As part1 of the United States, Puerto Rico must observe the Convention on the Recognition and Enforcement of Foreign Arbitration Awards2 and the Inter-American Convention on Commercial Arbitration 3 in international commercial disputes where private parties have agreed to arbitration. Likewise, with regard to agreements to arbitrate disputes between Puerto Rico parties and foreign governments of contracting states, Puerto Rico is bound by the Convention on the Settlement of Investment Disputes between States and Nationals.4
Separately, with respect to arbitration agreements concerning commercial disputes between private U.S. and Puerto Rico parties, the Federal Arbitration Act5 applies and preempts internal Puerto Rico legislation purporting to commit the disputes to the courts.6 With regard to agreements to arbitrate that are not otherwise covered by treaty, convention or federal statute, Puerto Rico has its own arbitration code.7 The Puerto Rico Supreme Court has acknowledged a strong policy in favor of arbitration,8 despite earlier reluctance to enforce arbitration clauses, particularly in dealer termination cases.9
References 1 The exact nature of “part” has confounded many. The only clear conclusion to be drawn from an extensive reading on the subject is that the U.S. exercises ultimate sovereignty over Puerto Rico. For a helpful summary on what happened to Puerto Rico after Spain ceded it to the U.S. under the 1898 Treaty of Paris, see United States v. Quiñones, 758 F.2d 40, 41 (1st Cir. 1985).
2 Done in New York on June 10, 1958, entered into force for the U.S. on December 29, 1979. TAIS 6997; 21 U.S.T. 2517; 330 U.N.T.S. 3. The U.S. accession instrument states that it applies to “All territories for the international relations of which the United States of America is responsible.” For implementing legislation, see 9 U.S.C. §§201-208. See also Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, 473 U.S. 618, 105 S.Ct. 3346 (1985) (applying the convention to an agreement to arbitrate between Puerto Rican and Japanese firms).
4 Done in Washington, D.C., March 18, 1965, entered into force for the U.S. on October 14, 1966, 17 U.S.T. 1270; TIAS 6090, 575 U.N.T.S. 159 (“The convention is applicable to all territories for whose international relations the Contracting State is responsible, except those which are excluded by such State by written notice to the depository of this Convention either at the time of ratification, acceptance or approval or subsequently.” Article 70.