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.