Author
Felipe Fernández
Associate
Costa Rica
E-mail
Arbitration clauses in real estate contracts have become increasingly common, primarily because of the advantages arbitration offers as an alternative dispute resolution mechanism: greater speed, confidentiality, and technical specialization of arbitrators. However, there are situations in which such a clause can be counterproductive and, instead of providing efficiency and agility, it may create unnecessary procedural complications.
One such case arises in lease agreements, specifically regarding eviction. When the arbitration clause does not expressly exclude this action, it can prevent direct access to the judicial route, which generally provides a faster and more specialized procedure: the summary eviction process (proceso monitorio arrendaticio).
In this type of contract, one of the landlord’s primary interests is to have a quick and effective means of recovering possession of the property in the event of a breach. Situations such as non-payment of rent or expiration of the term require swift action, which is why the drafting of the arbitration clause is particularly important.
What Happens When Eviction Is Not Excluded from the Arbitration Clause?
Consider a typical case: the parties enter into a lease agreement containing a generic arbitration clause covering all disputes, without expressly excluding eviction. Over time, the tenant accumulates unpaid rent and remains in the property despite formal demands.
Although arbitration may seem like a suitable path, in practice it can be slower and more complex. The landlord must initiate arbitration, submit claims, await responses, and participate in hearings before obtaining an arbitral award. This process alone may take close to a year.
If the tenant does not voluntarily comply with the award, the landlord must then initiate judicial enforcement proceedings, since arbitral tribunals lack coercive enforcement powers. This adds a second procedural stage and further delays.
- The arbitral proceeding.
- The judicial enforcement of the arbitral award.
Thus, instead of simplifying the process, arbitration in this context may delay recovery of the property.
How Does the Summary Eviction Process Work?
The Civil Procedure Code (Law No. 9342) establishes a summary eviction process for swift recovery of possession when the lease relationship is documented and valid grounds exist (e.g., non-payment or expiration).
Once the claim is admitted, the court issues an eviction order granting the tenant five days to vacate or oppose. Opposition is limited to specific defenses such as proof of payment or non-existence of the obligation.
If the tenant fails to oppose or the opposition is rejected, the court may directly enforce eviction without further proceedings.
The main advantages over arbitration include:
- Speed: Short deadlines and simplified procedures.
- Lower costs: Fewer procedural stages.
- Direct enforcement: Courts can immediately order eviction.
- Asset protection: Preventive seizure measures are available.
These features make the summary eviction process the most effective tool for landlords seeking quick recovery of their property.
Should Arbitration Clauses Be Excluded?
Not entirely. Arbitration remains useful for disputes related to interpretation, performance, or validity of lease agreements. However, eviction actions should be expressly excluded to allow direct judicial enforcement.
Conclusion
While arbitration is valuable, it is not always the most suitable mechanism for eviction disputes. If eviction is not excluded, it may lead to longer, more costly, and more complex procedures.
Careful drafting of arbitration clauses—specifically excluding eviction actions—is essential to preserve efficiency and ensure landlords have access to a swift legal remedy.