Guide on the application of the New York Convention in Costa Rica
The New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards is one of the most successful United Nations treaties on international law. Costa Rica signed the New York Convention, with no reservations under Art.I(3), on December 2nd, 1977 (Source Law No. 6157). The guide intents to explain the application of NYC in the Costa Rican Judiciary.[1]
A.- Foreign award
The NYC is the instrument by excellence for the enforcement of foreign arbitral awards in Costa Rica. In addition to arbitral awards made in the territory of another State, the New York Convention (Art. I(1)) also applies to arbitral awards not considered as domestic awards in the State where recognition and enforcement are sought. This will be applicable when an award rendered in Costa Rica is considered as a foreign award.
Costa Rica has a dual arbitration system: Law No.7727 for domestic arbitration (Law on Alternate Dispute Resolution and Promotion of Social Peace, 1997), and Law. No. 8937 for international arbitration (Law on International Commercial Arbitration based upon the UNCITRAL Model Law, 2011).
Awards rendered pursuant to Law No. 8937 are not regarded as domestic awards, even if rendered in Costa Rica, when: (a) the parties to an arbitration agreement have, at the time of the conclusion of that agreement, their respective business premises in different States, or (b) one of the following places is located outside the State in which the parties have their business premises: i) the place of arbitration, if this has been determined in the arbitration agreement or in accordance with the arbitration agreement; ii) the place of compliance with a substantial part of the obligations of the commercial relationship or the place with which the subject of the dispute has a closer relationship; or when c) the parties have expressly agreed that the subject matter of the arbitration agreement is related to more than one State. (Source: Law No. 8937, art. 1.3/ NYC, art. 7)
B.- National sources of law
The sources of law applicable to recognition and enforcement of foreign awards in Costa Rica are the following:
- Costa Rican Code of civil procedure, Law No. 9342, Art. 99 (2018);
- Law on international commercial arbitration based upon the UNCITRAL Model Law, Law No. 8937 (2011);
- Washington Convention/ Convention on the Settlement of Investment Disputes between States and Nationals of Other States (since 1993);
- New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (since 1977);
- Inter-American (Panama) Convention on International Commercial Arbitration (since 1975);
- Code of Private International Law/ Bustamante Code (1930);
- Political Constitution of the Republic of Costa Rica (1949);
- Civil Code of Costa Rica (1887);
- Commercial Code of Costa Rica, Law No. 3284 (1964);
- Organic Law of the Judiciary, Law No. 8 (1937).
C.- Limitation periods (time limits)
Costa Rica has no specific legal provision for time limit applicable to the commencement of legal proceedings for recognition and enforcement of foreign awards.
The Civil Code of Costa Rica contains a chapter devoted to Rules on Private International Law, article 26 of which states: “The statute of limitations and all that pertains to the manner of fulfilling or extinguishing the obligations resulting from any legal act or contract to be executed in Costa Rica shall be governed by Costa Rican laws, even if the grantors are foreigners, and although the act or contract has not been executed or celebrated in the Republic”. (Source: Law No. 9342, art. 26)
For any international commercial award, the applicable law will be the Code of Commerce, which has a statute of limitations of four years. (Source: Law 3284, art. 984)
The time limit is four years from the date on which the foreign award is enforceable or became final under the law of the country where it was made. (Source: Law No. 3284, art. 874)
D. National courts and court proceedings
The First Chamber of the Supreme Court of Justice of Costa Rica is the court with jurisdiction over the recognition of foreign awards. Once the award is recognized in Costa Rica, the competent authority to enforce the award will be the Civil Judge of the place of the domicile of the party against which enforcement is sought; if that party is domiciled outside Costa Rica, the competent Civil Judge will be the one of the place chosen by the applicant. (Source: Law No. 9342, art. 99.3 / Law No. 8, art. 54)
The Costa Rican court has international jurisdiction when:
- it is determined by international treaties
- the respondent is domiciled in Costa Rica, or has an agency, subsidiary, or branch in the country;
- the obligation must be fulfilled in Costa Rica. (Source: Law No. 9342, art. 11)
The first decision granting or denying recognition and enforcement is obtained through an inter partes process, and the party against which enforcement is sought will be notified by the court or by the requesting party. Once the award has been recognized, the First Chamber will send the case for enforcement of the award to the Civil Judge, where the inter partes process continues. (Source: Law No. 9342, articles 99.3 and 114.2)
The decision of the First Chamber of the Supreme Court of Justice, granting or denying recognition and enforcement is not subject to recourse, and enforcement may not be suspended. (Source: Law No. 9342, art. 99.3)
If the recognition is denied, documents will be returned to the applicant. If recognition is rejected due to inaccurate formalities (such as not presenting an authentic copy of the award or translation thereof, lack of payment of the legal stamps to initiate the procedure, etc.), the applicant may file a new application once the formality at issue has been corrected. (Source: Law No. 9342, art. 99.3).
Once recognition has been granted by the First Chamber of the Supreme Court of Justice of Costa Rica, the party seeking enforcement of the award may request interim or protective measures from the Civil Judge assigned with the award’s enforcement, such as freezing of assets, annotations on public registries, etc.. That judge will command all measures directed at the protection of assets to fulfill the order in the award. In the event of an appeal against any such interim or protective measure, the decision granting or revoking the interim measures will not be suspended. In any event, possession of assetsmay only occur after the conclusion of the proceedings before the Civil Judge. (Source: Law No. 9342, articles 77, 78 and 86.2).
E. Evidence required
For the recognition and enforcement of foreign awards, the applicant must submit to the Court:
- an authenticated copy of the complete award issued by the arbitrator in charge of issuing it in the country of origin, stating that the diplomatic or consular requirements required by both the country of origin and Costa Rica have been met (and two copies thereof);
- an official translation of the complete award must be attached, when issued in another language than Spanish; and
- evidence that the party against whom the award is invoked was given proper notice of the arbitration process, and that if that party did not participate in the arbitration, it was declared in absentia according to the regulations of the country where the award was rendered.
The diplomatic or consular requirements are the authentication of the signatures or the apostille certification. (Source: Law No. 9342, art. 24.2 and 99.2)
It is necessary to provide a full translation of all documents submitted in another language than Spanish. (Source: Law No. 9342, art. 24.2).
Translations should be done by an official translator authorized by the Ministry of Foreign Affairs of Costa Rica. If a translator does the translation in another country than Costa Rica, the document will need to be certified by a diplomatic or consular agent of Costa Rica or bear an apostille. It is therefore recommended to do the translation in Costa Rica. (Source: Decree No. 23198-RE, art.1, and Decree No. 25683-RE, art. 6, both of the Ministry of Foreign Affairs regarding official translators and interpreters).
F. Stay of enforcement
The court in Costa Rica may deny recognition and enforcement of the award when it is not yet binding or has been set aside or suspended by a court of the country in which, or under the law of which, that award was rendered. In such case, the court may stay its decision and proceedings, if it considers appropriate, and it may also order the other party to give appropriate guarantees upon request of the party requesting the recognition or enforcement of the award. (Source: Law. No. 8937, articles 36.1.a.v) and 36.2; NYC, art. V(1)(e))
The authority or court may stay legal proceedings for recognition and enforcement (e.g., forum non-conveniens)when the award is not yet binding or has been set aside or suspended by the court of the country in which, or under the law of which, that award has been rendered. (Source: Law. No. 8937, art. 36.2)
The granting of a stay is not conditional on the provision of security, but, at the request of the applicant, the court may order the other side to give appropriate guarantees. (Source: Law. No. 8937, art. 36.2)
G. Confidentiality
Costa Rica recognizes the confidentiality of international arbitration. Only the parties to the procedure for enforcement and recognition and their representatives are given access to the record. This being said, the courts in charge of recognition and enforcement may publish their recognition and enforcement decisions on their website, and in such a case, without mentioning the parties’ names to preserve confidentiality, only the initials will appear (Source: Law No. 8937, art. 38)
Nonetheless, article 2.10 of the Costa Rican Code of civil procedure imposes that hearings be public. However, the following exceptions apply:
- when the law expressly provides otherwise, or
- when the court decides otherwise, either ex officio or at the request of a party, when particular circumstances may harm the interests of justice, the private interests of the parties, or fundamental rights of the parties. (Source: Law 9342, art. 2.10)
Any party may also request and obtain the protection of confidential information. (Source: Law No. 8937, art. 38)
H. Other issues
Interim or partial foreign awards
Costa Rican law does not refer to, or make use of the terms “interim” or “partial” awards, and only addresses awards and interim measures.
Interim measures
According to articles 98 to 100 of the Costa Rica Code of civil procedure, Costa Rica is open to accept international awards, interim measures, and any other type of assistance required by an arbitral tribunal.
Regarding recognition and enforcement of interim measures:
- An interim measure issued by an arbitral tribunal shall be recognized as binding and enforced in Costa Rica upon application to the competent court, irrespective of the country in which it was issued (subject to the provisions of article 17 I of Law 8937, stating the grounds for refusing recognition or enforcement);
- The party seeking or having obtained recognition or enforcement of an interim measure shall promptly inform the court of any termination, suspension or modification of that interim measure; and
- The court of the State where recognition or enforcement is sought may, if it considers appropriate, order the requesting party to provide security if the arbitral tribunal has not already made a determination with respect to security or where such a decision is necessary to protect the rights of third parties.
(Source: Law No. 9342, articles 98 to 100 / Law No. 8937, articles 9, 17.H. and 17.I)
The records of the First Chamber of the Supreme Court show that Costa Rica has not yet decided upon a request to recognize and enforce an interim measure rendered by an arbitral tribunal.
Monetary and non-monetary relief in foreign arbitral awards
Parties may request recognition and enforcement of non-monetary reliefs in foreign arbitral awards.
Set aside awards by the competent authority referred to in Art. V(1)(e) of the NYC
The court in Costa Rica may deny recognition and enforcement when the award has been set aside or suspended by a court of the country in which, or under whose law, that award has been rendered. (Source: Law. No. 8937, art. 36.1.a.v)
There is currently no case law on the issue of enforcement in Costa Rica of an award that would have been set aside at the place of arbitration.
Written by Andrea Hulbert.
[1] This article reflects the state of the law as of December 31, 2018.
