Revised regulations clarify courts' role in arbitration

Introduction
Court referral to arbitration
Commercial transactions and arbitration
Other procedural aspects
Comment

Introduction

January 27 2011 saw the publication of a number of significant changes to the Mexican commercial arbitration framework. The changes seek to improve the regulations on judicial intervention in arbitration. Among other things, the reform covers:

• the referral of parties to arbitration;
• the enforcement of interim measures ordered by an arbitral tribunal; and
• a new form of court proceeding to enforce or vacate an arbitral award.

Several provisions which have created uncertainty in the past have been derogated.

Court referral to arbitration

Where an action is brought in a matter that is subject to an arbitration agreement, a party may ask the court to refer the dispute to arbitration. The court must then suspend proceedings until the arbitral tribunal has ruled on its own jurisdiction.

The motion to refer the parties to arbitration must be made no later than the first statement on the merits of the dispute (generally, the defendant's response to the claim). The motion to refer the dispute to arbitration will be rejected only if:

• a final resolution indicates that the arbitration agreement is null and void; or
• the arbitration agreement is ineffective according to strict criteria.

In order to expedite proceedings, there is no automatic right of recourse to challenge such a referral.

This amendment brings the proceedings for referring parties to arbitration into line with the formula in use in most countries that have adopted the United Nations Commission on International Trade Law Model Law, as Mexico has done.

Commercial transactions and arbitration

A new court proceeding, termed a 'special proceeding on commercial transactions and arbitration', has been created in order to deal with certain matters relating to arbitral proceedings, including:

• enforcement and recognition of an arbitral award;
• annulment of an arbitral award;
• enforcement of interim measures ordered by an arbitral tribunal;
• a challenge to arbitrators;
• a dispute regarding the competence of the tribunal (where this is determined in a resolution other than the
  award on the merits); and
• the granting of interim measures, either before or during the arbitral proceedings.

Enforcement and annulment
The new regulation states that:

• decisions rendered in this type of proceeding are final - only amparo proceedings (ie, a remedy for the protection of a constitutional right) can be brought; and
• enforcement and annulment proceedings can be consolidated.

The new rules establish that in such proceedings, the response to the claim must be presented within 15 days of service on the defendant. There will only be a hearing on closing arguments before the final decision is rendered.

Interim measures
Interim measures ordered by an arbitral tribunal will be binding on the parties and a judge must order their enforcement without reviewing the decision afresh.

If the arbitral tribunal has not already done so, the judge may order the petitioner to post a bond before enforcing an interim measure. Both the party that requests an interim measure and the arbitral tribunal that grants it are liable for damages caused by its enforcement; however, parties may contractually limit such liability and the arbitration rules most commonly used in arbitrations in Mexico limit the arbitrators' liability.

Other procedural aspects

The reform makes provision for non-contentious proceedings to deal with:

• the implementation of measures related to the appointment of arbitrators;
• requests for assistance with the presentation of evidence;
• inquiries regarding tribunal fees; and
• requests for appointment of arbitrators.

Comment

The reform is a positive step, providing greater certainty regarding the judicial procedures related to arbitration. Dispute resolution practitioners have welcomed the fact that the reform preserves the principles of flexibility and efficiency.

For further information on this topic please contact Luis Enrique Graham or Salvador Fonseca at Chadbourne & Parke by telephone (+52 55 3000 0600), fax (+52 55 3000 0698) or email ([email protected] or [email protected]).