliance of the counterparty, the judge must recognise such provision and enforce it according to the scope given by the parties.
- 35.What is the appeal process against trial court decisions?
In order to appeal a court decision, the party must submit the appeal in the next three to five days (depending on the kind of resolution they are challenging) from the service of the resolution. The appeal must be filed before the same judge that rendered the resolution or decision and once received the judge will send the file to the appeal court. In civil matters a party can express their arguments since the beginning (in the same writing that he used to file the appeal) or within the period of time granted by the superior court.
Additionally, depending on the amount claimed at the case, the parties will have a final opportunity to challenge the court decisions before the Supreme Court of Justice, nevertheless this legal remedy applies only for limited cases and full of formalities.
- 36.How frequently do appellate courts reverse trial court decisions?
Although it sounds strange, it is usual that the appellate courts modify decisions.
- 37.May the courts entertain challenges to administrative decisions made by federal or local governments? If so, how frequently do courts reverse administrative decisions in favour of a private party?
As well challenging decisions from private entities, courts can also challenge administrative decisions made by our government institutions.
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