Lawyer and President of Facio & Cañas, Víctor Garita, successfully led an arbitration proceeding in Costa Rica’s territory on behalf of a real estate developer that was accused of breach of contract.
The lawyer won an appeal of annulment against the award dictated by an arbitral panel that ordered the reimbursement of the buyer’s initial installments and the compensation of damages based upon a contract clause that determined damages recovery equivalent to25% of the total purchase price of the condominiums. The claim was filed by a purchaser, who alleged that the properties were not delivered within the contractual term.
Garita explained that the appeal was possible due to the amount in dispute. The liquidated damages clause was established in regards with the total value of the condominiums acquired by the purchaser and not based on the payments effectively delivered at the moment of the alleged breach of contract. In consequence, the award granted that the purchaser should receive an amount equivalent to 200% of the sum effectively paid.
The lawyer alleged that the damages clause claimed, constituted an abussive provision and unlawful enrichment. “It was argued that when declaring the cause of action grounded on this clause of the agreement, Costa Rica’s provisions on public order established in the Civil Code were being violated”, said Garita.
That is one of the reasons why Costa Rican Arbitral Law authorizes the filing of the recourse to set aside the award as an extraordinary remedy, since its causes are limited and restricted.
Nevertheless, the First Chamber of Costa Rican Supreme Court accepted the arguments alleged and annulled the initial award that ruled against the developing company, which turned ineffective the claim of the abusive liquidated damages clause.
The proceedings took one year to reach a final decision, although it is still pending a recourse of addition and clarification filed by the purchaser.
