Commercial Arbitration in Puerto Rico

Intro

Arbitration has become a preferred method for resolving business, commercial, labor, and securities disputes. Whether the issue involves enforcing an arbitration clause, defending a claim before an arbitration panel, seeking emergency relief, or confirming or challenging an arbitration award, businesses benefit from counsel familiar with both arbitration proceedings and the litigation that often surrounds them.

At Fleming Law Offices, we represent businesses, owners, employers, and investors in arbitration matters throughout Puerto Rico. Our experience includes commercial arbitration, labor arbitration, FINRA proceedings, arbitration clause drafting, and court proceedings involving the enforcement or challenge of arbitration agreements and awards.

Experience in Arbitration Matters

Fleming Law Offices represents clients in arbitration matters throughout Puerto Rico. The firm’s arbitration practice benefits from more than three decades of experience accumulated by its principal attorney, R.A. Fleming, who has participated in over 200 arbitration matters, primarily in the labor and employment field, as well as commercial, contractual, and securities-related disputes. His experience also includes the analysis, drafting, and negotiation of arbitration provisions, as well as advising businesses on the strategic advantages and risks that arbitration clauses may present in commercial and employment agreements.

In addition to representing clients in redaction and analysis of contractual clauses and arbitration proceedings, Mr. Fleming has served as an arbitrator and panel member for various organizations and has participated in arbitration matters from both the advocate’s and decision-maker’s perspectives. His experience includes labor arbitration, commercial arbitration, FINRA-related disputes, arbitration clause drafting, and court proceedings involving the enforcement, confirmation, modification, or challenge of arbitration awards.

This combination of transactional, litigation, and arbitration experience enables the firm to advise clients not only on the resolution of disputes through arbitration, but also on the drafting of arbitration provisions designed to address business risks before disputes arise.

How We Assist Clients in Arbitration Matters

• Drafting and reviewing arbitration clauses in commercial contracts including distribution, franchising, agency and licensing as well as employment and subcontracting agreements.
• Enforcing arbitration agreements.
• Defending claims in arbitration proceedings.
• Seeking provisional and injunctive relief.
• Representing parties in commercial, labor, and FINRA arbitrations.
• Confirming, enforcing, modifying, or challenging arbitration awards.
• Advising businesses on dispute-resolution provisions during contract negotiations.

Arbitration is often closely connected to both contract drafting and commercial litigation. The language used in an arbitration clause can significantly affect the rights of the parties, the scope of discovery, the selection of arbitrators, available remedies, and the ability to seek judicial review of an award. For that reason, arbitration provisions should be considered carefully during contract negotiations rather than after a dispute arises.

Commercial Arbitration

Commercial arbitration in Puerto Rico is generally based in contractual law. This implies that  Arbitration agreements in Puerto Rico are constructed  as contracts and agreements  that allow parties to structure how to manage their contractual disputes using arbitrators functioning under specifically delegated powers. It is a widely used and preferred method of conflict resolution promoted by a strong national policy and enforced by federal and state laws. Leveraging the benefits of privacy, efficiency and finality, the general practice is for parties to subject themselves to the award issued by the arbitrator; one that is generally final and binding.   This article addresses both the Federal Arbitration Act and the Puerto Rico Arbitration Act as they provide the framework for commercial arbitration  in Puerto Rico and how it applies to arbitration agreements and or contracts. The law that regulates international commercial arbitration in Puerto Rico is discussed in my article,

The Federal Arbitraton Act (FAA) is the primary statute governing arbitration in Puerto Rico  and it applies  when the a transactions subject to arbitration affect interstate commerce. Thus, local courts are required to follow the provisions of the FAA and enforce arbitration contracts agreed by the parties like any other agreement. In other words Commercial arbitration in Puerto Rico is subject to federal law which is not the only law enforcing arbitration agreements in Puerto Rico.

The Puerto Rico Arbitration Act   is based on the Federal Arbitration Act and its interpretative jurisprudence guides the disposition of cases in the local jurisdiction.  Like sections 10 and 11 of the FAA, the Puerto Rico Arbitration Act  provides an expedited judicial review process to revoke or modify an award under very limited situations.

Beyond their similarities, common origin and professed public policy in favor of arbitration, there is a fundamental distinction in the application of both laws. The Puerto Rico Arbitration Act has been interpreted to allow expanded judicial review when the parties explicitly provide in the agreement that the award “conform to law. Conditioning an award “to conform to law” means that the arbitrator cannot disregard the substantive law adopted by the United States and Puerto Rico Supreme Courts.  This is not possible under the FAA which restricts the parties’ abilities to seek judicial review based on legal error.

The view of the Supreme Court of Puerto Rico is that the Puerto Rico Arbitration Act can  coexist with its federal counterpart because federal arbitration policy simply mandates the courts to enforce the parties’ private agreements; that although the FAA has narrow grounds for judicial review, it does not preclude parties to elect an arbitration agreement that opts out of the FAA in favor of the Puerto Rico Arbitration Act which allows for expanded judicial review when the parties thus expressly provide for it.

Although arbitration is designed to reduce court involvement, many disputes require judicial intervention. Courts are frequently asked to determine whether a dispute is subject to arbitration, compel arbitration, stay litigation, confirm awards, vacate awards, or issue provisional remedies. As a result, effective arbitration drafting and representation often requires experience in both contractual law, the specifics of the business agreement as well as arbitration proceedings and commercial litigation.

You can obtain  additional information about arbitration  in Puerto Rico and how the Supreme Court of Puerto Rico has addressed judicial review of commercial arbitration in Puerto Rico and the awards arising from disputes in interstate commerce  and  how arbitration contracts  in Puerto Rico  have been scrutinized  under the FAA and the Puerto Rico Arbitration Act, you can access my detailed article-  “Judicial Review of Commercial Arbitration Awards in Puerto Rico: Charting the Supreme Court of Puerto Rico’s Conflicted Interpretation of the Federal Arbitration Act”, published in Volume XIX of the Revista de la Academia Puertoriqueña de Jurisprudencia y Legislación.

International Commercial Arbitration

International arbitration is of importance in business and commercial affairs within a country’s jurisdiction and across borders. It has become the preferred method of solving international disputes  and while Puerto Rico is limited by the United States broad reach on international affairs, Puerto Rico has taken steps to adopt legislation in accordance with international commercial arbitration that benefit trade among borders and supports adjudication of  transnational disputes.

PR International Commercial Arbitration Law No. 10-2012 (“PRICA”)  is a law modeled by the UNCITRAL Model Law for Commercial International Arbitration of 1985 and subsequently amended in 2006 (“Model Law”).  UNCITRAL (The United Nations Commission on International Trade Law) is part of the United Nations, and it is focused on promoting international commerce and investments by standardizing laws affecting trade and international business.

The Model Law has been successful in achieving its goals for the most part. It has been adopted by 85 countries and is currently the most widely used arbitration law in international commercial arbitration. It provides a unified and harmonized framework for international arbitration which is based on common principles and practices. The Model Law standardizes the administration of arbitral proceedings, ensures that states respect their obligations under international arbitration agreements, and provides justice to parties involved in disputes. It also facilitates the recognition and enforcement of arbitral awards across international borders. Additionally, the Model Law has been instrumental in developing a uniform set of rules that can be adapted to the varied legal frameworks of countries around the world, allowing arbitration proceedings to be conducted in an efficient and cost-effective manner. It also provides a legal framework to address challenges such as the enforceability of awards and challenges to arbitral jurisdiction. Further, the Model Law has been successful in promoting arbitration as a fair, efficient, and cost-effective dispute resolution mechanism in international commercial arbitration. It has also enabled states to focus their resources on other legal matters and provided increased opportunities for international trade. All of these factors have contributed to the success of the Model Law in recent years.

Arbitration is not limited to commercial contract disputes. Depending on the circumstances, arbitration may also arise in labor and employment matters, securities disputes subject to FINRA procedures, partnership and shareholder conflicts, distribution, licensing, franchise disputes, and other business controversies. Whether the matter involves drafting an arbitration clause, prosecuting or defending an arbitration claim, or seeking judicial enforcement or review of an award, businesses benefit from legal counsel familiar with both the arbitration process and the underlying business relationship that gave rise to the dispute.

Whether the matter involves commercial arbitration, labor arbitration, FINRA proceedings, arbitration clause drafting, or judicial review of an arbitration award, Fleming Law Offices provides representation throughout Puerto Rico. To discuss an arbitration matter or the drafting of arbitration provisions in a business agreement, contact us.