Procedure for Collecting on Mexican Performance or Guaranty Bonds

July 17, 2008
Procedure for Collecting on Mexican Performance or Guaranty Bonds

In accordance with Article 3 of the Federal Bonding Institutions Law (Ley Federal de Instituciones de Fianzas, or LFIF), the beneficiary of a performance or guarantybond must first initiate a claim on such a bond by presenting written notice to the bonding institution containing their claim, information relating to such claim andsupporting documentation. The bonding institution will then have 15 calendar days to request more information, in which case the beneficiary of the bond will have an additional 15 calendar days to supplement its initial filing. Once the information has been presented according to the time periods mentioned above, the bondinginstitution will have 30 calendar days to issues its decision as to rejecting the claim, granting the claim, or granting the claim partially. It is important to note that in acase of partial payment, the beneficiary has the obligation to receive the payment, but this does not imply its consent to a settlement. Article 93 of the LFIF establishes that once the procedure has been completed, or if the bonding institution fails to respond within the time period set by law, the beneficiary shall have the right to appear before a mediation board of the National Insurance and Bonding Commission, or to file a lawsuit in conformity with the special provisions set forth in Article 94 of the LFIF, which is a summary proceeding. Once the claim has been filed, this stops the statute of limitations from running, which time limit expires 180 days following termination of the bond, unless the bond establishes a different time period.

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