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What legal requirements are there for recognition of an award? Must reasons be given for the award? Does the award need to be reviewed by any other body?
Pursuant to the Commerce Code, the award must be in writing and signed by the arbitrators; if there is more than one arbitrator, the signatures of a majority shall be sufficient if the reasons for the remaining arbitrators’ failure to sign are set forth (Article 1448 of the Commerce Code).
The award must be reasoned in a decision, unless the parties have agreed otherwise or have reached a settlement.
The award shall set forth the date that it was entered and the place where the arbitration was held.
After entry of the award, the tribunal shall give notice to the parties by delivering a copy of it signed by the arbitrators.
The award needs no validation from another body. However, an enforcement action may be brought before the Mexican courts if a party refuses to comply with the award.
Timeframe for delivery
Are there any time limits on delivery of the award?
No, the Commerce Code establishes no time limits.
Does the law impose limits on the available remedies? Are some remedies not enforceable by the court?
Yes. There is a three-month deadline for the setting aside of any award.
What interim measures are available? Will local courts issue interim measures pending constitution of the tribunal?
Unless otherwise agreed by the parties, the arbitral tribunal may, upon a prior request of either party, order provisional remedies that are necessary to protect the subject matter in dispute. In such event, the tribunal may also require a guarantee from the party requesting the measures (Article 1433 of the Commerce Code).
All interim measures ordered by an arbitral tribunal shall be recognised as binding. Unless otherwise determined by the tribunal, such interim measures shall be enforceable upon request to the courts, regardless of the stage at which they have been ordered. The party that requested or obtained the recognition or the enforcement of an interim measure shall immediately inform the judge in the event of revocation, suspension or modification of such measure. The judge to whom the request for recognition or enforcement of an interim measure has been addressed can, if appropriate, order the requesting party to give a guarantee whenever the arbitral tribunal has not issued a decision regarding such guarantee or if such guarantee is necessary to protect third-party rights (Article 1479 of the Commerce Code).
Courts will also grant provisional relief in support of arbitrations. The parties may request that a judge grant provisional relief before or during the arbitration proceedings (Article 1425 of the Commerce Code). Upon such request, the judge has complete discretion to adopt any interim measures that he or she may deem appropriate (Article 1478). Therefore, all types of measure without any limitation are allowed. However, any provisional remedy or relief is dependent on a special separate lawsuit that may take four to six months to reach a decision; where urgency is crucial, such timeframe may make it impractical to seek this kind of remedy before the courts.
Notwithstanding the above, anti-suit injunctions are not allowed as such, since the right of access to court is considered a fundamental right that cannot be restricted. In this regard, the Mexican courts have held that under Mexican law it is forbidden to impede a party to file an action exercising its rights to enforce an award.
Can interest be awarded?
The arbitrators can award interests only if the parties requested as such during the proceedings and according to the rate established in such request.
At what rate?
If the parties did not specify the interest rates, the legal interest rates apply. The legal interest rate in commercial matters is 6%. In civil matters, the legal interest rate is 9%.
Is the award final and binding?
Yes, although if a party fails to comply with it, an enforcement action should be filed. If during the enforcement action the award itself is set aside on the basis that the subject matter of the dispute is not arbitrable under Mexican law or the award is contrary to public policy, then the award will lose its binding nature in Mexico.
What if there are any mistakes?
The parties are entitled to request from the arbitral tribunal the correction of the final award within 30 days of it being rendered. The correction should refer only to a calculation, copying, typographical or similar error in the award. In addition, the arbitral tribunal may correct such errors at its own initiative within 30 days of the date of the award.
Can the parties exclude by agreement any right of appeal or other recourse that the law of your jurisdiction may provide?
In principle, there is no specific restriction in this regard, although the possibility of waiving the setting-aside proceeding has not been discussed before the Mexican courts. Therefore, a risk exists that a court may deem that such action cannot be waived based on the fundamental right of access to justice established in the Mexican Constitution.
What is the procedure for challenging awards?
The petition to set aside an award must be filed within three months of the date that notice is given of the award. However, if either party requests the tribunal to correct any errors in the award, to give an interpretation of such award or to enter an additional award regarding claims that were presented in the proceedings but omitted from consideration in the award, the abovementioned three-month period shall begin on the date that the petition was ruled on by the arbitral tribunal.
The proceeding begins with a formal complaint, to which the defendant must respond within the next 15 working days. After the response is filed, the court will receive the evidence. If the judge considers it necessary, he or she will set a deadline of 10 working days to receive the evidence. After all the evidence is received, the judge will set a date for holding a hearing on the merits within the next three working days. After the hearing has taken place, the judge renders a final judgment.
Challenge proceedings typically take between six and 12 months.
Lastly, if a petition for the setting aside of an award has been filed with a judge, such judge may suspend the annulment proceedings upon the petition of one of the parties, requesting a specific time period for the arbitral tribunal to continue with those proceedings, or may adopt any measures at his or her discretion that will resolve the causes of the annulment petition (Article 1459 of the Commerce Code).
On what grounds can parties appeal an award?
An award cannot be appealed on the merits pursuant to the Commerce Code. The only challenge available is the setting-aside proceeding, which can be based only on limited and specific causes for vacating an award.
What steps can be taken to enforce the award if there is a failure to comply?
The Commerce Code establishes a specific proceeding to enforce arbitral awards. The proceeding has the same deadlines and procedural regulations as the setting-aside proceeding explained above.
Can awards be enforced in local courts?
Yes, the award can be enforced before local and federal courts.
How enforceable is the award internationally?
An award rendered in Mexico should be deemed enforceable abroad, since Mexico is part of the New York Convention.
To what extent might a state or state entity successfully raise a defence of state or sovereign immunity at the enforcement stage?
Even though there is no specific legislation regarding immunity, sovereign power can be asserted from the Mexican Constitution (Articles 39, 40 and 41). Additionally, pursuant to the Federal Code of Civil Procedures, the institutions, services and entities of the Federal Government Public Administration, as well as the states, have the same status as any other party in judicial proceedings. Nevertheless, no enforcement or attachment orders can be imposed on them and they shall not be obliged to exhibit any guaranties (Article 4 of the Federal Code of Civil Procedures).
Mexico has ratified no treaties on this subject, not even the UN Convention on Jurisdictional Immunities of States and their Properties.
There is also an implicit and partial immunity recognised in favour of the administrative rescission of public contracts by government entities (except for PEMEX and the CFE). A national court can hear this type of administrative rescission only in an administrative or constitutional proceeding, and not in arbitration.
Are there any other bases on which an award may be challenged, and if so, by what?
Mexican courts are prohibited from reviewing the merits of a final award, but may set aside an award on one of the following grounds (Article 1457 of the Commerce Code):
- The party requesting it proves that:
- one of the parties to the arbitration agreement was subject to a legal disability, the agreement is invalid pursuant to the laws that were designated or, if no other laws were designated, it is invalid under Mexican law;
- such party was not given proper notice of the designation of one of the arbitrators or of the arbitration proceedings, or was impaired by any other reasons to assert its rights;
- the award refers to a dispute not contemplated within the arbitration agreement or contains decisions that exceed the terms of the arbitration agreement. However, if the provisions of the award that refer to matters subject to the arbitration can be separated from those that are not, only the latter will be annulled; or
- the arbitral tribunal or the arbitration procedures were not conducted in accordance with the agreement between the parties, unless such agreement conflicts with the provisions of the Commerce Code, which the parties cannot waive; or, in the absence of such an agreement, the proceedings did not conform with such provisions.
- The judge considers that pursuant to Mexican law the subject matter of the dispute is not arbitrable, or the award is contrary to public policy.
How enforceable are foreign arbitral awards in your jurisdiction?
Foreign arbitral awards are considered binding, and should be recognised and enforced by the Mexican courts. To enforce an award regardless of its international or national nature, a specific proceeding before the Mexican courts should be followed.
Will an award that has been set aside by the courts in the seat of arbitration be enforced in your jurisdiction?
The Mexican courts have discretionary power to decide whether they may enforce a nullified award. In any event, the party against which the award has been invoked must prove that such an award has been set aside or declared null by the courts in the seat of arbitration in order for the competent court to grant its discretionary power to enforce or reject the enforcement (Article 1462 of the Commerce Code).
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