International Arbitration 2023 Comparisons

Following the amendment to the Mexican Commercial Code (Código de Comercio) in 1993 and the adoption and implementation of the UNCITRAL Model Law on International Commercial Arbitration (the “UNCITRAL Model Law”), Mexico has seen a steady increase in the use of international commercial arbitration.

These changes have been paired with case law from federal courts and the Supreme Court, all of which have sought to strengthen pro-arbitration principles and implement clear guidelines on their use. As a result, Mexico is well on its way to becoming a prominent arbitration seat in Latin America and throughout the world. The statistics from the most relevant arbitral institutions confirm the increase in the use of commercial arbitration by Mexican parties and counsel.

Another reason for the steady increase in commercial arbitration in Mexico during the past decade is the arrival of sophisticated foreign companies and investors, who have opted to include arbitration clauses in their commercial contracts. Moreover, state-owned companies include arbitration clauses in the majority of their contracts – especially in the energy sector (electricity and oil and gas).

The rise of arbitration as a dispute settlement mechanism in many Mexican commercial contracts is evidenced by the fact that in 2020 Mexico was ranked tenth in the ICC’s most-represented nationalities, accounting for 3.11% of total worldwide arbitration.

In Latin America, Mexico is the second most frequently selected seat for arbitration. The ICC and the International Centre for Dispute Resolution (ICDR) remain the preferred international institutions, but the LCIA has increased its Mexican caseload in the past few years. This has been mainly motivated by the inclusion of LCIA clauses in contracts belonging to Mexico’s Federal Electricity Commission (Comisión Federal de Electricidad or CFE) and the state-owned petroleum company PEMEX. 

It is 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 private companies. In this context, the change in administration in 2018 – and the ensuing administrative restructure – has led to a growing number of domestic and international arbitrations involving construction, infrastructure and energy, as well as contractual disputes between state-owned companies and private parties.

Additionally, owing to the economic situation faced by many companies as a result of the COVID-19 pandemic, several M&A deals have faced certain difficulties both pre- or post-closing – some of which are being decided in arbitration.

The most common arbitral institutions used in Mexico can be grouped into domestic institutions and international institutions.

Regarding international institutions, the most common are the ICC, the ICDR and the LCIA. The 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 involving Mexican parties. 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 CANACO and the Arbitration Centre of Mexico (Centro de Arbitraje de Mexico or CAM).

There are no specialised courts designated exclusively for disputes related to international and/or domestic arbitrations. Federal and local courts specialising in commercial law are the competent tribunals to hear disputes related to domestic and international arbitrations. 

The Mexican lex arbitri is a special chapter entitled “Commercial Arbitration” within the “Commercial Proceedings” section of the Mexican Commercial Code.

In 1993, Mexico adopted the UNCITRAL Model Law almost in its entirety. The original 1985 version was then amended in 2006, but such amendments have not been incorporated into the Mexican Commercial Code.

The most relevant reform to the Mexican lex arbitri took place on 27 January 2011. Article 1460 of the Mexican Commercial Code was derogated, Article 1463 was reformed and Chapter 10 (on “Judicial Intervention in Arbitration”) was included. These amendments were intended to adapt Mexican judicial procedure to those limited situations where judicial co-operation or assistance is needed to aid the arbitration process.

The Mexican Commercial Code is applicable to domestic arbitrations and international arbitrations when the seat of arbitration is Mexico (Article 1415). Accordingly, Mexico has a single arbitration statute, unlike other countries that have independent regulations to govern international and domestic arbitration. Civil arbitrations (between private, non-merchant, parties) are currently regulated by the civil procedure codes of the 32 states, but will soon be regulated by the National Civil and Family Procedural Code which will gradually enter into force (state by state) in the upcoming years.

Aside from the statutory regulation of arbitration in Mexico via the Mexican Commercial Code, it is important to consider how courts have interpreted and applied such regulation in practice. For purposes of clarity, it is necessary to take a broad look at how the system of judicial precedent works in Mexico.

By mandate of Article 94 of the Mexican Constitution, Articles 215–230 of the Amparo Law (Ley de Amparo, Reglamentaria de los Artículos 103 y 107 de la Constitución Política de los Estados Unidos Mexicanos) regulate those cases in which a judicial decision by a federal court will either bind or guide lower courts. To understand this, a distinction must be made between two concepts.

Tesis

When a relevant decision is issued by the Supreme Court or a federal circuit court, an abstract of the decision will be drafted. This is known as a Tesis, and shall include:

• the title identifying the subject matter;
• the reference to the legal provision that is being applied or interpreted by the court, if any;
• the key legal considerations and interpretations of the court; and
• the identification data of the case, the number of Tesis, the court that issued it and mention of the concurring or dissenting votes of the case.

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.

Jurisprudencia

In Mexico, the term jurisprudencia refers to binding legal decisions. The Amparo Law provides for a series of mechanisms by which a precedent can become binding for lower courts. The following are the most frequently occurring mechanisms by which a precedent becomes binding.

• A binding precedent is created when the Supreme Court issues a judgment with favourable votes from a certain number of justices.
• A binding precedent can be created when five consecutive Tesis decide a legal question in the same way. This is known as “precedent by repetition”.
• Binding case law can also be created when two Tesis have decided the same legal matter in a contradictory way and the competent authority decides which decision shall prevail. This is known as “precedent by contradiction”.

Throughout this article, several Tesis and Jurisprudencias are referred to in which Mexican courts have either interpreted the scope of application of a provision from the Mexican lex arbitri or provided 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 that have arisen or that may arise between them out 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 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). As such, matters related to family (with some limited exceptions) and criminal law are understood to be under the exclusive jurisdiction of the state.

Additionally, certain explicit limitations regarding which matters can be referred to arbitration are found in different Mexican laws (lex fori).

Under the Federal Code of Civil Procedure, which has a limited scope of application, matters that cannot be referred to arbitration include those relating to:

• resources of the exclusive economic zone;
• any of the sovereign rights over the exclusive economic zone;
• acts of authority of the state and of state and federal departments;
• the internal regime of the state and of state and federal departments;
• the internal regime of the embassies and consulates of Mexico abroad and their official acts; and
• any other matter that is provided for in other laws.

According to the Hydrocarbons Law, a dispute about the validity of an administrative rescission cannot be submitted to arbitration. As such, both the Law on Public Works and Related Services and the Law on Procurement, Leasing and Services in the Public Sector state that the validity of an 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 – as well as acts of authority – may not generally be referred to arbitration. Under such law, the resolution of disputes concerning the legal validity of any administrative act may only be settled by federal courts.

The determination of which law applies to the arbitration agreement stems from a conflict of laws rule that establishes both the applicability of the party’s common intent and the law of the seat. As such, in the absence of the parties’ consent to a specific law, Articles 1457 (I) (a) and 1462 (I) (a) of the Mexican Commercial Code provide a default rule that favours the law of the seat. 

As is the case with arbitration around the world, parties sometimes try to sidestep their arbitral agreements and start litigation before state courts. In Mexico, the enforcement of arbitral agreements by the courts or the referral of the dispute to arbitration is not an ex officio decision. This means that one of the parties must request such referral in the corresponding proceeding. Failing to do so is considered a waiver of the right to enforce the arbitration agreement and also an expression of consent for the dispute to be resolved by a judicial court (a sort of forum prorogatum).

Originally, the Commercial Code ordered that the party wishing to enforce the agreement must do so no later than when it answered the complaint. However, the Third Federal Circuit Court for Civil Matters in the First Circuit 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 Commercial Code and the corresponding court interpretations, the execution of an arbitral agreement can only be denied if – by means of a prior or final judicial ruling or arbitral award – the arbitration agreement has been declared null and void, inoperative or incapable of being performed.

Recently, the Sixteenth Collegiate Tribunal of the First Circuit decided a case involving the annulment proceeding of an arbitration award between a private company and a state-owned entity. In the annulment proceeding, the Claimant (a private entity) tried to argue that the arbitration agreement was invalid. However, the Court ruled that if said party had initiated the proceedings under the arbitration agreement, it could not later argue its invalidity in an annulment proceeding (Amparo en Revisión 418/2022).

Under the Commercial Code, an arbitration clause (arbitration agreement) that is contained within a contract is deemed to be an independent agreement. A decision by an arbitral tribunal declaring a contract invalid does not mean that the arbitration clause is invalid.

The Mexican Commercial Code does not provide any statutory limitation to the appointment of arbitrators. However, parties can agree on limitations to such appointment (ie, qualifications or expertise). Of course, members of arbitral tribunals must be independent and impartial.

The Mexican Commercial Code expressly provides that no person shall be precluded from acting as arbitrator because of their nationality, unless otherwise agreed by the parties (Article 1427 (1) Mexican Commercial Code).

If the parties have not chosen a method for the selection of arbitrators, the following shall apply (Articles 1426–1427 Mexican Commercial Code).

• Where the parties have not agreed upon the number of arbitrators, the default rule will be the appointment of a sole arbitrator.
• In an arbitration with a sole arbitrator, he or she shall be appointed by a judge at the request of either party if they cannot agree on the appointment of the arbitrator.
• In an arbitration with three arbitrators, each party shall appoint one arbitrator, and these two appointed arbitrators shall appoint the third. If a party fails to appoint an arbitrator within 30 days of receiving a request from the other party, or if the two arbitrators fail to agree on the third arbitrator within 30 days of their appointment, the appointment shall be made by the judge at the request of either party. 

Conversely, either party may request a judge to take the necessary measures in cases where:

• an appointment procedure is agreed upon by the parties and 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 the agreed appointment procedure; and/or
• a third party (including an institution) fails to perform any function entrusted to it in such procedure.

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 Commercial 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 Commercial Code distinguishes between cases with a sole arbitrator and cases with three arbitrators (see 4.2 Default Procedures).

Arbitrators’ Obligation to Disclose

The Mexican Commercial Code mandates that an arbitrator must disclose, upon being notified of their potential appointment and throughout the arbitration, all circumstances that may give rise to justifiable doubts about their independence and impartiality (Article 1428 Mexican Commercial Code).

Grounds for Challenge and Removal of Arbitrators

An arbitrator may only be challenged and removed if doubts concerning their independence and impartiality are justified or if the arbitrator does not meet the requirements agreed by the parties (Article 1428 Mexican Commercial Code).

Challenge and Removal Proceedings

The Mexican Commercial 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 Commercial Code provides the following default rules (Article 1429 Mexican Commercial Code).

• A party that wants to challenge an arbitrator shall send the arbitral tribunal a written submission stating the grounds for challenge within 15 days after becoming aware of:
1. the constitution of the arbitral tribunal; or
2. circumstances that give rise to questions concerning an arbitrator’s impartiality, independence or lack of qualifications.
• If the challenged arbitrator does not withdraw from their appointment and the non-challenging party does not agree to the challenge, then the arbitral tribunal shall decide the challenge.
• If the challenge procedure is not successful before the arbitral tribunal, the challenging party may file a request to a Mexican court within 30 days of receiving notice of the decision rejecting the challenge. The court’s decision may not then be appealed.
• During such court proceedings, the arbitral tribunal may continue the arbitral proceedings and issue an award; the court proceedings do not suspend the arbitral proceedings.

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 Commercial Code).

The Mexican Commercial Code does not provide a definition of what should be understood as impartiality and independence. However, in certain commentaries it is found that:

• “independence” refers to the ties that an arbitrator may or may not have to the parties, their representatives and the subject matter of the dispute; and
• “impartiality” refers to the arbitrator’s capacity to make objective and autonomous decisions.

The Mexican Commercial 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 Commercial 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).

The article also establishes the following timeframes in which the parties may challenge the arbitral tribunal’s jurisdiction or raise a plea that the arbitral tribunal is exceeding the scope of its authority during the arbitration. 

• A jurisdictional challenge shall be raised no later than the submission of the response to the request for arbitration. A party is not precluded from raising such challenge because it has appointed or participated in the appointment of an arbitrator.
• A plea that the arbitral tribunal is exceeding the scope of its authority shall be raised as soon as the matter alleged to be beyond the scope of its authority is raised during the arbitral proceeding.

The Mexican Commercial Code indicates that the arbitral tribunal may admit challenges at a later stage if it considers the delay to be justified.

The Mexican Commercial Code also provides for the possibility of the jurisdictional challenge being resolved either during preliminary questions or in an award on the merits.

The abovementioned are default rules, which are superseded by the institutional arbitration rules chosen by the parties.

The Mexican Commercial Code establishes four circumstances in which Mexican courts may rule on the jurisdiction of an arbitral tribunal.

• If a court receives a claim that has been submitted to arbitration, the general rule is that it shall refer the parties to arbitration at the request of either party. However, a court may not refer the parties to arbitration if it finds that the arbitration agreement is null and void, inoperative or incapable of being performed. The initiation of such court proceedings does not preclude the parties from starting an arbitration or continuing existing arbitral proceedings until an award is rendered (Article 1424 Mexican Commercial Code).
• If the arbitral tribunal issues an interim award upholding its jurisdiction within 30 days of receiving notice of such award, a party may request a Mexican court to rule on such decision. Throughout the duration of these court proceedings, the arbitral tribunal may continue the arbitration and render an award. The judgment of the Mexican court on this matter shall not be subject to appeal (Article 1432 Mexican Commercial Code).
• In domestic or international arbitrations seated in Mexico, setting-aside proceedings may be filed by a party within 30 days of receiving notice of the award (Article 1458 Mexican Commercial Code). An award may be set aside by a Mexican court pursuant to Section (a) if the arbitration agreement is invalid or pursuant to Section (c) if the award refers to disputes not included in the arbitration agreement (Article 1457 (I) Mexican Commercial Code).
• The recognition and enforcement of an award may be refused by a Mexican court pursuant to Section (a) if the arbitration agreement is invalid or pursuant to Section (c) if the award refers to disputes not included in the arbitration agreement (Article 1462 Mexican Commercial Code).

Even if there are several points at which a Mexican court may render a decision regarding the jurisdiction of the arbitral tribunal, Mexican federal courts have found that such determination has res judicata effects. Therefore, once a Mexican court has finally determined that an arbitral tribunal has jurisdiction, its decision on this issue cannot then be revisited (Tesis 162932).

See 5.3 Circumstances for Court Intervention.

The prospect of judicial review of arbitral jurisdiction has been addressed in previous sections (see 5.2 Challenges to Jurisdiction and 5.3 Circumstances for Court Intervention).

However, the standard of review has developed in a series of rulings. First, 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. 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 through the specific procedure set out by the statutory provisions, a second court cannot then review jurisdiction de novo at a later date (Tesis 162932).

As stated (see 5.3 Circumstances for Court Intervention and 5.4 Timing of Challenge), the Mexican Commercial Code has incorporated Article 8 of the UNCITRAL Model Law and Article II (3) of the New York Convention. In so doing, it mandates that the court shall refer the parties to arbitration at the request of either party if both parties consented to an arbitration agreement – unless the arbitration agreement is considered null and void, inoperative or incapable of being performed (Article 1424 Mexican Commercial Code).

In the 2011 reform of the Mexican lex arbitri, several provisions further specified the procedure that must be followed when a court refers the parties to arbitration (Article 1464 of the Mexican Commercial Code).

• The motion to refer the parties to arbitration must be made by the requesting party in its first submission on the merits (ie, the answer to the claim).
• The judge shall ask both parties to submit their arguments regarding said motion.
• If the judge finds it appropriate, they will refer the parties to arbitration immediately and order a stay of the court proceedings. The parties may not appeal this decision (although other challenges may be filed).
• If the dispute is finally resolved in the arbitration, the judge will finalise the court proceedings at the request of either of the parties.
• If the dispute is not finally resolved in the arbitration (ie, the arbitral tribunal declines jurisdiction), after consulting all parties involved the court may lift the suspension at the request of one of the parties and the proceedings may continue.

As per Article 1465 of the Mexican Commercial Code, a motion to refer the parties to arbitration may only be denied if:

• one of the parties provides evidence – in the form of a court judgment or arbitral award – that the arbitration agreement has been declared null and void in a final and binding decision;
• the submissions of the parties clearly demonstrate that the arbitration agreement is null and void, inoperative or incapable of being performed – however, the Mexican lex arbitri mandates that the judge use a “rigorous approach” when making this decision.

As a general premise, arbitral tribunals only have jurisdiction over signatory parties to the arbitration agreement. Despite the ongoing debate based on recent decisions issued by foreign courts, Mexican courts have yet to reach a direct decision on this issue. Nevertheless, two judicial precedents will be closely analysed when deciding this matter.

First, in 2004 the Third Federal Circuit Court for Civil Matters of the First Circuit established that an arbitral tribunal or court could consider applying an arbitral agreement to third parties in cases of transferred rights and succession (Tesis 178813). The latter scenario opens up the possibility that a person who inherits rights may also inherit the arbitral agreement related to those rights.

Second, in 2012 the Fourth Federal Circuit Court for Civil Matters of the First Circuit recognised the working premise of inter partes applicability. However, it acknowledged that there are complex commercial relations that require close analysis when it comes to applying arbitral agreements to third parties (Amparo en Revisión 273/2012). Nevertheless, a 2019 decision by the Third Federal Circuit Court for Civil Matters of the First Circuit reiterated the inter partes premise for applying arbitral agreements, albeit without directly disputing the previously mentioned precedents (Tesis 2021201).

The circumstances upon which a third party may be bound by an arbitration agreement must therefore 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 the arbitral tribunal or an emergency arbitrator, or a Mexican court.

Arbitral Tribunals or Emergency Arbitrators

An arbitral tribunal or an emergency arbitrator may order interim measures in cases where the procedural rules chosen by the parties provide for this option.

An interim measure ordered by an arbitral tribunal or emergency arbitrator will be recognised as binding and enforced throughout Mexico by a Mexican court, if so requested – regardless of the state where it has been ordered (Article 1479 Mexican Commercial Code)

Per Article 1480 of the Mexican Commercial Code, recognition and enforcement of an interim measure ordered by an arbitral tribunal or emergency arbitrator can only be refused if the affected party proves that:

• one of the grounds to refuse the recognition and enforcement of awards provided in Article 1462 I (a) (b) (c) or (d) would be violated by enforcing the interim measure;
• the requesting party has not posted the guarantee ordered by the arbitral tribunal when it granted the interim measure; or
• the interim measure has been revoked or suspended by the arbitral tribunal or a competent court.

Mexican Courts

Recognition and enforcement of a requested interim measure can only be refused by a Mexican court if it is found that:

• the interim measure is incompatible with the court’s powers; or
• one of the grounds to refuse the recognition and enforcement of awards provided in Article 1462 II would be violated by enforcing the interim measure.

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 Commercial Code).

A Mexican court can order an interim measure at the request of one of the parties before an arbitration is initiated or during the arbitral proceeding (Article 1425 of the Mexican Commercial Code). Mexican courts have full discretionary power when adopting interim measures in disputes subject to arbitration (Article 1478 Mexican Commercial 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 Commercial 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 an arbitration. Although Article 1425 of the Mexican Commercial Code provides courts with a wide discretionary power to adopt the interim measures they see fit, courts tend to base their jurisdiction on said article and refer to other articles of the lex fori such as Article 1168, which establishes the interim measures in commercial proceedings.

Mexico’s Commercial Code makes no distinction between provisional measures granted by arbitral tribunals and those granted by emergency arbitrators. Accordingly, the authors are not aware of any judgments issued deciding whether a Mexican court may intervene once an emergency arbitrator has been appointed.

Despite their right to issue certain immediate provisional measures, Mexican courts have interpreted that, upon receiving a request for interim measures from one party, the procedure to be followed shall include service of process or notice to the defendant – even if such notice is not given when the measures are initially granted (Tesis 2002829).

The Mexican Commercial Code does not provide an express regulation of security for costs. However, parties to an arbitration can seek an interim measure for that purpose. Arbitral tribunals and courts must decide this issue as they would with other provisional measures (see 6.1 Types of Relief).

Mexico’s Commercial Code has adopted the UNCITRAL Model Law. Parties are therefore free to agree upon the rules that govern their arbitration and may reference institutional arbitration rules to do so. However, in case the parties fail to choose such rules, and instead pursue an an ad hoc proceeding, the arbitral tribunal may conduct the arbitration however it deems appropriate (Article 1435 Mexican Commercial Code), according to default rules contained in Articles 1436–1443 of the Mexican Commercial Code, among others.

Furthermore, the Mexican Commercial Code does include a due process mandatory provision that ensures parties must be treated with equality and 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 Commercial Code) or refuse the recognition and enforcement (Article 1462 Mexican Commercial Code) of an award before a Mexican court.

The Mexican Commercial 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 Commercial 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 procedures to be followed.

In the absence of such agreement, said provision also establishes that arbitral tribunals can conduct the proceedings in accordance with the applicable rules of the Commercial Code and in the manner they deem appropriate (including the corresponding evidentiary determinations). Article 1435 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 provides for the parties’ equal procedural opportunities (Amparo en Revisión 759/2003).

Moreover, Article 1448 of the Mexican Commercial Code enshrines the arbitral tribunal’s obligation to issue reasoned awards, 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 concerning particular qualifications or requirements for legal representatives appearing in arbitration proceedings in Mexico. There are no publicly available 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 Commercial Code (see 7.3 Powers and Duties of Arbitrators), the arbitral tribunal is responsible for deciding evidentiary matters and has the power to rule on the admissibility, pertinence, collection and submission of evidence. Taking of evidence commonly follows international practice, including the International Bar Association Rules on the Taking of Evidence in International Commercial Arbitration (the “IBA Rules of Evidence”).

Although rules of evidence are not binding upon arbitral tribunals, and parties are free to regulate such matters, it is worth noting that arbitral proceedings in Mexico tend to be swayed by civil law traditions of procedure.

Mexican counsel and arbitrators tend to feel more comfortable adopting rules of evidence of the civil law tradition (including the mixed approach of the IBA Rules of Evidence). Moreover, most of the arbitral institutions’ flexibility includes rules that allow not only the fusion of several traditions but their adaptation in the interest of efficiency to the specific circumstances of each case. 

One of the few cases for court assistance in aid of arbitration pertains to evidentiary powers of compulsion. The Mexican Commercial Code incorporates a flexible provision with respect to this matter.

Article 1444 not only allows arbitral tribunals to request judicial assistance in the production of evidence and subpoenas, but the parties can also request it (with prior approval from 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 Commercial Code does not expressly establish that arbitrations are confidential. In this respect, parties must either:

• expressly provide in their arbitration clauses that their arbitrations will be confidential; or
• 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, an arbitral award must comply with the following requirements unless the parties agree otherwise (including by agreeing to certain arbitration rules).

• It must be made in writing and signed by the arbitrator(s). In arbitrations with more than one arbitrator, the signatures of the majority of the members of the arbitral tribunal are sufficient, provided that the reasons for the omitted signatures are stated.
• It must state the reasons upon which it is based, unless the parties have agreed otherwise or the award is won on agreed terms resulting from a settlement between the parties.
• It must state the date of the award and the seat of arbitration.
• After the award is rendered, the arbitral tribunal must deliver a signed copy of such award to the parties.

The Commercial 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. There are no publicly available judgments annulling an arbitral award on the basis that the remedy awarded violates Mexico’s public policy.

The parties to an arbitration may expressly agree upon the rules for determining legal costs and the arbitral tribunal’s fees, or instead choose a set of procedural rules that regulate such matters (Article 1442 Mexican Commercial Code). In the absence of such agreement, the following default rules will apply when Mexico is the seat of arbitration.

Legal Costs

The arbitral tribunal shall fix the legal costs of the arbitration in the award (Article 1453 of the Mexican Commercial Code). If the arbitral tribunal issues a consent award or an order terminating the arbitration before rendering the award, the costs shall be fixed in such order or award (Article 1454 of the Mexican Commercial 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 this reasonable based on the circumstances of the case (Article 1455 of the Mexican Commercial Code). It is common for arbitral tribunals seated in Mexico to decide this issue on a costs-follow-the-event approach.

Regarding costs related to the legal representation of the parties, the Arbitral Tribunal shall take the circumstances of the case into consideration to decide which party shall bear them or instead make a pro rata distribution of such costs between the parties (Article of the 1455 Mexican Commercial 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. The arbitral tribunal must ensure that the fees charged are reasonable when issuing such determination by taking into account the amount in dispute and other relevant circumstances of the case (Article 1454 of the Mexican Commercial 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 the court and considering its observations (Article 1454 of the Mexican Commercial Code).

Once an arbitral tribunal is constituted it may request the parties to deposit an advanced payment of the fees to cover travel expenses, among other things (Article 1456 of the Mexican Commercial Code).

The arbitral tribunal shall not charge additional fees for the interpretation, rectification or completion of the award (Article 1455 of the Mexican Commercial 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 Law of Amparo, which constitutes a petition for judicial protection against violations of constitutionally guaranteed rights, has posed several challenges to the aforementioned premise.

In 2013, reforms to the Law of Amparo allowed for the possibility that certain private entities could be deemed “authorities” for the purposes of amparo proceedings. This reform prompted intense discussions among both practitioners and scholars regarding its implications. However, a recent decision by the Third Federal Circuit Court for Civil Matters of the First Circuit determined that arbitrators cannot be considered “authorities” in amparo proceedings (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 concerning possible challenges in recognition and enforcement proceedings by deciding that neither the final judgment nor the interlocutory rulings in these proceedings were subject to any type of ordinary remedy (Jurisprudencia 171447).

None of the above, however, has provided any judgments or precedents on the issue of whether parties can agree to exclude or expand the scope of appeal under the national law.

Regarding the potential intervention of arbitrators in annulment proceedings, the Eight Collegiate Tribunal of the First Circuit recently ruled in an amparo proceeding against an annulment decision that arbitrators cannot be defendants or interested parties in an annulment proceeding. Through its decision, said tribunal also emphasised that arbitrators have no obligation to return their fees when an award is annulled (Tesis 2023333 and 2023332).

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 for judicial review of arbitral awards are the limited grounds for review listed in the UNCITRAL Model Law and the New York Convention.

Recently, the Mexican Supreme Court of Justice upheld this criterion by determining that a judge ruling on a set-aside request of an award may not revisit the arbitral tribunal’s analysis of the admissibility, relevance and weight of the evidence, even if the party seeking the annulment argues a due process violation (Tesis 2025652).

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.

There are no precedents that can indicate a clear and identifiable judicial trend regarding the enforcement of an award that is subject to ongoing set-aside proceedings at the seat. However, courts might be inclined to apply the principle of international reciprocity and guide their determination by what the courts in the seat of the arbitration do in similar scenarios. 

Regardless of the country in which it was rendered, an arbitral award shall be recognised as binding under Mexican law and, upon application in writing to the competent court, shall be enforced in accordance with the provisions set forth in the Commercial Code. Federal or state first instance (trial) civil courts of the seat of the arbitration are competent to decide on the recognition and enforcement of an arbitral award. When the seat of the arbitration is not located in Mexico, the competent courts are the federal or state first instance (trial) civil courts wherever the debtor is domiciled or the assets are located (Articles 1422, 1462 and 1463 of the Mexican Commercial Code).

In the 2011 amendment to the Commercial 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.

The authors know of no judgments or decisions in which Mexican courts have analysed the enforcement of an award that was set aside by the courts in the seat of arbitration, or have decided on a state’s or state entity’s defence of sovereign immunity.

When Mexico is the seat of the arbitration, or where recognition and enforcement are sought in Mexico, it is possible to argue the validity of the award both in the annulment proceeding and the enforcement proceeding. This is principally down to the fact that the grounds for annulment are the same as the grounds to deny enforcement (with one exception). In this scenario, parties have frequently litigated 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 indicated emphatically that judges must practise self-restraint and that the courts must use two methods when analysing an arbitral decision in order to determine if the arbitral tribunal exceeded its jurisdiction. First, the court must analyse the arbitral agreement to determine if it is clear or ambiguous. Once this has been established:

• in cases where the terms are clear, the judge must strictly apply the text of the agreement. 
• in cases where the terms are ambiguous, the courts must adhere to what the tribunal decided and limit themselves to determining only whether the tribunal’s decision is reasonable (Tesis 2014012). 

In the same decision, the Supreme Court analysed the concept of public policy in relation to arbitrations arising from contracts with state agencies. As a result, the court set forth the idea that the decision to incorporate an arbitral clause into a contract of this nature was a public policy decision on its own.

As such, the state is thought to have agreed that the issues or conflicts arising from the contractual relationship come under the exclusive jurisdiction of the arbitral tribunal, ergo the award could have public policy repercussions. 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. In 2009, for instance, public policy issues were raised in the annulment proceedings of a case in which the award was annulled because a new law precluded administrative rescissions from being resolved through arbitration. Although many regard 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 (who were 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 Commercial Code – taken from Article 12 of the UNCITRAL Rules – establishes that, in order to be eligible as an arbitrator, the candidate must reveal any circumstances that may give rise to reasonable doubts concerning their impartiality or independence.

Additionally, Article 1428 of the Mexican Commercial Code binds the arbitrator to comply with the above-mentioned obligation from the moment they are appointed and throughout the entire procedure. Otherwise, the arbitrator may be disqualified or challenged if reasonable doubts regarding their independence or impartiality arise.

See 4.4 Challenge and Removal of Arbitrators and 4.5 Arbitrator Requirements.

The Mexican Commercial Code does not contain any rules or restrictions for third-party funding in arbitration.

The Mexican Commercial Code does not regulate arbitral proceeding consolidation. However, parties may agree upon procedural rules that allow such a possibility (ie, the ICC Arbitration Rules). There are no publicly available judicial decisions by Mexican courts on the consolidation of arbitral proceedings.

The Mexican Commercial Code does not regulate instances where a third party may be bound by an arbitration agreement or award. There are no publicly available judicial decisions by Mexican courts on this issue.