The Political Constitution establishes in Article 19 that aliens have the same individual and social rights and duties as Costa Ricans, with such exceptions and limitations as established by the Constitution and the laws. In addition, Article 33 guarantees that every person is equal under the law.

There is no special foreign investment law in Costa Rica.

There is no specific regulation at the administrative level to regulate foreign investment.

No, since there is no foreign investment law. There are, however, express definitions of foreign investment in the international agreements signed with the Federal Republic of Germany, France, the United Kingdom of Great Britain and Northern Ireland, and the United Mexican States.

Specifically in the Bilateral Treaty on the Promotion and Reciprocal Protection of Investment with the Federal Republic of Germany that establishes that the concept of "investments" includes all classes of goods, particularly:

a) The ownership of movable and immovable goods and other real rights such as mortgages and other securities;

b) Shares and other types of securities in companies;

c) Rights to funds used to create an economic value or to benefits which have an economic value;

d) Intellectual property rights, particularly copyrights, patents, utility models, industrial models and designs, trademarks, trade names, industrial and trade secrets, technical processes, know-how, and goodwill;

e) Concessions granted by public law agencies, including exploration and exploitation concessions;

A modification of the way the goods are invested does not affect their nature as invested capital.

Similar definitions were inserted in all the treaties signed with France and the United Kingdom of Great Britain and Northern Ireland.

On the other hand, in the Chapter on Investment of the Free Trade Agreement with Mexico, investment is defined as "all types of goods and rights of any kind, acquired with resources transferred to the territory of one Party, or reinvested there, by the investors of the other Party, such as:

a) Shares and any other form of participation in the capital stock of companies established or organized in conformity with the legislation of the other Party;

b) Rights deriving from all types of investments made with the objective of creating economic value (or obligations, credit and rights to any benefit that have economic value);

c) Movable and immovable property, as well as other real rights such as mortgages, securities, usufruct and similar rights;

d) Intellectual property rights; and

e) Rights to carry out economic and commercial activities authorized by legislation or by virtue of a contract."

In addition, this chapter includes a definition of "an investor’s investment on one Part", which is "the investor’s investment, property, or low control on one Part executed on the other’s Part territory. In the case of an enterprise, an investor owns an investment on one Part if the investor owns the titles of more than 49% of its social capital. An investment is under an investor’s control on one Part if the investor is authorized to designate most of the directors or is authorized to manage the operations in any other way.

No.

There is no foreign investment regime in Costa Rica.

There is no foreign investment regime in Costa Rica.

There is no foreign investment regime in Costa Rica.

This is not applicable. There is no foreign investment regime in Costa Rica.

Article 13 of the Labor Code prohibits all employers from employing in their companies, regardless of the kind of company, less than 90% Costa Rican workers. This percentage may be increased or reduced by up to 10%, during a period not to exceed five years, when the Ministry of Labor and Social Security deems it indispensable. This percentage may also be modified in cases of immigration authorized and controlled by the Executive Power or contracted by the same when immigrants enter the country to work in charitable or educational institutions or other institutions of undoubtedly social interest; or in the case of Central American nationals or foreigners born and established in the country.

When a company has no more than five workers, only four of them must be Costa Ricans.

This rule is not applicable to managers, directors, administrators, supervisors and general heads of companies, provided there are no more than two of each.

Notwithstanding the above, companies are free to enter into contracts for professional services without regard to nationality requirements, cases in which the labor laws are not applicable. On the other hand, these contracts are governed by ordinary civil law leaving the companies free to contract.

Finally, with respect to the question of the conditions under which the executive or other staff contracted abroad may remit their earnings abroad, there is no restriction in Costa Rica on remittances of capital and profits. Executives and other staff may therefore use the facilities offered by the local financial system.

At the constitutional level, there are fundamentally three provisions that guarantee a market economy in Costa Rica. First, Article 46 explicitly protects the principles of economic liberty, both in state actions as well as private sector practices. This provision is complemented by Articles 45 and 47 which constitute the pillars of the regime for the protection of private property that includes both real property and personal property, such as intellectual property rights.

The principle of economic nondiscrimination is guaranteed in two provisions of the Constitution: the generic principle of equality under the law, embodied in Article 33 of the Constitution; and the principle of equality of foreigners and nationals, guaranteed in Article 19 of the Constitution.

Article 33 stipulates:

"Every person is equal under the law and there shall be no discrimination whatsoever contrary to human dignity."

The generic principle cited above is specified with respect to the treatment of foreigners in Article 19 of the Constitution, which reads as follows:

"Foreigners have the same individual and social duties and rights as Costa Ricans, with the exceptions and restriction established by this Constitution and the laws."

It is not possible to give a general reply to this question since the applicable regulations vary depending on the productive sector under consideration. In principle, it could be stated that, given the principle of legality prevailing in the Costa Rican juridical regime, public enterprises would compete on equal terms with private enterprises, except in those activities for which the Constitution and laws expressly stipulate preferential terms for State enterprises.

Thus there are productive activities which, by virtue of the monopolies granted by the Constitution and laws of the Republic, are prohibited to private enterprises. In this area two categories may be distinguished. First are the sectors in which ownership, but not exploitation, is constitutionally prohibited to private enterprise. Within this category are the sectors stipulated in Article 121 Section 14 of the Political Constitution, namely:

a) Power that may be obtained from the waters of the public domain within the national territory.

b) Beds of coal, wells and deposits of petroleum, and any other hydrocarbon, as well as radioactive mineral deposits existing in the national territory.

c) Wireless services.

Property mentioned in paragraphs a), b) and c) above may be exploited only by the public administration or by individuals in conformity with the law or by special concession granted for a limited period and pursuant to the conditions and stipulations established by the Legislative Assembly.

Railroads, quays and national airports - the latter for as long as they are in service - may not be alienated, leased or mortgaged, directly or indirectly, or in any way cease to be owned and controlled by the State...."

From the above-cited constitutional provision, it may be inferred that in Costa Rica there is no economic activity reserved by the Constitution for the exclusive exercise by the State. What is reserved is ownership of the resources cited therein, as well as power to regulate the operation of railroads, quays and national airports, leaving open the possibility for the latter to be administered by the private enterprise.

Apart from the constitutional provision cited above, a second category may include those state monopolies established in special laws. Within this category are the following sectors:

a) Insurance: by virtue of Law No. 12 of October 30, 1924 and its reforms, the National Insurance Institute (INS) enjoys a monopoly in this sector. Excluded from that monopoly are existing domestic cooperative and mutual insurance companies.

b) Importation, refining and bulk distribution of petroleum and petroleum derivatives: although transport of refined products and ownership of gas stations are open to the private sector, by virtue of Law No. 5,508 of April 17, 1974 and reconfirmed by Law 7,356 of October 6, 1993, the Costa Rican Petroleum Refinery (RECOPE) enjoys a monopoly in the importation, refining and distribution of hydrocarbons.

RECOPE exercises a monopoly in refining crude petroleum and its derivatives destined to the domestic market.

c) Production and use of ethyl alcohol for the manufacture of liquor: by virtue of Article 443 of the Fiscal Code, the National Liquor Factory (FANAL) enjoys a monopoly in this economic activity. (That notwithstanding, "A draft law presented to the Legislative Assembly on September 14, 1993 and currently being examined by the Economic Affairs Commission, anticipates the privatization of FANAL. Approval of the bill was expected in 1995 and the privatization of the national liquor factory (FANAL) should begin within nine months from the date on which the law is published. Some shares will be distributed among the employees and it is intended to sell the remainder by public auction.")

d) Monopoly on current accounts and access to rediscount from the Central Bank: based on the provisions of the Organic Law of the Central Bank No. 1552 of April 23, 1953 and Organic Law of the National Banking System No. 1644 of September 26, 1953, only state banks may offer current account services to the public, and also access the rediscount of the Central Bank. (That notwithstanding, the Legislative Assembly already approved in a first debate the new Organic Law of the Central Bank, which would eliminate the restrictions mentioned. It is hoped that said draft law, at present before the Constitutional Chamber, will be approved during October 1995).

The State exercises a monopoly in postal services.

By virtue of the principle of equality of foreigners and nationals cited above, as well as the nonexistence of a general law on foreign investment, there is wide scope for foreign investment. The same applies, in principle, to all the areas of economic activity, except those in which the State enjoys a monopoly or has restricted foreign participation by legislation. This last point will be treated in the next section.

Following is a brief description of the activities and sectors where there are restrictions or limitations.

a) Construction services

Construction firms must be registered in the College of Engineers. Both the registration fee as well as the corresponding monthly fee vary depending on whether it is a local or foreign company.

As a general rule, local subcontractors enjoy preference in public works construction contracts.

Local companies may take advantage of the cost actualization regime in bids for public works construction. Foreign companies may only benefit from that regime if there are no local companies in the market.

b) Transport Storage and Communication Services

The Ministry of Public Works and Transportation issues the permit required for the operation of international overland passenger transport services to Costa Rican companies and others that fulfill the prescription of minimum national capital, as well as on the basis of reciprocity. The prescription related to minimum national capital stipulates in such a case that 51% of the capital and control of the company operating the service must remain in the hands of natural persons who are Costa Rican by nationality. The Ministry may also grant authorization for the provision of remunerated international overland passenger transport services to those companies that have 60% Central American capital. Those authorizations are granted based on the "principle of reciprocity."

The transportation of cargo originating in or destined to Central America is reserved to Central American vehicles, trailers, containers and chassis. As a general rule, Costa Rican companies enjoy preference over foreign companies for the operation of concessionary bus routes and taxi services. In that case priority is given to: i) former concessionaires; and ii) user cooperatives.

Foreign motor vehicles, trailers and semitrailers are barred from transporting cargo within Costa Rica; only Costa Ricans may transport local cargo.

Foreign multimodal transport enterprises must hire national haulage contractors to transport wagons and containers

Foreign commercial transport vehicles, foreign trailers moved by national truck trailers and foreign chassis for containers may remain for up to one month in Costa Rica; and foreign containers may remain for up to two months.

Only Costa Ricans may register ships in the National Register of Ships.

The operation of concessionary cabotage lines is reserved to Costa Rican citizens or Costa Rican companies in which at least 60% of the shares in the capital belong to Costa Ricans.

The General Law on Public Works Concessions authorizes concessionary operation of the new airport systems.

The General Bureau of Civil Aviation issues operating certificates for international transport services based on the "principle of reciprocity."

Control of auxiliary navigation services and air traffic services are also the responsibility of the General Bureau of Civil Aviation, which may contract qualified technical entities or non-profit national enterprises to be responsible for air-traffic-control services.

With respect to international airports, the General Bureau of Civil Aviation may put out to tender (when an operating certificate is not required) the provision of services under concessions. If, by virtue of the concession, construction of a work leads to subcontracting, preference will be given to national subcontractors.

The operation of local air transport services is reserved to Costa Ricans, who must show that 51% of the capital and control of the company is in the hands of nationals.

The Aircraft Register registers only aircraft operating pre-paid services for Costa Ricans.

National airlines which lack equipment may lease planes abroad for a maximum period of six months.

c) Services provided to companies

The operation of paid employment agencies is prohibited. The provision of aerial photographic services is reserved exclusively to Costa Rican technicians. National aerial photographic enterprises must show that 51% of the capital and control of the enterprise is in the hands of Costa Ricans.

Hydraulic power is under state control and may be exploited by individuals who hold an official concession. Only Costa Ricans may be guards, as auxiliary police.

d) Tourist services

Foreign enterprises in which 50% of the capital is owned by Costa Ricans may participate in tourist projects. Concessions are not granted to those enterprises in which more than 50% of the capital and members are foreigners nor to foreigners who have not resided for at least five years in Costa Rica.

Only nationals may participate in coastal tourist development. In this area no concessions are granted to corporations with bearer shares or to corporations domiciled abroad or incorporated in Costa Rica by foreigners.

Costa Rican nationality is required for acquiring a license as a tourist guide.

e) Health services

Professional health care services may only be exercised by those who have been registered in the respective College. Doctors and paramedics must show residence in Costa Rica for more than five years.

Foreign nurses must pass the corresponding examination, unless they are exempt therefrom by virtue of a reciprocal treaty.

The State may only contract foreign dentists if no Costa Rican dentists are available. Save with stipulation to the contrary in reciprocal treaties, universities may require that foreign dentists who want to practice in Costa Rica pass the pertinent examination. Foreign odontologists are authorized to practice in Costa Rica on the basis of reciprocity in their country of origin.

Foreign veterinarians may practice in Costa Rica on the basis of reciprocity in their country of origin provided they have resided in the country for five years.

f) Telecommunication services

Radio broadcasting services are under the control of the State and may be operated by individuals holding an official concession. The permit required to establish, administer and operate radio or television stations is granted only to Costa Ricans, to naturalized citizens resident for 10 years in Costa Rica, and enterprises with a minimum of 65% national capital.

The permit required to operate telegraph and telephone services is reserved exclusively to nationals, under state control.

With respect to cinematography and television, the proportion of foreign commercials may not be more than 30%. In general, the State only acquires national advertising or informational material. It only acquires foreign material that has artistic or educational value. Commercials with musical background recorded abroad, incur a flat tax of 1,000 colones.

Short commercial films, other than those originating in Central America, are subject to a 100% ad valorem tax, which may not be less than 10,000 colones or more than 50,000 colones. Short commercial films produced in other Central American countries which grant reciprocity in that sector are considered to be national.

g) Financial services (banking, insurance and financial services in general)

To be incorporated and to function, all cooperative banks must include the participation of at least 10 solvent Costa Rican cooperatives. The net worth of each bank is variable and its capital stock consists of contributions from the participating cooperatives. Those contributions or quotas must remain in Costa Rican cooperatives.

The establishment of a "solidarity bank" requires a group of at least 25 Costa Rican non-profit associations considered solvent by the Auditor General of Financial Institutions.

Investment companies must take the form of corporations and have a minimum capital of 10 million colones. In the case of fixed-income investment companies and investment funds, their capital may not include the participation, whether direct or indirect, of foreign governments, official foreign agencies, foreign financial institutions or groups of foreign natural or juridical persons.

All-risk insurance contracts are by law State monopolies, exercised through the National Insurance Institute (INS).

Insurance agents must have come of age. As a general rule, preference is given to nationals. Representatives of merchant insurance companies must be Costa Rican nationals or otherwise they must be nationals of a country offering reciprocity in that area; they must have resided for at least 10 years in Costa Rica with permanent domicile in Costa Rican territory.

From the reply to the preceding question, in principle there is no sector or economic activity from which only foreign investment is excluded. With respect to limits on foreign investment in various sectors, they were already indicated with detailed explanations of the composition of those restrictions.

The cases in which the principle of reciprocity operates are highlighted in the reply to question 3.3.a.

Income Tax Law No. 7092 of April 21, 1988 and its reforms ("the Law") and Rules on Benefits, Terms and Conditions of Export Contracts ("the Rules") issued by the National Investment Council of the Ministry of Foreign Trade on October 17, 1994: the Law, in the chapter on incentives for various export activities, defines the benefits that may be granted to non-traditional exports to third country markets. Included within these benefits is the Tax Bond Certificate (CAT), the percentage of which varies, inter alia, in conformity with the value added of the exports. The CAT is a freely negotiable bearer bond that accrues no interest and lapses 24 months after the maturity date. They are issued by the Central Bank of Costa Rica, in national currency, and used to pay direct or indirect taxes, the collection of which is the responsibility of the Central Bank as the State’s cashier. It must be pointed out that Law No. 7257 of September 17, 1991 provided for the elimination of CATs by 1999 at the latest.

The performance requirements existing in Costa Rica are not required to access and operate foreign investment, but rather to access the incentives granted by the various export promotion regimes that are offered to both foreign and national investors. The performance requirement consists of exporting non-traditional products to third country markets.

Non-traditional exports are exports other than traditional exports which fundamentally comprise: coffee, banana, beef, and sugar production. Decree 23784 specifically conceptualizes non-traditional exports as "exports of goods produced or manufactured in Costa Rica," with the exception of the following: coffee (except certain types); fresh bananas; cocoa beans; refined sugar cane; hulled and paddy rice; beans; corn; sorghum; unprocessed leaf tobacco; skins and hides; beef; certain woods; unprocessed mineral products; horses, cattle and pigs on the hoof, except thoroughbreds; cotton; crude non-metallic ores, except coal, petroleum, fertilizer and precious stones; iron ore and refined iron ores; non-ferrous base metal ores and their concentrates; iron and steel scraps; non-ferrous metal scraps; silver and platinum; coal and briquettes; coke; coins.

The above mentioned decree defines as third markets all the countries to which goods produced or manufactured in Costa Rica are exported, except: a) signatory countries of the Central American Economic Integration Treaty; and b) the countries with which there are currently free trade agreements with respect to goods that enter those countries under the respective treaty without the payment of import duties.

In Costa Rica, there is no generic legal body that regulates privatization procedures specifically. Law No. 7330, Law on Democratization of the Subsidiaries of CODESA, for example, establishes certain provisions for certain enterprises such as CEMPASA and FERTICA. As a result, and based on the principle of equality established in the Constitution, the foreign investor may participate on equal terms in privatization processes in the country. Nevertheless, it must be borne in mind that in some specific privatization processes, the law could reserve a fixed percentage of the company’s shares for workers associations, unions, cooperatives, integral community development associations, community associations, and so forth. In those cases, both foreign and national investors are prevented from participating in the percentage of the enterprise that the legislator has decided to protect in favor of certain groups involved in the enterprise.

With respect to national treatment, it is guaranteed in Articles 33 and 19 of the Constitution cited above. With respect to most favored nation treatment, this guarantee favors the investment of a foreign investor if his government had negotiated a bilateral investment treaty with Costa Rica and the respective clause were included in said treaty. To date, September 1995, Costa Rica has only signed investment protection treaties with Switzerland, France, Great Britain, Germany and Mexico. In the case of Mexico, it was within the framework of a comprehensive free trade agreement.

From the perspective of the interests of the foreign investor in Costa Rica, there are two constitutional provisions that limit the framework within which expropriation is regulated, namely, Articles 19 and 45 of the Political Constitution. As mentioned before, whereas Article 19 recognizes the principle of equality of nationals and foreigners with respect to the protection of their individual guarantees, Article 45 establishes the basis of the juridical regime regulating property in the country.

With respect to the constitutional basis for expropriation, Article 45 stipulates:

"Property is inviolable; no one may be deprived of his property unless it is for legally proven public benefit after indemnity pursuant to the law. In case of war or internal unrest, the indemnity does not have to be paid in advance. Nevertheless, the corresponding payment shall be made at the latest two years after the state of emergency ended.

On grounds of public necessity, the Legislative Assembly may, by a vote of two thirds of its full membership, impose limitations of social interest on property."

The constitutional provision cited above distinguishes two fundamental requirements for expropriation to proceed:

a) There must exist a public interest, legally proved, that justifies the act of expropriation, and

b) Prior to taking possession of the expropriated property, the State must indemnify the affected party on the terms established in the law.

With respect to indemnity to be paid by the State, the new Law on Expropriation uses the concept of "fair price."

The first article of said Law establishes:

"This law regulates forced expropriation on grounds of legally proven public interest. Expropriation is based on the exercise of the right of jurisdiction of the Public Administration and includes any form of alienation of private property or rights or legitimate patrimonial interests, whoever their owners may be, by the prior payment of an indemnity that represents the fair price of the expropriated goods." (Article 1, Law on Expropriation No. 7495 of May 3, 1995).

Fair price will be determined by an appraisal that the administration requests from the respective specialized dependency or, if there is none, from the General Bureau of Direct Taxation.

(Article 21) The appraisal in question shall indicate in detail the criteria on which the value assigned to the expropriated property is based as well as the methodology used. In addition, said appraisal shall contain:

a) In the case of real property: "the independent appraisal of the land, crops, construction, leases, commercial rights, right to exploitation of deposits, and any other goods or rights susceptible to indemnity; and (Article 22)

b) In the case of movable property: "each one will be separately appraised indicating the features that had a bearing on its appraisal." (Article 22).

It is important to indicate that appraisals only take into account permanent real damages, excluding future acts and expectations of a right that may affect the property and the increased values derived from the project that is grounds for the expropriation (Article 22).

It must also be mentioned that the amount of the administrative appraisal may be challenged in the judicial chamber, during the special expropriation process established in Chapter III of the new Law on Expropriation.

With respect to the form of payment, the new Law clarifies one of the points that had formerly been most controversial. In relation to this point, and on the possibility of the indemnity being paid in bonds as jurisprudence had previously admitted, Article 47 expressly stipulates:

"Fair price shall be paid in cash, unless the condemnee accepts payment in bonds. In this case, these bonds shall be for their real value, which the National Stock Exchange will certify through its agent, or, in his absence, by a sworn broker." (Article 47).

Costa Rican jurisprudence has traditionally considered that the prior indemnity stipulated in the Constitution referred to the fact that the same "is only due from the moment of alienation. The prior feature in this case must be understood as before taking possession of the expropriated property." (APUY SIRIAS [Luis Arnaldo], Analysis and comments on legal texts on expropiations proceedings in Costa Rica [Análisis y comentarios de los textos legales sobre diligencias expropriatorias en Costa Rica], University of Costa Rica, Law School, Thesis to receive the degree of Bachelor of Arts, San José, 1976, p. 25.)

The new Law on Expropriation in Article 31 incorporates the old jurisprudential principle in the letter of the law. That provision stipulates that, in the initial resolution of the expropriation proceeding in the judicial chamber, the judge "shall grant the condemnee a period of two months to vacate the property, provided the administration has deposited the amount of the administrative appraisal...." (Article 31, Law on Expropriation).

Thus there can be no eviction without prior deposit of the administrative appraisal. If the condemnee considers that the deposit does not correspond to the fair price, the administrative appraisal may be challenged by judicial process. In that case, there could be eviction since the amount of the appraisal had already been deposited. Nevertheless, once fair price has been determined in court, if such price should be greater than the administrative appraisal, the condemnee shall not only be granted the difference between the fair price and the appraisal, but also the interest on the appraised value. In this regard, Article 11 of the Law on Expropriation establishes:

"The administration is obliged to recognize interest to the condemnee, at the existing legal rate, from the date of appropriation of the property until the date of payment..." (Article 11).

The reply is in the affirmative. In this regard, see section 3.1, and the provisions of Articles 45 and 47 explained therein.

Capital contributions may comprise foreign currency, goods, technology, advisory services, loans or any other modality, with no specific regulation thereon.

No.

There is a single exchange market, the rates of which are determined by supply and demand, freely accessible to any participant and with limited participation of the Central Bank of Costa Rica.

There is no list of taxes affecting foreign investment specifically. Common legislation is summarized as follows:

Juridical persons, income tax, 30%

Small firms, income tax, 10-20%

Individuals, income tax, 10% and above a certain amount - 25% applied to the excess.

Profit capitalization, exempt.

For profits, dividends or shares in corporations, 15%

For other purposes, from 5 to 20%

In Costa Rica, there is no tax legislation applicable exclusively to foreign investment.

No.

In Costa Rica, there are no incentives that benefit foreign investment exclusively.

By virtue of Articles 33 and 19 of the Political Constitution, the foreign investor has access to the same legal recourse as local investors. Since there is no general foreign investment law, the Costa Rican legal system has no recourse specially designed for foreign investment. That notwithstanding, the foreign investor has at his disposal the recourse established by international conventions on investment protection signed by Costa Rica.

Costa Rica is a signatory member of the following conventions:

a) Agreement on the Settlement of Investment-related Disputes between States and Nationals of Other States (ICSID), concluded in Washington on March 18, 1965, approved by Law No. 7332 of March 30, 1993, and published in Gazette No. 72 of April 16, 1993.

b) Inter-American Convention on International Commercial Arbitration, concluded in Panama, on January 30, 1975, approved by Law No. 6165 and published in Gazette No. 241 of December 21, 1977.

c) United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards, concluded in New York, June 10, 1958, approved by Law No. 6,157 of December 2, 1977, published in Gazette No. 33 of February 15, 1978.

Within the Hemisphere, Mexico is the only country with which Costa Rica has reached agreement on this subject. The corresponding regulations are included in the Free Trade Agreement between the Government of the Republic of Costa Rica and the Government of the United Mexican States, Chapter XIII. Investment, approved by Law No. 7,474 of December 20, 1994, published in Special Edition No. 39 of Gazette No. 244 of December 23, 1994.

It is interesting to mention that foreign investment agreements have also been signed with other countries outside of the Hemisphere, namely:

a) Agreement between the Republic of Costa Rica and the Swiss Federation on the Protection and Promotion of Investment, approved by Law No. 3725 of August 8, 1966, published in Gazette No. 180 of August 12, 1966.

b) Agreement between the Government of the Republic of Costa Rica and the Government of the French Republic on the Reciprocal Promotion and Protection of Investments, signed on March 8, 1984, before the Legislative Assembly, bill No. 9440.

c) Agreement between the Government of Costa Rica and the United Kingdom of Great Britain and Northern Ireland on the Promotion and Protection of Investment, signed on September 7, 1982, before the Legislative Assembly, bill No. 9688.

d) Treaty between the Republic of Costa Rica and the Federal Republic of Germany on the Promotion and Reciprocal Protection of Investments, signed on September 13, 1994, pending submission to the Legislative Assembly.

With respect to the juridical hierarchy of international treaties, Article 7 of the Political Constitution of Costa Rica expressly stipulates: "Public treaties, international agreements, and concordats duly approved by the Legislative Assembly shall, from their enactment or from the date designated therein, take precedence over laws..."

Given that the constitutional provision cited above does not take into account the material treated in a treaty for determining its rank, it is clear that international investment protection agreements enjoy the same rank as any other treaty, and as such they take precedence over any law or regulation that may run counter to them.

The effectiveness of the above-cited constitutional provision is guaranteed by Articles 2b) and 73d) of the Law on Constitutional Jurisdiction. Article 2b) stipulates: "It rests specifically on constitutional jurisdiction: ....b) to exercise control of the constitutionality of rules of any nature and the acts subject to Public Law, as well as agreement of the internal legal system with International or Community Law, mediating on unconstitutional action and other constitutional questions."

The above-cited provision is complemented by Article 73d) of the same Law, which indicates: "Unconstitutional action is possible.... d) when any law or general provision infringes Article 7, first paragraph of the Constitution, because it runs counter to a public treaty or international agreement."

Considering Article 7 of the Constitution in conjunction with Articles 2b) and 73d) of the Law on Constitutional Jurisdiction, Constitutional Court IV of the Supreme Court of Justice established that, in principle, all international treaties properly approved by the Legislative Assembly and ratified by the Executive have direct effect in the internal juridical system. This principle is subject to the following conditions:

a) That the drafting of the treaty must be sufficiently clear and precise to identify, without any doubt, the international obligation assumed by the Government of Costa Rica by means of this instrument;

b) That the drafting of the treaty must be sufficiently clear and precise to identify the rights that this treaty protects in favor of natural and/or juridical persons; and

c) That Costa Rica’s internal juridical system must count on the required juridical institutions and procedures to allow natural and/or juridical persons to exercise the rights protected by the international treaty in question.

From the above it may be inferred that international treaties-- including those related to investment-- that meet the requirements cited above are directly applicable in Costa Rica. When they [such treaties] become part of the internal juridical system, all judges, regardless of their rank or competence, are obliged to apply international treaties in the cases in which they are justified. Also subject to the same conditions, any person may invoke the application of an international treaty in a judicial proceeding.

No.