A recent decision by the First Chamber of the Supreme Court upheld an arbitration award from the International Center for Conciliation and Arbitration (CICA), requiring a real estate company to pay over $110,000 to a client. The case centered on the company’s failure to deliver four properties after receiving an advance payment.
The dispute began in November 2017 when a buyer signed an option-to-purchase agreement with the real estate company for four units in a condominium located in Sabana Sur, San José. The total value of the properties was $375,000, and the buyer paid a $50,000 deposit for immediate access to the units. Completion of the sale depended on releasing the properties from a trust held by Banco de Costa Rica, which was not achieved due to delayed payments related to the company’s loan.
On June 8, 2021, after failed attempts to finalize the transaction, the buyer sent a letter stating: “We no longer believe in your promises,” and requested enforcement of a penalty clause that included returning his deposit and additional compensation.
The real estate company then initiated arbitration against the buyer on June 18, 2021. It claimed that the buyer had breached contract terms and sought penalties including payment of stipulated fines, condominium fees, all arbitration costs, and immediate eviction from the properties. Alternatively, it requested rent payments for continued occupancy past contract expiration.
In response, the buyer filed a counterclaim alleging that it was actually the company who breached by failing to transfer ownership as agreed. The buyer asked for termination of contract with application of penalties and additional financial adjustments.
On February 21, 2023, CICA’s arbitral tribunal ruled that there had been contractual breach by the company. The tribunal ordered termination of their agreement and required repayment totaling $110,878: $50,000 as deposit refund; $2,850 in interest; $8,027 for indexation; and $50,000 as damages per penalty clause.
Dissatisfied with this outcome, the real estate firm sought annulment of CICA’s award before the Supreme Court’s First Chamber. It argued six points including alleged procedural errors and misapplication of contractual terms—such as allowing continued possession until repayment rather than immediate eviction—and improper awarding of interest or indexation beyond what was stipulated.
The Supreme Court rejected all arguments raised by the company. The justices stated that issues like eviction timing were within arbitral scope since they had been part of initial claims. They found that evidence supported verbal modifications relieving buyers from certain fees during unresolved ownership status. The court also clarified that contractual waivers did not exclude interest or indexation where breach was established.
As a result, in October 2024, the Supreme Court confirmed CICA’s ruling requiring full payment to be made to the client.
