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International Arbitration Law in Mexico – Global Legal Collection Highlights

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This is a guest post by Dante Figueroa, a senior legal information analyst at the Law Library of Congress.  Dante is a frequent contributor to In Custodia Legis. His recent posts include Introduction to Roman Law – Global Legal Collection Highlights, Introduction to Canon Law – Global Legal Collection Highlights, Resources and Treasures of the Italian Parliamentary Libraries, and A Fresh Update on the Canonical Rules on the Election of a New Pontiff.

January 1 of this year marked the twentieth anniversary of the entry into force of the North American Free Trade Agreement (NAFTA) signed between the United States, Mexico and Canada. While there are conflicting views on the overall economic impact of NAFTA, I believe that NAFTA had a great impact on Mexico’s culture regarding international commercial and investment arbitration. From a historic reluctance to international arbitration embedded in the Commerce Code of 1889 and the Constitution of 1917, Mexico has witnessed a growing openness to international arbitration.

Growing Openness towards Arbitration in Mexico

During the last two decades, commercial arbitration, both domestic and international, has experienced rapid development in Mexico. The underlying rationale behind the efforts to promote arbitration in commercial matters is to reduce the workload of the Mexican judiciary and the costs associated with judicial adjudication, as well as to provide an expedited and specialized solution to commercial disputes.

North American Free Trade Agreement (NAFTA), Office of the United States Trade Representative
North American Free Trade Agreement (NAFTA), Office of the United States Trade Representative Website

The arbitration of international disputes received an important boost in 1994 with the passage of NAFTA. In 1993, in preparation for NAFTA, the Mexican Congress amended Article 14 of the Organic Law of PEMEX  (Mexico’s state-owned petroleum company), allowing contracts involving PEMEX to be subject to arbitration.  PEMEX became the only Mexican government entity allowed to use arbitration at that time. Later, in 2009, when the Mexican legislature amended the Law for Public Works and Services and the Law for Acquisitions, Leases and Services of the Public Sector, works contracts, particularly long-term acquisition contracts executed by all federal agencies, were allowed to contain arbitration clauses. Then, in 2012, another amendment to the Public-Private Partnerships Law (PPPL) removed the long-term requirement previously prohibiting arbitration in government acquisition. Consequently, to date all federal acquisition contracts may be subject to domestic or international arbitration.

It should be noted, however, that several restrictions concerning the termination and rescission of administrative contracts remain in place. Specifically, the PPPL excludes “acts of authority” and “administrative acts” from arbitration.  Recent academic and judicial debate in Mexico has focused on whether the administrative termination or rescission of an administrative contract qualifies as an act of authority or administrative act and is therefore, as a matter of public policy, not subject to arbitration.

Litigation Involving U.S.-Mexico International Commercial Arbitration

This debate is reflected in the case of Corporación Mexicana de Mantenimiento Integral (Commisa) v. Pemex, recently decided by a U.S. district court. In this case, the U.S. court confirmed an International Court of Arbitration arbitral award against PEMEX, a decision that was later overturned by a Mexican federal district court on several grounds.   In general, the Mexican appellate court found that “administrative rescissions were not arbitrable,” and that “it was unacceptable for arbitrators to resolve a matter of public policy.”  Behind the Mexican court’s decision lies the centuries-old French doctrine of “Le Contrat administratif” (administrative contract) that applied in Latin America during the nineteenth century based on the Napoleonic Civil Code. This doctrine recognized the public policy character of contracts where the government was involved and in practice, prohibited or greatly restricted arbitration.

Commisa v. Pemex is a highly complicated case that highlights the changing attitudes toward international commercial arbitration in Mexico, from a historic reluctance, to a growing openness followed by this recent reversal in trend. Among the myriad of relevant legal issues discussed in this case are: the arbitrability of government contracts in two different jurisdictions, the retroactive application of foreign laws to U.S. litigation, the effects of a foreign court decision on litigation held in the United States, as well as issues of international comity, reciprocity, and enforcement of international arbitral awards.

General Resources on International Commercial Arbitration

The Law Library of Congress holds a vast collection of resources on international commercial arbitration, including several recent publications:

In addition, we have numerous bibliographical resources available that deal with the topic of international arbitration with a focus on Mexico:

The Law Library of Congress Reading Room is open to the public six days a week.  To access materials you will need a Library of Congress Reader Identification Card.  You can also submit questions to our legal reference specialists through the Ask a Librarian form on our website.

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