Supreme Court Upholds Arbitration Clauses in Solar Panel Contracts

If you signed a solar panel contract in Puerto Rico, you may have already given up your right to take a dispute to court -- and you might not even know it.

The Puerto Rico Supreme Court ruled 6-3 on July 10 that arbitration clauses included in solar panel lease contracts are valid and enforceable ¹. The case, Sierra Lugo v. Sunrun PR Operations, Inc. (2026 TSPR 76), sets a precedent that directly affects the roughly 200,000 homes with distributed solar systems on the island ¹.

The Case

Nancy Sierra Lugo signed a 25-year lease agreement with Máximo Solar Industries in 2020 ¹. The deal committed her to paying $246 per month in the first year, with 1.9% annual increases ¹. She signed on an electronic tablet and received a copy of the contract only after signing ¹.

The system worked for just two weeks ¹. When she sought repairs, she discovered her contract had been transferred to Sunrun PR Operations, a company that operates approximately 30,000 solar systems on the island ¹. When she tried to sue, Sunrun invoked the contract's arbitration clause to block the case from court.

The Ruling

Associate Justice Camille Rivera Pérez wrote the majority opinion, arguing that both state and federal public policy favor arbitration ¹. The court determined that Sierra Lugo was obligated to submit her dispute to arbitration first, so that process could evaluate whether the case belonged there or in a courtroom ¹.

The majority rejected claims of fraud and deceptive practices, finding them insufficiently detailed ¹.

The Dissent

Three justices dissented: Chief Justice Maite Oronoz Rodríguez, Associate Justice Luis Estrella Martínez, and Associate Justice Ángel Colón Pérez ¹. They argued the court should have evaluated the arbitration clause's validity before forcing the consumer into arbitration ¹.

Colón Pérez highlighted the problematic practice of requiring signatures via tablet "without consumers seeing or understanding the terms and conditions" ¹. The dissenters emphasized these are adhesion contracts -- take-it-or-leave-it terms -- involving an essential service like electricity ¹.

What It Means for You

If you already have solar panels under a lease or power purchase agreement (PPA), check your contract today. If it includes an arbitration clause, this Supreme Court ruling confirms that clause is enforceable. That means if your system fails, if you're overcharged, or if the company doesn't deliver on its promises, your recourse isn't a courtroom -- it's private arbitration.

Arbitration isn't necessarily bad, but it has important differences from court:

• Cost: arbitration can be expensive. Some contracts split costs between parties.
• Transparency: arbitration proceedings are private and confidential, unlike public court proceedings.
• Appeals: arbitration decisions have very limited appeal options.
• Class actions: many arbitration clauses include a class action waiver, preventing you from joining other affected consumers in a collective lawsuit.

With roughly 200,000 distributed solar systems in Puerto Rico ¹, this ruling has enormous reach.

Checklist Before Signing a Solar Contract

1. Request the full contract before signing. Don't sign on a tablet without reading every page. If the company refuses to give you an advance copy, that's a serious red flag.
2. Look for the arbitration clause. It usually appears in the final pages under headings like "Dispute Resolution" or "Arbitration." Read it word by word.
3. Ask if you can negotiate or remove the clause. Some companies will let you cross out specific clauses if you ask before signing. If they say no, at least you know upfront.
4. Check who administers the arbitration. Rules and costs vary by administrator (AAA, JAMS, etc.). Research how much it would cost you to file a claim.
5. Check if the contract includes a class action waiver. If it does, you lose the option of joining other consumers with similar problems.
6. Consult a lawyer before signing. A 25-year contract at $246/month with 1.9% annual increases is not a decision to rush through with a salesperson standing over you.
7. Keep a signed copy immediately. Don't leave without it. Photograph or scan every page that same day.
8. Document everything from day one. Every communication, every bill, every reported problem. If something goes wrong, that documentation is your best tool, whether in arbitration or in court.

What Comes Next

This Supreme Court decision sets precedent, but it doesn't close the door entirely. The Legislature could pass laws regulating how arbitration clauses are presented in solar energy contracts, requiring greater transparency or allowing consumers to opt out. DACO, Puerto Rico's consumer affairs agency, could also issue regulations on solar company sales practices.

Meanwhile, Sunrun and other solar companies will continue using these clauses. Sierra Lugo's case shows that once you sign, the court will send you to arbitration -- even if you allege fraud, even if you never clearly saw the terms.

For now, the responsibility falls on you as a consumer. Read before you sign.

Sources:

¹ NotiCel -- Supreme Court upholds arbitration clause in solar panel contracts