Legal market overview in Costa Rica

Costa Rica continues to stand out in the region for both its political and economic stability.

Starting with the 2021 approval of a $1.778bn loan from the International Monetary Fund (IMF), with an immediate $296.5m release, a grant by the Inter-American Development Bank of two $250m loans, and the announcement of Costa Rica’s joining of the Organization for Economic Cooperation and Development (OECD) as its 38th member, the national continues its ascent as a regional economic power.

Following on from the country’s OECD entry in May 2021 came the March 2022 announcement by the UN International Trade Center that CINDES, Costa Rica’s investment promotion agency, had received its highest rating out of 85 organisations reviewed globally.

The trend continued with the June 2023 approval by the World Bank of a new $500m loan to strengthen support for the nation’s governmental budget.

Singled out internationally for its commitment to sustainability and biodiversity, in November 2022, Costa Rica became the first country to receive credit under the IMF’s Resilience and Sustainability Facility (RSF), with the IMF executive board approving a loan of approximately $710m.

In 2022, the nation also proved able to weather the economic uncertainty caused by a pair of cyber attacks by Russian ransomware groups, which targeted the computers of 27 government institutions and the country’s national health service, with the government the refusing to pay the $20m ransom and declaring a national emergency. Added support would later arrive in March 2023 from the US State Department, which granted $25m at the request of President Rodrigo Chaves to set up a security operations centre inside Costa Rica’s Ministry of Science, Innovation, Technology and Telecommunications, with a senior Biden administration official saying they believed the attacks were connected to Costa Rica’s ‘strong support for Ukraine’.

With continued regional economic leadership, international support and the IMF projecting a 3% growth in GDP in 2023, Costa Rica’s relative stability was mirrored by the observations of its legal market.

In the banking and finance sphere, firms had mainly noted an increase in fintech matters, while in the corporate and M&A area, respondent firms described a surge in matters related to the agrochemical, energy and insurance sectors. Firms interviewed also reported a rise in the regional expansion of companies in Central America; a key transaction in this area was Cementos Progreso Holdings’ $335m acquisition of Cemex’s assets in Costa Rica (as well as El Salvador), in which BLP advised the buyer while Consortium Legal acted for the seller. Firms also highlighted a continued surge in nearshoring activity.

In the dispute resolution arena, teams interviewed indicated a continued growth in bankruptcy matters stemming from the 2021 passage of a law which, among its many provisions, allows for the establishment of a single process for all types of private debtors and the incorporation of alternative conflict resolution to facilitate matters between debtors and creditors. Firms also pointed to the holdover usage of virtual hearings post-pandemic as having added greater flexibility.

In the labour and employment, respondent firms anticipate a wave of new work generated by newly passed laws which provide workers with the ‘right to disconnect’ (March 2022) and paternity leave (in April 2022). Firms interviewed also suggested an increase in matters emerging from a rising desire by employees to seek more flexible shifts in the post-pandemic era.

In the tax sphere, teams described a boom in matters related to the tourism sector and free trade zone projects, and work generated by an increased number of audits.

Intellectual property teams indicated an increased interest in matters related to AI, NFTs and the metaverse. Firms interviewed also described a practice space galvanised by the Trademark Office’s move to online filing.

Key developments in the Costa Rican legal market include BLP’s January 2023 opening of a new office at Marina Flamingo on the nation’s Pacific coast and the March 2023 alliance between global powerhouses ECIJA, which has a growing presence in Central America, and Taylor Wessing, with a special focus on TMT and lifesciences.

The market remains dominated by full-service regional firms Aguilar Castillo Love, Arias, BLP and Consortium Legal, while CENTRAL LAW Costa Rica, Lexincorp and Sfera Legal are also well-regarded Central American firms. Alta Batalla remains a growing force in the market, particularly following its May 2021 merger with firms in Guatemala, El Salvador and Honduras to form a regional entity. On the domestic front, Tactic Estudio Legal is an upcoming name following its split from COLBS Estudio Legal in September 2021, while other notable firms include labour specialist BDS Asesores.

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