(Supremacy clause) and centralizes the dispute in Puerto Rico courts
No emergency relief has been requested by the funds in the lawsuit, which is on a regular litigation track and is more in the nature of an advisory opinion from the court on the constitutionality of the legislation – something the courts are loath to provide.
Puerto Rico’s action is unprecedented… or is it?
In fact, the City of New York was in a financial mess in the 1970s, similar to Puerto Rico, and did not have access to Chapter 9 due to a technical difficulty.
New York therefore promulgated its own Emergency Moratorium Act (EMA) that prohibited creditors from enforcing their debt for three years during which they were paid interest at only 6% per annum (a below-market rate at the time).
The EMA met with a storm of litigation. There were no injunctions, however, and the city of New York was able to obtain valuable breathing space to fix its finances. The EMA, therefore, fulfilled its purpose.