Intermediate P.R. Appellate Court refuses to enforce Judgment of German Court for medical devices supplier

Federal and local courts continue the conflict on the enforcement of choice of law and forum provisions in distribution agreements governed by Law 75. The latest case to join the fray is AAP Implante AG v. Caribbean Healthcare Supplies, Corp., 2021 WL 1589093 (TCA March 12, 2021). The Supreme Court of Puerto Rico has yet to consider this conflict. The distribution agreement there had a choice of law provision providing for the application of German Law and dispute resolution in Berlin, Germany. Supplier sued Puerto Rico distributor of medical devices for collection of monies in a German court and obtained a default judgment for over 260,000 Euros.The supplier filed an exequatur proceeding to validate the judgment in the Court of First Instance in Puerto Rico which dismissed the proceeding under Article 3-B of Law 75 which essentially provides that the law and forum of another jurisdiction chosen in the agreement violate Law 75’s public policy. Joining the chorus of other local court opinions addressing the same issue, but citing none, the appellate court affirmed the dismissal of the exequatur with a broad holding that any distribution agreement governed by Law 75 that incorporates the law and forum of any jurisdiction other than Puerto Rico violates public policy and is unenforceable. Because a judgment that violates public policy of the forum state is null and void, the court affirmed the dismissal of the exequatur proceeding.