On January 27, 2011, an important reformon commercial arbitration was published in Mexico in order to improve theMexican regulations regarding judicial intervention in arbitration.
The reformhas a wide scope. Among the several aspects that it covers are the referral of the parties to arbitration, the enforcement of interimmeasures ordered by the arbitral tribunal, and a new proceeding in order to enforce (or to vacate) an arbitral award. Several provisions, which created uncertainty in the past, have been derogated.
The highlights of this reform are outlined below.
Referral to arbitration
According to the reform, if a party requests a court, before which an action is brought in a matter that is subject of an arbitration agreement, that the controversy be referred to arbitration, the court shall suspend the proceedings until the arbitral tribunal has ruled on its own jurisdiction.
Themotion to refer the parties to arbitration shall be made no later than the first statement on the merits of the dispute (generally, the answer to the claim).
The parties’ referral to arbitration will be denied only if:
- There is a final resolution indicating that the arbitration agreement is null, or
- The ineffectiveness of the arbitration agreement is notorious in accordance with very strict criteria.
In order to expedite the proceedings there will be no ordinary recourse available to challenge the resolution on the referral of the parties to arbitration.
With this amendment, the proceeding to refer the parties to arbitration is now fully in line with the formula that has been used in most countries that have adopted the UNCITRALModel Law (among themMexico).
Special proceedings on commercial transactions and arbitration
A new proceeding, called “special proceeding on commercial transactions and arbitration” was created in order to deal with certain matters related to arbitral proceedings. Among such matters are:
- enforcement and recognition of an arbitral award,
- annulment of an arbitral award,
- enforcement of interim measures ordered by the arbitral tribunal,
- challenge of arbitrators,
- competence of the arbitral tribunal, when it is determined in a resolution other than the award on the merits and,
- granting of interim measures either before or during the arbitral proceedings.
Of the foregoing, the enforcement and annulment of an arbitral award and the enforcement of interim measures ordered by the arbitral tribunal deserve special recognition.
Enforcement and annulment of an arbitral award
The new regulation sets forth the following:
- the resolutions rendered in this type of proceedings are final (only amparo [constitutional remedy] proceedings can be initiated), and
- the enforcement and annulment proceedings can be consolidated in order to have both matters decided together.
The new rules establish that, in such proceedings, the answer to the claim shall be presented 15 days after the defendant has been served. Additionally, there will be only a hearing on closing arguments before the final decision is rendered.
According to the new regulation, interimmeasures ordered by an arbitral tribunal will be binding upon the parties, and the judge shall order their enforcement without a de novo review of the resolution that ordered such interim measures.
In any event, if the arbitral tribunal did not do so the judgemay order the petitioner to post a bond before enforcing the interim measure.
Further, the reformestablishes that both, the party requesting the interimmeasure and the arbitral tribunal granting it, shall be liable for the damages caused by the enforcement of the measure. However, it is possible for the parties to contractually limit such liability. And, as a practical matter, it must be taken into account that in the arbitration rules most commonly used in arbitrations in Mexico limit the arbitrators' liability. The rules of the following institutions, among others, include a limitation of arbitrators liability: International Centre for Dispute Resolution (ICDR), the International Court of Arbitration of the International Chamber of Commerce (ICC), the London Court of International Arbitration (LCIA), the National Chamber of Commerce of Mexico (CANACO), and, the Arbitration Center ofMexico (CAM). This limitation on the arbitrators’ liability is consistent with the practice of international commercial arbitration.
Other procedural aspects
The reformincludes a non-contentious proceeding to dispose of the following:
- implementation of any measures related to the appointment of arbitrators,
- requests for assistance with the presentation of evidence,
- the inquiries regarding the fees of the arbitral tribunal and,
- the requests for the appointment of arbitrators.
Regarding the last point, it is important to highlight that the reform establishes that, only when it is not inappropriate or otherwise agreed by the parties, the judge shall use a system of lists for appointing the arbitrators. The judge will send to the parties a list with, at least, three candidates, for the parties to rank the arbitrators in their order of preference or to reject them.
To prepare such lists, the judge shall consult with one or more arbitral institutions, or chambers of commerce or industry.
If the appointment was not possible by using the list method, the judge may appoint the arbitrator in his or her own discretion.
The reformis a positive step because it provides greater certainty regarding the judicial proceedings that are related to arbitration. It is also to be welcomed that the reform preserves the principles of flexibility and efficiency.