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17 May 2019
Under Mexican commercial regulations, contracting parties have traditionally been free to determine in their corresponding agreement the jurisdiction in which disputes must be resolved. However, a new binding precedent from the Supreme Court challenges this traditional approach with regard to banking adhesion contracts.
In a nutshell, 'adhesion contracts' are non-negotiable banking contracts which:
On 12 April 2019 a First Chamber of the Supreme Court decision was published in the Mexican Judiciary Newspaper in order to clear up the confusion which had arisen from two conflicting judicial precedents.
The first of these conflicting precedents was delivered by the Second Collegiate Court of the Auxiliary Centre for the 11th Region of Coatzacoalcos, Veracruz. This precedent privileged consumer protection over contractual jurisdiction covenants. It established that, under the constitutional right for effective judicial protection, any litigation could be resolved in a jurisdiction of the consumer's choosing – regardless of whether a jurisdiction clause had been established in the applicable adhesion contract – provided that the bank's domicile was in the same jurisdiction and the contract had been signed there.
The second conflicting precedent was delivered by the First Collegiate Court of Civil Matters for the Fourth Circuit. This precedent aligned with the traditional legal approach, under which:
To resolve the conflict, the first chamber's resolution privileged consumer protection over contractual jurisdiction covenants. The relevant points in the excerpt are as follows:
The Supreme Court's precedent is a good example of how Mexico is advancing its consumer protection regulations. The precedent is binding for all Mexican courts (except the Supreme Court).
Since this trend of increased consumer protection is expected to continue, similar precedents that eliminate or reduce abusive practices, as categorised by the courts, are likely be handed down in the near future.
Therefore, financial institutions should take special care when designing adhesion contracts in order to avoid establishing clauses that the courts may declare null.
For further information on this topic please contact Federico de Noriega Olea, Maria Aldonza Sakar Almirante or Carlos Romero at Hogan Lovells BSTL by telephone (+52 55 5091 0000) or email (firstname.lastname@example.org, email@example.com or firstname.lastname@example.org). The Hogan Lovells website can be accessed at www.hoganlovells.com.
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Federico De Noriega
Maria Aldonza Sakar Almirante