This country-specific Q&A provides an overview of Litigation laws and regulations applicable in Mexico.
What are the main methods of resolving commercial disputes?
The main methods of resolving commercial disputes in México are: a) ordinary commercial trial, b) executive commercial trial, c) special proceedings, d) oral commercial trial, e) bankruptcy proceedings (concurso mercantil), f) arbitration, and g) mediation.
What are the main procedural rules governing commercial litigation?
Commercial law in Mexico is a matter of federal law. Commercial litigation in Mexico is governed by the Commerce Code; (Código de Comercio); when a specific rule is not provided for in the Commerce Code, the Federal Code for Civil Proceedings (Código Federal de Procedimientos Civiles) is applied supplementary. Additionally, when the rule is not sufficiently provided for, the local proceedings law becomes applicable.
What is the structure and organisation of local courts dealing with commercial claims? What is the final court of appeal?
Regarding commercial claims, in Mexico City, the local Court of Justice is composed of 73 civil courts, 26 small claims courts, 20 oral proceedings courts, and 11 Civil Courts of Appeals, each one of them composed of 3 Appeal Judges.
However, the final judgment in commercial proceeding is subject to an Amparo Directo, which constitutes a new proceeding regarding Constitutional violations, which is tried before the Federal Circuit Courts.
How long does it typically take from commencing proceedings to get to trial?
In Mexico, every trial begins with the filing of the corresponding complaint before the appropriate Civil Court. Once the complaint has been filed, the Judge will issue (in three to five days) a ruling ordering the summon of the defendants. Once the defendants are served and summoned to court, they will have 15 business days to file their reply/answer, except in the case of the executive commercial trial, in which defendants have 8 business days to file their reply/answer.
Are hearings held in public and are documents filed at court available to the public? Are there any exceptions?
All hearing are held in public, nonetheless there are several cases in which the Judge is authorized to hold private hearings, such as family law matters.
Regarding documents that are filed at court, they are not available to the public, unless the parties waive their right for privacy or there is a higher court order granting access (typically from Federal Courts in amparo proceedings). However, judgments in Federal Courts are made public via internet, but the personal information of the parties is deleted.
What, if any, are the relevant limitation periods?
The relevant limitation periods in Mexico are as follows:
a) One year for disputes arising from ordinary sales, wages, liability of brokers, and naval repairs.
b) Three years for the execution of promissory notes, and other debentures in executive commercial trial.
c) Five years for shareholders disputes and responsibility of liquidators.
d) Ten years for all other disputes not provided for.
e) Class actions are to be filed within three years and six months from the moment the damage occurred.
The limitation period runs from the day the action could have been filed.
What, if any, are the pre-action conduct requirements in your jurisdiction and what, if any, are the consequences of non-compliance?
In general terms, the are no pre-action conduct requirement before turning to litigation. Even though there are alternate means to solve disputes, they are not mandatory in Mexico, so parties are allowed to present their claims even if a settlement is being explored. For that reason, there are no sanctions for non-compliance.
However, specific actions do have specific requirements. For example, for executive commercial trials, the original note has to be presented for collection. In other cases, when the obligation does not specify a specific date for compliance, a pre-requisite is to demand compliance within the next thirty days. In shareholders disputes, the stocks have to be deposited before a Notary Public or Credit Institution before filing the complaint. In bankruptcy proceedings, it must be demonstrated a generalized default or breach of payment by the Debtor of its obligations, which consists of the default of its obligations of payment to two or more different creditors and the fulfilment of certain conditions. Therefore, before filing a specific action, litigators must analyse the specific requisites provided for in the law regarding the action to be initiated.
How are commercial proceedings commenced? Is service necessary and, if so, is this done by the court (or its agent) or by the parties?
In Mexico, commercial proceedings are commenced when the plaintiff files its complaint before the Civil Court along with all relevant documents, defendant’s addresses, and the names of any witnesses they intend to call.
Once a claim is admitted by the Judge, the defendant will be summoned to court and must respond the claim within 15 business days following such notification, unless it is an executive commercial trial, in which case the complaint must be replied within 8 business days.
Every Court has special officers that are in charge of delivering personal notifications to the parties in their designated addresses. Daily notifications are published every day in a Judicial Bulletin. All of these services are public and provided by the Courts.
How does the court determine whether it has jurisdiction over a claim?
First of all, every claim must be filed before a competent court, which can be determined by i) the amount in controversy, ii) by the nature of the case and the type of relief sought, which is also known as subject matter jurisdiction, and iii) territorial jurisdiction.
Additionally, in order for the court to determine whether it has jurisdiction or not over a claim, it must observe if the parties submitted expressly or tacitly to such jurisdiction. There is express submission when the interested parties renounce to the venue that the law grants them, and they choose a specific forum or venue to bring an action. Usually, this submission is made in the contract or agreement celebrated between the parties. On the other hand tacitly submission happens when the plaintiff files a lawsuit before the judge deemed to have jurisdiction, or when the defendant responds to the claim or files a counter claim before the same judge without raising a lack of jurisdiction defense. In those cases the court determines it has jurisdiction.
How does the court determine what law will apply to the claims?
Commercial litigation in Mexico is governed by the Commerce Code and both, the Federal Code of Civil Proceedings and local proceedings law, as a supplementary provisions, so the Court does not has to decide which law to apply to the procedure. Except for bankruptcy proceedings and class actions, which have their own set of rules.
However, each action is also governed on the merits by specific laws such as the General Securities and Credit Operation Act (Ley General de Títulos y Operaciones de Crédito) and the General Mercantile Entities Act (Ley General de Sociedades Mercantiles), and so on, which can also provide specific rules to the proceedings.
In what circumstances, if any, can claims be disposed of without a full trial?
Claims can be disposed of without a full trail in several cases, but generally for the following:
a) If the plaintiff does not comply with the requirements of its complaint, even after being warned by the judge to emend the complaint for deficiencies or errors in it (for example, to clarify the names or addresses of the defendants, to exhibit certain documents, to clarify certain facts, etc.)
b) If the Judge orders his Court lacks jurisdiction.
c) If the complaint needs a previous ruling on a different matter before moving forward.
d) If the claim is necessarily related to another claim before a different court.
e) Lack of standing of the Plaintiff.
f) Lack of compliance of the conditions that the claims are subject to.
g) Filing in an inappropriate method/way.
What, if any, are the main types of interim remedies available?
The Commerce Code regulate interim remedies that the parties can request in order to maintain the status quo during trial. In other words, an interim measure is granted by a Judge to immediately preserve the current status existing among the parties, or to refrain a party form taking certain actions that could make it impossible to obtain relief.
Interim remedies can be granted prior or during trial when there is a founded fear that the person against whom a lawsuit will be filed, may disappear or hide to avoid being summoned to trial; or when there is a founded fear that the assets will be disposed of.
Additionally, recent court precedents have determined that other precautionary measures referred to in other regulations such as the Federal Code for Civil Procedures, are also available for the parties in commercial litigation.
After a claim has been commenced, what written documents must (or can) the parties submit and what is the usual timetable?
In all proceedings, plaintiffs must file their complaint with all the documents that support their claim. Same rule applies to the defendants, that is, when they file their reply or counterclaim, all documents available must be presented.
However, if the parties don’t have the documents at their disposal, they must announce them to the judge and demonstrate an intent to obtain them. In light of that, the judge will decide whether issuing a judicial order to obtain the documents, or if it is possible, to grant the interested party an extension to submit such documents.
There are certain exceptions that allow the parties to submit documents once the trial has been commenced, such as: In case there is evidence not known at the time of filing; when the plaintiff responds to and contradicts the defendant’s answer to the claim; in response to a counterclaim, if any.
Notwithstanding the foregoing, all documents must be submitted to Court, before the day the evidence phase of the trial is concluded, and before the parties move for closing arguments.
What, if any, are the rules for disclosure of documents? Are there any exceptions (e.g. on grounds of privilege, confidentiality or public interest)?
As general statute, parties are obliged to present every document that could be used as evidence in trial. Failure to disclose and present all available documents can result in negative inferences drawn up by the Judge at judgment, however, there should be an indication that the documents exists and that one of the parties is failing to present such document.
Additionally, it is possible for the parties to request the Judge to order third parties or government agencies to submit documents to be used as evidence.
In Mexico there is no such thing as exceptions for disclosure, however, government agencies may deny production of documents based on national security concerns.
How is witness evidence dealt with in commercial litigation (and, in particular, do witnesses give oral and/or written evidence and what, if any, are the rules on cross-examination)? Are depositions permitted?
One of the requirements to offer witnesses in any commercial litigation, is that they must be announced at the time of filing the complaint or its reply/answer, otherwise the witnesses will not be admitted, unless they constitute evidence not known at the time of filling.
Once admitted, the Court will schedule a date for the hearing, in which the witnesses will be examined by both parties, first by the offering party, and right after by opposing counsel. Each party is obliged to present their own witnesses, however, the Judge can issue a subpoena in case the witnesses refuse to appear.
Is expert evidence permitted and how is it dealt with? Is the expert appointed by the court or the parties and what duties do they owe?
Expert evidence is permitted in commercial litigation. The role of experts is to deliver expert opinions providing specialized knowledge that pertains to a particular subject matter necessary to deliver judgment.
The party offering this type of evidence must indicate the subject matter, issues to be determined and the expert appointed. The opposing party will be given the opportunity to deliver comments on the subject matter, indicate additional issues to be determined, and select an expert of its own. The experts are to deliver their testimony in writing, and if they are substantially contradictory, the Court will appoint an expert in the same subject matter to deliver its expert opinion.
Party-appointed expert’s fees are paid by each party. The fees of the Court-appointed expert, are shared equally among the parties.
Can final and interim decisions be appealed? If so, to which court(s) and within what timescale?
Final and interim decisions can be appealed. Generally, regarding interim decisions the parties can appeal without a stay of execution of the lower court’s judgement within 6 business days from the issuance of the order appealed. Final judgments can be appeal with a stay of execution of the judgment, within 9 business days from the issuance of the final judgment appealed. Additionally, some procedural orders can be appealed in a preventive manner, in which the corresponding grounds for appeal are reserved and raised together with appeal against the final judgment, in this cases, the preventive appeal must be filed within 3 business days from the issuance of the order appealed.
What are the rules governing enforcement of foreign judgments?
The rules that govern the enforcement of foreign judgements in our jurisdiction, are provided for in the Commerce Code and the Federal Code of Civil Proceedings. To enforce a foreign judgement the following requirements must be fulfilled:
The judgement must have been resolved in compliance with the procedural rules established under the local law; The judgement must not arise from in rem actions. The Court that issued the judgement must have had subject-matter jurisdiction in compliance with foreign regulations supported by the Mexican local regulations. The foreign Court will not have subject-matter jurisdiction when the documents that gave place to the foreign judgement established a clause of exclusive jurisdiction to Mexican Courts; The defendant must have been personally summoned and its right to heard in Court must have been ensured; The judgement must be final, not subject to further appeal; That a Mexican Court is not simultaneously resolving the same case; That the foreign judgement is not contrary to public order; The foreign judgement is dully apostilled.
Local Courts will only review the foreign judgement with regards to its authenticity (not regarding its substantial issues), and will determine if such foreign judgement can be enforced in Mexico.
Additionally, enforcement of foreign judgements in Mexico is also ruled by the treaties that our government has signed with other countries. Among others, the following treaties have been signed by the Mexican Government:
The Inter-American Convention on Extraterritorial Validity of Foreign Judgments and Arbitral Awards; The Convention on Competence in the International Sphere for the Extraterritorial Validity of Foreign Judgments.
Can the costs of litigation (e.g. court costs, as well as the parties’ costs of instructing lawyers, experts and other professionals) be recovered from the other side?
In commercial proceedings, the cost and legal fees can be recovered from the other side, as stipulated for by the Commerce Code, or when in opinion of the judge, one of the parties has proceeded with recklessness or in bad faith.
In commercial claims, there will always be a judgment for costs, in the following cases:
a) If one of the parties does not offer evidence to demonstrate its claim or defense.
b) If one of the parties submits forged documents, or brings before trail a false or bribed witness.
c) If the defendant is sentenced to pay in an executive commercial trial.
d) If the plaintiff does not obtains a favourable judgement in an executive commercial trial.
e) If one of the parties is sentenced by two judgements issued in the same terms, without taking into account the declaration or ruling on costs of litigation. In this case the judgment on costs of litigations will include both instances.
f) If the plaintiff fails to state a claim upon which relief can be granted.
g) If the defense lacks of merits or validity.
h) If one of the parties files a motion, an appeal or a remedy that lacks of merits or validity.
The costs of litigation are limited to the tariff available, depending if granted in first or second instance. Generally, when the relief sought is monetary, the tariff is 6% of the relief sought, in first instance, and 8% of the relief sought, in second instance.
What, if any, are the collective redress (e.g. class action) mechanisms?
Class actions can be commenced in protection of common rights or interests. They seek to obtain from relief of the damage and compensation.
Collective actions are initiated by a formal complaint filed before a Federal District Court. In case the claim is admitted, a conciliation meeting is schedule in order for the parties to settle, before the dispute is initiated.
According to the Federal Code of Civil Procedure, there are three types of class actions:
Diffuse actions: they are not divisible claims brought to protect diffuse rights or interests belonging to an undetermined community. Their purpose is to obtain from the defendant relief of the damage caused. Such repair can consist in the restitution of status prior to the damage or, in case this is not possible, a substitute relief. The existence of a legal relationship between the community and the defendant is not necessary.
Collective actions in the strict sense: they are not divisible claims brought to protect common rights or interests belonging to a determined or determinable community or group based on common circumstances. Their purpose is to obtain from the respondent the remedy of the damage (usually through the performance or abstention of certain acts), as well as the compensation for damages for each member of the group. It is required for the members of the group to have a legal relationship with the respondent; the relationship must be established in statutory law.
Individual homogenous actions: they are divisible claims brought to protect individual rights or interests that have a collective impact, belonging to individuals in common circumstances. Their purpose is to obtain from the defendant the specific performance of a contract or its termination, along with the applicable legal effects and consequences.
What, if any, are the mechanisms for joining third parties to ongoing proceedings and/or consolidating two sets of proceedings?
Third parties can be joined by the plaintiff in its complaint, or by the defendant in its answer. Usually, third parties are called to join for the specific purpose of making them part of the final judgment in order to avoid further litigation against such third party. Additionally, third parties can appear by their own right in support of one of the parties, for the determination of a paramount title or right, or even in opposition to both parties.
Now, consolidation of actions takes place in the following cases: i) identity of the parties and actions, ii) identity of parties and “things”, iii) actions that arise from the same cause, iv) identity of actions and “things”. Consolidation always aims to avoid having two contradictory judgements, and that is standard followed prior to ordering the unification of cases. In case consolidation occurs, each case is tried separately by the same Judge, but only one final judgment is delivered.
Are third parties allowed to fund litigation? If so, are there any restrictions on this and can third party funders be made liable for the costs incurred by the other side?
Under the Mexican Law, third party funding litigation is not prohibited nor expressly allowed. Each party normally funds its own litigation, but side agreements governing litigation funding can certainly exist. There is no precedent of third party funders being made liable for costs incurred.
What, in your opinion, is the main advantage and the main disadvantage of litigating international commercial disputes?
In our opinion, the main advantage in litigating international commercial disputes in Mexico is the fact that there are no fixed court costs or taxes, so no matter the amount of the controversy, the Courts are compelled to hear the claim, provided that they are competent.
On the other hand, a disadvantage might be that legal proceedings in Mexico take a substantial amount of time to be resolved in whole (20-24 months), basically due to the overload of work of the Courts.
What, in your opinion, is the most likely growth area for disputes for the next five years?
In our opinion, the most likely growth area for disputes in Mexico for the next 5 years will be in the area of oral proceedings. Mexican lawmakers, in the recent years, have passed many reforms that order for the majority of the disputes to be resolved in oral trials.
The second area of growth will be in commercial arbitration. Mexico has important arbitration centers and ideal facilities for the conduction of arbitral proceedings. In addition, Mexico has a wide and consolidated body of laws integrated by international laws, that guarantee the resolution of controversies through arbitration in a predictable, certain and secure manner, providing ideal mechanisms for recognition and execution of national and international awards. Therefore, subject to the positive response from Mexican Courts, Mexico is a viable alternative to be selected as a place for arbitration.
What, in your opinion, will be the impact of technology on commercial litigation in the next five years?
In the next five years technology will have a huge impact in commercial litigation, especially because everything will be done electronically, from submissions and filings, to notifications and summons. Additionally, everything will be available electronically, so there will be less need to go to Courts. This will not only reduce time and costs, but it will also help the environment.
How have the courts in your jurisdiction dealt with the COVID-19 pandemic and have you seen particular types of disputes arise as a result of the pandemic?
Due to the global pandemic crisis of COVID-19 all Federal and Local Courts were closed on March 18 and until May 5. Only issues pertaining to criminal courts and family courts (only violence, alimony, and spousal separation) were substantiated. Additionally, during this period no action could be commenced in Federal Courts as all activity was reserved for “urgent” amparo proceedings only. Urgent matters are defined in article 48 of the Federal Judiciary Council General Order and consist in arrest, search warrants, orders to intervene private communications, extradition, among others of criminal nature. The Federal Judiciary Council allowed District Court Judges to decide discretionally in what would also constitute an urgent matter and provided as example freezing of bank accounts.
We foresee a rise in commercial disputes related to force majeure as well as bankruptcy and restructuring proceedings of companies that before the COVID-19 pandemic were already in financial distress.