The 20/22 Act Society, an organization composed of investors relocated to Puerto Rico under the decrees of laws 20 and 22 of 2012 , initiated a legal action for breach of agreements and contracts established when the laws were promulgated with said investors.
“After holding several conversations to try to resolve these issues, we have no choice but to proceed with a legal remedy to address the situation of non-compliance with the agreements entered into with us when we signed the decrees of Laws 22 and 60. We are constantly they have made changes to them; thus changing the rules with which investors initially decided to make the investment in Puerto Rico, ”said in written statements, Robb Rill, founder of the organization and who was also part of the first of this group of investors to relocate to the island .
For his part, Pedro Ortíz Álvarez, legal representative of Act 20/22 Society, pointed out that given the constant modifications to Laws 20 and 22 , which were changed, almost entirely, and today are included in the new Law 60 of July 1, 2019 , “investors are forced to stop retroactive implementation as their initial contract is being violated. This may result in a bad precedent for investment on the island. ”
He argued that this, in turn, could disrupt the investment climate in Puerto Rico, when new entrepreneurs and investors perceive that doing business in Puerto Rico is not safe. This is due to the constant changes to the laws made by the government, and this causes them to withdraw from investing in the Island. Under both laws (Law 22 and Law 60), approximately 2,600 decrees have been issued to date.
“Although in Law 60 of 2019 it had been pointed out that those already covered by Laws 20 and 22 could manage a prior clause (‘grandfather clause’) that excluded them from certain effects or restrictions prior to the date of the new law. This clause could be managed until December 31, 2019. They did so. ”Said Ortiz Álvarez.
He explained that there are several changes included retroactively. The most forceful example is that of the administrative fee that was originally $ 300 and payable at the time of submitting the decree’s annual report and now changed to $ 5,000. The breakdown that is made is that there are $ 300 as an administrative fee and $ 4,700 that go to the Puerto Rico General Fund, which he classified as “a tax not previously contemplated.”
“A decree is a contract and its impairment raises a serious constitutional question. The Company and its members have no problem with possible changes in the law if they are applied prospectively. In this way, new investors will know in advance the amount they will have to pay. Although an increase of such magnitude could be considered deficient in terms of public policy, prospective treatment is not being questioned in the lawsuit, “Ortiz Álvarez continued.