The Nicaraguan market remains characterised by economic instability and political turmoil.
‘The Nicaraguan state, in fact, has been weaponising literally all institutions of the state in terms of control and repression. The word is weaponising. They have been weaponising the justice system, weaponising the legislative function, weaponising the executive function,’ declared Jan-Michael Simon in March 2023, after leading a team of UN-appointed criminal justice experts in an investigation into the conduct of President Daniel Ortega, Vice President and First Lady Rosario Murillo and his government in the years following the anti-Ortega protests of April 2018 and the violent government crackdown (which left at least 300 dead and over 100,000 fleeing persecution).
Said Simon: ‘These violations and abuses are being perpetrated in a widespread and systematic manner for political reasons, constituting the crimes against humanity of murder, imprisonment, torture, including sexual violence, deportation, and politically motivated persecution.’
The announcement of the investigation’s findings occurred only weeks after the Nicaraguan government stripped over 300 political opponents of their citizenship, including 222 political prisoners released to the US one week prior. In a statement, United States Secretary of State Antony J. Blinken called the action ‘another step backward for the Nicaraguan people and a further step toward solidifying an autocratic regime’.
The Ortega regime’s human rights record has taken an economic toll, as has its support for Russia over the invasion of Ukraine, leading to the October 2022 signing by President Biden of an executive order expanding the US government’s sanctions programme and allowing for future restrictions on trade with Nicaragua, as well as imposing visa restrictions on 500 Nicaraguan government officials, for the government’s ‘continued dismantling of democratic institutions, attacks on civil society, and increasing security cooperation with Russia’.
As the trading partnership between the US and Nicaragua continues to deteriorate, Russia has emerged as a potential candidate to fill the trade vacuum – as has China, following the Ortega government’s December 2021 severing of ties with Taiwan and its recognition of the Chinese Communist Party’s One China policy. In addition, following a trip in early 2023 by an Iranian delegation led by Iran’s Foreign Minister Hossein Amir Abdollahian to Nicaragua, President Ortega’s son Laureano, who manages the regime’s most important foreign relationships, was quoted in a government-affiliated newspaper as stating, ‘We are countries with sister revolutions that defend our right to choose our own path to development and prosperity.’
The effect of the regime’s actions can also be seen all across the legal market.
In the corporate and finance sphere, respondent firms spoke of the difficulties of a political situation in which lawyers operating in the practice area have had to flee the country as a result of governmental persecution. The continued deterioration of the US-Nicaragua relationship has led corporate firms to become more aggressive in pursuing client accounts. Firms interviewed reported a parallel rise in due diligence. The Nicaraguan government’s June 2022 decision to cancel almost 200 NGOs (including the Society of Pediatrics and the historic Nicaraguan Academy of Letters) has generated work in the form of amending various contracts for the cancelled organisations.
In the intellectual property space, firms interviewed described the challenges of dealing with a government consumed by political activity and uninterested in IP matters, and the slow trade mark registration process caused by a stagnant and corrupt system reliant upon outdated legislation which has failed to address developing areas such as sports and the internet. Respondent firms also indicated a need for firms to adjust to the arrival of Chinese corporates in Nicaragua following the opening up of relations between China and Nicaragua.
In terms of real estate, firms interviewed described a state of investment uncertainty stemming from governmental political action. However, it was noted that after the number of real estate purchases slowed in the third quarter of 2022, early 2023 proved to be more active.
In the dispute resolution area, firms interviewed reported a decline in the perception of the impartiality and effectiveness of judicial venues in the country. Respondent firms also indicated a rise in disputes over loan defaults and a limited number of arbitrations, stressing the need for out-for-settlements due to judicial corruption. Firms also described a rise in judges using ChatGPT in the course of their work.
Finally, turning to energy and natural resources, even as deal values dipped in 2022, top regional firms remained strong in the practice area, with Arias remaining the market leader, as it maintains a reputation for managing large-scale energy projects (including wind, solar and natural gas).
In terms of the performance of ranked firms, the Nicaraguan legal marketplace remained stable in 2022.
Regional firms Arias, Consortium Legal and García & Bodán remain dominant forces in the market; other Central American firms active in Nicaragua include BLP, Lexincorp and Aguilar Castillo Love, while global firm Dentons Muñoz has also established a strong foothold in the country. When it comes to domestic firms, full-service practice Alvarado y Asociados is a key player and boutique firm Guy José Bendaña-Guerrero & Asociados continues to lead in the IP space.
With regards to firm movements, Munguia Vidaurre Law, which had been developing a niche in fintech and crypto, saw the departure of two managing partners: Pastor Lovo Castellón, who left in March 2023 to form Lovo Castellon Abogados, and Elvis Martinez, who departed to join Dentons Muñoz‘s litigation practice in May 2023.