PUERTO RICO Trends and Developments Contributed by: Ricardo F. Casellas Sánchez and Carla S. Loubriel Carrión, Casellas Alcover & Burgos
appointed arbitrator, but it is not clear that the par - ties have any say in the AAA’s decision, or that the AAA will provide a roster from which to choose. The emergency arbitrator’s duties should conclude with the issuance of an interim award on the request for provisional remedies. The AAA Rules provide for an election of remedies: the applicant has a choice to seek provisional relief pending arbitration in court or request the AAA to designate an emergency arbitrator. This choice is consistent with contractual autonomy. About the interplay with the FAA, it is worth noting that the FAA applies broadly to transactions involving interstate or foreign commerce. It is easy to see that most distribution agreements, most financing agree - ments and many other contracts involving stateside actors or transactions crossing interstate lines will lead to applying the FAA. There are other types of contracts, however, where the nexus with interstate commerce is tenuous. One could think of a purchase and sale contract for real estate in Puerto Rico, a real estate brokerage contract, or a partnership agreement between local actors, where a connection to inter - state commerce is more remote. In those cases, if the arbitration agreement is subject to the laws of Puerto Rico, the AAPR comes into play where arguably the FAA might not. Even if it is not entirely clear from the contract or the claims at issue that one arbitration statute governs over the other, the substantive pro - visions of the AAPR for confirmation and vacatur of awards are in harmony with the FAA so that there is a low probability that conflict pre-emption will arise. This is another benefit that did not exist before the enactment of the AAPR. Parties also have the autonomy to incorporate the AAPR to govern their written agreements to arbitrate and decide not to adopt the rules of any of the exist - ing arbitration administration organisations. These so- called “ arbitrajes criollos ” or ad hoc arbitrations (those that apply AAA Rules but are not administered by the organisation) now have the protections of the AAPR whereas, before 2024, they did not. What are the salient features of the AAPR? The AAPR has four chapters. Chapter 1 governs the three types of arbitration provided for in the Act, which are then set out in Chapter 2 (“Ordinary Arbitration”), Chapter
3 (“Abbreviated Arbitration”) and Chapter 4 (“Interna - tional Commercial Arbitration”, which is beyond the scope of this article). Chapter 1 Article 1.06 in Chapter 1 defines the form of the award. The AAPR requires a reasoned award unless the par - ties, with the arbitrator’s consent, provide differently. A reasoned award is not an award with findings of fact and conclusions of law (defined as a “ laudo motivado ” in Article 1.03 (f)). Rather, a reasoned award explains briefly the arbitrator’s reasoning for deciding the con - troversy. Chapter 1 states the standards for modifying, confirming and vacating arbitration awards (Articles 1.07, 1.08, 1.09, 1.10). The intermediate appellate courts may review by certiorari motions concerning arbitration and awards and shall decide the petitions within six months (Article 1.14). Importantly, confirmation should be initiated by motion or petition, not by formal complaint. If no litigation con - cerning the arbitration agreement is pending, motions shall be served by formal service of process (Article 2.02 (b)). Awards shall be confirmed promptly by the court (Article 1.08). These procedures are similar to those in the FAA. Courts have discretion to allow costs and fees (Article 1.11). For arbitrations whose locale is Puerto Rico, “courts in Puerto Rico” shall have exclu - sive jurisdiction to execute arbitration awards (Article 1.12). The phrase “courts in Puerto Rico” means a court with jurisdiction in Puerto Rico (Article 1.03 (i)). For an award issued after a Puerto Rico arbitration, confirmation in federal district court in Puerto Rico is possible but requires complete diversity citizenship of the parties and meeting the jurisdictional amount, since the FAA does not create an independent federal question. Chapter 2 (“Ordinary Arbitration”) Ordinary arbitrations are more streamlined than litiga - tion procedures and more suitable for complex dis - putes. Ordinary arbitration procedures in the AAPR are modelled after provisions in both the Uniform Revised Arbitration Act and the FAA. Unless agreed otherwise, courts shall decide the existence, validity and scope of arbitration agreements. The arbitration clause is severable from the contract as a whole, so it is for arbitrators to decide the validity of the underlying
761 CHAMBERS.COM
Powered by FlippingBook