Since 11 March 2020 dispute resolution in Mexico has been significantly affected due to the COVID-19 crisis. In such exceptional circumstances, alternative dispute resolution has taken on greater importance, as it offers parties the chance to continue proceedings (with restrictions) as efficiently as possible without having to wait for the judicial branch to resume operations.
Over the past three decades, alternative dispute resolution (ADR) has increased in popularity to the point that most parties appear to prefer it to having the courts resolve their conflicts. The benefits of ADR are flexibility, reduced costs and the opportunity to actively participate in the resolution of the dispute. However, these benefits depend on the parties voluntarily honouring the commitments adopted during the ADR proceedings.
Precautionary measures are an essential way in which to preserve assets that are subject to dispute or ensure that a final award is enforceable. Arbitration offers many advantages over judicial proceedings. However, in practice, such measures need to be issued more quickly in order to achieve the objectives for which they are designed. Notably, under Mexican law, such measures are issued much faster and more effectively than those issued under the International Chamber of Commerce arbitration rules.
The Supreme Court has reviewed the power of judges regarding arbitration procedures and arbitral awards issued under the terms of the Commerce Code, and the effects of resolutions ex aequo et bono or as amiable compositeur (ie, based on what is fair and just, rather than on the letter of the law). However, the court's arguments regarding resolutions ex aequo et bono have met with some criticism.
Including: Sources of law; Institutions; Arbitral agreements; International or domestic arbitration?; Institutional or ad hoc arbitration?; Recognition, enforcement and annulment; Arbitration and amparo; Recent legislative changes.
A Mexican court's annulment of a final arbitral award - which had granted around $400 million in damages to a company in dispute with the government agency Pemex - has become a highly controversial issue. This approach to arbitration puts future and current investments at risk, as a result of the lack of legal commitment and security that government agencies may be seen to offer.
The amendments to the International Chamber of Commerce Arbitration Rules finally measure up to international practice in jurisdictions such as Mexico, where the arbitration rules of the main local arbitral institutions had already included provisions for appointing emergency arbitrators and seeking interim relief.
The Law for the Protection and Promotion of Fair Business Practices was recently introduced to the legislative body. Unfortunately, the chapter on dispute settlement disregards the general principles of mediation. In particular, imposing a penalty on parties that fail to participate in an initial dispute resolution meeting contradicts the idea that mediation is a voluntary procedure.
Recent Commerce Code changes provide that an arbitral tribunal and a requesting party are liable for interim measures and any damages that such measures may cause to the other party. It has been argued that this will deter tribunals from granting interim measures. However, in practice an arbitral tribunal has a range of arguments at its disposal that may limit or exclude its liability.
Recent amendments to the Commerce Code include several provisions regarding judicial involvement in arbitration procedures. Although various changes will expedite the arbitration procedure by clarifying the judiciary's scope of action, the provisions relating to injunctions represent a risk for arbitral tribunals.
The arbitration involving Grupo Radio Centro and Monitor is one of the most significant alternative dispute resolution cases in Mexico's history. Recently, the First Chamber of the Supreme Court resolved not to grant an motion for judicial review that would have annulled the disputed arbitral award. In reaching its conclusion, it conducted a thorough inquiry into the status and nature of arbitration.
In ruling on a judicial review claim, the First Chamber of the Supreme Court of Justice has interpreted several fundamental aspects of arbitration. However, on many points the rationale on which the court relied is inconsistent with applicable doctrine and legislation; as such, it has confused rather than clarified issues that lie at the heart of arbitration's processes and philosophy.
Including: Sources of law; Arbitral agreements; International or domestic arbitration?; Institutional or ad hoc arbitration?; Institutions; Recognition, enforcement and annulment; Arbitration and amparo; Recent legislative changes.
Commercial arbitration is gaining acceptance in Mexico as a method of resolving disputes which arise from commercial transactions. However, if the parties agree to amiable composition - that is, dispute resolution based on principles of equity and considerations of what is reasonable and just - how far, and at what point, should an arbitrator be able to depart from considerations of the applicable law?
Including: International Agreements; Arbitrable Issues and Validity of Arbitration Agreements; Role of the Courts; Setting Aside Awards.
The Supreme Court has ruled that Article 1435 of the Commercial Code is constitutional, establishing that the powers of the arbitral tribunal, and specifically those for providing the rules of arbitral procedure inherent to the offering, admission and examination of proofs and pleas, are not absolute or arbitrary.