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Background

Frequency of use

How common is commercial litigation as a method of resolving high-value, complex disputes?

Although commercial litigation is not the only method for resolving complex disputes in Mexico, it is the most common practice and the most resorted to by Mexican lawyers. Alternative dispute resolution (ADR) mechanisms are strongly encouraged and increasingly popular. This not only because Mexican law acknowledges and provides rules for the use of ADR, but also because in recent years the Mexican courts have issued several resolutions favourable to such mechanisms.

Litigation market

Please describe the culture and ‘market’ for litigation. Do international parties regularly participate in disputes in the court system in your jurisdiction, or do the disputes typically tend to be regional?

Mexican judiciary provides both local and federal jurisdiction, and international parties might opt for either jurisdiction, particularly in commercial matters, depending on which is most applicable. The market for litigation is wide and heterogeneous, according to the region, matter and parties involved, among other cultural factors.

Legal framework

What is the legal framework governing commercial litigation? Is your jurisdiction subject to civil code or common law? What practical implications does this have?

The legal framework that applies to Mexican commercial proceedings is subject to civil code, meaning that judges necessarily need to rule according to the written laws that apply to the case in dispute (ie, Commerce Code, General Law for Negotiable Instruments and Credit Operations, General Law for Commercial Companies, etc).

Nonetheless, jurisprudence plays an important role, since the federal courts interpret the laws, and further, are entitled to integrate and fill gaps in the law through the criteria provided in case law and jurisprudence.

Bringing a claim - initial considerations

Key issues to consider

What key issues should a party consider before bringing a claim?

It is important to consider the capacity a party has to bring evidence before the court, once the trial has started. Another important issue to be considered is the financial standing of the party to be sued, since collecting could be an important challenge.

Establishing jurisdiction

How is jurisdiction established?

Jurisdiction is established by the specific clause agreed by the parties. In the absence of an agreement, jurisdiction will be established according to the territory where the dispute needs to be settled, the matter of the dispute, and the circumstances and amount with regard to said matter.

Preclusion

Res judicata: is preclusion applicable, and if so how?

Preclusion is applicable once the time to claim or exercise a right has elapsed. The time period to claim a right is established by law and it will vary according to the legislation on a specific matter.

Res judicata is a valid defence that will need to be proven by the defendant.

Applicability of foreign laws

In what circumstances will the courts apply foreign laws to determine issues being litigated before them?

The parties are entitled to agree which law will be applicable, before the dispute proceedings commence. The courts necessarily need to apply the law appropriate to a specific case. In case domestic laws were agreed by the parties, foreign laws will only serve as comparative law and are non-binding.

When foreign laws are applicable, the parties will have the burden to prove what the foreign law establishes and how it applies to the matter under dispute.

Initial steps

What initial steps should a claimant consider to ensure that any eventual judgment is satisfied? Can a defendant take steps to make themselves ‘judgment proof’?

Before filing a claim, it is advisable to investigate the financial and patrimonial status of the debtor, ie: to research the debtor at public registries in order to determine whether there are assets to be attached. Furthermore, it is also recommended that the claimant investigate an adequate address to serve notice at, and determines all the parties that might be involved in the trial and could be held responsible, whether as debtor or third party called to trial. This can ease the whole process and an eventual collection.

Defendants are entitled to post a bond in order to avoid having their assets attached.

Freezing assets

When is it appropriate for a claimant to consider obtaining an order freezing a defendant’s assets? What are the preconditions and other considerations?

Mexican law provides for summary pretrial procedures to request precautionary measures to seize assets of the debtor, in case the plaintiff has a well-founded fear and evidence that the debtor will hide or squander its assets in order to avoid payment or to become insolvent, or in case the debtor is planning to leave the country or hide itself to become unreachable.

In case that the debt is documented in an executive title (promissory notes, acknowledgment of debt before a notary public, judicial settlement agreements, etc), the plaintiff is entitled to assert a preferential executive commercial action, which allows it to freeze and attach assets even before serving process, while the ordinary commercial procedure will allow the attachment of assets only if there is a real danger that the debtor might hide or squander its assets.

Pre-action conduct requirements

Are there requirements for pre-action conduct and what are the consequences of non-compliance?

Interim relief is available for the parties as a pre-action conduct. Certain requirements must be satisfied for interim relief to be authorised, and the claim will need to be filed shortly after the interim relief is granted (three or five days), or the claimant could be held responsible for damages and the interim relief declared null and void.

Other interim relief

What other forms of interim relief can be sought?

The most common interim relief in the jurisdiction is the attachment of assets. It could be requested to restrain the person against whom the claim is to be filed from leaving a particular territory, if there is reasonable fear that that person will attempt to be absent or concealed.

Other types of relief can also be granted if the requesting party demonstrates its necessity as an urgent matter. Such relief is known as ‘conservatory precautionary measures’, which are commonly used in order to preserve the status quo of a factual or legal situation until a final judgment or award resolves the merits of the dispute.

Alternative dispute resolution

Does the court require or expect parties to engage in ADR at the pre-action stage or later in the case? What are the consequences of failing to engage in ADR at these stages?

ADR mechanisms are not mandatory; however, ADR is strongly encouraged.

Claims against natural persons versus corporations

Are there different considerations for claims against natural persons as opposed to corporations?

Corporations and natural persons are treated equally; however, corporations may only claim their rights through their legal representatives, which will need a power of attorney with enough authority granted by the corporate governance of the company.

Class actions

Are any of the considerations different for class actions, multi-party or group litigations?

In 2012, a Class Actions Law was enacted in Mexico (as part of the Federal Procedural Civil Code). In any case, it is important to consider an adequate common representative to act on behalf of the collective. Class actions were introduced in the Mexican legal system in matters related to antitrust, consumer protection, financial services and environmental issues.

Third-party funding

What restrictions are there on third parties funding the costs of the litigation or agreeing to pay adverse costs?

Third parties may fund litigation but a third party will only be able to directly pay for costs of a proceeding if it has been called to trial and the court determines its liability in the case. Otherwise, the relevant arrangements have to be made directly between the parties and the funding third party.

The claim

Launching claims

How are claims launched? How are the written pleadings structured, and how long do they tend to be? What documents need to be appended to the pleading?

Generally, claims contain the following: court to which the claim is addressed, according to its jurisdiction; name and legal address of both plaintiff and defendant; the specific claims and applicable law; the facts upon which the case relies; and a description of the evidence to be submitted by the plaintiff.

All documents that will serve as evidence need to be appended to the pleading, and the names of the people who will be called as witnesses during the trial will need to be mentioned in the lawsuit.

It is also important to specify that claims cannot be modified or extended at a later stage.

Serving claims on foreign parties

How are claims served on foreign parties?

Foreign parties are called by the judicial authority through letters rogatory or diplomatic channels. The Hague Convention for Service Abroad is commonly used.

Once foreign parties appear before a court, they need to appoint an address to receive notices inside the jurisdiction of the court.

Key causes of action

What are the key causes of action that typically arise in commercial litigation?

Commercial litigation usually arises because of the breach of agreements, including payment default, or relief sought because of damages suffered; examples of litigation include shareholders’ disputes, insurance disputes, lease actions and liability actions.

Claim amendments

Under what circumstances can amendments to claims be made?

There are very limited circumstances that permit amendments to claims. Usually amendments are allowed when there is acknowledgement of previously unknown facts or supervening information due to supervening facts.

Remedies

What remedies are available to a claimant in your jurisdiction?

The most frequent remedy available in Mexican jurisdiction is the appeal, although it isn’t always applicable. At a subsequent stage, complainants are entitled to file a constitutional challenge (amparo lawsuit), which is a constitutional rights protection trial available in the federal courts.

Recoverable damages

What damages are recoverable? Are there any particular rules on damages that might make this jurisdiction more favourable than others?

The general rule under Mexican law is that damages are recoverable only when caused as a direct and immediate consequence of a breach of an obligation (contractual or out of contract) or unlawful conduct. The plaintiff has the burden of proof to produce evidence of the actual damages and the causal link to the breach of the obligation.

Both patrimonial and moral damages are recoverable under Mexican jurisdiction, and they will always be recovered monetarily. This jurisdiction is not specifically favourable in order to claim damages; for example, punitive damages are only acknowledged in regard to environmental issues or awarded in virtue of moral damages. Indirect or consequential damages are not recoverable.

Responding to the claim

Early steps available

What steps are open to a defendant in the early part of a case?

Usually a defendant has 15 days to answer a claim. By doing so, he or she is also entitled to file a counterclaim, with the same requirements as an initial pleading. In any case, along with the response defences must be raised, documentary evidence should be submitted and the name of the witnesses announced. Additionally, when answering a claim a defendant can request that a third party be called to trial in order to share the consequences of the final judgment.

Defence structure

How are defences structured, and must they be served within any time limits? What documents need to be appended to the defence?

Every defence must be raised at the moment of filing the answer to the lawsuit. Some of the defences are named and listed with their respective codes; nonetheless, any available defence that could be case related may be raised by the defendant.

As previously mentioned, all documentary evidence needs to be appended to the answer to the claim.

Changing defence

Under what circumstances may a defendant change a defence at a later stage in the proceedings?

It is not possible to change defences at a later stage in the proceedings, unless the defendant raises supervening information and the court acknowledges and admits the same.

Sharing liability

How can a defendant establish the passing on or sharing of liability?

Third parties can be called to trial per request of the defendant or plaintiff, if it is considered that liability could be shared. The so-called third person or entity becomes a formal party of the dispute and is entitled to answer the claims and submit evidence as well.

Avoiding trial

How can a defendant avoid trial?

The courts encourage alternative dispute resolution (ADR) mechanisms, which could serve to avoid trial. Accepting the claims will also permit a defendant to avoid trial.

Generally, attorneys should promote settlement between the parties before litigation, but it is not mandatory.

Case of no defence

What happens in the case of a no-show or if no defence is offered?

In case of a no-show, the trial will continue despite the defendant’s failure to appear. If the defendant appears on trial after the defence-offering stage, he or she will still have the opportunity to seek a favourable judgment, although no defences will be assessed by the judge. The judge is entitled to issue judgment against the absent defendant, as long as the plaintiff’s case is proven merited.

Claiming security

Can a defendant claim security for costs? If so, what form of security can be provided?

Attachment of assets as a provisional measure could secure payment and costs of the trial. In order to obtain the provisional measure, the requesting party should provide evidence that there is an actual and real risk its counterparty will not be able to pay or could hide its assets.

Progressing the case

Typical procedural steps

What is the typical sequence of procedural steps in commercial litigation in this country?

Before the claimant files its initial pleading, there is a procedure available to secure evidence or satisfy formalities necessary to bring the suit, as well as interim relief.

Once the initial pleading has been filed along with all documentary evidence, generally the defendant will have 15 days to file its answer and counterclaim, if applicable. At this expository stage, the parties will need to establish their arguments, which cannot vary at a further stage.

Consequently, at the evidentiary stage the parties will be granted 10 days in order to offer and provide the necessary evidence so as to verify the facts sustained at the expository stage (request for admissions by the parties, factual witness testimonies, expert witness testimonies and written report, inspection of things, places or people, etc). The law provides that the evidentiary stage, for receiving the evidence offered by the parties and admitted by the court, shall last 40 days, but such time frame in most cases is likely to be extended.

Afterwards, at the conclusive stage the parties submit their final pleadings, before the judge issues the final resolution. Judgment may generally be challenged through appeals, which are heard and resolved by the State Court of Appeals of Federal Unitary Courts.

After the second instance is resolved, an amparo lawsuit (constitutional challenge) might be filed by the aggrieved party, seeking to obtain a favourable resolution by the federal courts in regard to any constitutional rights that might have been violated by the lower courts, mostly in connection with due process.

Finally, if the losing party does not voluntarily comply with the final judgment, the party that obtained a favourable ruling may request the judge to take all necessary measures to enforce the resolution.

Bringing in additional parties

Can additional parties be brought into a case after commencement?

Yes. Third parties may be called to trial per request of the defendant at its counterclaim, or by the plaintiff in virtue of the defendant’s response, if it is considered they are involved in the matter of claim.

Consolidating proceedings

Can proceedings be consolidated or split?

Yes. Proceedings can be consolidated in order to facilitate the procedural sequel, as long as the parties, facts and claims are so intimately related that different procedures may lead to contradictory resolutions.

Proceedings can be split only if a person or entity of the multi-defendant parties is able to demonstrate that the court is not competent to rule on such party according to the venue agreed by the parties or by a jurisdictional principle of law.

Court decision making

How does a court decide if the claims or allegations are proven? What are the elements required to find in favour, and what is the burden of proof?

The general rule provides that claimant or plaintiff needs to prove the established facts of its allegations, and the defendant its defences and exceptions. However, negative facts do not need to be proven, such as the lack of payment or the disregard of a legal presumption the counterparty has in its favour.

Mexican procedural law has a mixed system of valuation of evidence, since some pieces of evidence are given a specific value (ie, public documents have full probative value), and some have a free value at the discretion of the judge (ie, factual witness testimonies and expert witness reports).

How does a court decide what judgments, remedies and orders it will issue?

Every fact and piece of evidence brought by the parties should be analysed by the judge. Once the judge has analysed the facts and relief sought, it must be established which claims are merited and, consequently, an order issued to enforce the judgment, duly grounded (citing the specific law provisions applicable to the case) and motivated (explaining why the claim is merited and proven).

Evidence

How is witness, documentary and expert evidence dealt with?

Factual witness testimonies are to be announced in the lawsuit and the answer to the lawsuit. The testimonies then have to be formally offered during the evidentiary stage of the trial and, if admitted by the court, are received by the court according to very formal and strict rules during a court hearing. The party offering the testimony orally interrogates the witness first, and then the other party is entitled to oral cross-examination.

Expert witness testimonies in the form of written reports are submitted to the court by the experts appointed by each party. If the judge finds the reports contradictory, the court may appoint a third independent expert to resolve the same questions. A hearing may follow to allow the parties and the judge to orally interrogate the three experts in regard to their written reports.

Normally evidence is produced in writing, unless the amount at issue in the case does not exceed 633,075.88 Mexican pesos. In this circumstance, oral proceedings will take place (although the lawsuit and the answer to the lawsuit have always to be submitted in writing).

These traditional rules apply to all evidence; the judge will freely weigh some pieces of evidence and some other pieces are granted specific value according to the law (see question 32).

How does the court deal with large volumes of commercial or technical evidence?

As previously stated, evidence has to be produced in writing. Furthermore, the court is obliged to analyse every fact and piece of evidence brought before it. Therefore, the only difference between dealing with large and small cases is the time it will take a judge to render the final judgment.

Because of the huge workload of the courts, attorneys should have the skills to narrow the facts and evidence in order to bring before court what really matters for the case.

Can a witness in your jurisdiction be compelled to give evidence in or to a foreign court? And can a court in your jurisdiction compel a foreign witness to give evidence?

Yes. It is possible to compel witnesses in Mexico to give evidence in or to a foreign country, and a court in Mexican jurisdiction can compel foreign witnesses to give evidence. This is done through diplomatic channels, through subpoenas and orders of constraint.

How is witness and documentary evidence tested up to and during trial? Is cross-examination permitted?

Witnesses are tested during an oral, public hearing at the court, where they render their testimony; cross-examination is allowed at the same hearing. Testimonial evidence has certain specific rules. For instance, elderly or sick people may render their testimony at their address, or high public authorities may render their testimony in a written manner.

Documentary evidence needs to be produced in hard copy, and only original documents or certified/authenticated copies of the originals will be weighed by the court. Documents need to be filed along with the initial pleading, unless under certain exceptional circumstances. The counterparty will always have the right to dispute and challenge the documents filed.

Time frame

How long do the proceedings typically last, and in what circumstances can they be expedited?

Commercial proceedings usually last approximately 12-15 months at first instance. If appealed, an additional 3-5 months could be added to the proceedings. Finally, if challenged by an amparo lawsuit, they could take an extra 3-8 months.

Procedural time frames cannot be expedited unless the defendant agrees to the claims; then there is no evidentiary stage and the case goes directly to final pleadings or final judgment.

Gaining an advantage

What other steps can a party take during proceedings to achieve tactical advantage in a case?

It is an important advantage if a claimant obtains as much information as possible from the counterparty before filing its claim or before the enforcement of the sentence; this will permit the timely attachment of assets or freezing of bank accounts.

A defendant may try to find facts from the commercial relationship to use as leverage with its counterparty in order to settle the dispute under convenient terms.

Impact of third-party funding

If third parties are able to fund the costs of the litigation and pay adverse costs, what impact can this have on the case?

There are no restrictions on third parties funding the costs, although each party usually bears its own costs. The fact that a third party is able to fund the costs of the litigation does not have a significant impact on the case, since the judge will determine the costs that will need to be paid by the condemned party. Funded or not by a third party, the costs will not vary since such funding is not ruled under Mexican procedural law.

Parallel proceedings

How are parallel proceedings dealt with? What steps can a party take to gain a tactical advantage in these circumstances, and may a party bring private prosecutions?

Parallel proceedings are useful to obtain advantages in a case, although they cannot alter the stated claims. They could serve as evidence in order to demonstrate and support the facts at the commercial proceedings, and ultimately attain a positive award or judgment. Furthermore, they could tilt the parties to seek for a settlement agreement. There are no private prosecutions under Mexican law.

Trial

Trial conduct

How is the trial conducted for common types of commercial litigation? How long does the trial typically last?

Commercial litigation is always followed as a trial. The proceedings usually last 15-30 months, including the second instance and the constitutional challenge, as previously stated (see question 38).

Use of juries

Are jury trials the norm, and can they be denied?

There are no jury trials in Mexico.

Confidentiality

How is confidentiality treated? Can all evidence be publicly accessed? How can sensitive commercial information be protected? Is public access granted to the courts?

Every case is private and confidential; therefore, no public access is granted to the files dealt with at the courts.

Only the people authorised by representatives of the parties can access the files.

After the case is closed, the courts may publish some case-related information, although sensitive information is always protected and the parties can expressly request to have their name, address and any other information kept confidential in any court publication.

Media interest

How is media interest dealt with? Is the media ever ordered not to report on certain information?

The media does not really influence the courts, and there are no orders to keep certain information from the spotlight. This corresponds to the freedom of press right.

Proving claims

How are monetary claims valued and proved?

Commercial trials necessarily need to be valued in order to determine the competent court that will entertain jurisdiction. The plaintiff has to provide the value of its monetary claims, if possible. If it is not possible to determine the monetary value of a claim in the lawsuit (a claim for undetermined damages, for instance), then the judge may order in the final judgment that the defendant shall make payment of such claim, once it is quantified and liquidated in a post-judgment ancillary action asserted by the claimant.

Post-trial

Costs

How does the court deal with costs? What is the typical structure and length of judgments in complex commercial cases, and are they publicly accessible?

Courts determine the costs according to the value of the claim, once liquidated. Normally a percentage of the condemned value is fixed as the amount of costs (between 6 and 10 per cent of the condemned amount). If the amount of the claim is undetermined, the performance of the attorneys will serve as the parameter to fix the costs, according to the fixed tariff provided by the law.

The typical structure and length of judgments are: facts and results, recitals and conclusions - between 20 and 100 pages.

Appeals

When can judgments be appealed? How many stages of appeal are there and how long do appeals tend to last?

Every judgment is subject to be challenged, either through an appeal or an amparo lawsuit. Appeals are admissible when the amount of the claim is undetermined or higher than 633,075.88 Mexican pesos, among other minor requirements.

There is only one stage of appeal against a final judgment and it usually tends to last three to five months.

After the appeal ends, the parties may file a constitutional challenge against the sentence of the appeal before the federal courts.

Enforceability

How enforceable internationally are judgments from the courts in your jurisdiction?

International enforceability may vary, hinging on the country where the judgment is sought to be enforced. International reciprocity principles may apply.

How do the courts in your jurisdiction support the process of enforcing foreign judgments?

The courts will support the process of enforcing foreign judgments, but because of the strict formalities in the jurisdiction it is generally challenging to accomplish enforcements. International reciprocity principles may apply.

Other considerations

Interesting features

Are there any particularly interesting features or tactical advantages of litigating in this country not addressed in any of the previous questions?

Alternative dispute resolution (ADR) mechanisms are increasingly important under Mexican jurisdiction. Likewise, law by precedent has been acquiring greater relevance in the way in which commercial cases are resolved. Class actions, punitive damages, piercing of the corporate veil and criminal law corporate responsibility are some of the hot topics that have given rise to important developments in recent years.

Jurisdictional disadvantages

Are there any particular disadvantages of litigating in your jurisdiction, whether procedural or pragmatic?

Emphasis must be laid on the fact that Mexican law and Mexican courts tend to be very formalistic. This, in most cases, delays the administration of justice.

Special considerations

Are there special considerations to be taken into account when defending a claim in your jurisdiction, that have not been addressed in the previous questions?

The terms granted to defendants to answer claims are usually short.

Because of the overload of work burdening the courts, the terms established by law may be longer than those provided, and there are no term extensions granted upon party requests.

Bear in mind that documentary evidence is the most relevant and valued type of evidence, and has to be original documents or certified/authenticated copies in order to be weighed by the courts.