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25 May 2010
In September 2009 the Mexico City Congress passed a major reform of the Code of Civil Procedure of the Federal District. Of around 1,000 articles in the code, over 300 were amended. The key amendments included the introduction of oral proceedings and the use of electronic service of notifications. The reform also sought to improve the appeals process, the collection and production of evidence and foreclosure proceedings.
The changes to the rules on using electronic communications in certain procedural stages have generally been seen as a positive development. The term 'electronic communications' now appears in seven provisions of the code. Such communications can be used for requests between courts, general notifications in proceedings, notifications to witnesses and, in the new oral proceedings, all notifications except service. Oral proceedings can be recorded electronically and parties may request a copy of the electronic record.
However, the new rules do not define the term 'electronic communications'. Although this can be remedied in guidelines from the local judiciary council (ie, the administrative body of the local judiciary) or by the interpretation of the federal courts, it would have been preferable to have a definition in the code. For example, Article 89 of the Commercial Code establishes that the term 'data message' refers to information generated, sent, received or stored by electronic, optical or similar technologies, and that 'information system' means a system for generating, sending, receiving, storing or otherwise processing data messages. These definitions provide clarity in commercial transactions. Article 111 of the Rules of Civil Procedure establishes that notifications within proceedings can be made by electronic means. Despite the lack of definition, the amendments are considered useful, as they will help to eliminate unnecessary formalities in civil proceedings, especially with respect to notifications.
One of the most controversial amendments is the addition of a new section regulating oral proceedings. Such proceedings are limited to cases where a set amount is in dispute - at present, the threshold is Ps212,460 (approximately $16,300). Decisions rendered in such proceedings are not subject to appeal.
The drafting of the new section is over-complicated, duplicating several provisions on ordinary civil proceedings instead of simply referring to the general rules. However, the new section sets out several rules that did not exist in civil proceedings in Mexico City. For example, the general rule is that parties submit their arguments orally at the hearing and that all notifications (except service) can be made electronically. The changes also provide that parties can submit evidence in the claim, response, counterclaim and response to counterclaim, rather than only in the claim and response. In addition, the time allotted for a response to a claim is now 15 days, rather than nine days; the period for responding to a counterclaim has been extended from five days to 10 days.
The amendments establish that the judge can conduct the hearing as he or she considers appropriate and that proceedings can be recorded electronically. They also provide for a preliminary hearing in which to determine accepted facts and reach agreements and determinations regarding evidence; this hearing also allows for an attempt at conciliation.
The amendments are a first step towards incorporating oral proceedings into Mexico City's civil procedure and changing Mexico's overly formal civil procedure. However, the amendments could have been applied to all civil cases, rather than only to small-value claims.
Mexico City's civil procedure rules have traditionally made it difficult and complicated to challenge a court's resolutions. Although the amendments reduced the number of available challenges from five to four, they still leave room for confusion. For instance, they further complicate the processing of appeals - the most frequently used form of challenge is the one that was most amended. However, the amendments seek to allow for faster court proceedings by leaving certain intermediate appeals (ie, appeals against resolutions issued by the judge during proceedings) to be considered alongside an appeal against the final decision on the merits. They also make decisions more effective in certain circumstances by allowing for the enforcement of a first instance judgment despite the filing of an appeal against it.
Previously, all intermediate appeals were resolved by the appeal court at the time of filing, which made it necessary to present all arguments and allegations in the intermediate appeal. However, such appeals did not halt the processing of first instance proceedings. However, final appeals barred the enforcement of first instance judgments. This system created problems in cases where the appeal court's decision on an intermediate appeal was issued after the civil court had rendered a final decision on the merits of the case; moreover, there was no way of enforcing a first instance judgment if it was appealed.
The reform provides that reasons need not be advanced with the intermediate appeal, but should instead be filed with the final appeal - intermediate appeals and the final appeal are decided together. Where the intermediate appeal relates to the admissibility of evidence, the appeal court must study and (if appropriate) receive such pending evidence before ruling on the merits of the final appeal. Intermediate appeals are examined only if the party bringing the appeal can show that the appeal has an impact on the merits of the case.
However, this new system does not apply in all cases - in a number of circumstances, intermediate appeals follow the old system. The applicable system depends on the type of resolution being challenged. Determining the correct approach requires reference to the entire code, since the exceptions are not grouped in the same article or section.
Apart from these provisions, the most significant change in respect of final appeals is that in certain cases (ie, real estate lease proceedings, mortgage foreclosure proceedings and other summary proceedings), a final appeal does not prevent enforcement of the first instance judgment. However, the enforcing party must file a deposit-in-court certificate or a surety agreement to cover damages that enforcement may cause to the losing party. The losing party may be required to file a counter-guarantee in seeking to preclude enforcement of the judgment; the counter-guarantee covers damage and direct loss of profit that the suspension of the judgment may cause to the prevailing party.
The right to request that a final and binding judgment be set aside was introduced into Mexico City's civil procedure in 2004 and has been much criticized ever since. Although originally available in any one of seven sets of circumstances, it can now be sought only where: (i) the final and binding judgment was based on evidence that was found or declared to be fraudulent after the binding judgment was issued, or if the losing party was unaware of such a finding or declaration before such a judgment was issued; or (ii) the claimant was the victim of collusion or other fraudulent activity by the parties.
This change is a positive step in favour of judicial certainty and make it more likely that a future reform will abolish this controversial procedure.
The rules on evidence have undergone major modifications. The amendments were intended to harmonize the local civil procedure rules with the rules on commercial proceedings in the Commercial Code.
The new rules reflect a wish to simplify and expedite the process of presenting evidence in civil proceedings, which has been a matter of concern for many years. Although the changes are not a complete solution, they represent a step in the right direction.
Many of the specific aspects of the reform are technical, but in general the changes:
The provisions of the Code of Civil Procedure on foreclosure proceedings have been changed in an attempt to make them simpler and fairer. In Mexico, summary proceedings are available for various causes of action - for example, to obtain the enforcement of a final judgment and to attach or auction a debtor's property.
In general, the provisions of the reform:
In certain circumstances, creditors can opt to keep attached property as partial payment. Changes to this part of the code are intended to assist creditors in enforcing their rights; as such, they constitute a noteworthy step towards simplifying the enforcement of judgments.
Significantly, the reform endorses mediation as an alternative to litigation, providing that settlements reached after mediation before the Centro de Justicia Alternativa, the official mediation agency, can be enforced through summary proceedings.
Mexico is now recognized as a favourable jurisdiction for commercial arbitration.(1) However, arbitration of non-commercial matters, which is regulated at the local level, is mostly governed by outdated laws that apply the rigid rules of civil proceedings to arbitration and impose a judicial structure and formality to almost all stages of arbitral proceedings. This has discouraged the use of arbitration for civil matters, both in Mexico City and elsewhere.
The reforms significantly improve the status of civil arbitration, recognizing the agreement of the parties as the basis for arbitration. They provide that that parties are free to agree on arbitration rules and prescribe the UNCITRAL Arbitration Rules 1976 as the default. The reforms to civil arbitration were shaped in line with the UNCITRAL Model Law, including the same set of restricted grounds for refusing recognition and enforcement of an award or for setting it aside.
Although the amendments have been in force for only a few months, the results have been positive. The judiciary will play a key role in the long-term success of the new rules. Mexico City is the most important and influential jurisdiction in Mexico; the changes are expected to permeate the local codes of civil procedure in other states and to serve as a starting point for a wider reform of civil procedure.
For further information on this topic please contact Luis Enrique Graham or Salvador Fonseca at Chadbourne & Parke by telephone (+52 55 3000 0600) or by fax (+52 55 3000 0698) or by email (firstname.lastname@example.org or email@example.com).
(1) Mexico has been a party to the 1958 New York Convention since 1971 and a party to the Panama Convention since 1978. The country adopted the United Nations Commission on International Trade Law (UNCITRAL) Model Law on Commercial Arbitration in 1993.
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