Commercial Arbitration: Mexico

Mexico did not make a reservation upon ratification, and thus the New York Convention applies in all of its terms throughout Mexico.

Yes, Mexico is a party to several bilateral and multilateral treaties regarding the recognition and enforcement of arbitral awards other than the New York Convention. Some of these treaties are:

• Inter-American Convention on International Commercial Arbitration (Panama Convention) – Mexico is a party to this convention, which was adopted in 1975 by the Organization of American States (OAS). The convention provides a framework for the recognition and enforcement of arbitral awards among the member states of the OAS, and is similar in many respects to the New York Convention.
• Free trade agreements (FTAs) – Mexico has entered into several FTAs that contain provisions regarding the recognition and enforcement of arbitral awards. For example, the North American Free Trade Agreement between Mexico, the United States, and Canada, contains a chapter on dispute settlement that provides for the recognition and enforcement of arbitral awards.
• Bilateral Investment Treaties (BITs) – Mexico has signed a number of BITs with other countries that include provisions for the resolution of disputes through international arbitration and the recognition and enforcement of arbitral awards.
• Pacific Alliance Framework Agreement – Mexico is a member of the Pacific Alliance, a regional integration initiative with Chile, Colombia and Peru. The member states have signed a framework agreement that includes provisions for the recognition and enforcement of arbitral awards.

Overall, Mexico has shown a strong commitment to the recognition and enforcement of arbitral awards, both through its participation in international conventions and through its network of bilateral and multilateral agreements.

• The Mexican Chapter of the International Chamber of Commerce (ICC Mexico): ICC Mexico administers international commercial arbitrations and acts as an appointing authority for arbitrators.
• The Arbitration Center of Mexico (CAM): CAM is a private arbitration institution that administers both domestic and international arbitrations and provides services such as appointing arbitrators, assisting with the selection of venues and managing arbitral proceedings.
• The Center for Mediation and Commercial Arbitration (CANACO): CANACO is an arbitration institution that administers both domestic and international arbitrations and acts as an appointing authority for arbitrators.

All of these bodies are recognised in Mexico as reputable institutions for the resolution of international commercial disputes through arbitration. They all have experienced arbitrators on their panels and provide a range of services to parties involved in arbitral proceedings.

In addition, these bodies, also act as appointing authorities, which means they can assist parties in the appointment of arbitrators in cases where the parties are unable to agree on an arbitrator themselves.

In fact, many international arbitral institutions, such as the International Chamber of Commerce (ICC), or the Inter-American Commission of Commercial Arbitration have offices in Mexico or work with local organisations to administer arbitrations in the country. Nevertheless, the Mexican Commerce Code does not distinguish between institutions that have a physical presence in Mexico and those that do not, nor does it govern the institutions themselves. In this vein, all of the renowned arbitral institutions around the world administer cases involving Mexican law, Mexican parties or Mexican arbitrators.

The Mexican judiciary is generally familiar with and supportive of the law and practice of international arbitration. Mexico has a relatively strong legal framework for international arbitration, based on the UNCITRAL Model Law. The country has also ratified several international treaties and conventions related to arbitration, including the Convention on the New York Convention.

In recent years, Mexico has made significant efforts to promote arbitration and improve its legal framework. The country has taken steps to modernise its arbitration law, educate its judiciary, render legal decisions that reflect the pro-arbitration spirit of its laws, and encourage the use of arbitration as a preferred method of resolving disputes.

Furthermore, Mexican case law holds that an arbitration agreement must clearly indicate the parties’ intent to submit their disputes to arbitration and the scope of the disputes covered by the agreement.

In addition to the non-arbitrable disputes, the following types of disputes are generally considered to be reserved for resolution by the Mexican courts:

• Constitutional disputes: Disputes related to constitutional matters, such as challenges to the constitutionality of a law or administrative act, are generally considered to be reserved for the Mexican courts.
• Criminal matters: Criminal matters, including criminal investigations, trials and penalties, are generally considered to be outside the scope of arbitration.
• Insolvency proceedings: Disputes arising from insolvency proceedings are generally reserved for the Mexican courts.
• Labour disputes: Labour disputes, such as those related to collective bargaining agreements, strikes and unfair labour practices, are typically resolved through Mexico’s specialised labour courts.

It is worth noting that there may be exceptions or qualifications to these general rules depending on the specific circumstances of each case, and the parties may be able to agree to submit some of these disputes to arbitration as permitted by Mexican law. 

Under Mexican law, a third party cannot be bound by an arbitration agreement unless that third party has expressly agreed to be bound by the agreement or is deemed to have consented to arbitration.

Express consent may be given in a number of ways, such as by signing an agreement that contains an arbitration clause, or by later agreeing in writing to submit a dispute to arbitration. Implied consent may be found in situations where the third party has actively participated in the underlying transaction or has otherwise taken actions that indicate acceptance of the arbitration clause.

If a third party is bound by an arbitration agreement, that party may be required to participate in the arbitration proceedings as a party to the agreement. Third parties may participate in the arbitration process through joinder, which is the process of adding a new party to the arbitration proceedings with the consent of the existing parties and the new party. Alternatively, a third party may be brought into the proceedings through a third-party notice, which is a legal mechanism that allows a party to bring in a third party that is potentially liable for the dispute.

It is important to note that the rules governing the joinder of third parties and the use of third-party notices may vary depending on the specific arbitration rules or procedures that the parties have agreed to use.

If these conditions are met, the arbitral tribunal may order the consolidation of separate arbitral proceedings. This may be done by ordering the joint hearing of the proceedings, the appointment of a single arbitral tribunal to hear all of the disputes, or any other appropriate means.

It is important to note that the rules and procedures governing the consolidation of arbitral proceedings may vary depending on the specific arbitration rules or procedures that the parties have agreed to use, or on the discretion of the arbitral tribunal.

Yes, under Mexican law, arbitration clauses are generally considered to be separable from the main contract. This means that an arbitration clause can be enforced even if the main contract is found to be invalid or unenforceable.

The separability of an arbitration clause is recognised in article 1432 of the Mexican Commerce Code, which provides that an arbitration agreement is an independent agreement that is separate from the underlying contract. The article states that the validity or invalidity of the main contract does not affect the validity of the arbitration agreement, unless the invalidity of the main contract is due to a defect in the arbitration clause itself. The separability of an arbitration clause is also recognised in Mexican case law.

Yes, the principle of competence-competence is recognised in Mexico. This principle refers to the ability of an arbitral tribunal to rule on its own jurisdiction, including the validity and scope of the arbitration agreement.

According to article 1432 of the Mexican Commerce Code, a party may raise objections to the arbitral tribunal's jurisdiction and competence, but the tribunal has the power to rule on these objections. If a party raises an objection, the tribunal may decide on the issue as a preliminary matter before proceeding with the merits of the dispute.

Institutional international arbitration is generally more common than ad hoc international arbitration in Mexico. This is because parties may prefer to have an established arbitral institution administer their arbitration, which can provide a range of services, including appointing arbitrators, managing the arbitration process, and enforcing awards. Institutional arbitration can also provide parties with greater certainty and predictability in terms of the arbitration process and the application of procedural rules.

That being said, ad hoc international arbitration is also used in Mexico, particularly in cases where the parties prefer more flexibility and control over the arbitration process. Ad hoc arbitration allows parties to tailor the arbitration to their specific needs and circumstances, without being bound by the procedural rules of an institution.

The UNCITRAL Rules are commonly used in ad hoc international arbitrations in Mexico. These rules provide a well-established framework for ad hoc arbitrations, including procedures for initiating the arbitration, selecting arbitrators, conducting the proceedings, and rendering an award. 

The Mexican Commerce Code does not regulate multi-party arbitration agreements in a different manner to an ordinary arbitration agreement. Nevertheless, parties may consider advisable to include in multi-party arbitration agreements the rules related to joinder and consolidation, or reference to arbitration rules that foresee such circumstances.

If the multi-party arbitration agreements are contained in different contracts, it is important that the same arbitration agreement is replicated across such contracts, or at least in arbitration agreements that are compatible among them.

In Mexico, the substantive law of the dispute is determined by the parties themselves, who are free to choose the applicable law to govern their contract and the disputes arising therefrom. This choice of law may be made in the contract itself or in a separate agreement.

If the parties have not expressly chosen the applicable law, the arbitral tribunal will determine the substantive law of the dispute based on the conflict of law rules that apply in Mexico. Mexican conflict of law rules require the tribunal to look at various factors, such as the place of the contract’s formation, the place of performance, and the parties' nationality, among others, to determine the law that is most closely connected to the contract and the dispute.

If the applicable law remains unclear, the arbitral tribunal may also resort to general principles of law, such as the principles of equity, justice and fairness, to determine the dispute.

It is worth noting that when deciding on the applicable law, the arbitral tribunal must also consider any mandatory rules of Mexican law that may apply to the dispute, regardless of the choice of law made by the parties.

According to the Federal Law of Arbitration in Mexico, an arbitrator must be impartial and independent, and must not have any conflict of interest with the parties or the dispute at hand. Therefore, a party’s choice of arbitrator is subject to these requirements, and any arbitrator who does not meet these requirements may be challenged by the other party.

Yes, non-nationals can act as arbitrators in Mexico, even if the seat of the arbitration is in Mexico or the hearings are held there. There are no specific legal requirements under Mexican law that limit the appointment of non-national arbitrators, and the Mexican Commerce Code expressly provides that arbitrators may be of any nationality.

However, non-nationals who are appointed as arbitrators and who are not residents of Mexico may be subject to certain immigration requirements to enter the country and participate in the arbitration proceedings. In particular, they may need to obtain a visa or work permit, depending on the duration and nature of their participation in the proceedings.

The request to the court for the appointment of an arbitrator shall be made within 30 days from the date on which the party was to appoint the relevant arbitrator. Such term also applies for cases of request to a court for the appointment of the chairman of a tribunal.

The Mexican Commerce Code does not provide general immunity to arbitrators. Nevertheless, according to principles of damages in Mexico, in principle, an arbitrator would only be responsible for their acts as arbitrators if there is bad faith or gross negligence.

In connection with interim measures, article 1480 of the Mexican Commerce Code established that arbitrators shall be responsible for damages and loss profits arising from interim measures granted by them.

Under Mexican law, interim relief can be granted by both the arbitral tribunal and the courts. The types of interim relief that are available in respect of international arbitration under Mexican law include measures to maintain or restore the status quo, preservation of assets, interim injunctions, and security for costs.

The arbitral tribunal can grant interim relief under article 1433 of the Commerce Code, which provides that the tribunal may, at the request of a party, order interim measures that it considers necessary to safeguard the rights of the parties. The tribunal has the power to order any interim relief that it considers appropriate, including measures to maintain or restore the status quo, preservation of assets, interim injunctions, and security for costs.

In addition to the arbitral tribunal, the Mexican courts can also grant interim relief under articles 1478 and 1425 of the Commerce Code. Article 1478 provides that a local judge has broad discretion to adopt any interim measures in support of arbitration proceedings.

Article 1425 provides that a party may request interim measures from the court before or during the arbitration proceedings. Such measures may include measures to maintain or restore the status quo, preservation of assets, interim injunctions, and security for costs.

While the Commerce Code provides Arbitral Tribunals with broad discretion to issue any interim measures in support of arbitration, anti-suit injunctions have been interpreted by federal courts as illegal and contrary to article 1424 of said Commerce Code, as well as unconstitutional.

In Mexico, the applicable law regarding a respondent’s failure to participate in an arbitration can be found in article 1441 of the Commerce Code.

According to article 1441, if a respondent fails to participate in an arbitration, the arbitration proceedings will continue without them, and an award may be rendered based on the evidence presented by the claimant. The arbitrators must notify the respondent of the proceedings and give them an opportunity to present their case, but if the respondent fails to do so, the arbitrators may continue the proceedings and issue an award.

It is important to note that this provision does not mean that the respondent loses their right to participate in the proceedings or to challenge the award later. If the respondent can show good cause for their failure to participate, they may be able to challenge the award through a request for annulment or by other means.

Article 1444 establishes that during an arbitration proceeding, the parties may request assistance from the competent judge to obtain evidence, either through a petition to the arbitral tribunal or by a direct request by any of the parties.

In Mexico, there is no specific law or prevailing practice governing document production in international arbitration. However, the parties and the tribunal may agree on the scope and modalities of document production in the arbitration agreement or during the course of the proceedings.

In practice, the parties may exchange documents voluntarily, or the tribunal may order the production of documents at the request of a party. The tribunal may also set out specific guidelines and timelines for the production of documents and may impose sanctions for non-compliance.

The Mexican Commercial Code, which governs commercial arbitrations in Mexico, does not expressly require a final hearing on the merits in an arbitration. However, it does provide for the principle of due process and the right to be heard, which includes the right to present evidence and arguments.

Article 1440 of the Mexican Commerce Code provides the arbitral tribunal (absent an agreement of the parties) the discretion to determine the necessity to hold a hearing for the offering of evidence and oral arguments.

Therefore, while the Mexican Commercial Code does not specifically require a final hearing on the merits, it does provide for the right to be heard and to present evidence and arguments, which can include a hearing if the parties so choose or if the arbitrators deem it necessary. Ultimately, the decision on whether to hold a final hearing on the merits will depend on the specific circumstances of the case and the agreement of the parties, as well as any applicable arbitration rules.

Under the Commerce Code, dissenting opinions are not explicitly prohibited in arbitration, and thus are permitted. In fact, the Code provides for parties to choose their arbitrators and allows them to agree on the procedure for the arbitration, which could potentially include provisions for dissenting opinions.

However, the practice of including dissenting opinions in arbitration awards is not very common. This is because arbitration is generally viewed as a consensual process where the parties have chosen to resolve their dispute outside of the courts. As such, there is a strong emphasis on finality and efficiency in the arbitration process, and including dissenting opinions could potentially undermine these goals.

Article 1448 of the Commerce Code establishes that an arbitration award must be in writing and signed by the arbitrator or arbitrators. Unless agreed otherwise, the award must also state the reasons for the decision reached and the date and place where it was rendered.

Additionally, the award must meet the following conditions to be enforceable:

• The award must be rendered within the time limit established in the arbitration agreement or by law.
• The award must not violate Mexican public policy.
• The award must decide a dispute contained within the relevant arbitration agreement and which is considered as arbitrable by Mexican courts.
• The award must be duly notified to the parties in accordance with the arbitration agreement or by law.

Under the Commerce Code of Mexico, parties to an arbitration should be aware of certain time limits that govern the interpretation and correction of an arbitral award.

In particular, article 1450 of the Mexican Commerce Code provides that parties may request the arbitral tribunal to interpret or explain any part of the award, as well as correct errors in computation, any clerical or typographical errors, or any other errors of a similar, within 30 days of the date on which the award was notified to the parties. This request must be made in writing, and the tribunal must consider the request within thirty days of receipt. If the tribunal finds the request justified, it may issue an interpretation or explanation of the award.

Similarly, article 1451 of the Mexican Commerce Code provides that parties may request the arbitral tribunal to issue an additional award regarding remedies or petitions that were part of the proceedings but failed to be referred in the award.

It is important to note that these time limits are mandatory and failure to comply with them may result in the loss of the right to request interpretation or correction of the award. Therefore, parties should be aware of these time limits and act promptly if they wish to seek interpretation or correction of an arbitral award.

Furthermore, petitions to vacate an award shall be filed within three months of the moment in which the award was notified to the parties.

Under the Mexican Commerce Code, parties to an arbitration may be able to recover fees and costs incurred in the arbitration, and the “loser pays” rule generally applies. In this vein, article 1452 recognises that parties are able to agree on the use of such formula by reference to arbitration rules or by agreeing to it in the relevant arbitration agreement or as part of the procedural agreements during the course of the arbitration. Article 1453 of the Commerce Code provides that the arbitral tribunal shall fix the costs of the arbitration in the award.

Yes, interest can be included on the principal claim and costs in an arbitration award rendered in Mexico. The Mexican Commercial Code provides for the payment of interest on the principal claim and costs in commercial disputes, including those resolved through arbitration.

The Mexican Commercial Code sets the mandatory interest rate on commercial claims at 6 per cent per year, unless the parties have agreed to a different rate in the underlying contract or otherwise.

In Mexico, there are limited grounds on which an arbitral award may be vacated before the courts. The grounds for vacating an award are set out in the Mexican Commercial Code (which follows the UNCITRAL Model Law) and include:

• Procedural irregularities: An arbitral award may be vacated if there were procedural irregularities during the arbitration that affected the outcome of the case, such as a lack of due process or a violation of the parties’ rights.
• Lack of legal capacity of any of the parties or invalidity of the arbitration agreement: An arbitral award may be vacated if any of the parties that entered into the arbitration agreement was affected by any lack of capacity or if the relevant agreement is invalid under the applicable law.
• Excess of power: An arbitral award may be vacated if the arbitrator exceeded their power or acted outside the scope of their authority. For example, if the arbitrator made a decision on a matter that was not submitted to arbitration, or if the arbitrator decided on an issue that was expressly excluded from arbitration by the parties.
• Failure to notify the parties: An arbitral award may be vacated if any party was not duly notified of the appointment of an arbitrator, decisions of the arbitral tribunal, or was unable – for whatever reason – to exercise its rights.
• Conflict with public policy or inarbitrability: An arbitral award may be vacated if it conflicts with Mexican public policy, or the subject matter is not allowed to be referred to arbitration. This ground is interpreted narrowly and is only applicable in exceptional cases, such as where the award violates fundamental principles of Mexican law.

Article 1462 of the Mexican Commerce Code states that an arbitral award may deny enforcement in Mexico of an award that has been set aside or suspended by a court at the seat of arbitration.

Therefore, Mexican courts have discretion to deny enforcement of an award that has been set aside or suspended in the courts of the seat of arbitration and shall be determined on a case-by-case basis.

In recent years, there has been a trend in Mexican courts towards greater recognition and enforcement of arbitral awards. Mexican courts have generally shown a willingness to enforce foreign arbitral awards.

Mexican courts have held that awards that violate Mexican public policy cannot be enforced in Mexico. However, the Mexican Supreme Court has stated that the public policy exception should be narrowly construed and should only be invoked in exceptional circumstances.

Overall, the prevailing approach of Mexican courts in recent years has been to uphold the finality and enforceability of arbitral awards, consistent with Mexico's obligations under international treaties and conventions such as the New York Convention. However, the specific approach of Mexican courts in any given case will depend on a variety of factors, including the particular facts of the case and the applicable law and regulations.

Under Mexican law, there is no express provision mandating confidentiality in arbitral proceedings. However, parties to an arbitration agreement may agree to keep the proceedings confidential. Many institutional rules, including those of Mexican arbitration institutions, provide for confidentiality of the arbitral proceedings, and parties can also agree to confidentiality provisions in their arbitration agreement.

However, it's worth noting that the confidentiality of arbitral proceedings may not be absolute, and certain exceptions may apply. For example, disclosure may be required by law or by a court order, or a party may be entitled to disclose certain information in order to protect its legal rights or interests.

Overall, the extent of confidentiality in arbitral proceedings in Mexico will depend on the parties' agreement and the applicable arbitration rules, and parties should consider including specific provisions in their arbitration agreement to address confidentiality and the circumstances under which disclosure may be required.

In Mexico, ethical rules are not provided in the Mexican Commerce Code. Nevertheless, both counsel and arbitrators are generally subject to ethical codes and professional standards that govern their conduct in arbitral proceedings.

For counsel, the Mexican Bar Association has issued an Ethical Code of Conduct for lawyers that includes rules on confidentiality, conflict of interest, candor with the tribunal, and other aspects of professional conduct.

For arbitrators, the Mexican Commerce Code provides that they must act with independence, impartiality and competence, and that they must disclose any conflicts of interest that may arise during the arbitration proceedings. The Code also requires arbitrators to conduct the proceedings fairly and efficiently, and to treat the parties equally.

In addition to these general ethical standards, there are various international codes and guidelines that provide guidance for arbitrators and counsel in arbitral proceedings. For example, the International Bar Association (IBA) Guidelines on Conflicts of Interest in International Arbitration provide guidance on the identification and management of conflicts of interest for arbitrators, counsel, and party-appointed experts. The IBA also has Guidelines on Party Representation in International Arbitration, which set out standards for the conduct of counsel in international arbitration.

Third-party funding is generally permitted in Mexico for arbitration, but there are currently no specific rules governing its use.

In recent years, third-party funding has become more common in international arbitrations taking place in Mexico, particularly in complex disputes involving significant financial stakes. Third-party funding can be an attractive option for claimants who lack the resources to pursue their claims effectively or for respondents who want to manage the financial risks associated with defending against a claim.

While there are no specific rules governing third-party funding in Mexico, there are some general ethical considerations that counsel and arbitrators should be aware of. For example, the Mexican Bar Association’s Ethical Code of Conduct for lawyers includes rules on conflict of interest, candor with the tribunal, and other aspects of professional conduct that could be relevant to third-party funding arrangements. Counsel and arbitrators should also be aware of any disclosure requirements that may apply under the rules of the relevant arbitral institution or under the Mexican Commerce Code.

In addition, the lack of specific rules governing third-party funding in Mexico means that there may be some uncertainty as to how such arrangements will be treated in the event of a challenge to the arbitral award or at the enforcement stage. However, given the increasing acceptance of third-party funding in international arbitration and the fact that it is not prohibited under Mexican law, it is likely that Mexican courts would uphold third-party funding arrangements absent any evidence of fraud or other misconduct.