Puerto Rico State Courts
Rule 51.5 of the Puerto Rico Rules of Civil Procedure (hereinafter, “PR Rules”) on the enforcement of a writ of executions against the debtor’s property must be read in conjunction with PR Rule 51.4. Rule 51.4 allows for supplementary proceedings such as allowing the creditor to conduct discovery to ensure asset identification via depositions (through written or oral questions). See 2.2 Enforcement of Domestic Judgments.
In addition, a party can obtain or perform an online title search in the Puerto Rico Property Registry if it has sufficient information to identify the properties, such as the property identification number, the Property Registry section, and the owner’s name. Similarly, the Municipal Revenues Collection Center is a resource for information about a debtor’s property tax debts over real estate properties. Also, the Electronic Registry of Commercial Transactions under the Puerto Rico Department of Estate can be used to find liens on property, which arise as collateral by debtors to their creditors.
Rule 69 of the Federal Rules of Civil Procedure (hereinafter, “Federal Rules”) is the federal counterpart of PR Rule 51.4, and also allows for discovery to aid in the execution of a judgment, as provided in the Federal Rules or the procedure of the state where the court is located.
There are different types of judgments, remedies, and extraordinary remedies available in the federal courts of the United States and Puerto Rico. Below are examples of each.
The declaratory judgment is a binding judgment establishing the legal relationship between parties and their rights. See the following:
The default judgment is a ruling where one of the parties failed to appear or execute a court-ordered action, preventing the issue from being presented before the court and/or resulting in the court settling the legal dispute in favour of the compliant party. See the following:
The summary judgment is a judgment issued by a court for one party against another party based on documentary evidence, without a hearing on the merits. See the following:
The partial judgment in a case involving multiple claims or involving multiple parties concerns where an action has more than one claim, either as a counterclaim, cross-claim, or third-party claim, or when multiple parties are involved – the court may issue a final judgment on one or a few of the claims after an express determination from a party that there is no reason to delay judgment as to those matters. When the determination is made, the partial judgment will become final for all purposes of the claims and the rights and duties adjudicated therein. See the following:
The attachment is a provisional remedy through which a court orders the seizure of a party’s property. See the following:
The garnishment is a court order to collect money damages from a defendant by ordering a third party – who owes money to the defendant – to pay the plaintiff instead. See the following:
The replevin is an action to recover private property wrongfully taken or held by the defendant. See the following:
The preventative annotation of a claim is a temporary remedy filed at the Puerto Rico Property Registry regarding the existence of an action affecting a real property title or interest. It is meant to inform third parties of the ongoing legal action. See the following:
The Mandamus is an extraordinary remedy to order a government official to fulfil their duties or correct an abuse of discretion. See the following:
The restraining order and/or injunction (temporary or permanent) is an order requiring a party to perform or abstain from performing a particular course of action. See the following:
Exequatur is a procedure for the legal recognition and validation of a foreign judgment. See the following:
Puerto Rico State Courts
PR Rule 51.1 provides that a prevailing party may execute a judgment within five years after the judgment becomes enforceable. After the five-year term, a judgment can only be executed with the court’s leave, upon motion from the movant party and with prior notice to all parties. In terms of money collection claims, PR Rule 51.2 mandates for the issuance of a writ of execution with the terms of the judgment and the amount due.
When a judgment requires the execution of a specific act, PR Rule 51.3 provides that, when a party refuses to comply with the judgment, the court may direct the act to be performed by another person appointed by the court, at the expense of the non-compliant party. In addition, in appropriate cases, the court may also find the party who does not comply in contempt of the court, and issue an attachment order or a judgment divesting a party of their property title and vesting it to another party.
In judgments entered on mortgage foreclosures and other liens, courts shall order the plaintiff to recover the debt, interests, and costs through the judicial sale of the encumbered property. If the mortgaged property cannot be found or if the proceeds from the judicial sale are insufficient, the bailiff shall collect the remaining unpaid balance out of any of the defendant’s properties, as in the case of an ordinary execution. PR Rule 51.5 allows a court official or a person designated by the court to enforce the judgment – with interest and costs – on the property of the debtor. As discussed in 1.1 Options to Identify Another Party's Asset Position, asset identification is pivotal in this process and, as such, PR Rule 51.4 allows the creditor to conduct discovery via depositions.
A mortgagee may enforce his credit and guarantee by: (i) filing an ordinary mortgage execution claim under the Puerto Rico Mortgage Act (“PR Mortgage Act”), and (ii) filing a civil money collection claim and attaching the property as both a provisional remedy and as a means to enforce the judgment.
Also, the PR Mortgage Act states that prior to execution, parties in mortgage foreclosure cases are compelled to mediate by virtue of the Principal Residence Protection and Mandatory Mediation in Foreclosure Proceedings Act, PR Act No 184-2012, as amended, 32 PR Laws Ann Sections 2881–2886. Before the sale of property on execution, PR Rule 51.7 requires notice of such sale in public places and a copy of the notice shall be sent to the judgment debtor. When real estate property is sold, the officer in charge of the sale shall execute a public deed in favour of the purchaser. The execution shall constitute a transfer of ownership of the property to the purchaser.
In child support cases, the Special Child Support Act provides for the attachment of assets as a measure to ensure payment. After 30 days of non-payment, an attachment order over all of the debtor’s assets may be issued for the amount owed. Any court, including administrative forums, shall grant an order, under the PR Rules, for the attachment of funds in possession of a third party, the attachment of income from any of the debtor’s sources, attachment of real or movable property, or any other measure to ensure child support payment. Moreover, attachment orders and notices issued by courts of other states shall not be required for the execution by the court or the administrator if the state that issued the order complies with the procedural requirements for attachments in Puerto Rico. These types of attachments shall have preference over other attachments and liens, except for previous mortgage debts. See 8 PR Laws Ann Section 524.
Federal Rule 69, the federal counterpart to PR Rule 51, states that a money judgment is enforced by a writ of execution, unless the court directs otherwise. The rule also dictates that the procedure on execution and in supplementary proceedings and/or in aid of execution must accord with the procedure of the state where the court is located, but a federal statute governs to the extent it applies. Just like PR Rule 51.4, its federal counterpart establishes that a creditor may conduct discovery in aid of the judgment’s execution in accordance with the Federal Rules or the procedure of the state where the federal court is located. In other words, United States District Courts (also referred to as “federal courts” or “district courts”), including for the District of Puerto Rico, can register judgments from other district courts from any state in the USA and execute them accordingly.
As the counterpart to PR Rule 51.3, Federal Rule 70 states that if a judgment requires a party to convey land or to deliver a deed or other document, or to perform certain acts, the district court may order the act to be done at the disobedient party’s expense by another person appointed by the district court. If it involves a title, the district court may, instead of issuing conveyance, enter judgment divesting any party’s title to vest it to another. The clerk can also obtain a writ of attachment or sequestration against the disobedient party’s property to compel obedience.
Lastly, the US Bankruptcy Code provides for an automatic stay applicable to the commencement or continuation of actions against the debtor. See 11 USC Section 362(a)(1). Thus, a court cannot order the continuation of proceedings to enforce a judgment, for example, against a spouse in a Puerto Rico marital community where one of the spouses has filed for bankruptcy and the debt that was attempted to be collected through the judgment enforcement is part of the bankruptcy proceeding. See SLG Baez-Casanova v Fernández, 193 DPR 192 (2015).
The enforcement of a judgment in Puerto Rico involves legal costs, attorney’s fees and other fees depending, for example, on the complexity of the case and the number and types of assets the defendant has in Puerto Rico. As an example, parties seeking to enforce a judgment may need to invest in private investigators and valuation experts to search for properties and/or valuate them.
Additionally, when a bailiff from the Puerto Rico state court is tasked to seize defendants’ bank accounts to enforce a judgment in Puerto Rico state courts, a payment of USD48 is required for the seizure within all three main banks of Puerto Rico: the First Bank, Banco Popular of Puerto Rico, and Oriental Bank. If the judgment is to be executed in other institutions, such as co-operatives or credit unions, it requires a fee of USD36 for each institution in addition to mileage fees. In the aforementioned instances, the bailiff needs a certified copy of the writ of execution and order, which costs a USD6 case docket fee, USD1 for a certified copy of the first page and USD0.60 per additional page.
Costs to Register and Enforce Out-of-State Federal Judgments in Puerto Rico Federal Courts
The costs to register and enforce a domestic out-of-state federal judgment in Puerto Rico federal courts include:
In terms of commissions, the US Marshals Service collects a commission of 3% of the first USD1,000 collected and 1.5% on the excess of any sum over USD1,000 for seizing property and/or selling such property. The commission applies to all court ordered sales and/or execution sales. The commission shall not be less than USD100 and shall not exceed USD50,000. See 28 CFR Section 0.114.
See 1.1 Options to Identify Another Party’s Asset Position and 2.2 Enforcement of Domestic Judgments.
Puerto Rico State Courts
A defendant in Puerto Rico may challenge enforcement under PR Rule 49.2 which states that the court may release a party from a judgment, order or proceeding for the following reasons:
The provisions of this rule do not apply to judgments in divorce actions unless it is challenged as a fraudulent or void judgment. A motion under PR Rule 49.2 does not affect the finality of a judgment or suspend its effectiveness. However, this rule does not limit a court’s authority to:
While an appeal or certiorari is pending final resolution, the trial court may not grant relief, unless with the appellate court’s leave. Once the appellate court enters judgment, no relief inconsistent with the judgment may be granted unless permitted by the appellate court.
At the federal level, a district court may relieve a party or its legal representative from a final judgment, order, or proceeding for the following reasons:
See Federal Rule 60(b).
Generally, all types of judgments in Puerto Rico can be enforced unless at least one of the circumstances under PR Rule 49.2 and Federal Rule 60(b) is present. In those cases, a court may release a party or its legal representative from complying with a judgment for any of the reasons discussed in 2.5 Challenging Enforcement of Domestic Judgments.
Puerto Rico State Courts
Puerto Rico does not have a central judgment registry. Notwithstanding, as of 7 March 2016, notaries and the general public have access to the Puerto Rico Property Registry known as KARIBE. The Property Registry allows, among other things, access to judgments issued by courts affecting property and ownership titles, if they were registered at the Property Registry.
The federal judgment registration statute provides that “[a] judgment in an action for the recovery of money or property entered in any court of appeals, district court, bankruptcy court, or in the Court of International Trade may be registered by filing a certified copy of the judgment in any other district or, with respect to the Court of International Trade, in any judicial district, when the judgment has become final by appeal or expiration of the time for appeal or when ordered by the court that entered the judgment for good cause shown” – 28 USC Section 1963. “Such a judgment entered in favor of the United States may be so registered any time after judgment is entered. A judgment so registered shall have the same effect as a judgment of the district court of the district where registered and may be enforced in like manner. A certified copy of the satisfaction of any judgment in whole or in part may be registered in like manner in any district in which the judgment is a lien. The procedure prescribed under this section is in addition to other procedures provided by law for the enforcement of judgments.” The district court in which judgment is registered pursuant to 28 USC Section 1963 may grant a motion under Federal Rule 60(b) seeking relief from that judgment.
At the federal level, a debtor who has paid what is owed can remove a judgment from the register by filing a motion under Federal Rule 60(b)(5) within a “reasonable time”. In addition, every judgment rendered by a district court within a state “shall be a lien on the property located in such State in the same manner, to the same extent and under the same conditions as a judgment of a court of general jurisdiction in such State, and shall cease to be a lien in the same manner and time” – 28 USC Section 1962. "This does not apply to judgments entered in favor of the USA. Whenever the law of any State requires a judgment of a State court to be registered, recorded, docketed or indexed, or any other act to be done, in a particular manner, or in a certain office or county or parish before such lien attaches, such requirements shall apply only if the law of such State authorizes the judgment of a court of the United States to be registered, recorded, docketed or indexed, or otherwise conformed to rules and requirements relating to judgments of the courts of the State.” Section 1962 conforms with congressional policy that execution of federal judgments shall be done according to state law.
The USA is not a party to any convention on the enforcement of foreign judgments. The USA is also not party to any multilateral agreements for the enforcement of foreign judgments. As recent as March 2022, the USA became the sixth signatory to the 2019 Hague Judgments Convention on the Recognition and Enforcement of Foreign Judgments. However, as of June 2022, this convention is yet to be ratified.
The surge in international trade has meant an increase in litigation which in turn will increase the number of foreign judgments to be enforced and recognised in the USA. Without a treaty or a uniform law, the enforcement of these judgments will become increasingly more complicated. In contrast, PR Rules provide for the enforcement of foreign judgments which are validated and recognised by Puerto Rico state courts through the process of exequatur. See PR Rule 55, and 3.2 Variations in Approach to Enforcement of Foreign Judgments and 3.3 Categories of Foreign Judgments Not Enforced.
Generally, all judgments are treated in the same manner. However, “foreign judgments do not operate ex proprio vigore in Puerto Rico… [thus] they must be validated and recognized by the courts of this jurisdiction through the exequatur proceeding” (see Maritime Preservation LTD v Black Hawk Shipping, 212 F Supp 3d 273 (DPR 2016)).
PR Rule 55(a) regarding the enforcement of foreign judgments explicitly refers to “judgments entered by a state of the United States”. The Supreme Court of Puerto Rico has interpreted this reference as one that excludes judgments entered by federal courts within a state of the USA. See Gulf Petroleum v Camioneros, 199 DPR 962 (2018). In doing so, it concluded that judgments entered by federal courts in the USA are not enforceable in Puerto Rico’s state courts because they do not constitute foreign judgments and were not issued by a state court. Hence, the only venue in Puerto Rico for the enforcement of federal judgments is in the United States District Court for the District of Puerto Rico. See 2. Domestic Judgments.
The United States Congress has “mandated that federal courts grant full faith and credit to the judgment of all states” including Puerto Rico. The method to recognise and enforce a judgment “is determined by the local law of the enforcing state” (see Endocare, Inc v Technologias Urologicas, Inc, 950 F Supp 2d 341 (DPR 2013). However, Federal Rule 69 does not apply as it is not relevant to the federal district court’s jurisdiction as such rule “only applies to the execution of judgments entered by a federal court following the rules and regulations of local courts”.
As the exequatur procedure regulated by Rule 55(a) is not available for judgments issued by district courts outside of Puerto Rico, a party who wishes to enforce a foreign country judgment in Puerto Rico’s federal district court shall follow the procedure enumerated in PR Rule 55(b) specifically for “judgment[s]… rendered in a jurisdiction other than a state of the United States of America or its territories” – PR Rule 55.5(b).
Foreign judgments in Puerto Rico shall not be enforced if they do not comply with the requirements set forth in PR Rule 55 for Puerto Rico state courts to validate a judgment issued by a court in a state within the USA or its territories:
When the judgment has been entered by a foreign court, four additional requirements must be met:
Exequatur proceedings do not allow for Puerto Rico state courts to delve into the merits of the foreign decision.
Puerto Rico State Courts
Applications for exequatur may be filed pro se or through counsel duly admitted to practise law by the Supreme Court of Puerto Rico. The interested party has two options before the Puerto Rico Court of First Instance, namely: (i) to file a complaint against the other parties affected by the judgment whose validation is sought, or (ii) to file an ex parte petition signed under oath by all the parties affected by the judgment rendered in another jurisdiction.
In all cases where the interests of minors or individuals with functional disability can be affected, the parents or legal guardians must be included in the application and the Puerto Rico family matters solicitor must be notified. In addition, in matters involving a subsequent property title inscription in the Puerto Rico Property Registry and issues involving matters of great public interest, Puerto Rico’s Attorney General and Secretary of Justice must be notified, respectively.
An exequatur application must include the following documents:
Additional documents may be required depending on the complexity and type of action filed, particularly in adoption, divorce and name-change proceedings.
Foreign judgments must meet the requisites discussed in 3.3 Categories of Foreign Judgments Not Enforced for their enforcement in Puerto Rico state courts. Also, the application must be filed in the corresponding court venue where the judgment is sought to be enforced. The exequatur proceedings do not allow for Puerto Rico’s state courts to delve into the merits of the foreign decision.
PR Rule 55 distinguishes between different types of judgments, that is, judgments issued by state courts in the United States and judgments from foreign countries (see 3.3 Categories of Foreign Judgments Not Enforced). A party who wishes to enforce a foreign-country judgment in Puerto Rico’s federal district court shall follow the procedure enumerated in PR Rule 55(b) specifically for “judgment[s]… rendered in a jurisdiction other than a state of the United States of America or its territories” – PR Rule 55.5(b). The judgment must comply with the initial three requirements applicable to judgments from state courts in the United States and the additional four requisites applicable to foreign judgments (see 3.2 Variations in Approach to Enforcement of Foreign Judgments). The application at the Federal Court for the District of Puerto Rico shall be signed and accompanied with a certified copy of the judgment to be enforced.
Puerto Rico State Courts
To initiate an exequatur proceeding, there is a USD90 filing fee. Also, there is a USD30 fee for every summon, plus USD3 per mile the bailiff must drive to serve the required documents. Alternatively, the parties may hire a process server for a fee. In addition to legal costs and attorney’s fees and just like domestic judgments, the fees and costs detailed in 2.3 Costs and Time Taken to Enforce Domestic Judgments may also apply to enforcing foreign judgments.
As per PR Rule 4.3, parties must be summoned within 120 days after the claim has been filed. Once parties have been summoned, PR Rule 10.1 sets forth a 30-day deadline to file an answer to the complaint. This deadline may be extended for just cause. Once all parties have appeared before the court, the initial scheduling conference will take place and proceedings will begin. The complexity of the case, the need to conduct discovery to identify assets, the number and types of assets owned by the defendant, as well as the court’s schedule are some of the factors that influence the length of time it may take to enforce a judgment in Puerto Rico.
Costs to Register and Enforce Foreign Judgments in Puerto Rico Federal Courts
To enforce a foreign judgment in the US District Court for the District of Puerto Rico, a USD49 miscellaneous action fee will apply. For additional enforcement costs, see 2.3 Costs and Time Taken to Enforce Domestic Judgments.
Non-compliance with the requirements set forth in PR Rule 55 would provide grounds for challenging the enforcement of foreign judgments. See 3.3 Categories of Foreign Judgments Not Enforced. Once a foreign judgment is validated in Puerto Rico, it may be challenged pursuant to the grounds discussed in 2.5 Challenging Enforcement of Domestic Judgments.
In the jurisdiction of Puerto Rico, just like in the USA, arbitration is favoured. The Puerto Rico Commercial Arbitration Act (PRCAA) allows for parties to agree in writing to submit to arbitration any controversy that could be subject to a legal action. The general rule is that courts will abstain from intervening with arbitration proceedings. Puerto Rico’s legal system recognises instances where judicial intervention may be warranted, such as when the parties agree that the dispute shall be resolved according to the law and a party claims the arbitral award is contrary to the legal precepts that govern the matter. See 4.6 Challenging Enforcement of Arbitral Awards.
An arbitral award is the final decision issued by an arbitrator to dispose of the controversy. The Supreme Court of Puerto Rico, when interpreting the PRCAA, has established that the confirmation of an award is not an indispensable requirement for its validity and effectiveness. Therefore, arbitration awards may be enforced without a judicial confirmation. See Vivoni Farage v Ortiz Carro, 179 DPR 990 (2010). However, issues can arise when parties differ on the validity or correctness of an award, resist complying with its terms or simply prefer the confirmation by the courts. In such instances, in the absence of voluntary compliance, the party who seeks enforcement has the option of requesting confirmation of the award through a summary proceeding and its subsequent enforcement through the ordinary judgment enforcement procedures regulated by the PR Rules.
In Puerto Rico, the Supreme Court has stated that an arbitration award is similar in its effects to a judgment issued by a court; thus an arbitration award can be challenged or vacated if there is a defect in the submission to the arbitration proceeding or the award, or the process has been plagued by misconduct or fraud so serious or harmful as could be equated to due process violations. See Aquino González v AEELA, 182 DPR 1 (2011) and Ríos v Puerto Rico Cement Corporation, 66 DPR 470 (1946).
In terms of the types of arbitral awards, the general rule is that an arbitral award must be final and definitive regarding the controversies submitted to the arbitrator so a court may confirm/enforce, vacate, or correct it. However, as an exception, partial awards may be reviewed by courts in Puerto Rico (federal and state) to order their execution, confirmation, vacation, modification, or correction, but they must comply with the finality rule – that is, only those partial awards that resolve separate and independent controversies in a final and definitive manner may be reviewed. Puerto Rico Courts of First Instance shall analyse the revocability of the partial award as contemplated by Article 22 of the PRCAA and determine if it resolves, in a final and definitive manner, at least one separate and independent controversy to those that remain unresolved. See VDE Corporation v F&R Contractors, 180 DPR 21 (2010).
Regarding labour disputes, there is also a strong public policy in favour of arbitral proceedings for labour claims. When the award is final, the party in favour may seek assistance from the Puerto Rico Labor Relations Board or go directly to the Puerto Rico Court of First Instance to enforce it. The relief granted by Puerto Rico’s labour laws to seek assistance to the Labor Relations Board for enforcement is similar to the process in place to enforce judgments under the PR Rules. In this process, the court shall order the losing party to appear and show cause as to why the judgment shall not be enforced. After this step, the court will pass judgment on the award’s validity and decide whether to enforce it or not. However, Puerto Rico’s case law has established that the Labor Relations Board expressly requires the obliged party to comply and that a party should only resort to court when there is a continuing refusal to comply. See JRT v AEE, 133 DPR 1 (1993).
The general rule is that interim arbitral awards are not enforceable because they are not final. However, as discussed in 4.2 Variations in Approach to Enforcement of Arbitral Awards, as an exception, certain partial awards may be reviewed and enforced if they resolve a controversy that is separate and independent in a final and definite manner.
Puerto Rico State Courts
The prevailing party in an arbitration proceeding may need the assistance of the court to confirm and enforce an arbitration award if the other party fails to comply. Article 21 of the PRCAA states that on any date within the year following the award, unless the parties agree to extend the term in writing, either party can request the Puerto Rico Court of First Instance to confirm the award. The notification of the order requesting confirmation shall be sent to the opposing parties or their legal representatives at least five days prior to the start of a hearing. Such an order shall be granted unless the award is vacated, amended, or corrected. See 32 PR Laws Ann Section 3221. Note that the validity and enforceability of an arbitral award will not be affected by a party’s omission to file a petition to confirm. Id.
Hence, a party seeking to confirm or enforce an arbitral award must: (i) file a petition to confirm an arbitral award in the Puerto Rico Court of First Instance within one year of the award’s date, and (ii) notify said petition to the parties in the arbitral proceedings. Once a judgment is entered confirming, modifying or revoking the award, the clerk of the Court will file the following documents, which will constitute the judgment file: (i) the agreement; the selection or appointment of the arbitrator or arbitrators; and the extension or extensions granted for rendering the award; (ii) the award; (iii) each notice, affidavit or other document upon which an application to confirm, modify or correct the award is based, and a copy of the judgment. The judgment confirming an award will have the same force and effect as any other judgment in an ordinary proceeding. See PR Laws Ann Section 3226. Therefore, a party may enforce a judgment confirming an award as set forth in 2.2 Enforcement of Domestic Judgments.
The party that seeks the enforcement of an arbitral award must file a motion to the district court where it seeks enforcement. This motion shall include: the arbitration agreement; the memorandum of law in support; the selected arbitrators; the award; time extensions that arbitrators had before issuing the award; and any supplemental documentation. The party shall notify the adverse party of the proceeding. The action needs to be filed in a district court that has personal jurisdiction over the losing party or in the district where the arbitration was seated, if in the USA. Petitions to enforce shall be submitted within a year of the award. See Section 9 of the Federal Arbitration Act (FAA), 9 USC Section 9. Also, see 4.5 Costs and Time Taken to Enforce Arbitral Awards for costs in this jurisdiction.
In sum, at the federal level, a party seeking to enforce an arbitral award must: (i) file a motion to the district court where it seeks enforcement; (ii) submit to the district court the arbitration agreement; the memorandum of law in support; the selected arbitrators; the award; time extensions that arbitrators had before issuing the award; and any supplemental documentation, and (iii) notify the motion to the adverse party.
Puerto Rico State Courts
A petition to confirm an arbitration award requires a USD90 filing fee. The serving of notice shall be made in the manner prescribed by law for civil lawsuits. For the bailiff to serve each notification, there is a USD30 fee, plus USD3 per every mile the bailiff must drive. Alternatively, the parties may hire a process server for a fee. In addition to these costs, parties must consider the attorney’s fees, legal costs, and the complexity of the case. Just like domestic judgments, the fees and costs detailed in 2.3 Costs and Time Taken to Enforce Domestic Judgments may also apply to enforcing arbitral awards through Puerto Rico state courts. The time it takes to enforce an award at the state level depends on the case’s complexity and whether the award is challenged by opposing parties.
Costs to Confirm and Enforce Arbitral Awards in Puerto Rico Federal Courts
The time it takes to enforce an arbitral award in the US District Court for the District of Puerto Rico also depends on the case. The costs involve, for example, a USD402 filing fee, comprised of USD350 applicable for any civil action suit or proceeding and a USD52 administrative fee (28 USC Section 1914). For additional enforcement costs through the federal court in Puerto Rico, see 2.3 Costs and Time Taken to Enforce Domestic Judgments.
Puerto Rico State Courts
Article 22 of the PRCAA sets forth certain circumstances under which a court may vacate an arbitral award that is final. These circumstances are:
See 32 PR Laws Ann Section 3222.
In terms of modifications and corrections, Article 23 establishes three circumstances where the court, upon notice and a hearing, may issue an order. These are:
See 32 PR Laws Ann Section 3223.
Aside for the process to modify, correct or vacate an award set forth above, the PRCAA does not contemplate appeals to arbitral awards. However, the judgment issued by the Puerto Rico Court of First Instance that either confirms, modifies, corrects, or vacates an award will have the same effect and will be subject to the same provisions that apply in civil actions, and can be appealed through a writ of certiorari before Puerto Rico’s appellate courts. See 32 PR Laws Ann Section 3228. Thus, the enforcement of the judgment is also subject to PR Rule 49.2 as discussed in 2.5 Challenging Enforcement of Domestic Judgments.
Section 9 of the FAA states that if the parties have agreed that a judgment shall be entered upon the award, then at any time after one year after the award is issued, any party may request the court for an order confirming the award (9 USC Section 9). Notice of such a request to the court shall be made to the adverse party for the court to have jurisdiction over the adverse party. A district court’s review of an arbitral award is “extremely narrow and exceedingly deferential” – Bull HN Info Sys, Inc v Hutson, 229 F 3d 321, 330 (First Circuit 2000). Consequently, “[a]rbitral awards are nearly impervious to judicial oversight” – Teamsters Local Union No 42 v Supervalu, Inc, 212 F 3d 59, 61 (First Circuit 2000). The court shall confirm the award unless it is vacated, modified, or corrected.
In addition, Section 10 of the FAA states that a court can issue an order vacating the award under any of the following circumstances:
See 9 USC Section 10.
If the award was vacated and the time within which the agreement required the award to be made has not expired, the court may direct a rehearing by the arbitrators.
Also, Section 11 of the FAA regarding modification or correction of awards provides that the court, upon the application of any party to the arbitration, may order the correction if:
See 9 USC Section 11.
An award must be final for it to be confirmed, modified or vacated. An appeal may be taken from an order confirming or denying confirmation of an award or partial award or modifying, correcting or vacating an award. See 9 USC Section 16. Also, see Federal Rule 60 regarding relief of judgment as discussed in 2.5 Challenging Enforcement of Domestic Judgments.
Trends and Developments: Puerto Rico
As a territory of the United States, Puerto Rico is subject to the jurisdictional division between state and federal courts that stems from a federal system of government. Whereas state courts have general subject-matter jurisdiction, which allows them to enter valid and enforceable judgments on most kinds of claims, federal courts have limited jurisdiction. Under this system, Puerto Rico state courts – like other state courts within the United States – may hear any claim arising under state and federal law, except those that fall under the exclusive jurisdiction of the federal courts, such as admiralty and patent cases, for example. See 28 USC Sections 1333, 1338.
Generally, federal and state courts have concurrent subject-matter jurisdiction, which means that litigants can choose in which court they opt to pursue their claims and, consequently, request the execution of any judgment entered in their favour. To litigate in federal courts in Puerto Rico, however, parties must demonstrate that there is either diversity or federal question jurisdiction. In general terms, diversity jurisdiction requirements are met if: (i) all plaintiffs and defendants are citizens of different states and (ii) the claim exceeds USD75,000. See 28 USC Section 1332. Federal question jurisdiction allows federal courts to hear claims arising under federal law, including the United States Constitution, regardless of the claim’s value. See 28 USC Section 1331. State courts can also hear cases arising under federal law unless the law grants federal courts exclusive subject-matter jurisdiction, which is unusual.
Because of the twofold nature of the Puerto Rico legal system and the coexistence of two judicial forums in which litigants can bring claims, two sets of rules for the execution of judgments apply. At the state level, the execution of judgments is governed by Rule 51 of the Puerto Rico Rules of Civil Procedure (PR Rules). At the federal level, Rule 69 of the Federal Rules of Civil Procedures (Federal Rules) sets forth the process of executing judgments in federal courts. Puerto Rico courts also have a procedure through which litigants may ask courts to recognise the validity of foreign judgments for them to become enforceable within their jurisdiction. As discussed further below, the Supreme Court of Puerto Rico has ruled that such a process is unavailable for litigants who request to enforce judgments entered by federal courts of the United States. See Gulf Petroleum v Camioneros, 199 DPR 962 (2018). As such, the federal district court is the only venue available to enforce federal judgments in Puerto Rico.
Execution of Judgments in State Courts
At the outset, PR Rules provide that a judgment is “any determination of the Court of First Instance that finally resolves the matter in dispute and from which an appeal may be taken” – PR Laws Ann Tit 32, Ap V, R 42.1. When rendered by an appellate court, the term “judgment” refers to the final determination of that court as to (i) the appeal before it – including the final determination of the appellate court when it dismisses any cause of action or appeal – or (ii) the discretionary appeal in which the court has issued a writ and a subsequent interlocutory order.
PR Rule 51.1 provides that a party in favour of whom a judgment is entered may execute such judgment within five years from the date the judgment becomes final. If such term expires, the judgment may only be executed with the court’s permission and prior notice to the adverse parties. PR Rule 51 outlines specific procedures for the execution of different judgments. For judgments entered in money collection claims, PR Rule 51.2 provides for the issuance of a writ of execution which specifies the judgment’s terms and the amounts owed. The writ will be served upon the adverse party for the judicial enforcement of the judgment. Note that the writ is distinguishable from the judgment itself, as the latter only declares the existence of a debt, while the writ of enforcement mandates its payment. See SJ Credit, Inc v Ramírez, 113 DPR 181, 184 (1982).
When a judgment orders the execution of a specific act and the party refuses to execute, the court may order another person to perform it at the expense of the party against whom the judgment was entered. Judges may also find the party refusing to act in contempt of the court. The courts also have the authority to issue an attachment order and find the defaulting party in contempt of the court (PR Rule 51.3). Moreover, in appropriate cases, the court may issue a judgment divesting a party from its property title and transferring it to another. Such judgment shall have the same effect of an ownership title transfer under applicable law.
PR Rules also set forth the procedure for enforcing mortgage foreclosures and other liens. Litigants in mortgage foreclosure cases are compelled to mediate before execution under the Principal Residence Protection and Mandatory Mediation in Foreclosure Proceedings Act, Act No 184-2012, as amended, 32 PR Laws Ann Sections 2881–2886. Additionally, in mortgage foreclosure cases, the mortgagee has the following two ways of enforcing his credit and guarantee: (i) filing an ordinary mortgage execution claim under the Puerto Rico Mortgage Act, and (ii) filing a civil money collection claim and attaching the property as both a provisional remedy and as a means to enforce the judgment.
Finally, PR Rule 51.5 regulates the enforcement of the writ of execution. It states that if the writ of execution is directed against the debtor’s property, it shall require the court official (bailiff) or the person designated by the court to enforce the judgment with interest and costs on the debtor’s property. In other words, the judgment becomes effective in the debtor’s assets. Asset identification is therefore crucial in this process. In this regard, PR Rule 51.4 allows the creditor to conduct discovery subject to the applicable procedural rules.
Execution of Judgments in Federal Courts
The rules governing the execution of judgments in federal courts are virtually the same as those in Puerto Rican state courts. This is so because the PR Rules are modelled after the Federal Rules. As such, at the federal level, a writ of execution also represents the main mechanism through which a party can enforce a judgment entered in its favour. The Federal Rules also allow the creditor to engage in discovery during the enforcement stage in aid of the judgment or execution and, just like the PR Rules, set forth the procedures to execute different types of judgments. Likewise, the Federal Rules state that courts may hold a disobedient party in contempt during the execution procedures. The Federal Rules do consider, however, the relationship between state and federal judicial power.
Specifically, Federal Rule 69 states that “[a] money judgment is enforced by a writ of execution, unless the court directs otherwise. The procedure on execution – and in proceedings supplementary to and in aid of judgment or execution – must accord with the procedure of the state where the court is located, but a federal statute governs to the extent it applies.” Consequently, when a creditor seeks to enforce a judgment in a federal district court, he must take into account state procedural rules. In the case of Puerto Rico, for example, creditors must consider the five-year statute of limitations for executing a judgment without leave of the court. In terms of discovery, Federal Rule 69(a)(2) provides that a creditor “may obtain discovery from any person – including the judgment debtor – as provided in these rules or by the procedure of the state where the court is located.”
From a practical standpoint, the enforcement of a judgment issued by a federal district court requires the creditor to file a certified copy of the judgment in any other district. A judgment so registered shall have the same effect as a judgment of the district court of the district where registered and may be enforced in like manner. See 28 USC Section 1963 – “a judgment in an action for the recovery of money or property entered in any court of appeals, district court, bankruptcy court, or in the Court of International Trade may be registered by filing a certified copy of the judgment in any other district or, concerning the Court of International Trade, in any judicial district, when the judgment has become final by appeal or expiration of the time for appeal or when ordered by the court that entered the judgment for good cause shown.” In other words, federal district courts have the authority to register judgments of other district courts from different states as well as from the Court of International Trade and execute them accordingly. This statute was adopted to spare creditors and debtors alike the additional costs and harassment of further litigation which would otherwise be required by way of an action on the judgment in a district court other than that where the judgment was originally obtained. See S Rep No 83-1917 (1954), reprinted in 1954 USCCAN 3142.
The enforcement of arbitral awards
The Federal Arbitration Act (FAA) authorises applications to confirm, vacate, or modify arbitral awards in the United States courts. See 9 USC Sections 9–11. Multiple federal courts, including the First Circuit, interpreted that those sections of the FAA granted federal courts jurisdiction to hear petitions to confirm, vacate or modify arbitration awards if the underlying arbitrable dispute arises under federal law. See Ortiz-Espinosa v BBVA Securities of Puerto Rico, Inc, 852 F 3d 36, 43–44 (First Circuit 2017), abrogated by Badgerow v Walters, 142 S Ct 1310 (2022); UBS Financial Services Inc v Asoc Empleados del Estado Libre Asociado, 223 F Supp 3d 134 (DPR 2016). These courts generally followed a look-through approach established in Vaden v Discover Bank, 556 US 49 (2009) (concluding that the statutory language of Section 4 of the FAA allowed a federal court to exercise jurisdiction over an FAA application to compel arbitration when the parties’ underlying substantive dispute would have fallen within the court’s jurisdiction).
A recent case decided by the Supreme Court of the United States changed that precedent from the First Circuit by further evidencing the interplay between state and federal courts that characterises the Puerto Rican legal system and recognising the importance of state courts in implementing the FAA. In Badgerow v Walters, 142 S Ct 1310 (2022), the United States Supreme Court ruled that federal courts do not have subject-matter jurisdiction to confirm, modify, or vacate an arbitral award issued under the FAA even if the dispute originally submitted to arbitration involved an underlying federal question. In other words, the fact that the dispute addressed by the arbitration panel involved a federal question does not grant federal courts subject-matter jurisdiction to enforce or alter the award. After this decision, a party seeking to vacate, modify, or confirm an arbitral award under the FAA and that cannot meet diversity jurisdiction requirements must file a petition in state court.
In interpreting Sections 9 and 10 of the FAA, the Court reasoned that compelling arbitration and vacating or confirming an award were distinguishable procedures and that, while there was a statutory instruction that granted federal courts jurisdiction to compel arbitration under Section 4, such instruction was absent from the sections regulating the enforcement of the arbitral award – Badgerow, 142 S Ct at 1318 (“Congress has not authorized a federal court to adjudicate a Section 9 or 10 application just because the contractual dispute it presents grew out of arbitrating different claims, turning on different law, that (save for the parties’ agreement) could have been brought in federal court”).
From a practical standpoint, the Supreme Court decision in Badgerow significantly narrows federal courts’ jurisdiction to enforce domestic arbitration awards. This is important because, in the authors’ practice in Puerto Rico, arbitration is commonplace in disputes involving commercial law, intellectual property law, and employment law. In fact, the Puerto Rico Supreme Court has highlighted the importance of arbitration as a faster and less expensive alternative to civil litigation. See Constructora Estelar v Aut Edif Púb, 183 DPR 1 (2011).
The United States Supreme Court’s opinion in Badgerow recognises that the result of its ruling “is to give state courts a significant role in implementing the FAA” – Id at 1322. As per the Court’s opinion, when both parties are citizens of the same state, all post-arbitration proceedings and the enforcement of the arbitral award itself will be funnelled to state courts instead of federal courts regardless of whether the underlying dispute in the arbitration case raised a federal question. The Court explained that the applications at issue involved the enforceability of an arbitral award which is a matter of state law – Id at 1321 (“But the underlying dispute is not now at issue. Rather, the application concerns the contractual rights provided in the arbitration agreement, generally governed by state law”).
The effect of the Badgerow decision in Puerto Rico’s state courts is forthcoming. The narrowing of the federal court’s jurisdiction will probably represent an increase in petitions to enforce arbitral awards in Puerto Rican state courts. For litigants seeking to enforce arbitral awards in Puerto Rico, the decision certainly poses challenges, especially considering that, as courts of general jurisdiction, state courts’ calendars are often much more congested than those of federal courts. Hence, considerations of speed and efficiency sometimes move parties to file their claims at the federal level as long as they comply with diversity requirements or the cause of action poses a federal question. The impact of budgetary constraints, lack of resources, and the ordinary prioritisation of the works of state courts may result in delays in enforcement procedures.
Enforcement of international arbitral awards in Puerto Rico
The Puerto Rico International Commercial Arbitration Act provides for the recognition and enforcement of foreign arbitral awards. The law states that such an award, “irrespective of the country in which it was made, shall be recognized as binding” – PR Laws Ann Tit 32, Section 3249. For an arbitral award to be enforced, the party relying on it or applying for its enforcement must present the original or a copy thereof. If the award is in a language other than Spanish or English, the court may request the party to supply a translation.
A party may request for a local court to decline enforcing an international arbitral award on the following grounds:
A court may also refuse to enforce an award if it finds that:
The recognition of foreign judgments in Puerto Rico
PR Rules also provide for the enforcement of foreign judgments. These are validated and recognised by Puerto Rican courts through the process of exequatur, which allows for those judgments to be enforceable within the state’s jurisdiction. As such, exequatur is the appropriate mechanism to enforce judgments that state courts did not issue in Puerto Rico. Exequatur proceedings do not allow for Puerto Rican courts to delve into the merits of the foreign decision. For Puerto Rican courts to validate a judgment issued by a court in a state within the United States or its territories, the judgment must meet these requirements:
When a foreign court has entered the judgment, four additional requirements must be met:
PR Rule 55 explicitly refers to judgments entered by a state of the United States and judgments entered by another jurisdiction that is not a state of the United States. The Supreme Court of Puerto Rico has interpreted this reference as one that excludes judgments entered by federal courts within a state of the United States. See Gulf Petroleum v Camioneros, 199 DPR 962 (2018). In doing so, it concluded that judgments entered by federal courts in the United States are not enforceable in Puerto Rico’s state courts because they do not constitute foreign judgments and were not issued by a state court. Hence, the only venue for such enforcement is in Puerto Rico’s federal district courts.
The Puerto Rico Supreme Court noted that “[t]he current regulation directs the enforcement of federal judgments to the federal district court and thus clears the calendar of local courts of such matters. In other words, it directs the litigant to the jurisdiction that issued the judgment sought to be enforced. Any change to enforce such judgments in the local courts is a matter for the legislative process.” – Gulf Petroleum, 199 DPR at 971. Indeed, pending before the state legislature is a bill to amend PR Rule 55 to authorise Puerto Rico state courts to validate, recognise, and enforce judgments entered by federal courts. See PC0801, 19th Leg, First Session (PR May 12, 2021).
As discussed, the creditor of a judgment in an action for the recovery of money or property entered by a federal district court that seeks its enforcement in Puerto Rico’s courts must register that judgment within the United States District Court for the District of Puerto Rico. In any actions other than those for the recovery of money or property, the enforcement procedures will be governed by Federal Rule 69 through a writ of execution. Exequatur will be the suitable enforcement mechanism for foreign judgments and judgments issued by United States courts.
The coexistence of two different legal systems may pose challenges for litigants wishing to enforce judgments in Puerto Rico. However, the enforcement of foreign judgments must be channelled through Puerto Rican courts in all cases by initiating an exequatur proceeding. Moreover, there is no federal statute, treaty or convention in force between the United States and other countries for the recognition and enforcement of judgments by the federal government because the recognition and enforcement of foreign judgments is governed by state law.
Litigants seeking to enforce judgments issued by Puerto Rican courts within Puerto Rico must resort to the procedure set forth in PR Rule 51, whereas procedures to enforce a judgment issued by a federal court will be governed by Federal Rule 69. As mentioned, when the federal judgment sought to be enforced is entered in an action for the recovery of money or property, its enforcement will require the registration of said judgment within the United States District Court for the District of Puerto Rico.
Finally, enforcing international arbitral awards is possible in Puerto Rico if the award meets the criteria set forth in the Puerto Rico International Commercial Arbitration Act. The procedures must be brought before a state court. Where the arbitral award was issued under the FAA, Puerto Rico courts will likely be the appropriate forum for their enforcement. If diversity requirements are met, the award will be enforceable at the federal district court.