Doing Deals in Costa Rica

 

 

 

 

 

Firm: Arias & Muñoz
Email: ahutt@ariaslaw.co.cr
Telephone: 506.2204.7575
Location: Centro Empresarial Forum, Building C, Office 1C1,Santa Ana, San José, Costa Rica
Web Address: www.ariaslaw.com

 

I. Challenges:
A foreign investor needs highly experienced, local legal counsel in Costa Rica because of the following main challenges:
• A Different Legal System: Costa Rica follows the Civil Code Law System
• Excess Amount of Laws: Despite Costa Rica being a small country in which all its laws – because there are no state or federal distinctions except zoning regulations – are applicable throughout the country, its system of laws and regulations is intricate and hard to interpret, which makes it confusing and difficult for foreign attorneys to undertake doing business in the country. Furthermore, both the Country’s Attorney General and Comptroller General frequently issue legal decisions and interpretations that impact the respective law’s application; specifically, in matters involving the environment or of public interest.
• Permits Process: Obtaining permits for tourism, and residential or commercial development in Costa Rica is very time-consuming and could take from five months to three years, depending on the project’s complexity. Therefore, it is essential that an expert local advisor, experienced with the process, is hired to expeditiously guide clients through all the bureaucratic red tape and potential obstacles to ensure a successful outcome.
• Judicial System. Although transparent and free from the corruption that causes concerns in other developing countries, Costa Rica’s court system can be cumbersome and time consuming; it is not unusual for commercial litigation to take up to ten years.
• Litigiousness: Costa Ricans, like Americans, are a litigious society.

II. Opportunities
Costa Rica´s strategic position, political stability (60 years of uninterrupted democracy), and highly educated population make Costa Rica an ideal place to both live and do business.
The following are some of the business or other opportunities in the country that can be of interest to foreign investors:
• Health Care and Assisted Living: Costa Rica’s developed eco-tourism and both sound socio-economic and political systems have already positioned the country as an attractive place for tourism and foreign investment. But now, the country is also becoming a popular destination for high quality medical care; especially, for medical procedures and treatments and for dental services related to wellness and spa treatments. Because these services are much cheaper than in many other countries, the result is that Costa Rica has become a very competitive player in the health tourism industry.
• Private Public Partnerships: A few years ago both Costa Rica’s government and private enterprise realized that if each party pooled their respective resources, they could achieve their objectives better, faster, and cheaper. Since then, PPPs have been materializing throughout the country; especially, in infrastructure projects, such as:
o Ports
o Aqueducts
o Roads
o Railroads

We anticipate that in the next five years Costa Rica will invest around US$10 billion in infrastructure projects through PPPs.
• Telecommunications: Costa Rica, on approving the CAFTA-DR, initiated a very important reform in the state-owned telecommunications sector by opening the sector to private companies. This breaks the government’s telecommunications monopoly and sets the rules for both modernizing and strengthening those Public Entities that provide telecommunication services, among other new legal frameworks.
• Insurance: for 84 years a state-owned insurance monopoly, the National Insurance Institute (Instituto Nacional de Seguros-INS), was Costa Rica’s only authorized insurance service provider; however, as a result of the country’s commitments under CAFTA-DR, the insurance market has recently been opened up to competition.

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