Collective actions are familiar in common law jurisdictions, but are only just becoming established in Mexico. In July 2010 the Constitution was amended to provide for federal legislation on actions and procedures to protect of collective rights. Congress approved a bill to regulate collective actions under the Federal Civil Procedure Code and the Federal Law on Economic Competition in April 2011, although it is still awaiting promulgation and is not yet in force.
The bill inserts a new section into the code, which provides - among other things - that collective actions are properly exercised when they seek to protect:
- collective and separate rights and interests in respect of acts:
- which are restricted to a common source;
- whose subjects are or may be easily determined; and
- which harm a wide and undetermined group of people who have no legal connection; and
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- individual rights and interests with collective effects.
In line with international practice, the first draft of the bill provides for the filing of opt-out collective actions, as these are more protective and less restrictive than opt-in actions. Article 594 of the code stated:
"Any member of the collectivity or group in question will be entitled to request its exclusion from the action, provided that said request is made in writing at any stage of the procedure and before the ruling is issued."
However, the original article has been modified to enshrine opt-in actions and establish rules for them. The first paragraph of the approved provision states that "members of the affected collectivity will be entitled to join the action in question".
Article 585 lists the subjects with legal standing in collective actions, including the Federal Competition Commission (FCC). Article 588 sets out the criteria for demonstrating legal standing, including a final FCC resolution which declares the existence of:
- a violation of the law that has caused damage to consumers; and
- the existence of at least 30 group members in the case of collective actions (in the strict sense) and individual homogenous actions.
The inclusion of opt-in collective actions arguably detracts from the effectiveness of this legal mechanism. The collective proceeding as outlined by the recent amendments lacks the proper nature and characteristics of collective actions. Rather, it is closer to a litisconsortium - that is, a relationship between two or more parties which litigate jointly in defence of a common interest, with the outcome affecting all parties equally.
The reform includes amendments to the Law on Economic Competition. In principle, these seek to allow for collective actions for damages in economic competition matters. However, the wording of the provisions is ambiguous and contains various inconsistencies. One of the key questions that the reform has so far failed to answer is whether different standards apply for bringing individual actions and collective actions. The code states that one of the requirements to prove legal standing in collective actions is a final resolution from the FCC which confirms the existence of acts that have caused harm to consumers as a result of prohibited concentrations or monopolistic practices. However, the amended law does not include this requirement. This inconsistency allows for the interpretation that in the case of individual claims, a final FCC resolution is not required. This would be an alarming contradiction of the rules on collective claims in the code.
In addition to the legal uncertainty caused by this contradiction, a further problem arises in relation to the period within which collective actions may be brought. The code establishes that collective actions will lapse three years and six months after the date on which the damage was caused. It is unclear whether the right to bring an action will expire if FCC proceedings (and subsequent appeals) have taken more than three years, or whether the period in which an action may be brought will be postponed until the FCC's decision becomes final. It will be interesting to see whether Supreme Court precedent from another area of law will be applied to collective actions for competition claims. Some years ago, the court held that actions for damages in industrial property matters may be brought only once the relevant decision of the Mexican Institute of Industrial Property becomes final. This could be a starting point in the search for a solution.
For further information on this topic please contact Lucia Ojeda Cardenas at SAI Abogados by telephone (+5255 59 85 6618 ), fax (+5255 59 85 6628) or email ([email protected]).