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Mediation and Arbitration Clauses Save Headaches

by Garland M Baker on December 26, 2006

The ultimate mediation and arbitration
. . . Paul mediates while Peter selects destination

Q. What is the difference between a good priest and Peter at the Pearly Gates?

A. One is a mediator and the other is an arbitrator.

Most people do not know they can pick their own arbitrator in Costa Rica if they know what they are doing.

A mediator is a person who can assist two or more persons to come to an agreement but has no decision power one way or the other if they do not.

An arbitrator moderates disputes but in the end can make a decision as to who wins and who loses.

Law 7727 of Dec. 9, 1997, called the “Ley Sobre Resolución Alterna de Conflictos y Promoción de la Paz Social,” or law of alternative resolution of conflicts and promotion of social peace is a very important and under-utilized set of rules to resolve conflicts and avoid the judicial system.

Good advice for living and doing any kind of business in Costa Rica is to stay out of the courts. The judicial system in this country is slow and inefficient.

Getting into a legal action in Costa Rica is like two kids throwing mud pies over a fence. One throws one pie, and the other tosses two. Usually this goes on geometrically making lawyers wealthy.

Law 7727 can keep people out of court and solve problems quickly. However, the trick here is to learn how to use it effectively. Some of the articles of the law do not work as designed. For example, the law states that in a conflict one can request the bar association or the Sala Primera of the Corte Suprema to appoint an arbitrator. However, several calls to both determined that neither put its part of the law to work.

Employees recommended calling the Ministerio de Justicia y Gracia where one can find a list of arbitrators.

All contracts in Costa Rica should have mediation and arbitration clauses in them. The resolution of conflicts center at the justice ministry’s office provides a detailed list of approved mediators and arbitrators. These are referred to as justice centers.

Mediators are generally free or low cost where arbitrators are not free and their costs can jump all over the place. Some justice centers provide both mediation and arbitration, some only mediation and others only arbitration.

In mediation, a decision reached by the parties is binding and is as good as a judgment by the courts and is executable as such. The keyword here is parties. The mediator cannot make the decision. If there is no agreement reached in mediation between the parties to the dispute, the conflict then can go to arbitration or to court.

Good contracts include an arbitration clause to stay out of court after failed mediation.

In arbitration, parties pick representatives to plead their case in front of an arbitrator or arbitrators referred to as an arbitration panel. The decision of the panel is final and again as good as a court judgment.

The secret that most people do not know is that articles 19 and 20 of the law states arbitration can be either be by law or by equity. This means a contract can appoint an arbitrator or arbitrators in the event of a dispute, avoiding justice centers all together. The arbitrator or arbitrators can be anyone, even people with no knowledge of law.

A great tip is to put mediation and arbitration clauses in employment contracts. (Yes, even with domestic employees.) They are constantly making proverbial mountains out of molehills at the expense of employers. When disgruntled employees go to court, employers generally lose. Employment contracts cannot take away any inalienable rights of employees but contracts with the correct clauses can sure level the playing field and protect employers rights much more so than the courts do.

In conclusion, wise expats will use contracts in Costa Rica to conduct business affairs including buying or investing in property. They should put mediation and arbitration clauses in the contracts and appoint an arbitrator or arbitration panel in the contract to avoid justice centers.

Justice Centers

Casa de Justicia Universidad Latina de Costa Rica
mediation 253-7729.

Casa de Justicia de la Municipalidad de Mora
mediation 249-3124.

Casa de Justicia Universidad de Costa Rica, Liberia mediation 665-5064

Casa de Justicia en materia del Consumidor
mediation 284-8888, 800-CONSUMO.

Casa de Justicia de San Ramón mediation 437-9844.

Casa de Justicia de Santa Cruz mediation 680-4747.

Centro de Conciliación de la Cámara de Comercio de Costa Rica mediation and arbitration 256-4041, 221-0005 Ext. 102.

Centro Resolución de Conflictos Colegio Ingenieros y Arquitectos mediation and arbitration 202-3942, 202-3989.

Centro Internacional Conciliación y Arbitration Cámara Costarricense Norteamericana de Comercio. CICA-AMCHAM mediation and arbitration 220-2200, 296-0696.

Centro Resolución de Conflictos, Ministerio de Trabajo, mediation 256-2798.

Centro Mediation y Manejo Conflictos, Enseñanza e Investigación CEMEDCO mediation 221-7425.

Instituto de Conflictos Familiares INCOFAMI
mediation 256-7232, 222-0647.

Centro de Resolución de Conflictos en Materia de la Propiedad. Cámara de Corredores de Bienes Raíces. CRCP mediation and arbitration 224-8607, 283-2891.

Centro Latinoamericano de Arbitration Empresarial. CLAE arbitration 253-2545, 253-0728.

Centro de Mediation y Arbitration, CEMEDAR

mediation and arbitration 296-5203.

Centro de Mediation, Balanza y Nivel JURISIS
mediation 257-5747.

Centro de Mediation y Arbitration AUSA
mediation and arbitration 288-2861.

Centro Autónomo RAC Laboral
mediation and arbitration 223-6603.

Casa Armonía Centro de Mediation Familiar
mediation 376-5850, 886-5322.

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