Enforcement of Judgments 2022

Last Updated August 02, 2022

Mexico

Law and Practice

Authors



White & Case SC is recognised for its market-leading presence in Mexico City and offers highly specialised and integrated services to its clients, bringing critical insights born from three decades of experience working in leading innovative transactions and resolving high-profile disputes, working from White & Case’s seamless global platform with 45 offices in 31 countries. The civil and commercial litigation team, composed of nine lawyers, has long been involved in shaping the development of civil and commercial litigation in Mexico, representing market-leading clients in general commercial disputes, Supreme Court and appellate litigation, financial services and insurance litigation, bankruptcy and restructuring litigation, arbitration (domestic), and white-collar/investigations litigation. Recent examples of the firm's work are representation of a leading global financial institution and its Mexican subsidiary in a USD500 million cross-border litigation; and representation of a leading global manufacturing entity in the enforcement of a USD15 million arbitral award resulting from a joint venture agreement.

In Mexico, there are several mechanisms to know the legal status of the assets owned by the counterparty in a court case. However, the way to access such information is generally in public records accessible to any person or, in the case of being in the hands of private parties (or even the State), access is through court orders. The following is a summary of the sources of information mentioned and the ways in which a private individual can access them.

Public Information

Legal status of real estate

This information is available in the public property registries of each Mexican state. Each of these public registries contains information regarding the legal status of any real estate property, such as the existence of encumbrances, the owner or co-owners and the location of the property. Each Public Registry of Property allows users to know which real estate is publicly owned by an individual or legal entity, as well as the existence of other encumbrances or charges in favour of third parties on such real estate.

Legal status of patents and industrial property records

The Industrial Property Gazette of the Mexican Institute of Industrial Property is the means of national communication through which information on patents and industrial property registrations is made public. This Gazette can be consulted through the Industrial Property Gazette Information System (SIGA, for its acronym in Spanish), which contains collections dating back to 1873 on registered patents and, more importantly, their public owners. This public system allows users to know which patents and registrations are held by an individual or legal entity, as well as the validity of such registration or patent.

Legal status of rights related to copyright

Copyright has two facets protected by the Federal Copyright Law: moral rights and economic rights. The economic right of copyright is the recognition of the exclusive enjoyment of economic prerogatives and privileges by virtue of the creation of a literary or artistic work. The economic right of a literary work or creation is the value for pecuniary purposes.

The Public Registry of Copyright is the means of national publicity of all acts related to the ownership and alienation of the economic rights of authors. Therefore, the Public Registry of Copyright, managed and administered by the National Copyright Institute, allows users to know which individual or legal entity is the holder of the economic rights of a literary work and to find out whether any person or legal entity is the holder of any economic rights subject to seizure.

Legal status of commercial acts and securities subject to public offering and intermediation in the securities market

In Mexico, the Public Registry of Commerce is a system of universal accessibility by virtue of which the acts of commerce applicable in Mexican territory are made public and the creation of legal entities under Mexican law is recorded. This registry allows individuals to know who are the shareholders of a legal entity and the amount of its capital stock, as well as its main corporate acts. This information is relevant in the identification of the assets of a subject.

The National Securities Registry (Registro Nacional de Valores, or RNV for its initialism in Spanish) is a public means of dissemination administered by the National Banking and Securities Commission, by virtue of which the legal status of investment funds organised under the Investment Funds Law and securities of authorised issuers is made known. This registry allows individuals to identify securities issued (bonds, stock certificates, debentures, etc).

Legal status of assets subject to a guarantee

The Sole Registry of Personal Property Securities (Registro Único de Garantías Mobiliarias, or RUG for its acronym in Spanish) is a section of the Public Registry of Commerce through which financial institutions and creditors publicise the guarantees they receive from their debtors, when they are constituted on movable assets. This registry provides information on the status of encumbrances on a debtor's or counterparty's movable property that may be subject to seizure. Although the main users are creditors and public notaries, the information contained in this registry is accessible to any subject.

National Transparency Platform

A final mechanism for the identification of assets, information on which may become accessible to any third party that submits a request for information, is the use of the National Transparency Platform. Although the main purpose of this mechanism is not to publicise the assets of legal entities, it is possible to obtain information on legal relationships and assets derived from governmental relationships. The Platform allows the content of any government document to be known, including public contracts, with a special treatment for being sensitive information, and is administered by the National Institute of Transparency, Access to Information and Protection of Personal Data.

Confidential Information

Banking or financial information in possession of credit institutions

In accordance with the fundamental rights recognised in Mexican law, banking information is classified as confidential information, protected by a principle called "banking secrecy". This principle prevents individuals from immediately knowing information related to financial transactions carried out with credit institutions. However, since it is one of the most valuable and relevant assets in judicial proceedings, there are regulated mechanisms for access to this type of information.

Article 142 of the Credit Institutions Law establishes that credit institutions are obliged to provide information related to their banking operations (current account contracts, credit contracts, trust operations, etc) when requested by the judicial authority by means of a court order, as long as the owner of the information, settlor, beneficiary, trustee, or agent is a party to the court case. The request for this information is made through the National Banking and Securities Commission. This mechanism is extremely relevant, since it allows individuals (i) to identify the existence of bank or similar accounts in regulated credit institutions within the Mexican territory; and (ii) to know their balances for the purposes of the judicial proceeding.

Information on the status of Mexican companies in which foreign investment participates

This information is not of a public nature; however, it is contained in the National Registry of Foreign Investments (RNIE, for its initialism in Spanish), administered by the Ministry of Economy and regulated by the Foreign Investment Law. In this registry reliable information on the legal status of any of these companies is registered, such as:

  • the name or corporate name, nationality and condition of the foreign investors in such companies;
  • their percentage of participation; and
  • the approximate amount of total investment, including the amount of capital stock subscribed and paid or subscribed and payable.

A private individual may obtain access to this information exclusively through a court order, mediated by judicial process. In such a case, the Court shall treat the information in a manner that safeguards the confidentiality of the entity.

Precautionary Measures

In Mexico, judicial proceedings in all matters, specifically civil and commercial, provide for the figure of precautionary measures. These judicial tools allow judges to secure the subject matter of the litigation by:

  • maintaining factual or legal situations, immobilising goods, assets or even legal acts;
  • retaining goods, through the figure of the provisional seizure; or
  • retaining persons.

The purpose of the securing measures is to allow creditors to obtain the effective collection of the judgment, through a preliminary examination of the appearance of the good right of a subject to claim in court from another the payment of a benefit. The granting of this type of provisional measure, while the judgment is being issued, does not imply an advance or preliminary pronouncement on the meaning of the judicial decision.

Under Mexican law, there are two types of judgments: interlocutory and final. Interlocutory judgments are the procedural act by which the judge decides on some incidental issue that arises during the process: jurisdiction of the judge, interim relief requested by the parties during the process, inconsistency during a service of notice, etc. Final judgments are the culminating act by which the proceeding is terminated, since the judge decides definitively on the subject matter of the litigation. Although through the final judgment the judges make a definitive decision regarding the controversy, it can only be executed after the parties have exhausted the available means of appeal, within the elapse of time periods required by law.

According to a classification based on the content of the judgments, there are the following classes.

  • Declaratory judgments – these judgments contain only a judicial declaration on the existence or non-existence of a right or obligation, but do not oblige the parties to deliver an asset or perform an action.
  • Condemnatory judgments – these judgments impose an obligation to give, to do or not to do as the solution of the conflict on one of the parties. It is important to mention that condemnatory judgments are also commonly declaratory, since, in order to impose an obligation to give, to do or not to do, the judge first had to recognise the existence of a right and/or an obligation.
  • Judgments constituting rights – these judgments create, modify or extinguish a legal situation that is the subject matter of the controversy between the parties. They modify an existing situation as a way of resolving the controversy.

Secondly, the Federal Code of Civil Procedures defines a judgment as a judicial resolution that decides the merits of the case. Said Code recognises that the resolution of judicial disputes may be carried out through the following mechanisms.

  • Final judgment – a resolution issued directly by the judge that ceases the conflict between the parties, in accordance with the evidence provided to the court. It is understood that a judgment is "final" when a superior judicial body to the one that issued it cannot revoke the ruling.
  • Transactions – the legal act by which the parties to a litigation grant mutual concessions and cease the conflict, giving such contract the effectiveness and authority of res judicata, without a direct intervention of the judge to resolve the controversy.
  • Judicial or extrajudicial agreements – an agreement between two or more persons to create, transfer, modify or extinguish obligations, in the form of an agreement, which does not necessarily have mutual concessions.

The enforcement of judgments is carried out by means of foreclosure procedures. Enforcement can be divided into procedural and extra-procedural. The procedural ones come from a jurisdictional authority where judgments, agreements and transactions are included. Extra-procedural executions come from an entity but the judges or courts (public notaries, mediators or some governmental bodies). However, prior to the execution of the judgment, the following conditions must be met:

  • obtain a final judgment that cannot be modified by the judicial authority at a later date (res iudicata); or
  • that the agreement or transaction has been approved by a jurisdictional authority and is elevated to a final judgment (if applicable).

Court order to enforce compliance/specific performance

In Mexico, via de apremio (foreclosure procedure) is known as the procedure that occurs within a court case, subsequent to obtaining a final judgment, by which the judge of origin who first heard the dispute proceeds to a compliance stage and then an enforcement stage of the final ruling (if the defendant fails to comply voluntarily with the ruling). Its mechanism of operation begins with the obtaining of a judgment that can no longer be modified; once this is obtained, the winning party must request the initial judge to request voluntary compliance with the judgment by the condemned party.

In the event that the losing party does not voluntarily comply with the judgment, the judge will proceed to initiate a compulsory enforcement stage. For this purpose, the judge may use any appropriate enforcement measure to force the condemned party to comply with the judgment (fines, seizure or even arrest). In ordinary civil and commercial court cases, if the parties allow, as a rule, more than five years without giving procedural impetus to the execution, they will lose their right to execute. In executive, oral or abbreviated court cases, if the parties allow more than three years to pass without giving procedural impetus to the execution, as a rule, they will lose their right to do so.

If the winning party seeks the anticipated execution of the judgment without it being final and irrevocable, it must grant a bond or guarantee to cover the damages caused by the anticipated execution. This bond or guarantee will be delivered to the party that is subject to the execution in the event that the condemnatory judgment is revoked. However, the judge will have the power to deny an anticipated execution in order to avoid unnecessary use of judicial resources.

The authors consider that there are special premises regarding the enforcement mechanism of Mexican judgments.

  • Agreements or transactions – they have the peculiarity that they can only be executed once the judge hearing the case has approved them.
  • Class actions – in class action proceedings governed by the Federal Code of Civil Procedures, a stage is started for the individual execution of the judgment for the members of the class.
  • Mortgage foreclosure action – the purpose of a mortgage foreclosure action is to enforce a mortgage guarantee on real estate. Its execution stage is peculiar, since it necessarily concludes with a public auction of real estate that takes place before the court, to which any citizen may participate as a bidder and be awarded the mortgaged real estate.
  • Commercial bankruptcy – the enforcement of the judgment recognising the creditors' claims is carried out before the judge who heard the insolvency proceeding and is regulated by the Commercial Insolvency Law. In the event that the merchant and its creditors have reached an agreement through an insolvency agreement, the judge will verify that the merchant complies with such agreement. In the event that the company reaches the bankruptcy stage, the judge will verify the disposition of the company's assets and the payment ordered to the creditors.
  • Judicial bank liquidations – the enforcement of the judgment recognising the creditors' claims is carried out before the judge who heard the judicial liquidation and is regulated by the Credit Institutions Law. In this bankruptcy proceeding, the dissolution of the credit institution is necessarily sought through the sale of assets with the participation of the Instituto para la Protección al Ahorro Bancario (the government agency in charge of deposit insurance).
  • Criminal proceedings – in criminal matters, an exclusive law (the National Criminal Execution Law) regulates the execution of sentences ordering the serving of a criminal penalty, such as imprisonment. In criminal proceedings, the execution of the sentence is carried out by judges specialised in the completion of sentences.

There is no average time to achieve the enforcement of a judgment delivered by a domestic judge, as this depends on various factors that can modify the time and costs from case to case, except for the following considerations. First, the intermediate steps between obtaining the judgment and its enforcement, and the approximate procedural times, will be explained.

  • Notice of the judgment to the parties – after a judgment has been rendered, it must be notified to the parties so that they can proceed with its enforcement or challenge it, in the case of disagreement. The period for notification of a judgment may vary depending on the labour saturation of the jurisdictional body, since this service of notice is usually made at the address of the parties. However, the authors consider that the approximate term to conclude this stage is from one to three weeks, maximum.
  • Resolution appeal – once notified of the judgment, each party has the opportunity to appeal the judgment and have the decision reviewed by a superior court. The time for challenging a judgment varies from nine to 12 days.
  • The amparo proceeding as an autonomous means of challenge – after the challenge stage, the parties may use the amparo proceeding, which is an autonomous proceeding by which a federal collegiate court will review whether the final judgment respects the human rights of the parties. The amparo proceeding could last from six months to two years.
  • Modifications to the final judgment – in the event that the higher judicial body, upon resolving the challenge or amparo proceeding, determines to modify the initial judgment, the judge will have periods ranging from three to 15 days to deliver a new judgment, which may be challenged again by the parties, due to new issues derived from this last judgment.
  • Voluntary compliance period – once the deadlines for the parties to challenge the final judgment have ended, the judge will give a period of five business days to the loser to comply voluntarily with the judgment. Otherwise, it proceeds with the specific performance.

Secondly, the authors consider that there are three main variables that will affect or benefit the times and costs in each specific case:

  • labour saturation of courts and judicial bodies;
  • costs of legal counsel and expertise; and
  • availability and use of online trial tools to expedite court proceedings.

Once the court issues the final judgment and the period for voluntary compliance granted by the judge to the condemned party has elapsed, there may be different scenarios for the enforcement stage. This enforcement procedure or stage is the final stage of any judicial proceedings and its purpose is to use force to obtain compliance with the final judgment. This is why, depending on the content of the judgment, the authors can find the following premises:

  • In the case of declaratory judgments – declaratory judgments do not have an enforcement stage, because they only contain a pronouncement on the existence of a right or obligation, but do not oblige the parties to do or refrain from doing something.
  • In the event that the judgment orders a personal obligation to do something – in this case, the judge will order the defendant to make the obligated performance immediately and the plaintiff may claim damages or proceed to the collection of the alternative penalty established in the judgment.
  • In the event that the judgment orders a non-personal obligation – in this case, the judge will appoint a different person to perform the obligation, at the expense of the judgment debtor in the judgment, or will proceed to the calculation and collection of damages, at the choice of the plaintiff.
  • In the event that the judgment orders the granting of a document – the judge will grant the document on behalf of the defendant, without the need of their intervention, and it will have all the legal effects as if it had been granted or signed by the defendant.
  • In the event that the judgment orders the delivery of real estate, money, books, papers or any object/thing – the judge will make use of all the means of compulsion within their reach, such as the use of seizure and withholding of goods, fines and even arrest for contempt of court order, being able to make use of any means and through any utility to achieve the withholding of sufficient goods for the payment of what is owed. In the case of vacating real estate, the judge may grant a term of up to 60 days to deliver it.

Please note that, pursuant to case law issued by the Supreme Court of Justice and the Collegiate Courts in Mexico City, the suitable remedy against the resolutions in the post-judgment procedures for determining defendants assets is the amparo trial, in the following cases:

  • the resolution that approves the total compliance of the ruling;
  • the resolution that declares the impossibility to execute the ruling;
  • the last resolution in the auction proceeding;
  • the resolution(s) that quantify non-liquid amounts to execute the ruling; and
  • the resolution(s) that directly affect human rights.

Challenging enforcement is the mechanism available to the parties that obtained a favourable judgment, in the event that the condemned party refrains from voluntarily complying with the judgment within the term granted by the judge. Therefore, the condemned party has at its disposal three ways to prevent the specific performance of a judgment, in which its assets are secured and taken to public auction:

  • voluntary performance of the obligation;
  • a transaction, compensation or arbitral compromise, provided that it is requested 180 days after the final judgment becomes final; or
  • a settlement between the parties that modifies the obligation contained in the judgment in favour of the winner of the judicial contest.

The person submitted to the final judgment may only question or challenge acts of the process of enforcement of the judgment when they do not comply with the law or violate constitutional principles, such as privacy, confidentiality or bank secrecy. However, through such means of challenge (appeal and amparo proceedings), the finality of the judgment and the existence of an enforcement procedure cannot be questioned, but only the guidelines issued by the judge to achieve its performance.

Although Mexico does not have a catalogue of judgments that are unenforceable, there are indispensable requirements for a local judgment to be enforceable by a judge. First, the judgment can only be enforced by the judge of origin; ie, by the judge who originally heard the dispute, except in cases of extinction or reassignment of judicial bodies. Secondly, the judgment must be final; ie, the legal term must have elapsed without the parties having challenged it or, if they have done so, the remedy must have been declared unfounded or insufficient by a final judgment. If it has been modified, only the content of the last decision delivered in the court case may be taken into account.

In Mexico, there is no central registry of each judgment delivered by judges. On the other hand, when judgments order the immobilisation of real estate, such immobilisation must be registered in the corresponding Public Registry of Property. However, such registries are not registries of judgments, but only of property of a specific nature.

Mexico has ratified several international treaties regarding the enforcement of judgments, which include:

  • the Inter-American Convention on the Extraterritorial Validity of Foreign Judgments and Arbitral Awards;
  • the Inter-American Convention on Jurisdiction in the International Sphere for the Extraterritorial Validity of Foreign Judgments;
  • the Inter-American Convention on Letters Rogatory;
  • the Convention between the United Mexican States and the United Kingdom of Spain on the Recognition and Enforcement of Foreign Judicial Judgments and Arbitral Awards in Civil and Commercial Matters; and
  • the Hague Convention on the Taking of Evidence Abroad in Civil or Commercial Matters.

Likewise, the national legislation in civil matters has adapted its internal framework to recognise the enforcement of judgments in national territory; as well as to delimit the procedure and requirements. In this order of ideas, it sets forth that foreign judgments, private arbitral awards of a non-commercial nature and jurisdictional resolutions will be enforced by means of an enforcement. The ancillary proceedings to enforce a foreign judgment will only be limited to examining the authenticity of the foreign final judgment and whether it must be enforced in accordance with the provisions of Mexican territory.

Among the necessary conditions to be able to execute a foreign judgment, the Federal Code of Civil Procedures in its Article 571 and the Commercial Code in its Article 1347-A set forth the following requirements:

  • that the formalities established in the international treaties regarding letters rogatory to which Mexico is a party have been complied with;
  • that they have not been issued as a consequence of an action in rem;
  • that the jurisdictional authority that issued the decision has had competent jurisdiction and will evaluate the matter according to the rules of international law that are compatible with the national legislation;
  • that the defendant has been personally summoned;
  • that the decision has the character of res judicata in the country in which it was rendered, or that there is no ordinary appeal against it;
  • that the action that gave rise to them is not the subject matter of a lawsuit that is pending between the same parties before Mexican courts and in which the Mexican court has taken a preventative action or at least that the letter rogatory to summon has been processed and delivered to the Ministry of Foreign Affairs or to the authorities of the state where the summons is to be served;
  • that the obligation to be performed is not contrary to public order in Mexico; and
  • that the documentation satisfies the requirements to be considered authentic.

In matters of a civil and commercial nature, including bankruptcy proceedings, the law imposes the same burden of exhausting the ancillary proceedings to enforce a judgment on the parties. Therefore, the treatment in the enforcement of foreign judgments is comparable in each specific case.

The types of foreign judgments that cannot be enforced in Mexican territory are the following.

  • Judgments contained in illegal or improperly authenticated letters rogatory.
  • In order for a judge to proceed to enforce a judgment, the letter rogatory sent by the foreign judge must comply with international standards and treaties on the matter.
  • Judgments in violation of the essential formalities of the process. Although Mexican judges may not analyse the merits of a foreign judgment, they may oppose its execution in the event that they denote a procedural violation to the detriment of the judgment debtor, by which their human right to a hearing and to a due defence at a court case has been breached.
  • Judgments that breach Mexican law and order. Likewise, Mexican judges are compelled to oppose the execution of a foreign judgment in the event that the decisions contained therein are contrary to Mexican public order; ie, to the prohibitive or mandatory rules contained in Mexican laws or in the Constitution.
  • Judgments involving actions in rem. Finally, in the event that the foreign judgment deals with an action that disposes or modifies the regime of real property located in Mexican territory, the judge must oppose its enforcement.

Requirements to Initiate the Enforcement Procedure

The process to enforce a judgment sets forth the need for a judge or court to issue a letter rogatory where the petitioner accompanies it with:

  • an authenticated or certified copy of the judgment, award or jurisdictional resolution;
  • an authenticated or certified copy of the evidence that the essential formalities of the proceeding were complied with (competence of the foreign judge to hear the matter, that it does not concern a civil in rem action, correct and legal summons to the defendant, that it satisfies the legal requirements of all letters rogatory, notice of the judgment to the defendant and finality of the judgment, that the documents forwarded are authentic); and
  • a translation into Spanish of all the authenticated documents.

Likewise, for proceedings in Mexican territory, the plaintiff must indicate an address for service of notice in the jurisdiction of the judge before which it is requesting the enforcement of the foreign judgment.

Jurisdiction for Enforcement Proceedings

Regarding the jurisdiction of the court to enforce the foreign judgment, it will be sufficient to take into consideration the national address of the defendant or, in its absence, the location of its assets within the national territory. It may be a local judge or a federal judge for commercial matters.

Procedural Stages

The ancillary proceedings to enforce a judgment will begin with a personal summons to the executing party and the executed party, who may present their defences and exercise their corresponding rights and, if applicable, offer the pertinent evidence. In this part of the process, it is important to reiterate that neither the court of first instance nor the appeal court may examine or decide on the merits of the judgment, or on the reasons or grounds of fact or law.

Additionally, the decision delivered in the first instance may be appealed in both effects, whether it denies or grants the execution. Questions relating to attachments, seizure of assets, appraisal, auction and other matters related to the liquidation and enforcement of a judgment delivered by a foreign court will be resolved by the court in charge of the enforcement process. The distributions of the funds resulting from the auction will remain at the disposal of the foreign judge delivering the judgment.

The costs and time taken to enforce a foreign judgment vary from case to case. In this regard, the fundamental variables for arriving at an estimate of costs and waiting time are, in principle, two: the workload of the corresponding courts and the collection rate and accumulated experience of the legal counsel handling the specific case.

The costs of enforcing foreign judgments must also take into consideration the individual cost of the translation of the foreign court decision and obtaining the enforcement, as the case may be. A fundamental element for the reduction of costs, as a viable alternative when enforcing a foreign judgment, is the search for an official expert, recognised by the judge's term of office in charge of the judicial enforcement procedure. This will avoid the need to opt for a second translation, if the corresponding judge does not recognise the expert nature of the translator.

Likewise, a viable alternative for the reduction of time and costs for the enforcement of a foreign judgment is the use of the emerging online court case systems within the Mexican territory. According to the authors' experience, the online court case system of the federal judge's term of office is more efficient and contains greater functionalities than those available in local jurisdictions. The adoption of a judicial proceeding through an online court case system is a fundamental variable to achieve efficiency and low cost in a judicial proceeding, even more so if it involves the enforcement of a foreign judgment. In this regard, through the online court case system known as the "Online Services Portal", the parties have at their disposal the consultation of judicial resolutions and pleadings of the parties, notices and the possibility of filing initial pleadings and motions, thus avoiding unnecessary transfers to the court and greater agility for the filing of judicial motions.

The only assumptions for challenging and opposing the enforcement of a foreign judgment are those contained in Articles 571 of the Federal Code of Civil Procedures and 1347-A of the Commercial Code, ie:

  • that the letter rogatory sent with the foreign judgment to be executed does not comply with legal requirements;
  • that the judgment deals with an action in rem;
  • that the essential formalities of the procedure have not been complied with in the original court case;
  • that the content of the foreign judgment is contrary to Mexican public order;
  • that the documents sent are not authenticated;
  • that the judgment is not final according to the laws of the country of origin; or
  • that the action originating from abroad is not the subject matter of a lawsuit still pending in Mexican territory.

However, Mexican judges are prevented from analysing the merits of the case or the subject matter of the foreign judge's decision. Likewise, the judgment by which the Mexican judge orders the execution or denies it may be challenged by means of an appeal by the non-conforming party. For civil matters, the party will have 12 days to appeal and for commercial matters, nine days after having been notified of the decision.

The Principle of Minimum Intervention in Mexican Judicial Practice

In recent years, the judicial criteria issued by Mexican judges and courts in commercial arbitration matters have been highly criticised, due to their interpretation that is far from the essence of the principle of "minimum intervention". The principle of minimum judicial intervention or minimum intervention is based on Article 17 of the Mexican Constitution, which constitutionally recognises alternative dispute resolution mechanisms and gives them a character comparable to centralised dispute resolution before the courts. Therefore, the alternative dispute resolution mechanisms are not subsumed to the state jurisdiction, but they merely contribute to its execution and materialisation.

Although the latest legislative reform on commercial arbitration in Mexico – through which several provisions of the Commercial Code were amended to adopt the UNCITRAL Model Law – established the principle of minimum intervention as a fundamental and guiding principle for the jurisdictional function in commercial arbitration, the judicial criteria that have been developed around it hinder compliance with such principle. As an inherent consequence of the aforementioned improper judicial practice, the authors have identified five main complications that litigants may encounter when going before a Mexican judge to request the recognition and enforcement of an arbitral award. These are identified below.

Five Main Complications When Enforcing an Award in Mexico

Simultaneous enforcement and nullity of arbitral awards

In the Mexican jurisdiction, the simultaneous processing of an enforcement proceeding and a nullity proceeding with respect to the same arbitral award is not prohibited. This implies the possibility of contradictory rulings on the validity of an arbitral award by different Mexican judges.

It is important to note that Mexican law provides a mechanism for the joinder of both proceedings (enforcement and annulment). However, such procedure is only feasible if the hearing of pleadings has not been held in either proceeding. In this regard, several Mexican Collegiate Courts have established that, in these cases, it must be understood that the enforcement and nullity proceedings are autonomous and deal with a different controversy.

The means of challenge against the judgment of the enforcement of the award is not resolved immediately

The amparo proceeding is a judicial procedure for the control of constitutionality, through which a district judge reviews that the challenged acts of the authorities are constitutional and do not harm the human rights of individuals. Otherwise, they must revoke such acts of authority. Previously, case law considered that judgments rendered in a judgment for the enforcement of an award could be challenged through a "direct" amparo proceeding; in other words, a single-instance amparo proceeding.

However, in a new case law, the Mexican Supreme Court of Justice determined that judgments rendered in the enforcement of an award can be challenged through the "indirect" amparo proceeding and not the "direct" amparo proceeding. Under Mexican law, although both types of amparo proceedings have the same purpose, the indirect amparo proceeding has two instances, while the direct amparo proceeding has only one instance (with exceptions).

The foregoing implies that the judgment delivered in an indirect amparo proceeding is not final and may be subject to a motion for reconsideration of an administrative decision. Consequently, this new reflection of the Supreme Court of Justice forces the parties to face a double-instance amparo proceeding. Instead of a single-instance amparo proceeding to obtain a final judgment for the enforcement of the award, the arbitrariness of the matter depends on the arbitrariness of the case.

The arbitrariness of the matter depends on Mexican law

Before Mexican courts, the enforcement of the award depends on whether the subject matter of the dispute settled in the award can be arbitrated under Mexican law, even in the case of international commercial arbitration. This implies that, even if the dispute was subject to arbitration under the law of the forum where the arbitral award was rendered, the award will not be enforceable in Mexico if Mexican law does not allow the dispute to be subject to arbitration.

In this regard, Mexican law adopted a centralised position related to the performance of arbitral awards in Article 1462, Section II of the Commercial Code. This is due to the fact that the possibility of performing an award depends on the arbitrariness of the matter according to Mexican law, regardless of whether the award is included in a valid decision by the arbitral court. This translates into a conflict when enforcing an arbitral award, since, despite the fact that an arbitral tribunal having competent jurisdiction has definitively issued the award, it cannot be enforced in Mexican territory, unless the dispute is subject to arbitration under domestic law. However, this limitation was included as an assumption for the denial of awards by the New York Convention, specifically in Article V. However, the inclusion in the New York Convention is that the judge may refuse to enforce the award in these cases, but does not have to (it is not mandatory).

The uncertainty of the concept of "public order"

This problem when enforcing arbitral awards does not derive from the prohibition established in the Commercial Code, since the Mexican legislator sought to safeguard the fundamental laws of Mexican law. The problem derives from the lack of a clear and binding judicial criterion as to what falls under the undefined concept of "public order".

That is, the party opposing the enforcement of the award has in its hands a tool that has not been clearly defined, since the judge may interpret the concept of "public order" as broadly as possible, according to the considerations of the parties. The difficulty in handling this concept has caused problems in other jurisdictions, not only in Mexico. For example, the Swiss Federal Tribunal has emphasised the difficulty of its handling in the case Tensaccia S.P.A. v Terra Armata R.L., dated 8 March 2006.

The meaning of "arbitration agreement" for Mexican judges

It should be emphasised that Article 1416 Section I of the Commercial Code establishes that the arbitration agreement is, specifically, the agreement by which the parties decide to submit to arbitration all or certain controversies that have arisen or may arise between them, through an arbitration clause or an independent agreement. In this regard, the wording of the article is clear and firm.

One of the grounds for non-enforcement of an award that the Commercial Code sets forth, the origin of which derives from the New York Convention, consists of denying enforcement if the award contains decisions that exceed the terms of the arbitration agreement. Therefore, according to the article mentioned above, the most logical interpretation would be that the award should not be enforced if it contains any decision that specifically exceeds the agreement to submit the dispute to arbitration.

However, some courts have established that the power of review of the judges of the concordance of the award with the arbitration agreement implies the power to review that the decision of the arbitrators is also in accordance with the binding conditions of the legal relationship of the parties, beyond the mere arbitration clause.

In conclusion, the aforementioned problems are not exclusive to the Mexican jurisdiction. However, they are accentuated problems that may violate the rights of the parties that decided to submit their dispute to arbitration. Their concurrence demonstrates the urgency for Mexican judges to adhere more closely to the principle of "minimum intervention" that prevails in arbitration matters.

Under Mexican law, the treatment of the enforcement of arbitral awards varies depending on the type of award. In this regard, the authors consider that there are four main categories into which the treatment of the enforcement of arbitral awards can be classified according to their subject matter:

  • commercial;
  • labour;
  • consumer protection; and
  • financial services user protection.

In the following, the main differences for their enforcement are listed.

Domestic or International Commercial Arbitration Awards

The enforcement of arbitral awards in commercial matters (domestic or international) must be carried out through the bodies belonging to the federal judicial power or the state judicial powers in each state, through a judicial proceeding called "special court case on commercial transactions and arbitration for the recognition and enforcement of the arbitral award". The judge who has competent jurisdiction for the enforcement of a commercial arbitration award will be the judge located in the place where the arbitration takes place or, failing that, the judge of the address of the defendant or the place where the assets are located, in that order.

For the enforcement of the award, Mexican commercial law only requires the presentation of the original of the authenticated award or a certified copy and the original of the arbitration agreement or a certified copy, which is in accordance with the New York Convention. If the award is in a language other than Spanish, it will be necessary to submit a translation by an official expert translator.

Labour Matters Awards

For the resolution of labour disputes, the Mexican Federal Labour Law allows the parties to settle the dispute through an arbitration award before the conciliation centres (Article 939). In this regard, because of the new 2019 Labour Law amendment, new conciliation and alternative dispute resolution agencies were created, consisting precisely of the state conciliation centres, as well as the Federal Centre for Labour Conciliation and Registration.

As of today, with the creation of the conciliation centres, pursuant to Articles 939 and 940 of the Federal Labour Law, the Federal Labour Courts will be in charge of proceeding with the enforcement of such arbitration awards, giving them the same treatment for their enforcement as a judgment delivered in a labour law court case.

Consumer Protection Awards

Mexican consumer protection legislation, and, specifically, the Federal Consumer Protection Law, provides for a special treatment for the enforcement of awards delivered to settle consumer disputes. In this regard, it is important to emphasise that the arbitral awards referred to in this law are delivered solely and exclusively by the Federal Consumer Protection Agency (PROFECO) or by the arbitrator appointed by the parties (Article 121).

In this regard, the enforcement of arbitral awards in this matter must be carried out within 15 days following their service of notice, unless otherwise expressly agreed by the parties. For the enforcement of arbitral awards issued by the PROFECO, the courts also have competence, but the enforcement will be carried out through an executive proceeding, as if it were an enforceable title that entails execution; that is to say, a proceeding with an abbreviated judicial procedure and that allows for a provisional seizure.

Financial Services User Protection Awards

Finally, Mexican legislation on the protection and defence of users of financial services also provides for the issuance of an arbitration award as an alternative for the resolution of disputes. In this context, the arbitration procedure is carried out by the regional, state or local delegations of the National Commission for the Protection and Defence of Users of Financial Services (CONDUSEF). This arbitration procedure in amicable composition is resolved by CONDUSEF itself, pursuant to the Law for the Protection and Defence of the Financial Services User (Article 73), the arbitration awards of which will have the character of an enforceable judgment.

As to the issue of concern here, the enforcement of such awards is in the first place under the observance of CONDUSEF, which may adopt all necessary measures to achieve the execution and materialisation of the final determination adopted in the award, including enforcement measures. In the event that an award condemns a financial institution, CONDUSEF is empowered to appeal to the courts that have competent jurisdiction. In the authors' opinion, such courts may be the courts in charge of commercial or administrative matters, depending on the subject matter of the arbitration award.

Pursuant to Mexican commercial law, in the matter of arbitral awards derived from domestic and international commercial arbitration, there are several categories of awards that will not be enforced by Mexican judges despite the initiation of the corresponding lawsuit. For the purposes of this chapter, the unenforceable awards can be categorised as follows.

Unenforceable Awards Due to Defects in the Arbitration Proceedings

Here are included all those awards that, in their structure, processing or issuance, suffer from some defect that does not affect the arbitral decision, but rather the forms and circumstances that led to such decision. The main distinctive feature of this category is that the defect that causes the award's non-enforcement is not to be found in the reasoning or decisions of the arbitrators, but in the process or framework within which the decision was made.

Awards with pathological arbitration agreements

This first subcategory includes all those awards whose cause of non-enforcement derives from a defective arbitration agreement. This type of pathological arbitration agreement can be found when one of the parties to the arbitration agreement was affected by some disability. Although the commercial legislation is not clear in this regard, the authors consider that judges must determine whether a person is incapable according to the law governing the contract or legal act where such arbitration clause is included. Secondly, when the arbitration agreement is not valid by virtue of the law governing the contract or legal act in which the arbitration clause is included. Third and finally, when the arbitration agreement suffers from any cause of invalidity under the law governing the contract or legal act containing the arbitration clause.

Awards that violate due process

This second subcategory includes all those awards that are not enforceable because of a procedural violation in the arbitration procedure, due to the violation of the essential formalities of the procedure: service of notice, guarantee of hearing, and opportunity to prove and deliver a final decision.

Unenforceable Awards Due to Defects in the Arbitral Decision

In this second category are included all those awards whose grounds for non-enforceability derive from the decisions adopted by the arbitrators. Although Mexican judges are prevented from reviewing the merits of the case in the award, here are included those arbitral awards whose procedural defect is reflected up to the issuance of the final decision in the award. In this sense, the following subcategories are proposed.

Inconsistent awards

This includes all arbitral awards where there is a disparity between the decision of the arbitral tribunal and any of the following:

  • the arbitration agreement;
  • the provisions of the legal relationship of the parties; or
  • the petition filed with the arbitral tribunal.

Not-subject-to-arbitration awards

This includes all awards whose subject matter cannot be arbitrated under Mexican law. Therefore, in the event that an arbitral award deals with any matter in which Mexican law prohibits arbitrariness, even if such award is in accordance with the law established by the parties, a Mexican judge may not enforce the award.

Awards in violation of public order

This third and last subcategory may be confused with the second subcategory mentioned above. This last subcategory refers to those awards whose content is in violation of public order. However, an award may be in violation of public order, understood for practical purposes as those that violate prohibitive and mandatory provisions of Mexican law, but whose subject matter cannot be subject to arbitration, and vice versa.

Awards Annulled by a Res Judicata Judicial Resolution

A final category of awards that is unenforceable under Mexican law is that corresponding to awards that have been annulled or suspended by the judge of the country in which the award was rendered. Even in the event that a Mexican judge has annulled an award, the enforcement of which is also being processed by Mexican courts, such award will be unenforceable, since, under Mexican commercial law, judges must suspend the enforcement of an award in the event that they are notified of the nullity of such arbitral award. In this regard, it is important to mention that in common law, some courts have taken the decision to enforce annulled awards, in view of the pro-arbitration principle, such as France ("Hilmarton" case), Austria ("Zdravilisce Radenska" case), Belgium ("Sonatrach v Ford" case) and the USA ("Chromalloy" case).

For the enforcement of an arbitral award in commercial arbitration, the Commercial Code establishes a specialised procedure with few procedural stages in the enforcement of arbitral awards. This process is named "special court case on commercial transactions and arbitration for the recognition and enforcement of arbitral awards" and is regulated by Article 1472 of the Commercial Code.

Requirements of the Initial Brief

  • Indicate the judicial authority to which it is addressed. The commercial judge or judge of concurrent jurisdiction, located in the place where the arbitration takes place, or, failing that, the judge with jurisdiction in the territory where the domicile of the defendant is located or of the location of the assets, in that order, has jurisdiction to know the case.
  • The name and surname of the natural person or, in the case of a legal entity, its corporate name or denomination, as well as an address for service of notice, which must be located in the place where the judge in charge of the case resides. Likewise, in the case of Mexican promoters, a copy of the Sole Population Registration Code (Clave Única de Registro de Población, or its acronym CURP, in Spanish), the Federal Taxpayer Identification Code (Registro Federal de Contribuyentes, or its initialism, RFC, in Spanish) and their official identification number must be submitted.
  • State the name and surname of the natural person or its denomination, the latter in the case of a legal entity, against which the enforcement of the award is sought, as well as the address where it may receive a service of notice.
  • The object claimed; ie, the judicial declaration that the award is enforceable and to proceed with such enforcement.
  • The facts preceding the enforcement of the award, such as the beginning of the conflict that led the parties to the arbitration proceeding, the procedure thereof and the details of the award delivered.
  • The legal grounds, which in this case are Articles 1471, 1472, 1473, 1474, 1475, 1476 and 1477 of the Commercial Code, specifying that the action is the special action on commercial transactions and arbitration for the recognition and enforcement of the arbitration award.
  • The value of the claim.
  • The offer of evidence to accredit the proceeding to enforce the arbitration award.
  • A handwritten signature or, in the case of being filed digitally, an electronic signature recognised by the corresponding court.

Likewise, the evidence and documents evidencing the action, as well as simple copies of the claim and its annexes sufficient to be delivered to the defendant, must be exhibited with the initial document of the claim. It is necessary for the admission of the claim that the plaintiff exhibits the original of the authenticated award or certified copy and the original of the arbitration agreement or a certified copy.

Procedural Stages

  • Admission of the claim and service of notice – once the claim has been admitted, the judge will order to summon the party, against whom the arbitration award is enforced, giving 15 business days to answer the claim.
  • Evidentiary stage – once the claim has been answered, a period of ten days will be opened for the judges to present the evidence offered by the parties. During this period, a hearing will be held for the judge to analyse the evidence and, if witnesses are interviewed, to conduct the interrogation.
  • Judgment – once the evidentiary stage is over, the judge will have a period of 15 ordinary days, with the possibility of extending the period for an additional ten days, to deliver the final judgment declaring the enforcement of the award, its partial enforcement or denying its enforcement.

If the parties do not file an amparo proceeding against the final judgment delivered by the judge within 15 business days following its service of notice, the judgment will become final, which means that it may be enforced voluntarily or by force.

There is no clear parameter to determine the costs and average time to enforce an award in the Mexican jurisdiction. However, several factors that influence the cost and duration of the procedure.

  • Operating scheme and judicial saturation – a saturated judicial system, as is the case of the Mexican judicial system, has a direct impact on delays and costs for the processing of the same.
  • Legal costs – a second element to take into consideration, for both the cost and the time it takes to conclude the procedure, is the hiring of the legal team that will provide representation in court. The rate of legal services in Mexico is highly variable and the procedural agility before the court will depend from office to office.
  • Disagreement of the parties with the content of the arbitration award – a third and last element to take into consideration is how much both parties agree with the determination reached by the arbitral tribunal. When one of the parties does not agree with the arbitral award, that party could delay the enforcement proceeding by challenging each of the resolutions issued by the court.

In Mexico, judges cannot review the merits of the award. Once the arbitral tribunal issues the final award, the parties cannot challenge it through an ordinary appeal. However, the parties may challenge the judicial resolution that orders the enforcement of an arbitral award by the means of an indirect amparo proceeding, which has two instances, since the judgment delivered therein may be subject to review by a Collegiate Court.

On the other hand, the parties have the possibility of invalidating the award through a nullity proceeding, without this allowing the judges to review the merits of the case. The provisions adopted in the Commercial Code for such proceeding are equivalent to those contained in the New York Convention; ie, such court case will only consist of analysing the validity of the award, but it is not an ordinary means to achieve its enforcement.

One step back: competence-competence

The principle of "competence-competence" has been embodied in Article 1432 of the Commercial Code since 1993.

In spite of this, in 2006, the Supreme Court of Justice determined that the action for nullity of the arbitration agreement corresponds to a judge, and not to an arbitration court.

Today, such criterion of the Supreme Court has to be understood as superseded, since in 2011, it was established in the Commercial Code that any matter in which there is an arbitration agreement, must be referred to arbitration at the request of any of the parties, and this request can only be denied because there is a final decision declaring the nullity of the arbitration agreement; or because the nullity, ineffectiveness or unenforceability of the arbitration agreement is notorious.

White & Case, SC

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Ciudad de México
Mexico

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White & Case SC is recognised for its market-leading presence in Mexico City and offers highly specialised and integrated services to its clients, bringing critical insights born from three decades of experience working in leading innovative transactions and resolving high-profile disputes, working from White & Case’s seamless global platform with 45 offices in 31 countries. The civil and commercial litigation team, composed of nine lawyers, has long been involved in shaping the development of civil and commercial litigation in Mexico, representing market-leading clients in general commercial disputes, Supreme Court and appellate litigation, financial services and insurance litigation, bankruptcy and restructuring litigation, arbitration (domestic), and white-collar/investigations litigation. Recent examples of the firm's work are representation of a leading global financial institution and its Mexican subsidiary in a USD500 million cross-border litigation; and representation of a leading global manufacturing entity in the enforcement of a USD15 million arbitral award resulting from a joint venture agreement.

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