Mexico: International Arbitration (4th edition)

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This country-specific Q&A provides an overview of the legal framework and key issues surrounding international arbitration law in Mexico.

This Q&A is part of the global guide to International Arbitration.

For a full list of jurisdictional Q&As visit http://www.inhouselawyer.co.uk/index.php/practice-areas/international-arbitration-4th-edition/

  1. What legislation applies to arbitration in your country? Are there any mandatory laws?

    The Mexican Commerce Code, which is mandatory.

  2. Is your country a signatory to the New York Convention? Are there any reservations to the general obligations of the Convention?

    Yes, Mexico is a signatory party of the New York Convention (ratified on April 14, 1971) and did not file any reservations.

  3. What other arbitration-related treaties and conventions is your country a party to?

    1. The Inter-American Convention of Extraterritorial Validity of Foreign Judgments and Arbitral Awards (Montevideo Convention).
    2. The Panama Convention.
    3. The International Centre for Settlement of Investment Disputes.
  4. Is the law governing international arbitration in your country based on the UNCITRAL Model Law? Are there significant differences between the two?

    Yes, it is based on the UNCITRAL Model, but with minor modifications, such as:

    1. The Mexican commerce Code has not yet adopted the 2006 Amendment to article 7 regarding the formation of the arbitration agreement.
    2. Article 1467 sets forth the criteria and procedure that courts must follow when a party requests the court to appoint an arbitrator.
    3. The number of arbitrators when parties fail to agree on that issue.
  5. Are there any impending plans to reform the arbitration laws in your country?

    Not regarding commercial arbitration.

  6. What arbitral institutions (if any) exist in your country? When were their rules last amended? Are any amendments being considered?

    1. Capítulo Mexicano de la Cámara Internacional de Comercio (ICC Mexico for its acronym in Spanish) Last rules amended in 2017.
    2. Cámara de Comercio de la Ciudad de México (CANACO for its acronym in Spanish) Last rules amended in 2013.
    3. Centro de Arbitraje de México (CAM for its acronym in Spanish) Last rules amended in 2009.
    4. Centro de Arbitraje de la Industria de la Construcción (CAIC for its acronym in Spanish) Last rules amended in 2009
  7. What are the validity requirements for an arbitration agreement under the laws of your country?

    According to article 1423 of the Commerce Code, an arbitration agreement must be in writing and signed by the parties, or it may be in an exchange of letters, telexes, telegrams or faxes, or any other means of telecommunication that properly record the agreement.

    As well, the arbitration agreement can be valid if there it exists a written complaint and a written answer to it where such inference cannot be denied. Also, a reference made in an agreement to a document that contains a committing clause to arbitrate will constitute an agreement to arbitrate if such agreement is in writing and the reference creates the implication that such clause is part of the agreement.

    For these agreements it is strongly recommended to define the arbitral mechanism and institution that shall know about the arbitral procedure, since it is not advisable to use Ad Hoc mechanisms.

  8. Are arbitration clauses considered separable from the main contract?

    Yes, according to article 1432 of the Commerce Code, an arbitration clause included as part of the contract shall be considered as an agreement independent from the other stipulations of the contract. In this sense, a decision from the arbitral tribunal in which it declares the main contract to be null and void, does not translate in a nullity of the arbitration clause.

  9. Is there anything particular to note in your jurisdiction with regard to multi-party or multi-contract arbitration?

    No, the Commerce Code does not contain any particular specifications or restrictions regarding multi-party or multi-contract arbitration.

  10. In what instances can third parties or non-signatories be bound by an arbitration agreement?

    Third parties or non-signatories cannot be bound by an arbitration agreement, and local courts do not have faculties to order them to participate in arbitration agreements because consent is a non-voidable requirement under Mexican law to be bound by an arbitration agreement.

  11. How is the law applicable to the substance determined? Is there a specific set of choice of law rules in your country?

    According to article 1445 of the Commerce Code, the arbitral tribunal shall decide the dispute in accordance with the principles of law chosen by the parties, but if the parties does not choose the applicable law, the arbitral tribunal will decide it considering the characteristics and the nexus of the matter.

  12. Are any types of dispute considered non-arbitrable? Has there been any evolution in this regard in recent years?

    Yes, for example, the Hydrocarbons Law, establishes the non-arbitrability of disputes involving administrative rescission; the Law of Public Works and Related Services and the Law of Acquisitions, Leases and Services of the Public Sector excludes arbitration from matters regarding the validity of the administrative rescission or the early termination of contracts entered into by the private sector with public entities.

    Apart from the above, all family and criminal matters are not arbitrable and of exclusive jurisdiction of national courts.

  13. In your country, are there any restrictions in the appointment of arbitrators?

    No, the parties are free to jointly agree the number of arbitrators and procedure to select them.

    Nevertheless, the person that may be appointed as an arbitrator, prior accepting the designation, must disclose all circumstances that may give rise to justified doubts about his impartiality or independence with the parties.

  14. Are there any default requirements as to the selection of a tribunal?

    As stated above, the parties are free to agree the number of arbitrators and procedure to select them, but if one of them or both fail to nominate the arbitrators, the rules from article 1427 of the Commerce Code must be followed, which are the following:

    1. In cases with a sole arbitrator:

      • A judge will appoint the arbitrator upon request by either party.
    2. In cases with three arbitrators:
      • A judge will appoint the arbitrator if one party fails to nominate an arbitrator within 30 days of a request by the other party; or
      • A judge will appoint the arbitrator if both arbitrators named by the parties fail to agree on the third arbitrator within 30 days of their designation.
  15. Can the local courts intervene in the selection of arbitrators? If so, how?

    Yes, apart from the cases detailed in the question above, when in an appointment procedure agreed by the parties, one of them does not act as stipulated in such procedure, or the parties or two arbitrators cannot reach an agreement under the aforementioned procedure, or a third party, including an Institution, does not comply with any function conferred to it, any of the parties may request a judge to take the necessary measures to solve this matter.

  16. Can the appointment of an arbitrator be challenged? What are the grounds for such challenge? What is the procedure for such challenge?

    According to article 1428 of the Commerce Code, an arbitrator may be challenged only if there are circumstances that reasonably justify the existence of doubts regarding their impartiality or independence, or if they do not possess the qualities previously agreed upon by the parties.

  17. What happens in the case of a truncated tribunal? Is the tribunal able to continue with the proceedings?

    The Commerce Code establishes that in case an arbitrator does not participates in the proceedings or stop doing his duties, he can be removed from his duties upon a party request, and if there is a disagreement regarding this removal, either party can request the judge the termination of the arbitrator duties (article 1430).

    Apart from the above, according to articles 1446 and 1448 of the Commerce Code, even without the substitution of an arbitrator, the proceedings can continue since the president of the tribunal has the authority to decide proceeding matters without the vote of the other arbitrators (if parties previously agreed that way), and finally the award can be valid even if only has the majority of the signatures from the tribunal.

  18. Are arbitrators immune from liability?

    In strict sense, yes. Arbitrators are not liable by the consequences that may arise from the awards issued by them, since there are not existing legal provisions that foresee this circumstance, and because arbitrators are not considered as court officers or public officers who indeed are subject to liability for their actions.

    Notwithstanding the above, arbitrators can be responsible for damages caused by the grant of precautionary measures issued by them, this according to article 1480 of the Commerce Code.

  19. Is the principle of competence-competence recognised in your country?

    Yes, as said before the Commerce Code is based on UNCITRAL rules, and as in such rules, in Mexico the principle is recognised. In this sense, article 1432 of the Commerce Code states that arbitral tribunal shall be empowered to decide on its own jurisdiction, including on the exceptions concerning the existence or validity of the arbitration agreement.

  20. What is the approach of local courts towards a party commencing litigation in apparent breach of an arbitration agreement?

    According to article 1424 of the Commerce Code, the judge to whom a dispute is submitted on a matter that is subject of an arbitration agreement, shall refer the parties to arbitration at the time any of them request it, unless that it is proven that this agreement is null, ineffective or impossible to execute.

  21. How are arbitral proceedings commenced in your country? Are there any key provisions under the arbitration laws relating to limitation periods or time bars of which the parties should be aware?

    Proceedings are commenced following the rules of institutional arbitrations, by filing a request for arbitration and the appointment of an arbitral tribunal or in some specific cases with the appointment of a sole arbitrator.

    According to article 1047 of the Commerce Code, the ordinary prescription period is of 10 years to bring up an arbitration claim, nevertheless, shorter periods exist for specific claims.

  22. In what circumstances is it possible for a state or state entity to invoke state immunity in connection with the commencement of arbitration proceedings?

    No, in Mexico the states and state´s entities are under an equal status with any other party in judicial proceedings.

    Notwithstanding the above, there are specific circumstances (as mentioned in answer 11) in which arbitration is excluded.

  23. What happens when a respondent fails to participate in the arbitration? Can the local courts compel participation?

    If one of the parties fail to participate in the arbitration proceedings, the arbitral tribunal shall continue with the proceedings and issue a final award based on the information and documentation presented by the party that indeed participate. Despite from the above, the failure of participating does not mean an acceptance of the claim brought by the claimant, this according to article 1441 of the Commerce Code.

    As well, local courts are unable to compel parties to participate in arbitration proceedings.

  24. Can local courts order third parties to participate in arbitration proceedings in your country?

    Third parties or non-signatories cannot be bound by an arbitration agreement, and local courts do not have faculties to order them to participate in arbitration agreements because consent is a non-voidable requirement under Mexican law to be bound by an arbitration agreement.

  25. What interim measures are available? Will local courts issue interim measures pending the constitution of the tribunal?

    According to article 1433 of the Commerce Code, unless otherwise agreed by the parties, the arbitral tribunal may, at the request of any of them, order the adoption of the necessary precautionary measures regarding the object of litigation. The arbitral tribunal may require from either party a sufficient guarantee in relation to those measurements.

    Local courts are also capable of granting these measures, at the request of any of the parties, prior to arbitration proceedings or during its course, and the local judge has complete discretion to adopt any measures that may deem appropriate. This according to articles 1425 and 1478 of the Commerce Code.

  26. Are there particular rules governing evidentiary matters in arbitration? Will the local courts in your jurisdiction play any role in the obtaining of evidence? Can local courts compel witnesses to participate in arbitration proceedings?

    The Commerce Code, in its article 1435, states that the parties may freely agree on the procedure they want to be followed in the arbitration and in the absence of this agreement the arbitral tribunal has the liberty to conduct the proceedings as it may deem appropriate, this including evidentiary matters.

    Pursuant to article 144 of the Commerce Code, local courts can assist the tribunal in the filing of evidence, if the arbitral tribunal or any of the parties, with the approval of the tribunal, request so.

  27. What ethical codes and other professional standards, if any, apply to counsel and arbitrators conducting proceedings in your country?

    Even there are no mandatory ethical codes that arbitrators or counsel need to follow, it is a duty for arbitrators, according to the Commerce Code, to be independent of the parties and to act with impartiality.

    Apart from the above, there are respected organizations, like the Mexican Bar Association hat has its own ethical code, which is usually followed by counsels and arbitrators.

  28. In your country, are there any rules with respect to the confidentiality of arbitration proceedings?

    Arbitral institutions in Mexico have their own rules that are very clear and stipulate matters of costs and duration. However, it is also stipulated that all awards, orders, and materials submitted by a party in the course of an arbitral proceeding are to be kept confidential, unless agreed otherwise by the parties.

  29. How are the costs of arbitration proceedings estimated and allocated?

    According to article 1455 of the Commerce Code, the costs of the arbitration shall be borne by the defeated party. However, the arbitral tribunal may divide the elements of these costs between the parties if it decides that the apportionment is reasonable, taking into account the circumstances of the case.

    Regarding the cost of representation and legal assistance, the arbitral tribunal will decide, taking into account the circumstances of the case, which party must pay such cost or may apportion it among the parties if it decides that is reasonable.

  30. Can pre- and post-award interest be included on the principal claim and costs incurred?

    The arbitrators can award interests only if the parties requested it during the proceedings and according to the rate established in such request, but if the interest’s rates were not specified, the interest’s rates stated in the law applies. For this matter, the Commercial Code, pursuant to article 362, states an annual legal rate of 6%.

  31. What legal requirements are there in your country for the recognition and enforcement of an award? Is there a requirement that the award be reasoned, i.e. substantiated and motivated?

    Pursuant to article 1448 of the Commerce Code, the award must be in writing and will be signed by the arbitrator (s). In proceedings with more than one arbitrator, the signatures of the majority of the members of the arbitral tribunal shall suffice, provided that the reasons for the lack of one or more signatures are recorded.

    The award of the arbitral tribunal must be reasoned, unless the parties have agreed otherwise, or it is an award pronounced in the terms agreed by the parties in accordance with article 1447 of the Commerce Code.

    The date on which it was issued, and the place of the arbitration determined in the award shall be included in the award, in accordance with the first paragraph of article 1436. The award shall be deemed to be issued in that place.

    After the award is rendered, the arbitral tribunal will notify each of the parties by delivery of a copy signed by the arbitrators.

  32. What is the estimated timeframe for the recognition and enforcement of an award? May a party bring a motion for the recognition and enforcement of an award on an ex parte basis?

    There is no timeframe established in the Commerce Code for recognition ad enforcement of awards. The award needs no validation from another body. However, an enforcement action may be brought before the Mexican courts if a party refuses to comply with the award.

  33. Does the arbitration law of your country provide a different standard of review for recognition and enforcement of a foreign award compared with a domestic award?

    No, it treats them equally, since Mexico is a signatory party of the New York Convention, the Inter-American Convention of Extraterritorial Validity of Foreign Judgments and Arbitral Awards (Montevideo Convention), and the Inter-American Convention on International Commercial Arbitration (Panama Convention).

  34. Can arbitration awards be appealed or challenged in local courts? What are the grounds and procedure?

    Awards cannot be appealed but, as mentioned in the above answer, the parties can request the annulment of an award, request that must be done within three months of the date that notice is given of the award.

    Pursuant to article 1457 of the Commerce Code, awards can only be annulled, when the party requesting the annulment can be able to prove:

    1. One of the parties to the arbitration agreement was affected by some disability, or that said agreement is not valid under the law to which the parties have submitted it, or if nothing had been indicated to that respect under Mexican law;
    2. It was not duly notified of the appointment of an arbitrator or of the arbitration proceedings, or not he could, for any other reason, assert his rights;
    3. The award refers to a dispute not foreseen in the arbitration agreement or contains decisions that exceed the terms of the arbitration agreement. However, if the provisions of the award that are refer to the issues submitted to arbitration can be separated from those that are not, only the latter can be cancelled; or
    4. The composition of the arbitral tribunal or the arbitral procedure were not adjusted in accordance with the agreement between the parties, unless such agreement conflicts with a provision of the Commerce Code regarding the specifications for arbitral proceedings.

    As well, the award can be annulled if the judge verifies that according to the Mexican legislation, the object of the controversy is not subject to arbitration, or that the award is contrary to public policy.

  35. Can the parties waive any rights of appeal or challenge to an award by agreement before the dispute arises (such as in the arbitration clause)?

    There is no precedent for this matter under Mexican legislation, nevertheless, if an award annulment is based on grounds that prove it is contrary to public policy, these considerations cannot be waived by the parties.

  36. To what extent might a state or state entity successfully raise a defence of state or sovereign immunity at the enforcement stage?

    As stated before, under Mexican legislation, the states and state´s entities are under an equal status with any other party in judicial proceedings, therefore they cannot claim immunity in any stage of the arbitration.

  37. In what instances can third parties or non-signatories be bound by an award? To what extent might a third party challenge the recognition of an award?

    As said before, in general, arbitral awards do not bind third parties, who will likewise lack the capacity to challenge the recognition of awards.

  38. Have courts in your jurisdiction considered third party funding in connection with arbitration proceedings recently?

    No, under Mexican legislation there are no provisions regarding third party funding and have not been any significant developments on this matter. However, this is not a forbidden practice.

  39. Is emergency arbitrator relief available in your country? Is this frequently used?

    Under the provisions of the Commerce Code, the figure of emergency arbitrator does not exist, nevertheless, this figure can be used when the parties agreed to submit the arbitration under the ICC Rules.

  40. Are there arbitral laws or arbitration institutional rules in your country providing for simplified or expedited procedures for claims under a certain value? Are they often used?

    Yes, for example CANACO and CAM, both have rules for expedited procedures. The first one has an “accelerated arbitration” which is designed for claims under $1´500,000.00 Mexican pesos.

    For the second one, article 42 of its rules, contemplate a “Abbreviated procedure”, which establishes that the parties may agree to shorten the time limits set out in the CAM´s Rules, subject to approval of the arbitral tribunal.

  41. Have measures been taken by arbitral institutions in your country to promote transparency in arbitration?

    Arbitral institutions in Mexico have their own rules that are very clear and stipulate matters of costs and duration. However, it is also stipulated that all awards, orders, and materials submitted by a party in the course of an arbitral proceeding are to be kept confidential, unless agreed otherwise by the parties.

  42. Is diversity in the choice of arbitrators and counsel (e.g. gender, age, origin) actively promoted in your country? If so, how?

    There are no specific actions of promotion regarding diversity in the choice of arbitrators and counsel, nevertheless, diversity and equality are topics that are well implemented under Mexican legislation matters, especially because there are laws against discrimination that also protect human rights.

    In this sense, no limitative clauses exist regarding gender, race, sexual preference or religion and the parties are free to choose anyone with the required qualifications and necessary experience.

  43. Have there been any recent court decisions in your country considering the setting aside of an award that has been enforced in another jurisdiction or vice versa?

    No, there is no precedent of any awards that have been set aside in Mexico.

  44. Is corruption an issue that is regularly raised in your jurisdiction? What standard do local courts apply for proving of corruption?

    Like in many other countries, corruption is an issue that has been addressed several times by the various administrations that have been in power throughout Mexico´s history, discussions that concluded in the creation of the National Anticorruption System in 2016 as well as the General Law for the National Anticorruption System in order to:

    • Establish the minimum bases for the prevention of acts of corruption and administrative penalties.
    • Create coordinating mechanisms throughout the various organisms dedicated to combating corruption both at a Federal and Local capacity.
  45. Have there been any recent court decisions in your country considering the definition and application of “public policy” in the context of enforcing or setting aside an arbitral award?

    Yes, the First Chamber of the Mexican Supreme Court has stated that it is required a high standard to set aside an award on public policy grounds, it ruled that an award breaches public policy when:

    1. It is beyond the legal institutions of the State, the principles, norms and institutions forming it; and
    2. Transcends the community because of the offensive and serious misconduct committed in the decision.
  46. Have there been any recent court decisions in your country considering the judgment of the Court of Justice of the European Union in Slovak Republic v Achmea BV (Case C-284/16) with respect to intra-European Union bilateral investment treaties or the Energy Charter Treaty? Are there any pending decisions?

    No, there is no precedent of any awards in Mexico considering that judgement.

  47. Have there are been any recent decisions in your country considering the General Court of the European Union’s decision Micula & ors (Joined Cases T-624/15, T-694/15 and T-694.15), ECLI:EU:T:2019:423, dated 18 June 2019? Are there any pending decisions?

    No, there is no precedent of any awards in Mexico considering that judgement.