Background
Contradictory rulings
Supreme Court decision
Calculating interest in practice
One of the main features of amparo proceedings is that the party which requests such constitutional protection is entitled to seek the suspension of execution of the court decision (or other action of the state authorities) which is the subject of the proceedings. For example, in civil and commercial proceedings in which a party is claiming payment of an obligation, the debtor may file amparo proceedings against the court order for attachment and request that the execution of the order be suspended. However, if the debtor does not prevail in the amparo proceedings, the creditor is entitled to recover the losses and damages suffered as a consequence of such suspension.
The Supreme Court has recently decided that the applicable interest rate when calculating damages and losses suffered by the creditor is the benchmark interbank deposit rate, which at present sets an approximate annual interest rate of 4.5%. Such interest rate is determined by the general increase in prices, coupled with the decline in real value of the Mexican currency. As such, the interest rate is subject to constant change.
Before the court rendered its decision, the federal courts applied the so-called 'legal rate' - a standard rate of 9% for civil matters and 6% for commercial matters.
The decision in question was issued after two federal courts had rendered contradictory rulings on determining the applicable interest rate for calculating loss and damage resulting from a suspension obtained through amparo proceedings. One of the courts ruled that in order to determine the interest rate for calculating damages suffered by the creditor, the judge should take into account the general increase of prices, coupled with the decline in the real value of the Mexican currency, on the grounds that the value of the creditor's money would necessarily be affected by such variables. The other federal court ruled that in order to calculate damages suffered by a creditor, the legal rates of 9% for civil matters and 6% for commercial matters should apply.
The Supreme Court held that in such a calculation, attention must be paid to the devaluation of the money at the time that the suspension was granted and at the time it ended. As such, the benchmark interbank deposit rate is the appropriate rate by which to calculate such devaluation, as it takes account of the current and real value of the currency. Moreover, the court established that the so-called 'legal rate' applies to contracts where the parties have not agreed on an applicable interest rate, but does not apply to a calculation of the actual damage suffered by a party as a result of not receiving a given amount of money at the appropriate time.
Calculating interest in practice
In order to calculate the damages and losses to which the creditor is entitled, the amount in dispute must be multiplied by the annual benchmark interbank deposit rate (approximately 4.5%). The result is then divided by 12 and multiplied by the number of months that the suspension lasted. Amparo proceedings generally last for between four and seven months, so the suspension would be effective for that period.
For further information on this topic please contact Luis Enrique Graham or Angelica Huacuja at Chadbourne & Parke by telephone (+52 55 3000 0600), fax (+52 55 3000 0698) or email ([email protected] or [email protected]).
