INFORMATION NOTE

In this Information Note we would like to provide you with a brief analysis of the Ruling of the First Chamber of the Supreme Court of Justice of the Nation proposed by the Minister José Ramón Cossio Díaz, in the session held on January 31, 2018, which resolved the Contradictory Decisions on Powers for Lawsuits and Collections and for Acts of Administration.

I. APPLICABLE LAW

  • Federal Civil Code

II. GENERAL CONCEPTS

To better understand the matter, the following relevant concepts are defined:

1. Types of Powers

The law is clear in describing the types of powers of representation that exist: general or special, with general powers being only those contained in the first paragraphs of article 2554 of the Federal Civil Code, and the special powers being all others.

As provided in article 2554 of the Federal Civil Code, the following general powers are established:

  • General power for lawsuits and collections. Understood as conferred without limitation to take all actions for collection that do not involve the exercise of acts of ownership or of administration, and to handle disputes on behalf of the person granting the power, as in the representation in legal actions.
  • General power for acts of administration. This power is granted so that the representative has administrative authority, over both assets and interests.
  • General power to exercise acts of ownership. This power is conferred without limitation for the representative to have the powers of owner and it applies to any kind of fiscal procedure, including legal acts that may be carried out with powers for acts of administration of assets or for lawsuits and collections.

2. Power of Attorney [Mandato]

This is the contract by which the agent agrees to execute for the principal the legal acts the latter entrusts to the former (article 2546 of the Federal Civil Code).

III. BACKGROUND

III.1. According to the Isolated Decision I.12°.A.3 K, the Collegiate Circuit Court (“Court”) established the existence of a hierarchy with respect to the acts of ownership, acts of administration and acts of lawsuits and collections, in which it was determined that it was sufficient that the representative has a power for acts of ownership for the powers for lawsuits n and collections to be considered implicit, or that it was sufficient to have a power for acts of administration for the powers of lawsuits and collections to be considered implicit, based on the principle of “the higher powers encompass the lower powers”.

III.2. In accordance with the Isolated Decision IV.2°.A.81 K of April 10, 2015, the Court ruled that there is no ranking or hierarchy among the general powers of administration and for lawsuits and collections since they have different natures and purposes, and that an extension of powers conferred in a power of attorney, it means that whoever administers may have powers to dispute acts and whoever disputes acts can have powers of administration, cannot be presumed.

IV. RULING OF THE FIRST CHAMBER — CONTRADICTORY DECISIONS 225/2016

In its session of January 31, 2018, the First Chamber of the Supreme Court of Justice of the Nation ruled that among the general powers for lawsuits and collections and those granted to carry out acts of administration, there is no ranking or hierarchy.

  • The ruling is supported by the description of the power of attorney [mandato], which is transcribed below:

“Article 2546.- The power of attorney [mandato] is a contract by which the agent agrees to execute on behalf of the principal the legal acts the latter entrusts to the former“.

The above is in the understanding that with a literal interpretation of the above article, it is not specified that there is any ranking or hierarchy in relation to the powers of administration and lawsuits and collections; on the contrary, only those powers expressly referred to in the public instrument formalizing the granting of the power can be understood as granted, without considering any others as implicit. In other words, the powers conferred in the power of attorney cannot be inferred; the agent must be vested with them only by provisions of the law or by orders of the principal, so that the agent may carry out the instructions to carry out certain acts in the latter's name.

V. CONCLUSIONS AND RECOMMENDATIONS

The ruling of the Supreme Court of Justice of the Nation rejects any ranking or hierarchy among the powers that are granted in the General Powers for Lawsuits and Collections and Acts of Administration, and rules that each of them is granted to be exercised independently and for different acts in representation of the principal. Therefore, in light of this Decision it is essential to expressly and clearly grant the powers to be given to the representative or agent, since under no circumstances may it be interpreted that additional powers are implicitly granted.

Otherwise there is a risk that the acts carried out by the representative could be challenged for lack of representation and determined to be null and void, with the legal consequences this could represent.