Litigation and the Mexican judicial process
It is a good idea for companies that may be considering doing business as a maquiladora have, at least, an understanding of the basics of litigation and the Mexican judicial process.
Litigation in Mexico is quite similar to that in the US, and for that reason, many might assume that they are virtually the same. After all, Mexico has a federal system of government just like the US with many of the same structures of government and justice in place. But there are key differences between the judicial systems of each country that must be understood when doing business in Mexico.
Mexican Commercial Law: Disputes and Litigation
As is true in the US, litigation is quite costly in Mexico, resulting in more business cases settling outside of court than in. In general, Mexicans are less litigious than the US, especially when it comes to commercial law. Governed by the Commercial Code, Mexican commercial law prescribes that disputes are tried in state civil courts. Decisions can be appealed, and summary judgments may be acquired as in the US. It is important to note that under the judicial process in Mexico, there are no jury trials except in the case of treason, and proceedings are primarily written.
Civil Lawsuits and the Mexican Judicial Process
There are essentially four stages in a civil case:
1. Pre-Filing: At this juncture, a party clarifies any doubts of fact or removes preliminary obstacles to filing the motion for relief.
2. Opening: In written form, the parties state their case to the court, including any and all facts and applicable laws, for the judge to then rule on admissibility of the complaint. If the judge admits the complaint, the defendant is served with nine days to respond in one of three ways:
- Acquiescence to Demand
- Affirmative Defense
3. Evidentiary Stage: Unlike US trials, according to the judicial process in Mexico, civil cases in Mexico involve presentation of written arguments and evidence, with only occasional verbal hearings for witness testimony, and usually without the assistance of counsel or intermediaries.
4. Closing: Closing arguments are made in written form, and without consulting a jury, the judge rules on the case in a decision which must discuss the issues of the case, evidence, and the supporting laws.
Under the precepts of the Mexican judicial process, court rulings are only binding on the parties of the specific case, and do not set precedence for future cases in stark contrast to US case law. However, in limited cases, the Mexican principle of Jurisprudence may require lower courts to reflect the interpretation of prior court rulings. Jurisprudence is created only by:
- Reiteration: when the same federal court has the same opinion five consecutive times
- Contradictory Opinion: when the Supreme Court or Circuit Boards resolve discrepancies between rulings
- Substitution: only when a magistrate or justice requires substitution
Appeals must be submitted within six days of an interlocutory decision and nine days of a final decision. If it meets the statutory requirements, the appeals court hears the case and may or may not grant a stay of execution. No new evidence is admissible. Oral closing arguments are allowed, and the court may rule in one of three ways:
- Uphold the prior decision
- Partially modify the prior decision
- Overturn the prior decision
In addition to having an understanding of the basics of litigation and the Mexican judicial process, it is advisable that companies contemplating the initiation of manufacturing activities associate themselves with a strategic partner in Mexico, or other experts, that have experience in dealing with issues of this nature, and others, in the country.