by John Philip Sonner
If the article linked just below (the December 16th interview in La Nacion) is a hint, Costa Rican esteem for arbitration as a mechanism for international dispute resolution is high. Now, in the arena of international commercial arbitration, this interest has come to a head. A legislative initiative to revamp the 12-year-old international commercial arbitration rules requires only the signature of President Óscar Arias Sánchez to become law – a move the Costa Rican press seems to expect (see links to ElFinanciero and LaRepublica below). Importantly, the new rules would be more closely aligned with the UNCITRAL model laws and would allow for the appointment of foreign arbitrators. As a result, we may see this Central American nation host an increasing number of international commercial arbitrations.
For these last moments, Costa Rica’s law entitled “Ley Sobre Resolución Alterna de Conflictos y Promoción de la Paz Social” disincentivizes using Costa Rica as a situs for international commercial arbitration. Section II of the law, Composición del Tribunal Arbitral, Article 25, provides that the party appointed arbitrators must always be attorneys and have, as a minimum, five years of membership with the Costa Rican Bar. “…los arbitros deberan ser siempre abogados y tener como minimo cinco anos de incorporados al colegio de abogados.” The law may be found here: http://www.asamblea.go.cr/ley/ley7000.htm, listed as number 7727.
Of course, this can be compared with the UNCITRAL model law (which the Costa Rican proyecto de ley (bill) more closely resembles) or other IberoAmerican domestic enactments of the UNCITRAL model law which have no such requirement that appointments be from the local bar. Specifically, one can compare Chile’s law: Leg num, 19,971, Capitulo III, Articulo 11, which sets out that appointed arbitrators may be of any nationality. This can be found through the American Chamber of Commerce Website in Chile here: http://www.amchamchile.cl/node/1107).
This significance of this is well captured by articles in both ElFinanciero and LaRepublica, which emphasize that Costa Rica houses excellent infrastructure to support a cottage industry of international arbitration – however, domestic centers of arbitration have been hamstrung by the limits on appointment. (see http://www.elfinancierocr.com/ef_archivo/2009/noviembre/01/negocios2138078.html, or http://www.larepublica.net/app/cms/www/index.php?pk_articulo=30575).
The reform would be just one of several steps Costa Rica has recently taken to reposition itself within the global trade and commerce landscape. Over the past 10 years Costa Rica courted the location of a growing number of manufacturing plants from U.S. medical device and microprocessor companies (Intel, Baxter, Boston Scientific). Of even greater immediacy, Costa Rica is currently negotiating a free trade agreement with the People’s Republic of China (Costa Rica switched its diplomatic recognition from Taiwan to the China in 2007). While currently in their 5th round of negotiations, negotiators suggest an agreement will be finalized by the 6th round in February (see http://www.reuters.com/article/idUKN1252127920091112). This is important because, as a CAFTA signatory, Costa Rica has incredibly attractive potential as a final assembly hub for certain Chinese products. As a result of the CAFTA and a China-Costa Rica Free Trade Agreement, the incidence of commercial transactions between China and Costa Rica as well as Costa Rica and other CAFTA nations should be on the rise.