The Need for a Legal Framework on International Private Law in Puerto Rico

27Nov09

By Gabriel Ricardo Mulero Clas
For IPEC

The island of Puerto Rico lies dead center of the Caribbean basin.  Since the times of the Conquistadors, it was called the key to the Americas for its strategic geographical position.  It is now a small country with fervent commercial activity at both the national and international levels.  With $46.9 billion in exports to countries like United States, United Kingdom, Netherlands and Dominican Republic and $29.1 billion in imports from Ireland, Japan, U.S.A., among others, the need to expand our knowledge on the international legal framework in all legal matters acquires special importance.[1] Private practitioners, members of the judiciary and government officials are all exposed to this need. However, our knowledge in the field is minimal.

Education in international private law is not required in any of the law schools in the country. Judges lack the resources necessary to decide upon these issues having to revert to jurisprudence that is not in tune with our daily realities. Although some lawyers may have a basic knowledge in international law, the amount of its legal experts is limited to law professors and a certain few practitioners who work mostly with high profile clients. In essence, most lawyers have very little knowledge on the subject and this situation has brought mayhem to some.

Mitsubishi v. Soler Chrysler-Plymouth, 473 U.S. 614, a 1985 case, is the leading case on choice of forum clauses and it is a case that rose from a dispute between a Japanese automobile producer and a Puerto Rican distributor.  Their contract had an arbitration clause to which the distributor objected in the federal courts.  In the end, following the doctrine that contracts are the law between the parties it was decided that arbitration clauses such as the one in question were to be upheld.  The importance of this case is that, were this distributor or his lawyers in any way knowledgeable about law on international transactions they would have noticed the little clause that required any dispute to be arbitrated by a panel of Japanese arbiters in Japan using the laws of the Swiss Confederation.  There is no wonder why the distributor took to the federal courts: the alternative would have been monetarily impossible for the local distributor.

As of today, there is no code that regulates international business transactions between the island and other jurisdictions.  Some issues have already been decided and implemented as common practice and law by jurisprudence, however the lack of certainty among legal practitioners stemming from the lack of a code on international private law in a civil law jurisdiction may be precluding such lawyers from providing the type of legal advice that is definitive enough for entrepreneurs to desire to engage in transnational business transactions. Had a civil law legal framework existed in Puerto Rico as it does in jurisdictions such as Switzerland and Quebec, the contract into which the Japanese manufacturer and Puerto Rican distributor entered might have been less onerous on the distributor considering that his lawyers would have been aware of the intricacies of international private law in the matter of choice of forum and law.

In 1991, the Puerto Rican Academy of Jurisprudence and Legislation proposed a code on international private law authored by the jurists Arthur von Mehren and Symeon Symeonides.  The proposal exemplified what a code on international private law would contain if it were drafted in consideration of this Caribbean island’s particular circumstances. While bursting with fervent intentions, the code has not made it into law as of yet.  Regardless of the reason for its apparent failure, more effort is needed in terms of study and support.  With more experts in the matter walking the halls of government, academia and profession in Puerto Rico, a second attempt at codification might be successful.

International trade is never in short supply, but such trade is limited to large corporations and importers of goods and services that come mostly from the mainland and are limited to a small number of industries. If our island is to flourish economically in this century and reverse its downward spiral into deeper recession, it must diversify its commercial offer while it redistributes its nodes of commercial activity so that more people who are now eager to enter the market as entrepreneurs can do so with ease. A legal framework that regulates such trade would work as a facilitator for the thousands of Puerto Ricans who may see opportunities to engage in business between international borders.  Whereas it is the responsibility of each individual to develop its own entrepreneurial spirit as it sees fit, it is the job of legislators in civil law jurisdictions such as Puerto Rico to create the legal conditions that are necessary for all citizens to conduct business, even at the transnational level.


[1] Central Intelligence Agency, The World Factbook: Puerto Rico – Economy

 



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