Enforcement and recognition of foreign judgments and arbitral awards in Mexico.

• Author: Perez-Correa, Fernando

AS BUSINESS ventures increasingly cross national borders, the impact of comity for cross-border legal determinations has often failed to keep pace. Companies unfamiliar with legal standards for recognition of foreign judgments are often surprised to discover that obtaining a judgment from a court or arbitrator on a dispute is seldom the last word when it comes to recognizing the judgment. Mexico's legal system has adopted a regime of limited judicial supervision with respect to the enforcement of foreign judgments and arbitral awards. An international judgment or arbitral award will only have binding effects in Mexico after a recognition proceeding has been conducted.

This article explores the requirements and procedure to obtain the recognition and enforcement of foreign arbitral awards and judgments in Mexico. To add context, I have included a brief description of Mexico's legal system.

Judicial control of foreign judgments and arbitral awards focuses on two fundamental elements: (a) compliance with certain formal requirements and (b) limited review of the merits of the judgment.

The first broad category asks whether the judgment or award is valid and authentic. Additionally, and most importantly, the "formal requirements" element demands compliance with certain basic procedural "due process" requirements (i.e., that the foreign court had jurisdiction to adjudicate the case, that the judgment is final and conclusive, and that the defendant was properly served).

On the other hand, a Mexican court's review of the merits is strictly limited to public policy considerations, whereby local courts will only refuse recognition and enforcement of non-domestic judgment or arbitral award if they violate Mexican public policy. These requirements are contained in a myriad of very different legal statutes (local and federal codes of civil procedures, the Commercial Code and international conventions), which despite significant differences, uniformly respect the limited judicial review system that generally prohibits substantive review of the merits of the case.

Although the grounds to refuse the recognition and enforcement of foreign judgments are very similar to those regarding arbitral awards, recognition procedures widely differ. Recognition and enforcement of foreign judgments (both civil and commercial) entails an exequatur procedure, whereby a Mexican Court verifies if judgment complies with those formal and substantive requirements set forth by applicable procedural codes. In contrast, with respect to the recognition of arbitral awards, the competent Mexican court will determine the award's enforceability in the light of any arguments of refusal brought by the opposing party. Thus one must expect limited cases where the court finds on its own motion that the award is contrary to public policy.

1. Overview of Mexico's Judicial System and Regulations on Enforcement of Foreign Judgments and Arbitral Awards

   Mexico's Federal Constitution provides for a federal system where state legal regimes coexist with the federal legal regime. Each of Mexico's thirty two states, including the Federal District, has its own independent court system with jurisdiction to decide on state matters. A separate federal court system handles matters of federal interest set forth in the Constitution, particularly including commercial matters. (1)

   Article 133 of Mexico's Constitution, which is based on the Supremacy Clause of the U.S. Constitution, (2) has been interpreted the Supremacy Clause to mean that international treaties are second only to the Constitution and thus prevail over both Federal and State law. (3) The Supreme Court has also ruled that International treaties are automatically incorporated into Mexico's legal system, without further need of implementing legislation. (4)

   International treaties and conventions are of paramount importance in Mexico since its rules prevail over federal and local law, and they are part of the Mexico's legal system. Mexico is party to three conventions relevant to this article. Two apply to the recognition and enforcement of commercial arbitral awards: The United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards (the "New York Convention") (5); and the Inter-American Convention on International Commercial Arbitration. (6) Both the United States and Mexico are part of these conventions. The third convention, the Inter-American Convention on Extraterritorial Validity of Foreign Judgments and Arbitral Awards, (7) applies to non-commercial awards and to judicial judgments. Mexico is part if this convention but the United States is not. In general, enforcing commercial arbitral in Mexico is easier than enforcing foreign judgments, since (i) it is more likely that an arbitral award will be covered by and international convention than a court judgment, (ii) Mexico adopted the United Nations Model Law on commercial arbitration which codifies the rules and principles of the New York Convention, and (iii) the requirements of the Inter-American Convention on Extraterritorial Validity of Foreign Judgments and Arbitral Awards are harder to meet than the requirements of the New York Convention and the Model Law.

   The Supreme Court has ruled that every state has exclusive authority to enact domestic regulations regarding the proceedings to recognize and enforce foreign judgments and civil (as opposed to commercial) arbitration awards. (8) As a result, legal requirements to enforce an international civil judgment are found in the codes of civil procedure of each state or, for federal matters, the Federal Code of Civil Procedures. In addition, the Commercial Code provides the requirements for the enforcement of commercial foreign judgments. (9)

   Generally, a state code of civil procedures includes a chapter devoted to the enforcement of foreign judgments, which includes the list of grounds to deny recognition, the standard of determining if foreign court had jurisdiction, and the authentication requirements. (10)

   Mexico is also a signatory to several bilateral treaties on the enforcement of foreign judgments, (11) as well as the 1979 Montevideo "Inter-American Convention on Extraterritorial Validity of Foreign Judgments and Arbitral Awards", adopted by most of Latin American Countries. (12) The Montevideo Convention does not apply, however, to judgments rendered in countries which are not signatories (including the United States of America and Canada). Instead, judgments rendered in non-signatory jurisdictions shall instead be examined under the rules contained in the local or federal codes of civil procedure.

   The enforcement and recognition of arbitral awards is primarily governed by two pieces of legislation. First, the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards has been adopted in Mexico. (13) The New York Convention has a broad international consensus as it has been adopted by over 140 countries. Second, the Commercial Code has incorporated the complete text of the Model Law on International Commercial Arbitration. (14) The Commercial Code specifically states that recognition...