Reviving the 'haunting spectre of erie': the enforceability of forum-selection clauses under Puerto Rico's distributor's law

Author:Daniel Limés Rodríguez
Position:J.D., 2018, candidate from the University of Puerto Rico School of Law
Pages:186-197
 
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REVIVING THE “HAUNTING SPECTRE OF ERIE”: THE
ENFORCEABILITY OF FORUM-SELECTION CLAUSES
UNDER PUERTO RICO’S DISTRIBUTOR’S LAW
DANIEL LIMÉS RODRÍGUEZ*
Introduction ....................................................................................................................... 186
I. Puerto Rico’s Distributor’s Law ............................................................................187
II. The enforceability of particular clauses within commercial contracts ........ 189
A. Forum-selection ................................................................................................... 189
B. Arbitration Agreements ...................................................................................... 191
III. Act 75 and Forum-Selection Clauses .................................................................. 192
IV. Current Deb ates ....................................................................................................... 194
A. Recent Act 75 Case Law .................................................................................... 194
B. The Haunting Specter of Erie ........................................................................... 195
Conclusion.......................................................................................................................... 197
INTRODUCTION
In 1964, Puerto Rico’s Legisl ature enacted the Dea ler’s Contracts Act (Act
75)
1
with the express intent of protecting any distributor who, after creating a
favorable market for the principal’s products or services, wo uld see their
distributorship relationship terminated.
2
The Legislature specifically highlighted
the important public policy issues behind Act 75. Essentially, the statute provides
that principals may not terminate a distribut or’s contract, or deny renewal,
without just cause. Act 75 would later be amended to include an express
prohibition of any arbitration clauses, forum-selection clauses, or choice of law
clauses that excepted the applicability of Act 75.
3
Almost 40 years after the
amendment, this prohibition, and the evolution of state and federal court’s
interpretation therewith, remains controversial.
The evolution in federal case l aw concerning the enf orceability of
arbitration and forum-selection clauses inevitably led to parallel precedential
developments in Puerto Rico’s Supreme Court’s case law. For example, the
Supreme Court of Puerto Rico (hereinafter, “PRSC”)
4
included an extensive
analysis of federal precedent when interpreting the enforceability of forum-
* J.D., 2018, candidate from the University of Puerto Rico School of Law. The author would like to
thank his family for their unconditional support and infinite patience.
1
Dealer’s Contracts Act, Act No. 75 of July 24, 1964, 10 L.P.R.A. §§ 278-278e (2016).
2
Statement of Motives, Dealer’s Contracts Act, Act. No. 75 June 24, 1964, 1964 L.P.R. 231. (
quoted
in
Walborg Corp. v. Tribunal Superior, 104 D.P.R. 184 (1975)).
3
10 L.P.R.A. § 278b-2.
4
PRSC stands for Puerto Rico Supreme Court.

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