PUERTO RICO Law and Practice Contributed by: Dianette Rivera-Melendez, Oreste Ramos, Maria Trelles-Hernandez and Rosangela Sanfilippo, Pietrantoni Mendez & Alvarez LLC
This federal District Court is a trial-level court with general federal jurisdiction. There are generally two ways to gain access to the federal District Courts when there is concurrent jurisdiction: • the first is diversity jurisdiction, which involves disputes between citizens of different states, or between US citizens and foreign citizens, where the amount in controversy exceeds a certain threshold set by law; and • the second primary basis involves a federal ques - tion – ie, presenting an issue arising under the Con - stitution, federal statutes or treaties of the USA. Sources of Puerto Rico Law Applicable law derives from statutory laws, regulatory rules and regulations and common law. The sources of law in Puerto Rico are diverse, reflecting its history, constitutional status and unique relationship with the USA. Puerto Rico is an unincorporated territory of the USA, so federal laws enacted by the US Congress are appli - cable. Federal laws cover a wide range of matters, including taxation, immigration and other areas that impact Puerto Rico’s legal framework. The Puerto Rican Civil Code, modelled on the Span - ish Civil Code, governs various aspects of private law, including contracts, property, family law and torts. It serves as a foundational legal text for many civil law matters in Puerto Rico. Similar to the mainland USA, precedents from other jurisdictions have only persuasive or informational effect and are not binding, but for purposes of cer - tain local statutes (such as the Puerto Rican General Corporations Act, which is modelled on the Delaware General Corporations Law), local courts look to Dela - ware court opinions as persuasive precedent. Rules enacted by federal and state regulatory agencies – such as the US Securities and Exchange Commission (SEC), the Federal Trade Commission (FTC), the Puer - to Rican Department of Economic Development and Commerce ( Departamento de Desarrollo Económico y Comercio , or DDEC) and the Office of the Commis - sioner of Financial Institutions of Puerto Rico ( Ofici - na del Comisionado de Instituciones Financieras , or
OCIF) – provide additional sources of law and regula - tory frameworks that are relevant to investors. The US Congress, as the legislative branch of the federal government, and the Puerto Rican Legisla - tive Assembly, its local counterpart, are responsible for enacting statutes, and may delegate rule-making power to executive or independent agencies of the federal and Puerto Rican government to enact and enforce regulatory rules, such as the SEC, FTC, DDEC and OCIF. These regulatory agencies not only imple - ment and enforce new rules but also interpret exist - ing laws within their subject matter expertise. Inter - national treaties signed by the USA present further sources of law. 1.2 Regulatory Framework for FDI Puerto Rican law does not generally restrict foreign ownership specifically, nor impose special restrictions on foreign companies operating in Puerto Rico, but foreign companies must be authorised to do business in Puerto Rico. However, the Committee on Foreign Investment in the United States (CFIUS – see 7. For- eign Investment/National Security ) can review certain foreign investment transactions to determine if they impact US national security. Review by the CFIUS remains mostly voluntary, as mandatory filing is lim - ited to certain types of transactions, such as those that deal with critical technologies or infrastructure, or that collect and/or maintain sensitive personal data. Investors from certain foreign states are exempt from complying with some aspects of the CFIUS manda - tory filing regime. As described in 4.3 Disclosure and Reporting Obli- gations , the Bureau of Economic Analysis (BEA) of the US Department of Commerce has a mandatory survey (BE-13, Survey of New Foreign Direct Invest - ment in the United States) that collects data from US companies. A US company is required to report if it is: • acquired or established by a foreign person or entity, resulting in the creation of a foreign direct investment relationship; or • an existing US affiliate of a foreign parent and establishes a new US legal entity, expands its US operations or acquires a US business enterprise.
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