The Advantages of Arbitration in Mexico

April 7, 2015
The Advantages of Arbitration in Mexico

The rise of commercial arbitration as a means to resolve disputes in Mexico emerged in 1993 as a product of theamendment of the Mexican Commercial Code, which was adopted by the Model Law of the United NationsCommission on International Trade Law (UNCITRAL).From 1993 until the present, the practice of private arbitration in Mexico has become quite active and dynamic. Itis increasingly becoming a preferred alternative for resolving conflicts between private parties, without the needto resort to a judicial proceeding in Mexican courts and tribunals.Some of the advantages which make commercial arbitration in Mexico a good option for resolving disputesbetween parties, as opposed to a court proceeding, include:1. Judicial Saturation: Even though Article 17 of the Political Constitution of Mexico clearly establishes thatthe justice system in Mexico should be prompt and expeditious, the reality is that there is currently anoversaturation of lawsuits in Mexico deriving from a growing caseload, making the resolution of disputesbetween parties a slow process and which can take several months or years.Based on the above, commercial arbitration increasingly presents itself as a quicker and more efficientoption to resolve conflicts between parties.2. Lower Cost from Time Savings: Even though the justice system in Mexico presided over by the courtsand tribunals is a free public service, the delay and the slow performance of the Mexican courts andtribunals in issuing decisions makes the cost of a traditional lawsuit burdensome in many cases, includingamong others, attorneys' fees, which are often greater than those for an arbitration proceeding.3. Specialization: In Mexico, the tendency to create specialized courts and tribunals in different subject areasmakes the administration of justice more agile and accurate. However, the specialties of such courts andtribunals often cannot compare with the specialty of the members of an arbitral tribunal, who are selectedprecisely because of their high degree of preparation and expertise with respect to the subject matter ofthe conflict that is submitted to arbitration.4. Transparency, Trust and the Absence of Corruption: Despite the enormous efforts that have been made inrecent years to combat legal uncertainty in Mexico, at present cases of corruption, bribery and influencingthe judiciary still exist in Mexico, which causes parties to call into question some decisions of Mexicancourts and tribunals. This has led more parties to subject themselves to arbitration as an alternative meansto resolve their disputes, since arbitral tribunals may offer the confidence and transparency that might belacking in some judicial forums in Mexico.In view of all these factors, private commercial arbitration as an alternate means of resolving disputes betweenparties is a viable option that is worth considering when it comes time to negotiate and enter into a contract inMexico.Sources of information and disclaimer: The following sources of information, among others, have beenused in preparing this document: Official Journal of the Federation, the Bank of Mexico, Supreme Court ofJustice of the Nation, Department of Finance and Public Credit. The CCN MéxicoReport ™ does notconstitute legal or tax advice and should not be used for purposes other than as purely informative for thegeneral public. For more information on the CCN MéxicoReport ™, any of the issues mentioned therein orto inquire about legal services, please contact Rob Barnett (rbarnett@ccn-law.com) or Mario Melgar(mmelgar@ccn-law.com), phone (210) 222-1642.

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