|Free Trade Area of the Americas - FTAA
FTAA – NEGOTIATING GROUP ON DISPUTE SETTLEMENT
1. International Agreements
Is the jurisdiction a party to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, done at New York on 10 June 1958 (New York Convention). If so, are there any reservations? Name the domestic law that implements these commitments.
Mexico is a party to the New York Convention without reservations. In accordance with the Political Constitution of the United Mexican States1, international treaties signed by Mexico are the supreme law of the union, and thus part of domestic legislation.
Mexico is not party to the above-mentioned agreements. However, Mexico provides for dispute settlement mechanisms in the area of investment, which guarantee equitable treatment for investors in accordance with the international principle of reciprocity and due process. These mechanisms are established in NAFTA and in other free trade treaties with certain Latin American countries, as well as in bilateral investment agreements signed with Spain (June 22, 1995), Switzerland (July 10, 1995), Argentina (November 13, 1996), and in treaties signed recently with Germany (August 25, 1998), Austria (June 29, 1998), France (November 12, 1998), Finland (February 22, 1999), Italy (November 24, 1999, Uruguay (June 30, 1999), Portugal (November 11, 1999), Denmark (April 13, 2000) and The Netherlands (May 13, 1998).
Mexico is a party to the Convention on Inter-American Convention on International Commercial Arbitration since April 26, 1978 when Mexico ratified the convention and it entered into force for Mexico the day following ratification. (As mentioned above, pursuant to Mexican law, treaties or conventions do not require implementing legislation.)
Mexico is a party to the Inter-American Convention on Extraterritorial Validity of Foreign Judgments and Arbitral Awards (Montevideo Convention), as well as the Convention on the Recognition and Enforcement of Foreign Arbitral Awards of 1958 (New York Convention). Likewise, there are provisions regarding arbitration, requiring the observance of arbitral conventions on the recognition and enforcement of foreign arbitral awards in the following free trade treaties: NAFTA, Chile, Costa Rica, Israel, Northern Triangle, Nicaragua, G-3.
a. What is the source of law for international commercial arbitration within your jurisdiction? Please cite.
The source of law is the Commercial Code (CoC) and the international treaties on arbitration subscribed to by Mexico and case law. The substantive provisions on commercial arbitration are established in the Commercial Code, Book V, Title VI based on the UNCITRAL Model Law.
b. Does the law contain different rules for domestic and international arbitration?
There are no differences as the Commercial Code states that the provisions thereof on commercial arbitration “shall apply to national and international commercial arbitration when the site of arbitration is in the national territory, except as provided in international treaties to which Mexico is a party.
Although the Commercial Code recognizes and enforces arbitral awards, said awards can be set aside, inter alia, when the claim is not a matter subject to arbitration under Mexican legislation2. The Commercial Code does not contain specific provisions on limitations on disputes that can be submitted to arbitration. However, certain limitations are established in other legislation.
As a general rule any private dispute may be settled by arbitration provided the law does not stipulate otherwise. The law generally prohibits certain matters from submission to arbitration when the State or society has a direct interest (public interest) or when a third party is affected3, unless there is express authorization to do so. The Federal Code of Civil Procedure states that the following matters may not be subject to arbitration4:
d. Does the law specify rules for arbitration or do the parties have autonomy to set their rules?
In principle, the parties are completely free to define the procedure to be followed by the arbitral tribunal, subject to the provisions of the Commercial Code on commercial arbitration. The autonomy of the parties to define procedural rules includes the power to authorize a third party, including an institution, to decide the dispute.
As a general rule, matters governed by commercial arbitration shall not require judicial intervention, unless otherwise provided.5 Courts intervene solely upon petition for nullifying the award or when enforcement of an award is sought. However a judge may intervene in the proceeding at the request of a party when interim relief is sought and the competent body to hear the case is the federal court of first instance or the common law of the place where the arbitration takes place6.
f. Can the courts grant interim relief pending the outcome of an arbitration?
g. Does the law require citizenship or a particular bar membership for participation in an arbitral proceeding, as arbiter or representative of a party?
Only lawyers (national or foreign) who are licensed to practice in Mexico have the right to representation. There are, however, no limitations that prevent foreign lawyers from providing legal advice when they have a license to practice, solely during the arbitral proceeding and not before national courts (e.g., to seek enforcement of an award or its nullity before national courts).
h. Does the law require that the proceedings be conducted in a particular language?
The parties may agree freely on the language or languages to be used in the arbitral proceedings. In the absence of agreement, the arbitral tribunal determines the language or languages to be used during the proceedings. The arbitral tribunal may order that any documentary evidence be accompanied by a translation into one of the languages agreed to by the parties or determined by the arbitral tribunal 9.
i. Does the law have mandatory choice of law provisions?
There is no such provision. The Commercial Code states that the parties are free to agree on the procedure to which the arbitral tribunal must conform in its actions, and in the absence of such agreement, it is the tribunal that determines the procedure it shall follow10.
j. Does the arbitration law prescribe rules for decision making by the arbiters and the form of an award?
The Commercial Code establishes that the arbitral tribunal shall decide the dispute in accordance with the legal rules chosen by the parties. It is understood that any indication of the law or legal system of a particular country relates, unless otherwise stated, to the substantive law of that country and not to its rules on conflict of laws. If the parties do not indicate the law that should govern the substance of the dispute, the arbitral tribunal shall determine the applicable law, taking into account the characteristics and connections of the case11.
k. Is the confidentiality of arbitral proceedings and awards protected by law?
Confidentiality of arbitral proceedings is protected by the general rules on confidentiality contained in Mexican criminal law.
l. On what grounds will the courts set aside or decline to enforce an award?
The cases in which local courts may refuse enforcement or recognition of the arbitral award are the same as those for setting aside the award: lack of capacity of one of the parties, when one of the parties was not duly notified of the appointment of an arbitrator or of proceedings, when one the parties was not allowed to exercise his rights, when the award refers to a dispute not covered in the arbitration agreement, or exceeds the terms of the arbitration, so long as such circumstances may not be separated from the rest of the award, when the composition of the tribunal does not conform to what is agreed or provided for by the law of the country of arbitration, when the subject of dispute is not susceptible to arbitration, or its recognition and enforcement is contrary to public order and when the award is not yet binding on the parties or it has been set aside or suspended by the judge of the country in which, or in conformity with whose law, the award was made.12
m. What is the procedure for the enforcement of an award?
For the award, to be enforced the original award or certified copy of the arbitral award must be presented, as well as the original or certified copy of the arbitration agreement, both in Spanish or with a translation done by an official translator, together with a written petition to the judge13.
n. Please list any institutions available within your jurisdiction that provide international commercial arbitration services. Provide Internet address where available.
The most important institutions responsible for the administration and promotion of commercial arbitration in Mexico are: the Mexican section of the International Chamber of Commerce; Chamber of Commerce of Mexico City; Arbitration Center of Mexico (CAMEX), Commission for Protection of Foreign Trade (COMPROMEX-BANCOMEXT) and the Mexican Arbitration Center (CAM).
3. Alternative Forms of Dispute Resolution (ADR)
a. Are other forms of alternative dispute resolution (mediation, conciliation) available for the resolution of commercial disputes within your jurisdiction?
In Mexico, the most common method for the resolution of private commercial disputes, apart from the courts, is arbitration. Although mediation and conciliation are available, they are recognized less often. However, it should be noted that, in addition to arbitration, most of the free trade agreements contain provisions that promote the use of alternative forms of settlement of international commercial disputes.
b. Does the law or do the courts mandate or encourage the use of ADR in commercial disputes? Are there any legal impediments to using ADR for the resolution of commercial disputes?
ADR are optional. Both mediation and conciliation are recognized as consensual processes that establish a forum in which an impartial third party (the mediator or conciliator) facilitates communication between the parties in order to reach a mutually satisfactory agreement. Apart from arbitration, Mexican legislation says little about alternative forms of dispute resolution. However, there are some instances where a conciliation proceeding is a compulsory prerequisite for access to domestic tribunals such as the National Commission of Insurance and Sureties.
c. Can courts enforce agreements to mediate or use other forms of non-binding dispute resolution in commercial disputes?
Unlike arbitration, where the award is binding on the parties, in mediation and conciliation, the parties are not bound by the agreement proposed by the conciliator or mediator. Although commercial or civil legislation does not refer to ADR, an agreement reached by the parties as result of mediation or conciliation can be legally recognized. The parties involved in mediation or conciliation proceedings may seek legal recognition of the agreement through a settlement14.
d. Are there any organizations that specialize in ADR for commercial disputes not already mentioned?
The most important institutions responsible for the administration and promotion of commercial arbitration in Mexico and other ADR are: the Mexican section of the International Chamber of Commerce; Mexican Institute of Mediation; Chamber of Commerce of Mexico City; Arbitration Center of Mexico (CAMEX), and the Mexican Arbitration Center (CAM). In the academic sector, the Legal Center of Inter-American Trade (ITESM) and the Legal Center for International Trade Studies (Pan-American University).
e. What rules govern confidentiality and admissibility of evidence in other proceedings?
There are no rules on confidentiality except for the general rules of criminal law. Similarly, although there are no rules on the submission of evidence, this can be regulated by an agreement between the parties.
4. Legal Sources and References
In addition to the references above is there an authoritative Internet site containing up-to-date information on dispute resolution facilities available in this jurisdiction?
Please list respected reference works relating to arbitration and ADR in your jurisdiction.