Contributed By Galicia Abogados, S.C.
After Mexico’s amendment of the Commerce Code (Código de Comercio) in 1993 and its adoption and implementation of the UNCITRAL Model Law on International Commercial Arbitration, international commercial arbitration has seen a steady increase in its use.
The aforementioned has been paired with case law from federal courts and the Supreme Court, which have sought to strengthen pro-arbitration principles and implement clear guidelines on their use, and therefore Mexico is well in its way to becoming a prominent arbitration seat in Latin America and in the world. The statistics from the most relevant arbitral institutions confirm the increase in the use of commercial arbitration by Mexican parties and counsel.
Furthermore, commercial arbitration in Mexico has gradually and continuously increased in the last decade due to the arrival of sophisticated foreign companies and investors, which have opted to include arbitration clauses in their commercial contracts. Moreover, state-owned companies, especially in the energy sector (electricity and oil and gas) include arbitration clauses in the majority of their contracts.
The rise of arbitration as the dispute settlement mechanism in many Mexican commercial contracts can be seen by the fact that in 2018, Mexico was placed seventh in the ICC’s statistics of countries with the most recurrent parties, accounting for 3.6% of the worldwide total.
The ICC and the ICDR have continued to be the preferred international institutions, but the LCIA has increased its Mexican caseload in the last two years. This has been mainly motivated by the inclusion of LCIA clauses in CFE’s and PEMEX’s contracts.
Mexico has been no exception to the new trends defining arbitration practice around the world. The COVID-19 pandemic has not only prompted an intensified use of digital platforms for hearings, pre-hearing/procedural conferences, etc, but has also highlighted the parties' needs for swifter and more cost-efficient proceedings. The accelerated “ABC” (arbitration proceedings for low quantity disputes) arbitral proceeding offered by the National Chamber of Commerce in Mexico City (CANACO), as well as the ICC-expedited procedure, are proving to be an attractive option for parties wishing to resolve disputes that have arisen out of the global pandemic. This emergent – but still incipient – trend promises to paint an intriguing landscape for arbitration proceedings in Mexico.
It is a common practice in Mexico for government agencies and government enterprises, especially in the energy, infrastructure and construction sectors, to include arbitration clauses in their contracts with companies. In that context, the change in administration in 2018 as well as the ensuing administrative restructure has pushed towards a growing number of both domestic and international arbitrations regarding construction, infrastructure and energy, contractual disputes between the state-owned companies and private parties. Additionally, as a consequence of the economic situation faced by many companies arising from the COVID-19 pandemic, several M&A deals have faced certain difficulties both prior to or post-closing, some of which are being decided in arbitration.
The most common arbitral institutions used in Mexico may be grouped as domestic institutions and international institutions.
Regarding international institutions, the most common are the International Chamber of Commerce (ICC), the International Centre for Dispute Resolution (ICDR) and the London Court of International Arbitration (LCIA). The International Centre for Settlement of Investment Disputes (ICSID) is the institution used to resolve investor-state disputes. The German Arbitration Institute (DIS) and some South American institutions have recently administered certain disputes. Efforts have also been made to increase the presence and use of arbitration administered by institutions headquartered in Asia.
Regarding domestic institutions, the ones most commonly used are the Arbitration Centre of Mexico (Centro de Arbitraje de Mexico, CAM), and the National Chamber of Commerce of Mexico City (Camara Nacional de Comercio de la Ciudad de Mexico, CANACO).
The Mexican lex arbitri is a special chapter entitled “Commercial Arbitration” within the “Commercial Proceedings” section of the Mexican Commerce Code (Codigo de Comercio).
In 1993, Mexico adopted, almost entirely, the UNCITRAL Model Law on International Commercial Arbitration (1985). The original version of the UNCITRAL Model Law on International Commercial Arbitration (1985) was then amended in 2006, but such amendments have not been introduced into the Mexican Commerce Code.
The most relevant reform to the Mexican lex arbitri took place on 27 January 2011. Article 1460 of the Mexican Commerce Code was derogated, Article 1463 was reformed and Chapter 10, dealing with “Judicial Intervention in Arbitration” was included. These amendments were included in order to adapt Mexican judicial procedure to those limited situations where judicial co-operation or assistance in aid of arbitration is needed.
The Mexican Commerce Code is applicable to both (i) domestic arbitrations and (ii) international arbitrations when the seat of arbitration is Mexico (Article 1415 Mexican Commerce Code). Accordingly, Mexico has a single arbitration statute, contrary to other countries that have independent regulations to govern international and domestic arbitration. Civil arbitrations (between private – non-merchant – parties) are regulated by the civil procedure codes of the 32 states.
Apart from the statutory regulation of arbitration in Mexico via the Mexican Commerce Code, it is important to take into consideration how courts have interpreted and applied such regulation in practice. For purposes of clarity, we must look, in broad terms, at how the system of judicial precedent works in Mexico. By mandate of Article 94 of the Mexican Constitution, the Amparo Law (Ley de Amparo, Reglamentaria de los Artículos103 y 107 de la Constitución Política de los Estados Unidos Mexicanos), in its articles 215 through 230, regulate those cases in which a judicial decision by a federal court will either bind or guide lower courts. To understand the aforementioned, a distinction must be made between two concepts (see below).
When a relevant decision is issued by the Supreme Court or a Federal Circuit Court, an abstract of the decision, known as a Tesis, will be drafted, which shall include:
Abstracts are sent for publication to the Federal Judicial Weekly (Semanario Judicial de la Federación). Tesis issued by the Supreme Court or a Federal Circuit Court are not binding for lower courts but are certainly used as authoritative guides.
The Amparo Law provides for a series of mechanisms by which a criterion set forth in a Tesis can become a binding precedent for lower courts. To name the most recurrent mechanisms:
In the course of the present article on international arbitration in Mexico, we will refer to several Tesis and Jurisprudencias in which Mexican courts have either interpreted the scope of application of a provision from the Mexican lex arbitri or provide guidance as to Mexican arbitration practice.
There have been no significant changes to the Mexican lex arbitri in the past year.
Under Mexican law, an arbitration agreement is defined as an agreement by which the parties decide to submit to arbitration all or certain disputes which have arisen or which may arise between them in respect of a defined legal relationship, whether contractual or not. An arbitration agreement may take the form of an arbitration clause included in a contract or a separate agreement.
An arbitration agreement must be in writing and be recorded either in a document signed by the parties or in an exchange of letters, telexes, telegrams, facsimiles or other means of electronic communication that leave a record of the agreement. An arbitration agreement may also arise from an exchange of statements of claim and defence in which one party alleges the existence of an agreement and this is not denied by the other party.
Mexican courts have determined that only disputes relating to rights that parties can freely dispose of can be arbitrable (Tesis 162088). In this regard, matters related to family (with some limited exceptions) and criminal law have been understood to be under the exclusive jurisdiction of the state.
Additionally, certain express limitations regarding matters which can be referred to arbitration can be found in different Mexican laws (lex fori).
Under the Federal Code of Civil Procedure (whose scope application may be limited to certain limited scenarios), matters that cannot be referred to arbitration include those which relate to:
According to the Hydrocarbons Law, a dispute relating to the validity of an administrative rescission cannot be submitted to arbitration. In this sense, under the Law on Public Works and Related Services and the Law on Procurement, Leasing and Services in the Public Sector, both the validity of and administrative rescission and the early termination of contracts cannot be subject to arbitration. The effects and reach of these limitations are extensively discussed in Mexico. Also, the Law of Public-Private Partnerships provides that the revocation of concessions and authorisations in general, as well as acts of authority, may not be referred to arbitration. Under such law, the resolution of disputes relating to the legal validity of any administrative act may only be settled by federal courts.
As is the case with arbitration around the world, parties sometimes try to sidestep their arbitral agreements and start litigations before state courts. In Mexico, the enforcement of arbitral agreements or the referral of the dispute to arbitration by courts is not an ex officio decision. This means that one of the parties must request such referral in the corresponding procedure. Failing to do so is considered as a waiver of the right to enforce the arbitration agreement and as an expression of consent for the dispute to be resolved by a judicial court (a sort of forum prorogatum).
Originally, the Commerce Code ordered that the party wishing to enforce the agreement had to do so no later than in its answer to the complaint. However, the Third Federal Circuit Court for Civil Matters in the First Circuit recently issued a non-binding precedent in which it stated that the enforcement of the arbitral agreement and the referral of the parties to arbitration could be requested at any stage of the proceedings up until the final ruling (Tesis 2021586).
According to the Commerce Code and the corresponding court interpretations, the execution of an arbitral agreement can only be denied if – by means of a prior, final, judicial ruling or arbitral award – the arbitration agreement has been declared null and void, inoperative or incapable of being performed.
Under the Commerce Code, an arbitration clause (arbitration agreement), which is contained in a contract, is deemed to be an independent agreement. A decision by an arbitral tribunal declaring that a contract is invalid does not entail the invalidity of the arbitration clause.
The Mexican Commerce Code does not provide any statutory limitation to the appointment of arbitrators. Yet, parties can agree on limitations to such appointment (ie, qualifications, expertise, etc). Of course, members of arbitral tribunals must be independent and impartial.
In fact, the Mexican Commerce Code expressly provides that no person shall be precluded from acting as arbitrator because of his or her nationality, unless otherwise agreed by the parties (Article 1427 (1) Mexican Commerce Code).
If the parties have not chosen a method for the selection of arbitrators, the following method shall apply (articles 1426 and 1427 Mexican Commerce Code):
On the other hand, where an appointment procedure is agreed by the parties, one of the parties does not act in accordance with the provisions of that procedure, the parties or two co-arbitrators cannot reach an agreement under that procedure, or a third party, including an institution, fails to perform any function entrusted to it in such procedure, either party may request a judge to take the necessary measures. The aforementioned is only possible as a default mechanism if the agreed appointment procedure does not provide special rules for said circumstance.
There is no specific default procedure under Mexican law for multi-party arbitrations.
According to the Commerce Code, courts can intervene in the selection of arbitrators, as well as in the challenges made against them. Regarding the selection of arbitrators, Article 1427 of the Commerce Code distinguishes between cases with a sole arbitrator and cases with three arbitrators (See 4.2 Default Procedures).
Arbitrator’s Obligation to Disclose
The Mexican Commerce Code mandates that an arbitrator, upon being notified of its potential appointment and throughout an arbitration, must disclose all circumstances that may give rise to justifiable doubts as to his or her independence and impartiality (Article 1428 Mexican Commerce Code).
Ground for Challenge and Removal of Arbitrators
An arbitrator may only be challenged and removed if there are justified doubts as to his or her independence and impartiality or if he or she does not meet the requirements agreed by the parties (Article 1428 Mexican Commerce Code).
Challenge and removal proceedings. The Mexican Commerce Code provides that parties can agree upon the procedure for challenge and removal of arbitrators. However, if the parties did not expressly agree on such procedure, the Mexican Commerce Code provides the following default rules (Article 1429 Mexican Commerce Code):
In arbitrations governed by the Mexican lex arbitri, an arbitrator must be independent and impartial, both when appointed and throughout the entire arbitration (Article 1428 Mexican Commerce Code).
The Mexican Commerce Code does not provide a definition of what should be understood as impartiality and independence. However, in certain commentaries we find that (i) "independence" refers to the ties that an arbitrator may have with the parties, its representatives and subject matter of the dispute, and (ii) "impartiality" refers to the autonomy of criterion to make decision.
The Mexican Commerce Code does not provide for further arbitrator requirements, but the parties may agree upon additional requirements in their arbitration agreement.
See 3.2 Arbitrability.
The Mexican Commerce Code explicitly recognises the principle of competence-competence in Article 1432. This principle has also been recognised by several judicial decisions (Tesis 162932 and 176581). In this regard, the same article establishes the timing in which the parties may raise (i) a challenge to the jurisdiction of the arbitral tribunal or (ii) a plea that the arbitral tribunal is exceeding the scope of its authority during an arbitration, as detailed below.
The Mexican Commerce Code indicates that the arbitral tribunal may admit challenges at a later stage if it considers that the delay is justified.
The Mexican Commerce Code also provides for the possibility of the jurisdictional challenge being resolved either (i) as a preliminary question or (ii) in an award on the merits.
The above are default rules, superseded by the institutional arbitration rules chosen by the parties.
The Mexican Commerce Code establishes four different moments in which Mexican courts may rule on the jurisdiction of an arbitral tribunal, as detailed below.
Even if there are several moments in which a Mexican court may render a decision regarding the jurisdiction of the arbitral tribunal, Mexican federal courts have considered that such determination has res judicata effects. Therefore, once a Mexican court has finally determined that an arbitral tribunal has jurisdiction, such question cannot be then revisited (Tesis 162932).
See 5.3 Circumstances for Court Intervention.
The possibility for judicial review of arbitral jurisdiction has been addressed in previous sections (see 5.2 Challenges to Jurisdiction and 5.3 Circumstances for Court Arbitration). However, the standard of review has been developed in several rulings. Firstly, it has been established that courts have ex ante or ex post competence to review the tribunal's jurisdiction (Tesis 176472). Furthermore, the principle of res judicata has been confirmed regarding jurisdiction. In this sense, the Fourth Federal Circuit Court for Civil Matters of the First Circuit affirmed that when a first court has intervened to review the jurisdiction of an arbitral tribunal, in the specific procedural moments set out by the statutory provisions, a second court at a later time cannot review jurisdiction de novo (Tesis 162932).
As stated (see 5.3 Circumstances for Court Intervention and 5.4 Timing of Challenge), the Mexican Commerce Code has incorporated Article 8 of the UNCITRAL Model Law on International Commercial Arbitration and II (3) of the New York Convention; in so doing, it mandates that, if a court is seized of an action in a matter in respect of which the parties have made an arbitration agreement, it shall refer the parties to arbitration at the request of either of them, unless it finds that the arbitration agreement is null and void, inoperative or incapable of being performed (Article 1424 Mexican Commerce Code).
In the 2011 reform of the Mexican lex arbitri, several provisions were included that further specify the proceeding that must be followed for a court to refer the parties to arbitration (Article 1464 of the Mexican Commerce Code):
A motion to refer the parties to arbitration may only be denied (Article 1465 of the Mexican Commerce Code):
As a general premise, arbitral tribunals only have jurisdiction over signatory parties to the arbitration agreement. Despite ongoing debate, based mainly on recent decisions issued by foreign courts, no decision has been issued directly on this issue by Mexican courts.
Notwithstanding, two judicial precedents will be closely analysed when a case on this fact is decided. Firstly, in 2004 the Third Federal Circuit Court for Civil Matters of the First Circuit established that an arbitral tribunal or court could analyse the application of an arbitral agreement to third parties in cases of transferred rights and succession (Tesis 178813). The latter opens the possibility for a variety of legal scenarios in which a person who inherits rights may also inherit the arbitral agreement related to those rights.
Secondly, in 2012 the Fourth Federal Circuit Court for Civil Matters of the First Circuit recognised the working premise of inter partes applicability, but acknowledged that there are complex commercial relations that require a close analysis as to the applicability of arbitral agreements to third parties (Amparo en Revisión 273/2012). Despite the latter, a recent decision by the Third Federal Circuit Court for Civil Matters of the First Circuit (2019) reiterated the inter partes premise for the applicability of arbitral agreements, while not directly contending the previously mentioned precedents (Tesis 2021201).
This leaves us with a scenario in which the circumstances upon which a third party may be held to an arbitration agreement will have to be subject to a very specific legal and factual analysis, as well as a detailed review of the above-mentioned precedents.
Under the Mexican lex arbitri, parties may request interim measures from either (i) the arbitral tribunal or emergency arbitrator, or (ii) a Mexican court.
Arbitral Tribunal or Emergency Arbitrator
An arbitral tribunal or an emergency arbitrator – in cases where the procedural rules chosen by the parties provide for such option – may order interim measures.
An interim measure ordered by an arbitral tribunal or emergency arbitrator will be recognised as binding and enforced in Mexico by a Mexican court, if so requested, regardless of the state where it has been ordered (Article 1479 Mexican Commerce Code). Recognition and enforcement of an interim measure ordered by an arbitral tribunal or emergency arbitrator can only be refused if (Article 1480 Mexican Commerce Code) the party affected by the measure proves that:
Recognition and enforcement of an interim measure ordered by an arbitral tribunal can only be refused if the court finds that:
When requested to recognise or enforce an interim measure ordered by an arbitral tribunal or emergency arbitrator, a Mexican court may not revise the content of the interim measure (Article 1480 Mexican Commerce Code).
A Mexican court – even concerning disputes submitted to arbitration – can, before an arbitration is initiated or during the arbitral proceeding, order an interim measure at the request of one of the parties (Article 1425 of the Mexican Commerce Code). Mexican courts have full discretionary power when adopting interim measures related to a dispute subjected to arbitration (Article 1478 Mexican Commerce Code).
As stated in 6.1 Types of Relief, Mexican courts have jurisdiction to issue interim measures before the constitution of the arbitral tribunal and during the arbitral proceedings (Article 1425 Mexican Commerce Code).
However, there is no specific statutory provision that establishes the types of measures that may be adopted by a court in the context of arbitration. While Article 1425 of the Mexican Commerce Code provides courts with a wide discretionary power to adopt the interim measures it sees fit, courts tend to base their jurisdiction on said article and refer to other articles of the lex forilike Article 1168, which establishes the interim measures in commercial proceedings.
Mexico’s Commerce Code makes no distinction between provisional measures granted by arbitral tribunals and those granted by emergency arbitrators. Accordingly, we are not aware of judgments issued deciding whether a Mexican court may intervene once an emergency arbitrator has been appointed.
Furthermore, regarding judicial intervention in provisional measures, Mexican courts have interpreted that, when receiving a request for interim measures by one party, and notwithstanding the right to issue certain immediate provisional measures, the procedure to be followed shall include service of process or notice to the defendant even if such notice may be given the initial measures are granted (Tesis 2002829).
The Mexican Commerce Code does not provide an express regulation of security for costs. However, parties to an arbitration can seek an interim measure for that purpose and arbitral tribunals and courts will have to decide such issue as they would with other provisional measures (See 6.1 Types of Relief).
Mexico’s Commerce Code has adopted the UNCITRAL Model Law on International Commercial Arbitration. Therefore, parties are free to agree upon the rules that may govern their arbitration, including doing this by reference to institutional arbitration rules. However, in case the parties fail to choose such rules, and decide to proceed with an ad hocproceeding, the Arbitral Tribunal may conduct the arbitration in the way it considers appropriate (Article 1435 Mexican Commerce Code), considering the default rules contained in articles 1436 to 1443 of the Mexican Commerce Code, among others.
Furthermore, the Mexican Commerce Code does provide a due process mandatory provision, ordering that parties (i) must be treated with equality and (ii) must be given an opportunity to present their case. The breach of such provision by an arbitral tribunal may be grounds to set aside (Article 1457 Mexican Commerce Code) or refuse the recognition and enforcement (Article 1462 Mexican Commerce Code) of an award before a Mexican court
The Mexican Commerce Code does not require any specific mandatory procedural steps to be incorporated into arbitral proceedings. See 7.1 Governing Bodies for the default rules.
Although the Mexican Commerce Code does not enumerate specific powers and duties of arbitrators, Article 1435 upholds the principle of party autonomy as a general premise in determining the rules and procedure to be followed. In the absence of such agreement, said provision also establishes that arbitral tribunals can conduct the proceedings in accordance to the applicable rules of the Commerce Code and in the manner they deem appropriate (including the corresponding evidentiary determinations). Said article also provides the possibility of ex aequo et bono decisions, but only if the parties agree upon it.
Mexico’s Supreme Court established in 2003 that Article 1435 complies with constitutional standards, as it upholds the principles of due process and provided for the parties’ equal procedural opportunities (Amparo en Revisión 759/2003).
Moreover, Article 1448 of the Mexican Commerce Code enshrines the obligation to issue reasoned awards on the part of the arbitral tribunal, unless otherwise stipulated by the parties. Additionally, said article requires arbitrators to render their awards in writing and for them to be signed (see 10.1 Legal Requirements).
There are no specific provisions regarding particular qualifications or requirements for legal representatives appearing in an arbitration proceeding in Mexico. We are not aware of cases or decisions in which foreign law firms or lawyers have been disqualified from participating in such proceedings.
According to Article 1445 of the Mexican Commerce Code (see 7.3 Powers and Duties of Arbitrators) the arbitral tribunal is the one responsible for deciding evidentiary matters, having the power to rule on the admissibility, pertinence, collection and submission of evidence. Reception of evidence commonly follows international practice, including the IBA Rules.
While rules of evidence are not binding upon arbitral tribunals, and parties are free to regulate such matters, we must point out that arbitral proceedings in Mexico tend to be swayed by civil law traditions of procedure, including that of evidence.
A detailed comparative analysis of common law and civil law approaches to procedure exceeds the scope of this guide. However, it is worth mentioning that Mexican counsel and arbitrators tend to feel more familiar with the adoption of rules of evidence of the civil law tradition (including the mixed approach of the IBA Guidelines). Moreover, most of the arbitral institutions’ flexibility include rules which allow not only the fusion of several traditions but their adaptation in the interest of efficiency and the specific circumstances of each case.
One of the limited cases for court assistance in aid of arbitration is precisely regarding powers of compulsion of evidence. The Mexican Commerce Code incorporates a flexible provision in this matter. Article 1444 allows not only arbitral tribunals to request judicial assistance in the production of evidence and subpoenas, but the parties can also request it (with prior approval by the tribunal). Despite the latter, it is not a common practice to make use of powers of compulsion for international arbitrations seated in Mexico.
The Mexican Commerce Code does not expressly establish that arbitrations are confidential. In that sense, parties must either (i) expressly provide that their arbitrations will be confidential in their arbitration clauses, or (ii) choose a set of procedural rules that include such provision. Most domestic arbitration rules establish such confidentiality, at least, for the members of the arbitral tribunal and the administrative institution.
Under Mexican law, unless the parties agree otherwise (including by agreeing to certain arbitration rules) an arbitral award must comply with the following requirements.
The Commerce Code does not provide for any time limits on delivery of the award.
There are no provisions establishing limits on the types of remedies that an arbitral tribunal may award. Thus, arbitral tribunals may grant any remedy available under Mexican law or the law applicable to the merits of the dispute. We are not aware of a judgment annulling an arbitral award by considering that the remedy awarded violates Mexico’s public policy.
The parties to an arbitration may expressly agree upon the rules for the determination of legal costs and arbitral tribunal’s fees or choose a set of procedural rules that that regulate such matters (Article 1442 Mexican Commerce Code). In the absence of such agreement, the following default rules will apply when Mexico is the seat of arbitration.
The Arbitral Tribunal shall fix the legal costs of the arbitration in the award (Article 1453 Mexican Commerce Code). If the Arbitral Tribunal issues an order terminating the arbitration before rendering the award or issues a consent award, the costs shall be fixed in such order or award (Article 1454 Mexican Commerce Code).
Generally, the costs of the arbitration shall be borne by the losing party. However, the Arbitral Tribunal may make a pro rata distribution of costs between the parties whenever it deems it reasonable considering the circumstances of the case (Article 1455 Mexican Commerce Code). It is common for arbitral tribunals seated in Mexico to decide this issue on a costs-follow-the-event approach.
Regarding the costs related to the legal representation of the parties, the Arbitral Tribunal shall decide, taking into consideration the circumstances of the case, which party shall bare them or make a pro rata distribution of such costs between the parties (Article 1455 Mexican Commerce Code).
Arbitral Tribunal’s Fees
Article 17 of the Mexican Constitution provides that the administration of justice by Mexican courts shall be free of charge, therefore forbidding judicial costs. However, Mexican federal courts have interpreted that arbitration falls outside the scope of such prohibition (Tesis 176594).
Generally, the Arbitral Tribunal’s fees are determined by the Arbitral Tribunal itself. In issuing such determination, the Arbitral Tribunal must ensure that the fees charged are reasonable, taking into account the amount in dispute and other relevant circumstances of the case (Article 1454 Mexican Commerce Code).
Exceptionally, when one of the parties requests a Mexican court and such court accepts the request, the Arbitral Tribunal shall fix the fees only after consulting such court and considering its observations (Article 1454 Mexican Commerce Code).
Once an Arbitral Tribunal is constituted it may request the parties to deposit an advanced payment of the fees to cover travel expenses, amongst others (Article 1456 Mexican Commerce Code).
The Arbitral Tribunal shall not charge additional fees for the interpretation, rectification or completion of the award (Article 1455 Mexican Commerce Code).
Unless the parties agree otherwise, Mexican law does not recognise the right of appeal against arbitral awards. The only permitted judicial recourses after an award has been rendered are those of annulment, recognition and enforcement.
Despite the fact that there is no right of appeal against arbitral awards, Mexico’s writ of amparo, which constitutes a petition for judicial protection against violations of constitutionally guaranteed rights, has posed several questions to the aforementioned premise. In 2013, the Law of Amparo was reformed, permitting, among other things, that certain private entities be considered as authorities for purposes of this judicial procedure. Despite heated debates by practitioners and academics on the matter, a recent decision by the Third Federal Circuit Court for Civil Matters of the First Circuit determined that arbitrators cannot be considered as "authorities" with respects to the amparo proceeding (Tesis 2020940).
Notwithstanding the latter, a writ of amparo is still accessible to parties wishing to challenge judicial decisions regarding annulment and/or recognition and enforcement judgments. This creates a different but indirect way in which courts intervene in arbitral proceedings. It must be noted that in such cases, the scope of review is limited to the judicial decision in question and cannot interfere with the arbitral award.
Furthermore, it is important to point out that the Mexican Supreme Court rendered an important decision, regarding the possible challenges in recognition and enforcement procedures, by deciding that neither the final judgment nor the interlocutory rulings in these proceedings were subject of any type of ordinary recourse (Jurisprudencia 171447).
All of the above, however, has not provided any judgments or precedents on the issue of whether parties can agree to exclude or expand the scope of appeal or challenge under the national law.
As stated in 11.2 Excluding/Expanding the Scope of Appeal, in Mexico there is no possibility for appeal on the merits in commercial arbitration. The only standards of judicial review of arbitral awards are the limited grounds of review listed in the UNCITRAL Model Law on International Commercial Arbitration and the New York Convention.
Mexico ratified the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards on 14 April 1971 with no reservations and it entered into force on 13 July 1971 in Mexico.
Mexico is also a member state to the Inter-American Convention on Extraterritorial Validity of Foreign Judgments and Arbitral Awards, which it signed on 12 February 1986 and ratified on 2 November 1987.
In accordance with Mexican law, an arbitral award, regardless of the country in which it was rendered, shall be recognised as binding and, upon application in writing to the competent court, shall be enforced in accordance with the provisions set forth in the Commerce Code. The competent courts to decide on the recognition and enforcement of an arbitral award are the federal or state first instance (trial) civil courts of the seat of the arbitration or, when the seat of the arbitration is not located in Mexico, the federal or state first instance (trial) civil courts of the domicile of the debtor or of the location of the assets (articles 1422, 1462 and 1463 of the Mexican Commerce Code).
In the 2011 amendment to the Commerce Code, a procedure was established to expedite the recognition and enforcement of arbitral awards. The procedure includes two stages: the trial level procedure and an amparo proceeding in which the recognition and enforcement judgment may be challenged.
We know of no judgments or decisions in which Mexican courts have analysed whether to enforce an award that has been set aside by the courts in the seat of arbitration, or which has decided on a state’s or state entity’s defence of sovereign immunity.
When Mexico is the seat of the arbitration and recognition and enforcement is sought in Mexico, the possibility exists of having to argue the validity of the award in two separate instances: the annulment proceeding and the enforcement proceeding. This is principally due to the fact that the grounds for annulment are the same as the grounds to deny enforcement (with one exception). In this scenario, a recurring practice has been for parties to litigate the enforcement of the award within the annulment proceeding by claiming the enforcement of the award as a counterclaim (Tesis 167459 and 167398).
In 2017, the Mexican Supreme Court, through a petition of certiorari, ruled on a writ of amparo that sought to challenge an annulment decision (Amparo Directo 70/2014). The Supreme Court decided that, even though one of the grounds for annulment was that the arbitral tribunal had exceeded its jurisdiction, the judicial analysis of the arbitral award did not allow the court to substitute the arbitral tribunal. The court was emphatic in indicating that judges needed to practice self-restraint and, when analysing an arbitral decision, the courts needed to follow two steps in order to determine if the arbitral tribunal exceeded its jurisdiction, as noted below.
In the same decision, the Supreme Court analysed the concept of public policy in the context of arbitrations arising from contracts with state agencies. In so doing, the court set forth the idea that the decision to incorporate an arbitral clause in a contract of this nature was a public policy decision on its own. Therefore, the state is thought to have agreed that the issues or conflicts that arise out of that contractual relationship are of the exclusive jurisdiction of the arbitral tribunal and so the award could have public policy repercussions. Therefore, the court established that in these scenarios, public policy questions should not be understood as public order grounds for annulment (Tesis 2014011).
However, the scope of public policy or lois de police questions have not always been clear. For instance, in 2009, public policy issues were raised in the annulment proceeding of a case in which the award was annulled because a new law precluded administrative recessions from being resolved through arbitration. While many have regarded this as an exception, it goes to show the shifting scope of review.
The Mexican lex arbitri does not regulate class-action or group arbitration. However, in Amparo Directo 33/2014 the Supreme Court decided that a consumer class action should follow the judicial procedure applicable by law (including the court’s jurisdiction over the claim), even if the by-laws of the defendant corporation included an arbitration agreement entered into by the individual claimants (members of said corporation).
Mexico does not have an ethical code for arbitrators and counsel participating in arbitrations. However, this does not mean certain ethical questions (especially regarding independence and impartiality) are not regulated by the lex arbitri.
Article 1428 of the Mexican Commerce Code – taken from Article 12 of the UNCITRAL Rules – establishes that, in order to be eligible as an arbitrator, the candidate must reveal all the circumstances which may give rise to reasonable doubts regarding his or her impartiality or independence.
Additionally, Article 1428 of the Mexican Commerce Code binds the arbitrator to comply with the obligation mentioned above, from the moment he or she is appointed and throughout the entire procedure. Otherwise, the arbitrator may be disqualified or challenged if reasonable doubts regarding his or her independence or impartiality arise.
See 4.4 Challenge and Removal of Arbitrators and 4.5 Arbitrator Requirements.
The Mexican Commerce Code does not contain any rules or restrictions for third-party funding in arbitration.
The Mexican Commerce Code does not regulate arbitral proceeding consolidation. However, parties may agree upon procedural rules that allow such possibility (ie, ICC Arbitration Rules). We are not aware of any judicial decision in which a Mexican court decided on the consolidation of arbitral proceedings.
The Mexican Commerce Code does not regulate the instances in which a third party may be bound by an arbitration agreement or award. We are not aware of any judicial decision in which a Mexican court decided on the issue.
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