1.1 Advantages

Over the last decades, Mexico has gradually modernized its legal system and made it more receptive to arbitration. In 1988, Mexico departed from its traditional strict territoriality approach and fully adhered to private international and conflicts of laws principles in its civil codes. In 1993 it adopted the UNCITRAL Model Law in its Code of Commerce (CoC) and Mexico has continually expanded its net of free trade agreements (FTAs) and bilateral investment treaties (BITs). For the international treaties ratified by Mexico, see below, Section 2. As a result, Mexico has become an arbitration-friendly jurisdiction in Latin America. Disputes submitted to arbitration can be settled in a matter of months (sometimes in as little as two to six months) as opposed to years, as is the common denominator for disputes in municipal or local courts. Thus, Mexico allows the parties to choose between domestic arbitration institutions, international arbitration institutions, ad hoc arbitration and investor-related arbitrations under applicable international treaties.

1.2 Disadvantages and common pitfalls

Despite the many advantages of arbitration, including but not limited to, the choice of arbitrators based on their subject-matter expertise and access to swifter proceedings, the issue of arbitration costs can pose a disadvantage, as well as award enforcement if the award debtor does not comply voluntarily. Unlike judicial proceedings, a final arbitral award will impair a party’s ability to exhaust further remedies or appeal in a higher court.

1.3 Distinctive features

As described in Section 1.1 above and Sections 2.1 and 3.1 below, Mexico is to be considered an arbitration-friendly jurisdiction.

2.1 Legal framework

The main body of law regulating arbitration in Mexico, is Book V, Title IV of the CoC. This Code shall govern domestic arbitrations, and international arbitration if the arbitration seat is in Mexico or subject to Mexico law. Under constitutional supremacy principles, international treaties may be invoked.

The applicable international treaties are:

• The Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York, 1958), ratified by Mexico in 1971.
• The Inter-American Convention on International Commercial Arbitration (Panama Convention of 1975), ratified by Mexico in 1978.
• The Inter-American Convention on Extraterritorial Validity of Foreign Judgments and Arbitral awards (Montevideo Convention of 1979), ratified by Mexico in 1987.
• The Convention on the Settlement of Investment Disputes between States and Nationals of other States (ICSID Convention, establishing the International Centre for Settlement of Investment Disputes, Washington 1965), ratified by Mexico in 2018.

2.2 What qualifies under domestic law as “international arbitration”? Is there a specific statute?

Under paragraph III of Article 1416 of the CoC, “international arbitration” is defined as: “(…) such procedure in which: a) the parties upon laying down the arbitration agreement, have their establishments in different countries; or b) the place of arbitration, as per the arbitration agreement or in accordance with it, or the place of performance of a substantial portion of the binding commercial terms, or such place as is most intertwined with the merits of litigation, happens to be situated outside the country in which the parties have their establishment (…)”.

2.3 Ratification of the New York Convention

Mexico ratified the New York Convention on April 14, 1971. It entered into force on July 13, 1971.

2.4 Ratification of the ICSID Convention

Mexico ratified the ICSID Convention on July 27, 2018. It entered into force on August 26, 2018.

2.5 Other treaties relating to arbitration

Mexico has bilateral investment treaties (BITs) with over 20 countries (see International Investment Agreements Navigator/UNCTAD Investment Policy Hub https://investmentpolicy.unctad.org/international-investment-agreements/countries/136/Mexico).

Mexico is a member of the World Trade Organization (WTO), the Asia-Pacific Economic Cooperation (APEC), the Group of 20 (G20), and the Organization for Economic Co-operation and Development (OECD). Mexico has 13 FTAs with 50 countries including the United States–Mexico–Canada Agreement (USMCA)  and FTAs with the European Union, the European Free Trade Area, Japan, Israel, 10 countries in Latin America, and the 11-country Comprehensive and Progressive Agreement for Trans-Pacific Partnership. Mexico is also a member of the Pacific Alliance, a trade bloc formed in 2011 by Mexico, Chile, Colombia and Peru (see Mexico: Trade Agreements www.trade.gov/country-commercial-guides/mexico-trade-agreements).

2.6 Choice of forum for intra-EU dispute settlement

Mexico is not a Member State of the European Union.

2.7 Is the municipal law governing arbitration based on UNCITRAL Model Law?

Yes, Mexico adopted the UNCITRAL Model Law on International Commercial Arbitration almost in its entirety.

2.8 Recent amendments or reforms in arbitration laws

The General Alternative Dispute Resolution Law (Ley General de Mecanismos Alternativos de Solución de Controversias) was enacted on January 26, 2024. It seeks the furtherance of alternative dispute resolution (ADR) through information technologies (online).

In Mexico, local arbitration institutions have been key to promoting the practice of arbitration and provide a more tangible and cost-efficient approach for businesses operating locally.

3.1 Presence of local arbitration institutions

Local arbitration institutions include Arbitration Center of Mexico (Centro de Arbitraje de México (CAM)) and the National Chamber of Commerce of Mexico City (Cámara de Comercio de la Ciudad de México (CANACO)).

3.2 Does the London Court of International Arbitration (LCIA) have a local office?

No.

3.3 Does the Permanent Court of Arbitration (PCA) have a local office?

No.

3.4 Does the ICC International Court of Arbitration have a local office?

Rather than a branch office of the ICC International Court of Arbitration, there is a Mexican Chapter to the ICC. It is an independent body but it advances similar interests and seeks to support the ICC agenda.

3.5 Does the International Centre for Dispute Resolution (ICDR) have a local office?

No.

3.6 Agreement entered into with local offices of international arbitration institutions

The closest scenario is that addressed in Section 3.4, above.

Arbitration agreements must be in writing and comply with content and form requirements.

4.1 Requirements as to content and form

Under Article 1423 of the CoC, the arbitration clause or agreement must be in writing, signed by both parties, or be an exchange of letters, telex, telegrams, fax or other means of communication that provide evidence of consent, or an exchange of claims and counterclaims affirmed by one party without denial from the other party. Reference made to a contract or documents with an arbitration clause shall constitute an arbitration agreement so long as it is in writing and the clause is incorporated by reference to the contract.

4.2 Validity of arbitration agreements

Under Article 1795 Federal Civil Code, validity will be subject to

• legal standing or party capacity;
• no duress or flawed consent;
• lawful purpose; and
• compliance with mandatory form requirements.

4.3 Special formalities

Under Article 1416 (I) of the CoC, an arbitration agreement is that by which the parties’ consent to submit to arbitration all or certain disputes that exist or may exist among them regarding an ongoing legal relationship, whether contractual or not. The arbitration agreement may be laid down through an arbitration clause in a contract or as an independent agreement.

4.4 Governing law

Under Article 1445 of the CoC, both parties choose the law governing the merits of a dispute (substantive law, without conflicts of law rules). If not, the arbitral tribunal shall do so. In all cases, the arbitral tribunal shall do so on a case-by-case basis, mindful of the parties’ interests.

Both parties may determine the place of arbitration, and in the absence of such designation, the arbitral tribunal may do so on a case-by-case basis, mindful of the parties’ interests (Article 1436, CoC).

Under the CoC, Article 1435, the parties shall agree on the arbitration procedure (rules) to which the arbitral tribunal shall be bound. Absent such determination, the arbitral tribunal may conduct arbitration as it deems necessary. The arbitrators shall rule on admissibility, relevance and value of evidence. Under the CoC, section 1432, the arbitrators shall rule on whether they can hear the case or must excuse themselves.

5.1 Applicable restrictions

There are subject matter restrictions as follows:

• family law;
• criminal law;
• national lands and waterways, including the subsurface, airspace, territorial waters and continental shelf;
• exclusive economic zone resources or any sovereign zoning claims under the Federal Sea Act;
• governmental acts of authority of the State, its subdivisions, federal agencies and federal states; and
• internal operations and acts of Mexican embassies and consulates in foreign locations (Article 568 of the Federal Code of Civil Procedure).

Further, the issue of human rights under the Mexican constitution and international treaties ratified by Mexico cannot be subject to arbitration.

6.1 Stay of proceedings

Usually, a court will decline to hear a case if it already has been validly submitted to arbitration.

6.2 Anti-suit injunctions

Mexican law does not specifically regulate anti-suit or anti-arbitration injunctions. However, a party may seek injunctions under general interim relief provisions. See below, Section 8.1.1.

Under Article 1426 of the CoC, both parties are at liberty to appoint the number of arbitrators. Absent a determination on the number of arbitrators (tribunal), only one arbitrator shall be appointed.

7.1 Restrictions on the parties’ freedom to choose arbitrators

There are no restrictions. The parties may freely determine the rules of appointment of arbitrators (Articles 1426 and 1427, CoC).

7.2 Requirement of arbitrator independence and impartiality

Under the CoC, Article 1428, arbitrators must be neutral and independent. Any actual or potential bias must be disclosed.

7.3 Mandatory rules applicable to the appointment process

Both parties may agree on the rules for arbitration procedures and arbitrator(s) appointments (CoC, Article 1427(II). However, a party may have recourse to a court of law if the other party or even a third party fail to comply with the agreed-upon rules (Article 1427(IV), CoC).

7.4 Appointment mechanism in the absence of party agreement or applicable institutional rules

Absent any appointment rules, under the CoC Article 1427(III), the following applies: a) sole arbitrator: if there is no consensus, the latter shall be appointed by a Court at the request of the moving party; b) arbitral tribunals: each side shall appoint one arbitrator, and both appointees shall agree on the third arbitrator; if a party fails to appoint an arbitrator within 30 days … or if both appointees fail to concur on the third arbitrator appointment, within 30 days … either party may move for the Court to designate the third appointee.

7.5 Mandatory rules applicable to the replacement process

Under the CoC, Article 1431, if an arbitrator steps down, is removed by both parties in joint accord, or if the arbitrator ceases for any other cause, a replacement shall be determined in the same way as the substituted arbitrator was appointed.

7.6 Mandatory disclosure obligations

Under the CoC, Article 1428, the appointee must always disclose all circumstances affecting his or her neutrality or independence.

7.7 Grounds for challenge

Under Article 1428 of the CoC, an arbitrator may be challenged if there are circumstances that compromise that arbitrator’s neutrality, independence or ability to discharge his or her duties. A party may challenge its own appointee due to supervening circumstances.

7.8 Mandatory rules governing the challenge of arbitrators

Both parties may determine the rules to challenge arbitrators. In the absence of voluntary rules, or if the arbitral tribunal fails to remedy the challenge under the arbitration rules, the moving party may seek Court intervention (Article 1429, CoC).

7.9 Removal

If an arbitrator fails to excuse himself or herself, is otherwise impaired, or the parties fail to agree, then any party may request a Court to intervene (Article 1430, CoC).

7.10 Liability and immunity of arbitrators

There is no specific regulation. Thus, general principles of interim relief apply (Article 1480, CoC).

8.1 Interim measures

Generally available.

8.1.1 Overview of interim measures

The parties may seek interim relief, before or during arbitration. A court has wide discretion to grant or deny provisional measures (CoC, Articles 1425, 1478–1480).

8.1.2 Relevance of availability of emergency arbitrator mechanism

Both parties shall follow the arbitration rules governing the process. If the arbitrators fail to address such a mechanism, if available, the aggrieved party may seek recourse before a court of law (Article 1479, CoC).

8.2 Taking of evidence

The arbitrators may request court assistance in the taking of evidence (Article 1444, CoC). However, rulings on admissibility of evidence should be made by the arbitrators (Article 1435, CoC).

8.3 Appointment or challenge of arbitrators

Arbitrators shall be appointed or challenged under the rules of arbitration of the institution to which the parties have submitted for the conduct of their arbitration proceedings. No Mexican statute conflicts with this.

8.4 Other available assistance

No other types of assistance to arbitrations are commonly available.

9.1 Domestic scope of sovereign immunity from jurisdiction

State-owned companies may submit to arbitration, either through an arbitration clause or an arbitration agreement. This is the case when a governmental entity is a party to a contract. In this instance, it acts as a trader or in a commercial capacity (acta iure gestionis). It is the opposite to acts of state undertaken in a sovereign capacity (acta iure imperii). Mexico ratified the UN Convention on Jurisdictional Immunities of States and their Property on 29 September 2015.

9.2 Immunity from execution

When a state is the award debtor but refuses to recognize an award, and is unwilling to voluntarily comply with the award, the issue of execution can become complex. Certain assets of the Mexican State are unattachable, and certain acts of the Mexican State cannot be submitted to arbitration. Under the General National Assets Law (Ley General de Bienes Nacionales), governmental property of the public domain is not attachable (Article 13). Under the Law of Public Works and Ancillary Services (Ley de Obras Publicas y Servicios Relacionados con las Mismas, Articles 80–86) and the Law of Procurement, Leases and Public Services (Ley de Adquisiciones, Arrendamientos y Servicios del Sector Público, Articles 98–104), administrative cancellation or advance termination of governmental contracts cannot be submitted to arbitration. These acts of state are considered acts of governmental authority, iure imperii. The interpretation, performance or application of a contract may be submitted to arbitration. These acts are considered commercial, as the state acts iure gestionis, in privity of contract. Under the Hydrocarbons Law (Ley de Hidrocarburos), adverse administrative action, such as withdrawal from exploration or extraction contracts, cannot be submitted to arbitration. Challenges to tenders or adverse acts of authority can be sought through administrative remedies. However, an exploration or extraction contract can include an arbitration clause, provided that Mexican Federal law is the substantive law, and the arbitration is conducted in Spanish (Articles 20, 21 and 25). Under the Hydrocarbons Law, the grant or revocation of exploration and extraction contracts is in the public interest and constitutes public order. An arbitral award ruling on the issue of adjudication or revocation of such agreements, will be null and void because it is against Mexican public order. The subject matter of commerce, as laid down in Book Five, Title Four of the Code of Commerce, can be submitted to arbitration (Articles 95, 96, 97). In other words, Mexico follows the local remedies rule for the granting or revoking of exploration contracts, or to challenge tender procedures. Mexico will honor arbitration clauses or arbitration agreements regarding the commercial interpretation and performance of existing contracts.

Mexican law does not impose such requirements on the parties. The parties are free to draft arbitration clauses or arbitration agreements. Ultimately, the parties will adhere to model clauses and rules if they opt for institutional arbitration, for example, the ICC, ICDR-AAA or LCIA. Alternatively, if they seek ad hoc arbitration, for example, UNCITRAL rules, they will also have to draft a clause with minimal requirements, such as rules of procedure, substantive law, place, language, and so on.

There is no statutory guidance on this issue. The parties may make express provision or defer to the applicable arbitration rules on this point. However, the new General Alternative Dispute Resolution Law (Ley General de Mecanismos Alternativos de Solución de Controversias) does compel a general duty of confidentiality in Article 116(I).

12.1 Requirements as to content and form

The award must be in writing and signed by the arbitrator(s). An award not signed by the majority of arbitrators is effective if there are proper grounds to sustain the absence of an autographed signature. It must adhere to the arbitration rules and substantive law, display a date, and specify the place of arbitration. The award shall be notified, and a signed copy delivered to each party (Article 1448, CoC).

12.2 Time limit

The law of Mexico does not impose a time limit for rendering an award.

12.3 Remedies

There is no exhaustive list of remedies in the CoC. Arbitrators may grant requests for interim relief, but the parties shall seek provisional measures before municipal or local courts.

13.1 Interpretation and correction of awards

A party may, within 30 days of an issued notice of the award, (i) seek a ruling from the arbitral tribunal to correct calculation, typographical or similar errors; or (ii) upon joint accord, seek construction of the award (Article 1450, CoC).

13.2 Challenge of an award

Judicial appeals are not available, but a court of law may challenge or annul an award in limited cases if:

• a party to the arbitration agreement lacked standing or lawful consent;
• a party was not aware of the arbitrator appointment(s) or otherwise was curtailed in the exercise of its procedural rights;
• the dispute fell outside the scope of arbitration; or
• the procedure and appointments did not comply with the arbitration agreement or otherwise violate Mexico laws.

An award is null and void if it covers non-arbitrable subject matter or endangers Mexican public order (Article 1457, CoC).

13.3 Recognition and enforcement proceedings

An arbitral award, regardless of the country in which it was issued, shall be binding. Enforcement must be requested in writing to the court, together with the original, duly authenticated text or certified copy of the award and arbitration agreement. If in a language other than Spanish, an official translation from a court appointed translator will be required (Article 1461, CoC).

13.4 Cost of enforcement

When issuing the award, the arbitrators shall rule on the issue of apportionment of costs. No additional costs shall be levied for interpretation, ratification or completeness of the award (Article 1455, CoC).

13.5 Enforcement of orders of emergency arbitrators

To the extent that the emergency arbitrator has been appointed in accordance with the arbitration rules, any orders shall be deemed enforceable.

14.1 Process for enforcing New York Convention awards

Mexico has ratified the New York Convention. Enforcement will not be based on reciprocity. Under Article 133 of the Mexico Constitution, international treaties signed and ratified by Mexico, in compliance with constitutional requirements, are the supreme law of the land.

14.2 Grounds for resisting enforcement of New York Convention awards

Mexican courts may resist enforcement if doing so would aggrieve public order.

14.3 Enforcing non-Convention awards

A party seeking enforcement in Mexico will need to rely on one of the conventions signed and ratified by Mexico as they are the supreme law of the land. Failure to invoke the proper authority could result in grounds for declining enforcement.

There is no specific legislative ethics code in Mexico. The arbitrator shall be bound by the general rules of the profession or the bar association to which the arbitrator is affiliated.

15.1 Applicable to counsel

Mexico has an Act Regulating Constitutional Article 5 for Mexico City Professions (Ley Reglamentaria del Artículo 5º Constitucional relativo al ejercicio de las Profesiones en la Ciudad de México), but it lacks specific ethical codes or legislated professional standards binding upon counsel for conducting arbitral proceedings.

15.2 Applicable to arbitrators

Other than available institutional rules, there are no specific ethical codes or professional standards binding upon arbitrators for conducting arbitral proceedings.

16.1 Applicable regulatory requirements

While third-party funding has been addressed in Working Group III of UNCITRAL, it is not widely available in Mexico. Currently, access to funding exists, but it is not an extensive or common occurrence.

16.2 Overview of the third-party funding market

Although recent and somewhat limited, there is potential for growth in the third-party funding market in Mexico. Publicly available information on such sources can be found on the internet. Examples of third-party arbitration funding institutions active in the Mexican market include Qanlex Mexico (www.qanlex.com/mexico), Burford Capital (www.burfordcapital.com/loc/financiacion-de-litigios-en-america-latina/), and others that are active in Latin America.

17.1 Types of specialist arbitration

Other than national arbitration institutions such as CAM or CANACO mentioned in Section 3, above, there are no independent specialized arbitration bodies specifically covering copyright, IT or shipping. However, these matters can be submitted to international or national arbitration bodies if the parties choose to do so.

17.2 Key legal principles

Arbitration in Mexico tends to be general, not specialist.

17.3 Types of claim and defenses typically brought in that area

Arbitration in Mexico tends to be general, not specialist.

17.4 Issues and strategic considerations to take note of

Arbitration in Mexico tends to be general, not specialist.

The arbitration landscape could be subject to new trends. The recent Judiciary reform published in the Official Gazette of Mexico, September 15, 2024, has not been exempt from criticism by practitioners and legal scholars alike. The legal uncertainties it creates and the vulnerabilities it entails could lead to an increase in arbitration proceedings. Recent constitutional amendments, under Mexico’s incoming administration, published in the Official Gazette on October 31, 2024, are aimed at increasing national control over state companies in the name of the people. Political action may lead to governmental preference for national jurisdiction clauses over arbitration clauses in contracts with state-owned companies. Depending on the course of action taken by Mexican officials, there could be a potential increase in state-investor disputes under BITs and the ICSID. However, it is still too early to draw any conclusions.

Both authors would like to express their acknowledgement to Hugo E. Hernández García, Regional Representative for Latin America of the Young Arbitration and ADR Forum (YAAF) and the International Chamber of Commerce (ICC) for his time, generosity in providing valuable comments, suggestions, and feedback.