Contributed By Von Wobeser y Sierra, SC
Mexico has a civil law legal system and is a federal state. For historical reasons, it has received certain influence from the US legal system, especially in matters related to constitutional law. Proceedings before Mexican Courts traditionally followed an inquisitorial model, based mainly on written submissions, but influence from common law systems has become more notable of late; for example, in 2013 the Supreme Court introduced a particular notion of punitive damages, and in 2011 Congress amended the Federal Code of Civil Procedure to allow collective actions.
The inquisitorial model is also becoming a thing of the past, since Congress passed several amendments to the procedural codes to establish adversarial proceedings conducted through both written submissions and oral argument, with an emphasis on the oral part of the proceedings. This new type of proceedings is already applied for criminal matters and low-value commercial disputes, but it is supposed to apply to every type of commercial claim starting in 2020.
Mexico is a federal state and therefore the court system is integrated by federal and local courts.
The federal court system is four-tiered, as follows:
The states’ judicial systems are usually two-tiered, with first instance courts and appellate collegiate courts. However, amparo challenges can be submitted against judgments issued by the appellate courts.
Federal courts have jurisdiction over commercial disputes, but in cases dealing only with private interest, the claimant can choose to file a claim in either a federal or a state court.
Courts are organised by subject matter jurisdiction. It depends on the amount of cases in each circuit or state, but there are usually civil/commercial courts, administrative courts, family courts, and criminal courts.
Court filings are not open to the public; only interested parties have access to the judicial records. However, federal courts publish a summary redacted version of every ruling.
Parties can request the court to keep certain documents confidential, in which case they are not added to the record and access to them is controlled by a court clerk.
Only attorneys admitted to practise law in Mexico are allowed to appear as counsel before Mexican courts. To be admitted to practise law before a Mexican court, a lawyer must hold a law degree, hold a professional licence to practise law issued by the General Director of Professions of the Ministry of Public Education, and register that professional licence before Federal Courts or the State’s Superior Court.
Other representatives can appear before a court, but only as attorneys in fact. Foreign lawyers cannot conduct cases before Mexican courts as attorney of record.
Litigation funding by a third party is not regulated in Mexico. Since there is no restriction in the applicable laws, third-party funding is generally allowed.
Any type of lawsuit is available for third-party funding.
Third-party funding is available to both the plaintiff and the defendant, although it is more common to see third-party funding for plaintiffs.
Since there is no specific regulation regarding third-party funding, there are no minimum or maximum amounts.
Third parties usually fund attorneys’ fees and expenses related to factual and expert witnesses, as well as any bonds or other guarantees that may be necessary if an injunctive measure is obtained.
Contingency fees are permitted under Mexican law. There is no general regulation applicable to contingency fees, but lawyers are not allowed to buy the assets that are the subject of a trial in which they are intervening (Article 2276 of the Civil Code for the Federal District). This prohibition is sometimes interpreted by some to mean that an attorney cannot acquire any right disputed before a court when he is participating in the case, although there is no binding precedent on the issue.
There are no time limits by when a party to the litigation should obtain third-party funding. It could be done before the trial starts or at any point during the proceedings.
In general, Mexican law does not impose any rules on pre-action conduct, although there are some exceptions – for example, if the contractual right is not yet enforceable because the agreement did not establish a deadline for payment, in which case the party has to require payment judicially or before a Notary Public or two witnesses and wait 30 days before filing a law suit. However, this has more to do with the substantive right than with the procedural steps that must be taken before initiating a trial.
There are certain pre-trial motions (medios preparatorios) that the parties can file before they submit a claim, usually to prepare evidence or obtain relevant information for their case under very specific circumstances. For example, they may seek the examination of witnesses who are elderly or in imminent danger of dying, or the judicial inspection of assets.
In commercial disputes, the general statute of limitations is ten years (Article 1047 of the Commerce Code). The relevant exceptions include actions derived from a company’s bylaws or against the liquidators, which have a statute of limitations of five years (Article 1045 of the Commerce Code). However, other exceptions apply.
Other types of claims have specific statutes of limitations – for example, the statute of limitations for collective actions is three and a half years, starting from the day on which the damage was caused. Also, the general rule for claims based on tort is two years.
For commercial and civil disputes, if there is no forum selection clause agreed upon between the parties, the judge with jurisdiction to hear the case will be the judge of the place that the defendant selected to be judicially required to pay, of the place designated in the contract for the fulfilment of the obligation, or of the domicile of the defendant. If there are multiple defendants, the judge of the domicile of one of the defendants can exercise jurisdiction over all of them (Article 1104 of the Commerce Code and 156 of the Code of Civil Procedure for the Federal District).
According to the Commerce Code, an initial complaint must contain the following information:
There is no opportunity to amend the complaint after it has been filed.
Service of process is done by an authorised court clerk called an actuario. The court clerk must go to the domicile of the defendant indicated by the plaintiff, and look for the defendant, or his representative or agent. If the clerk cannot find the defendant or his legal representative, the clerk can serve a relative, employee or any other person that lives there, once he has confirmed that it is the defendant’s domicile.
Service of process includes a writ indicating the date and time of the notice, the kind of proceedings, the names of the parties, the court hearing the dispute, a transcription of the relevant court’s rulings, and the name of the receiving party. Copies of the complaint and documents submitted by the plaintiff are attached to that writ.
If the plaintiff does not know where the defendant lives, the court may request information from certain authorities or companies; if no domicile can be found, the court can order the service of process through publications in a newspaper.
According to the Code of Civil Procedure for Mexico City, if the respondent fails to file an answer to the complaint, the facts are considered admitted if process was served on the defendant or his legal representative. If process was served on someone else (for example, an employee or a relative), the facts are considered denied (Article 332 of the Code of Civil Procedure for the Federal District).
Even if the facts are considered admitted, the plaintiff still has to prove all the affirmative statements made in its claim, which serve as the basis of the action. The defendant also has the opportunity to offer evidence.
Collective actions have been permitted in Mexico since 2011. Federal courts have exclusive jurisdiction to hear this type of claim. Pursuant to the Federal Code of Civil Procedure, only class actions concerning the protection of collective interests or rights related to consumer relationships or environmental matters are allowed. Matters related to antitrust issues, financial services, product liability and consumer redress are considered included within the scope of consumer relationships.
However, in order to file a collective action for damages caused to consumers in relation to monopolistic practices or unlawful acquisitions, it is necessary to first obtain a final ruling from the Federal Antitrust Commission, declaring the existence of that practice or acquisition.
Mexican Congress decided to adopt the opt-in mechanism for collective actions, which means that the intent of a member of the class to join the collective action must be expressly declared. This consent can be declared during any stage of the proceedings or up to 18 months after the judgment issued is considered final.
Under Mexican law, there are no requirements to provide clients with a cost estimate of the potential litigation at the outset.
It is possible to obtain interim injunctions before a full trial, in the specific cases in which provisional remedies are available (see 6.1 Circumstances of Injunctive Relief).
A party cannot apply for early judgment on some or all the issues in dispute, nor for the other party’s case to be struck out before a trial or substantive hearing of the claim. However, a case can conclude before trial if certain matters – such as lack of authority, lack of representation, lack of subject matter or territorial jurisdiction, lis pendens – are resolved in ancillary proceedings. Most issues that can lead to an early conclusion of the trial have to be alleged as a defence when the answer to the complaint is filed (Article 1127 of the Commerce Code).
No dispositive motions are usually made before trial, other than the ones related to the application for interim relief to maintain the status quo, typically consisting of the attachment of assets.
Any party who may be affected by the judgment has the right to be heard in the proceedings. In that case, the third party may become involved in the proceedings by being summoned by one of the parties or by appearing voluntarily before the court.
In a commercial or civil action, a defendant cannot apply for an order for the plaintiff to pay a sum of money as security for the defendant’s costs.
Courts do not impose costs on interim applications or motions. However, they can consider whether they are frivolous or only meant to delay the proceedings when they decide if one of the parties must pay the costs of the trial (Article 1082 of the Commerce Code).
in practice, the timeframe for a court to deal with an application or motion depends on the issue presented to the court. If it is related to defences such as lack of authority, lack of representation, lack of subject matter or territorial jurisdiction, obtaining a ruling usually takes around six months from the moment in which the answer to the complaint was filed.
A party may not request for a motion to be ruled on an urgent basis, except for emergency interim measures (see 6.2 Arrangements for Obtaining Urgent Injunctive Relief).
Discovery is not regulated or allowed under Mexican law, which means that parties do not have the opportunity to depose potential witnesses or further investigate or develop the facts of the case once a complaint has been filed. The only exception that allows a party to obtain documents from the opposing party is if they identify the specific documents and declare to the judge that they are unable to produce them, asking the judge to issue an order against the party who has the document (Article 1061, section III, of the Commerce Code).
The only way to obtain documents from third parties that are not named as a plaintiff or defendant is to make the same declaration as explained under 5.1 Discovery and Civil Cases, so that the judge can issue a production order against the third party. However, the scope is limited.
Discovery is not required, and is in fact not even allowed under Mexican law. Each party is required to exhibit all the documentary evidence to support their case with the complaint or answer to the complaint.
The only alternative to discovery, but with a very limited scope, is to start preparatory proceedings before the court, in which the plaintiff can request, for example, the examination of witnesses, a judicial inspection, a declaration from the opposing party, or the showing of a chattel. This type of preparatory proceedings is not used often, because the law imposes strict limits – for example, a party may only request to examine witnesses if they are elderly or at risk of death.
Mexican law recognises the concept of legal privilege, but its regulation is not as developed as in other countries. The applicable provisions are scattered throughout different acts and regulations, and the Federal Judiciary has issued very few precedents on the topic. This often presents challenges for determining the scope of legal privilege.
The Professions Law imposes a generic obligation on every professional to keep matters that are revealed to them by virtue of their profession confidential, and Federal Courts have held that attorney-client privilege is a consequence of the constitutional rights to privacy and defence. In fact, Procedural Codes protect those that receive information through the exercise of their profession and exempts them from testifying as witnesses in trial, and the Criminal Codes make the violation of professional secrets a crime.
There is no specific statutory regulation of attorney-client privilege, so in principle the same obligations apply to external and in-house counsel.
A party that is ordered to produce a document by a judge may only refuse to disclose said document if it is considered to be privileged.
Under the Commerce Code, interim injunctions are only available on the following two grounds:
The Commerce Code provides a limitation on the type of remedies that can be granted, but some federal courts have held that the judge may grant other precautionary measures regulated in supplementary procedural laws if the circumstances to grant an interim measures are different from the ones described in the Commerce Code. Also, federal courts have stated that the two grounds established by the Commerce Code should be interpreted in an ample and flexible manner.
Mexican law does not expressly contemplate anti-suit injunctions to prevent parallel proceedings.
A party may request the motion for obtaining injunctive relief to be dealt with on an urgent basis, even without hearing the other party, if the circumstances support the urgent nature of the measure. In that case, courts usually rule on the issue within a week.
Once a trial has started, injunctive relief can generally only be obtained after notice of the request has been given to the respondent. However, Mexican courts have granted injunctive relief ex parte if the plaintiff can demonstrate a certain urgency that justifies not waiting to notify the opposing party. However, once the injunctive relief has been granted, the respondent still has the opportunity to be heard, and submit challenges to reverse or modify the order.
The applicant can be held liable for the damages suffered by the respondent if the respondent successfully discharges the injunction and proves that he suffered damages. In fact, in order to obtain injunctive relief, the applicant must submit a guarantee for the potential damages caused to the party against whom the injunction will be issued.
Injunctive relief can be granted against the worldwide assets of the respondent. However, the enforcement of that relief outside Mexico would require international judicial assistance from the judges of the place where the assets are located.
In principle, injunctive relief can only be obtained against the parties to the dispute. However, in some cases the court can order third parties to co-operate – for example, it can order a bank to freeze banking accounts or a debtor of the respondent not to pay him and instead deposit the money before the court.
If the respondent fails to comply with the terms of an injunction, the court may impose different sanctions, which can range from a fine to administrative detention for contempt of court. Ultimately, the defiance of a court order may constitute the crime of judicial disobedience.
In practice, there are no jury trials in Mexico; they are all bench trials. A trial proceeding in Mexico has three stages: the pleadings stage, the evidentiary stage, and the conclusions stage.
To start an ordinary commercial action, and the pleadings stage, the claimant must file a complaint before the court, along with all the relevant documents and the names of any witnesses the plaintiff intends to call. Once the complaint is admitted, the defendant is served with process and has 15 business days in which to file an answer and a counterclaim. The defendant must also submit all the documents to prove his defences and indicate the names of any witnesses he intends to call. The plaintiff then has three business days to respond, or nine days if a counterclaim was filed.
The evidentiary stage is for the parties to offer the evidence they are relying on to prove their case. This period must not exceed 40 business days – the first ten days are for offering evidence and the subsequent 30 days are for presenting the evidence to the court, during one or several hearings.
Once the evidentiary stage concludes, the parties have three days to submit written closing arguments. When this time has elapsed, the judge summons the parties for the issuance of the final judgment within 15 business days, although this period can be extended if the judge considers the dispute to be complex.
Hearings in ordinary commercial proceedings are very formalistic and are mainly focused on the receipt of evidence. It is not common for judges to issue a ruling during these hearings. However, in the new oral commercial proceedings, which will be used for all commercial actions from 2020, hearings become the central part of the proceedings, and judges are supposed to rule on interim motions or applications during the hearing.
There are no management hearings established in the applicable law, but it should be remembered that, in commercial matters, parties can freely agree the proceedings under which they want their dispute to be heard, and therefore could establish a case management hearing. Parties usually follow statutory proceedings without agreeing on any modifications to the rules.
There are no jury trails in civil or commercial cases.
Any evidence that may convince the judge about the disputed facts is admissible; the scope is very general. The burden of proof rests with the party making an affirmative statement (Article 1194 of the Commerce Code).
All documentary evidence must be submitted with the complaint or the answer to the complaint or it will not be admitted, unless it is supervening. Witnesses must also be identified by name in the complaint or answer to the complaint. Other evidence, such as expert testimony or judicial inspections, can be offered during the probatory stage of the proceedings. The judge rules on the admissibility of the evidence, reviewing whether it is appropriate and whether the legal formalities for its offering were followed, for example, indicating the facts that the offering party intends to prove.
Expert testimony is permitted at trial, but only in cases in which ruling on the dispute requires special knowledge of science, arts, or an industry. Each party can appoint an expert and prepare an interrogatory report for both experts to answer. If the reports are completely contradictory, the court may appoint a third expert witness.
The court may seek expert testimony itself if it needs guidance on a technical issue, because the Federal Code of Civil Procedure allows it to request any additional evidence to reach a more informed decision (Article 598 of the Federal Code of Civil Procedure).
In commercial proceedings, all hearings are public (Article 1080 of the Commerce Code). Other bodies of law, such as the Federal Civil Procedure Code, establish that the court will determine in which cases the hearings shall not be public (eg, in family matters or when one party is a minor).
Judges are supposed to preside over every hearing, review the interrogatories for witnesses and experts, encourage the parties to reach a settlement, etc. However, in practice, judges often delegate this work to their staff and intervene only when there is a conflict over a procedural decision. Judgments are reserved to a later date.
In the new oral proceedings, which will apply to every commercial dispute from 2020, judges must be more involved in the case, as they personally have to preside over the hearings, and judgments are also supposed to be notified at a hearing.
Because of the courts' workload, obtaining a first instance judgment in a typical commercial case takes around a year and a half in average from the complaint being submitted. The duration may vary depending on the complexity of the dispute.
Settlement agreements do not need to be certified or approved by the court. However, there are significant advantages of obtaining a certification of the agreement – mainly that the agreement will be authenticated and considered res iudicata, and could be enforced like a final judgment.
Settlement agreements between the parties are not a matter of public record. Even if the settlement agreement is certified or approved by the court, it is not a document that is considered public information, and therefore only interested parties can have access to it. However, a specific provision must be included in the agreement in order for the document to be considered confidential, thereby imposing specific obligations on the parties.
Settlement agreements certified by a judge or an authorised mediator, under the Law of Alternative Justice for the Federal District, are enforced through an independent summary proceeding or by initiating the enforcement stage before the judge who originally heard the case. The proceedings are designed to be abbreviated and efficient, and injunctive measures are available.
The only way to set aside a settlement agreement is to file a lawsuit asking a judge to declare the agreement null and void. The circumstances in which a settlement may be set aside are limited, because the law recognises settlement agreements as being fully enforceable. It would only be possible if the party seeking to set aside the settlement agreement alleges, for example, that there was fraud or violence, or that the person who signed the agreement had no powers of representation, etc. The parties may jointly modify the settlement agreement at any time.
Successful litigants can obtain both declarative judgments and orders for specific performance. The remedies available are very broad, and typically involve damages and lost profits.
Compensatory damages under Mexican law must be a direct and immediate consequence of the breach of contract or illegal act (Article 2110 of the Civil Code for the Federal District). Pain and suffering damages (moral damages) are also available as a remedy.
A party may only collect interest based on the period before a judgment is entered, according to the interest rate agreed upon by the parties or the statutory legal interest rate that is applicable. Once the judgment is issued, interest keeps accruing until the respondent makes a payment. However, interest is not awarded on costs. Also, in certain type of actions interest can only be awarded from the date the judgment was issued and onwards.
The mechanism to enforce a judgment depends on the nature of the decision. First, if the order refers to a monetary payment to the prevailing party, these decisions can only be enforced through the seizure of assets. That seizure can be made through attachment proceedings or through a new summary action, which is a separate trial and can be filed before a different court (Articles 400, 407 and 421 of the Federal Code of Civil Procedure).
If the decision involves an order against the losing party to do something that only he is capable of doing, such as executing a contract, the judge can sign the contract in lieu of the party if that party refuses to comply with the order (Article 421 of the Federal Code of Civil Procedure).
Finally, if the losing party is obliged to perform an obligation that someone else can do and he refuses to comply with the order, a third party can be designated to perform the obligation at the expense of the losing party (Article 421 of the Federal Code of Civil Procedure).
Foreign judgments are recognised and enforced in Mexico (Article 569 of the Federal Code of Civil Procedure). Mexico is a party to the Inter-American Convention on Extraterritorial Validity of Foreign Judgments and Arbitral Awards, and accordingly foreign judgments are enforced, provided that:
Also, Mexico is a party to the Hague Convention on Choice of Court Agreements. If applicable, this convention facilitates the enforcement of foreign judgments in a significant manner.
Under Mexican law, there is only one level of appeal. Appeals against an order issued by a district court go to a single-judge circuit court, and appeals against an order issued by a local first instance judge go to a collegiate court. However, in some types of proceedings it is not possible to appeal the judgment (for example, summary commercial actions) and the law establishes a minimum claim value for the judgment to be appealable. That amount is currently around USD35,000 (Article 1339 of the Commerce Code).
If it is not possible under the applicable law to file an appeal, or even after the appeal has been resolved, the parties can file a constitutional protection action (amparo), alleging violations to the Mexican Constitution.
An appeal against a final judgment must be filed within nine days of the judgment being notified to the party. An appeal may be filed by the losing party, by the wining party who did not obtain damages and lost profits, costs or other ancillary claim, or by a third interested party.
The appeal must be filed before the judge that issued the order, expressing all the grievances arising from the judgment. The judge then gives the opposing party the opportunity to make allegations, and finally sends the appeal to the superior court. Once the superior court receives the appeal, it confirms the admission and summons the party for a final judgment.
The appeals court may review any alleged violation of the applicable law. There is no re-hearing, but if the appeals court determines that there was a violation that had an impact on the judgment, it may reassess the claims and the evidence produced, and issue a new judgment.
New issues or arguments that were not explored at first instance cannot be introduced at an appeal.
Courts cannot impose conditions on granting an appeal. When the appeals are allowed under the law applicable to the specific type of proceedings, then the parties can exercise this right without any conditions.
The appellate court has limited powers, since it must rule only on the grievances exposed by the parties. However, if one of those grievances is enough to reverse the first instance judgment, the appellate court may study the entire record, reassess the evidence, and issue a completely new judgment.
There are no court fees or costs to file a civil or commercial lawsuit, and in principle each party must bear the costs of attorneys and other related expenses. However, the losing party is required to reimburse the prevailing party if that party did not provide any evidence to justify his action or defence, submitted false evidence, lost a summary action, obtained two unfavourable identical judgments in the first instance and the appeal, filed improper claims or made unwarranted defences (Article 1084 of the Commerce Code). The prevailing party must prove all the costs with proper evidence during an ancillary proceeding. Also, depending on the applicable rules, costs may be awarded based on a percentage of the amount in dispute.
The main factors considered when awarding costs are whether the losing party provided any evidence, whether the action or defence was frivolous or unwarranted, whether there was any false evidence, and whether the first and second instance judgments against the losing party were identical.
Generally, once the judgment awarding costs is final, it accrues interest under the general 6% rate if it is under the Commerce Code (Article 362), or 9% if it is under the Civil Code (Article 2395).
Alternative dispute resolution is becoming more common in Mexico, especially because judges are supposed to encourage the parties to engage in some methods – mainly mediation. There have been substantial efforts to professionalise the practice – for example, a few years ago, the Superior Court of Justice of Mexico City started to train and certify mediators.
The most popular ADR method in Mexico is still arbitration, both domestic and international.
The Mexican legal system promotes ADR, and the Mexican Constitution expressly acknowledges ADR as a valid method to resolve disputes (Article 17 of the Mexican Constitution). Many procedural laws establish a conciliation hearing as part of the proceedings. For example, in the new commercial oral proceedings, the judge has express powers to mediate during the initial hearing (Article 1390 Bis 2 of the Commerce Code). Likewise, in civil proceedings, the judge and the conciliator have powers to mediate between the parties during the whole process (Article 55 of the Code of Civil Procedures for the Federal District). However, there are no sanctions for refusing ADR – costs are not even awarded against a party who refuses to participate in ADR.
The settlement agreements executed by the parties during a mediation under the Law of Alternative Justice of the Superior Court of Justice of the Federal District are considered enforceable in the same way as a court judgment.
In Mexico, institutions offering and promoting ADR are well organised. In arbitration, the Mexican Arbitration Center (CAM) and the Chamber of Commerce of Mexico City (CANACO) are among the most important domestic institutions. In mediation, the better organised institution is probably the Alternative Justice Center, which is part of the structure of the Superior Court of Justice of Mexico City.
The law governing commercial arbitration proceedings and the enforcement of arbitral awards in Mexico is Book Five, Title Four of the Commerce Code. This body of law incorporates the United Nations Commission on International Trade Law (UNCITRAL) Model Law on arbitration (1985), with only minor modifications. It is a federal law that applies in the whole country, making the regulation of arbitration consistent everywhere in Mexico.
Mexico is also a party to the New York Convention for the Recognition and Enforcement of Foreign Arbitral Awards (the New York Convention), the Inter-American Convention on International Commercial Arbitration (the Panama Convention), and the Inter-American Convention for Extraterritorial Validity of Foreign Judgments and Arbitral Awards (the Montevideo Convention). Furthermore, Mexico is a party to the Convention on the Settlement of Investment Disputes between States and Nationals of other States.
Under Mexican law, the following subject matters cannot be referred to arbitration:
Parties can file a petition to set aside an award within three months of notice of the award being given. The challenge can only be based on limited and specific causes that mirror the ones provided in the UNCITRAL Model Law, as follows:
The Commerce Code provides for a specific proceeding to enforce arbitral awards. The proceedings begin with a complaint, which the defendant can answer within 15 working days. After the response is filed, the court receives the evidence offered by the parties. After all the evidence is received, the court holds a hearing on the merits within the next three days. Finally, the judge renders a final judgment. The proceedings to enforce an award usually take between six and 12 months.
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