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New Business Arbitration Center Opened

May 4, 2007

MANAGUA – A new business-arbitration center in Managua aims to make it easier for foreign investors to settle disputes here, part of a widespread U.S. government effort to modernize Nicaragua’s legal system within the framework of the Central American Free-Trade Agreement with the United States (CAFTA).

The new International Arbitrage and MediationCenter, inaugurated April 19, is the second of its kind in Nicaragua to focus solely on commercial disagreements, and one of 13 arbitration centers funded by the U.S. Agency for International Development (USAID), to the tune of $300,000.

A total of 120 U.S.-trained mediators preside over the courts.

“Every investor, no matter their size or nationality, wants to protect their investment,” said U.S.Ambassador Paul Trivelli.“They want to know that there are flexible and transparent legal mechanisms for resolving whatever legal conflict in a rapid and just manner.”

The arbitration centers settle disputes based on Nicaraguan laws, but offer an alternative venue to Nicaragua’s traditional judicial system.

“It is widely recognized that the inability to enforce contracts and the lack of transparency and reliability in judicial decisions are among the most serious obstacles to both foreign and domestic investment in Nicaragua,” USAID noted in its 2003-2008 country plan that outlined the need for such alternative courts.

The first U.S.-backed mediation centers started hearing legal disputes here last year.

So far, the courts have ruled on more than 1,200 cases, according to USAID. The cases have involved everything from property disputes to family and work matters.

The average time of the court proceedings is three to five days.

Trivelli pointed out that such professionally run mediation centers require funds Nicaragua doesn’t have, but thanks to U.S. assistance, they are now an option for all Nicaraguans.

“It’s a manner of extending access to justice,” Trivelli explained. “Particularly for those who cannot afford to wait for a judgment that takes a long time.”

The alternative mediation centers were established as part of a new law passed by the National Assembly in 2005. The mediation centers have the same legal authority as traditional Nicaraguan courts.

The most recent arbitration center, supported by the Nicaraguan-American Chamber of Commerce (AMCHAM) and located on the same property, will help out with the caseload of a similar business-arbitration center that started last year.

According to USAID, the first businessonly-mediation center has handled 63 cases and resolved three large arbitration settlements in its first year of operation.

Terencio García, a lawyer for García & Bodan law firm in Managua, said that the new centers offer an important complement to Nicaragua’s overburdened court system, providing a more straightforward, less controversial and faster system to settle disputes.

The business arbitration courts will help Nicaragua “become more attractive to foreign investors,” García said.

Although the United States has had its historical differences with the Sandinista government, Trivelli insists that the alternative courts will strengthen the economy and lead to greater reconciliation.

“These centers, with the support of the people of the United States, will foment a climate of true peace and promote reconciliation between everyone, a reconciliation in which we all win,” he said.

 

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