Information provided by the
Contrary to the beliefs widely held in the U.S. regarding the nature and function of Mexico's legal system, Mexico does, in fact, enjoy a highly evolved and organized legal system which with few exceptions is functional. The origins of Mexico's legal system are both ancient and classical, based on the Greek, Roman and French legal systems, and the Mexican system shares more in common with other legal systems throughout the world (especially those in Latin America and most of continental Europe) than does the U.S. legal system. U.S. business people and foreign owned corporations doing business in Mexico must directly and indirectly deal with the Mexican legal system, even if they do not have an actual business presence in Mexico. They might encounter Mexico's system through and international contract which they enter into with a Mexican company or individual, even if the contract is wholly performable in the U.S. Many such contracts are negotiated covering the distribution of products, the granting of franchises, or the transfer of technology, among other legal relationships.
Accordingly, such business people should have at least a general working knowledge of the system. U.S. legal counsel with clients doing business in Mexico should have a more detailed knowledge of Mexican practices, laws and courts. All should understand that if they are to accomplish their objectives they must work within the system, not against it. This article is intended to be only a general discussion of Mexico's legal system. A comprehensive treatise of the topic would fill volumes.
MEXICO'S CIVIL LAW SYSTEM COMPARED TO THE U.S. COMMON LAW SYSTEM
To better understand the Mexican legal system, it is useful to compare it to the U.S. legal system. A fundamental difference between the two legal systems is that Mexico is a so called "civil law" country while the U.S. is a "common law" country.
The U.S. common law system is based on the case law and statutory law of England and the American colonies before the American Revolution. As the name implies, the traditional common law system emphasizes case law, customs and usage rather than legislative enactments. In contrast, Mexico's civil law system is derived primarily from Roman law as set forth in the compilation of codes and statutes of the Emperor Justinian, called Corpus Juris Civilis, and later refined in the French or Napoleonic Code of 1804. Interestingly, the development of Mexican commercial law drew heavily on Italian law. Mexico's legal system is also influenced by colonial law (the Spanish and "Indian" law of Spain's colonization in the areas that became Mexico and other present day Latin American countries), which was a highly formal body of law, including specific collections of not only laws but customs or accepted legal practices, that required the use of intricate regulations and elaborate writings associated with every important act of one's life, such as birth or marriage, and canon law, or religious law, issued by the Catholic Church. This distinction between two systems based on their respective origins, along with the unique traditions and practices stemming from these different origins, is today the clearest and most important distinction.
For decades, another important distinction between Mexico's civil law system and U.S. law was the codification of Mexican law, on other words, Mexico's adoption and use of codes (like the Civil Code and Commercial Code). Codification, however, is no longer a significant distinction between the two legal systems. Indeed, the U.S. has enacted several federal codes such as the Tax, Bankruptcy and Immigration Codes, and collection or federal criminal statutes and civil and criminal procedure. Further, virtually every U.S. state has adopted some version of the Uniform Commercial Code. Also, most states have enacted codes covering such areas as Property, Probate, Tax, Family, Education, Government. Health and Safety, Penal matters, Insurance, and Elections.
Another traditional distinction between the two systems which has not declined in significance over the years is the importance of and reliance on case law precedent (a principle known as stare decisis) in the U.S. at both state and federal levels, compared with the sparse use of the case law in Mexico. In the U.S. even one case can establish a legal principle that judges will follow in subsequent, similar cases, especially where there is no applicable statute or conflicting precedent on point. State and federal judicial opinions are widely published and circulated. Indeed, so called case reporters constitute the bulk of law books found in U.S. law libraries.
Notwithstanding this distinction, case law in Mexico should not be ignored, Certain judgments, called educators, of the federal courts including the Mexican Supreme Court and the circuit courts, and, at the state level, judgments issued at the appellate level (Tribunal Superior de Justicia), have persuasive value and are published although they are not widely circulated.
In Mexican administrative law, such as taxation, labor and banking and financial service law, binding rulings and regulations are frequently issued by the corresponding regulatory agencies. These rulings and regulations have the effect of binding case law. Because of its dramatic growth and increasing importance, the dynamic and diverse body of Mexican administrative law is slowly overtaking the more staid institutions of Mexico's traditional civil law system.
Also, binding case law precedents not unlike common law precedents do exist in Mexico. These are called jurisprudencia, are published from time to time and are supplemented through restatements, or summaries of what the law is and how it has changed. To qualify as a jurisprudencia definida, the legal principle set forth in a case must interpret Mexican law under a Writ of Amparo, which is a summary proceeding that serves to guarantee constitutional rights. This relevant legal issue must also be decided the same way in 5 consecutive cases by majority vote of the judges and without and inconsistent ruling by the deciding court of the Supreme Court. Such rulings are binding only on equal or lower courts and administrative courts, not on executive administrative agencies. The concept of jurisprudencia has been expanded broadly with the increased use and number of administrative courts in Mexico.
Compilations of administrative rules and regulations can combine to create a binding effect within the different categories of administrative law. There are certain limitations on establishing such binding precedents and regulations, because under Mexican law, judgments, regulations ruling and administrative orders must be issued in accordance with the underlying statue. However, as a practical matter, the volume of these extra legislative decisions and rules is growing so rapidly that statutory law in Mexico now covers only the most basic and predictable cases and in most situations, one must look beyond the statute for guidance.
Each legal system has strengths and weakness. Whereas in the U.S. when law is declared unconstitutional its unconstitutionality is usually applied universally, in Mexico, for the reasons stated above, the law is unconstitutional only for the party which filed the amparo case. Others who wish to challenge the law must file their own cases. May business people consider this requirement inefficient and burdensome, although as a practical matter, most people doing business in Mexico do not engage in this type of litigation.
In the opinion of the authors, one advantage to the Mexican legal system is that the full body of Mexican law in particular area, for example labor law or contract law, is more readily ascertainable and definable in Mexico than in the U.S. In the U.S. lawyers and business people must supplement what a statute says by pouring over numerous cases interpreting the statute under myriad fact situations. In Mexico, one simply studies the applicable legal provisions and court decisions limited to a very specific area, and makes the best possible argument given the facts and policy concerns. Further, most new law not found in the standard Mexican codes (Civil, Commercial, Tax, Labor, among others) are published as the are enacted in the Diario Oficial, the Official Gazette of the Federation. Also, in the past, most of the important laws in Mexico have been federal, not state, but Mexico is changing. Mexican states are growing more independent from a traditional centralized Mexico, and administrative law has experienced unprecedented growth on the state level.
Additionally, although each state has adopted codes, in the civil areas (not necessarily in the administrative areas) the state codes virtually mirror the codes of the Federal District (D.F.). Conversely, immigration, and environmental laws) are the state laws, although recent decades have seen a creeping tendency to Federalize U.S. law. Another advantage to Mexico's civil law system is that in Mexico, legal procedure is not as important as in the U.S. courts, although in certain types of Mexican proceedings there are strict procedural rules which cannot be ignored.
One should remember, however, that just because Mexican law is less voluminous and in some ways more manageable than U.S. law does not mean that the outcome of its application is always predictable. Just as in the U.S., Mexican judges and regulatory agencies in the administrative areas do exercise their discretion in applying the law to a case, and because they are not usually hampered by precedent as are judges in the U.S., decisions can vary as Mexican judges must find their own interpretation of the law to the facts.
MEXICAN COURTS AND LITIGATION IN MEXICO
When discussing the structure of the court system in Mexico, one must distinguish between courts of "ordinary jurisdiction" (including, civil, commercial and criminal jurisdiction) and administrative courts or courts of "special jurisdiction".
A. Courts of Ordinary Jurisdiction.
Courts of ordinary jurisdiction include federal courts and state courts. At the federal level, the Mexican Supreme Court (Suprema Corte de Justicia de la Nacion) is the highest court in the land and decides the most important cases in the country. Next in the authority and significance are the Circuit Courts (Colegiados de Circuito), which take up cases on appeal and amparo cases. Last are the District Courts (Juzgados de Distrito), which have jurisdiction over amparo cases in the first instance, and which function as courts of ordinary jurisdiction on matters of federal law, such as commercial law cases.
State law establishes the structure and function of the courts in each sate in Mexico and such laws should be consulted on a state by state basis. However, in general terms, state courts are organized in the following manner: the highest appellate court is known as the Superior Court of Justice (Tribunal Superior de Justicia); this court is followed by the Courts of First Instance (Tribunales de Primera Instancia) of ordinary jurisdiction charges with hearing civil, criminal and commercial causes. (It is noteworthy that is commercial matters, dual jurisdiction exists where either federal or state courts of first instance can consider such matters.) Immediately below, are the minor courts of special jurisdiction, such as the family courts and bankruptcy courts (unlike in the U.S., where bankruptcy matters fall under the jurisdiction of federal bankruptcy courts).
B. Administrative Courts.
Administrative law in Mexico has grown so quickly as to make it difficult to control the diversification of administrative regulation in the different legal areas. The administrative courts are also classified as federal or state. At the federal level are the so called Federal Boards of Conciliation and Arbitration (Juntas Federales de Conciliacion y Arbitraje), which hear labor matters and are of great importance because Mexico's Federal Labor Law controls every employer employee relationship, the Court of Agrarian Justice (Tribunal de Justicia Agraria); the Court of Military Justice (Tribunal de Justicia Militar); the Court of Jurisdiction over the Electoral Process (Tribunal de Jurisdiccion de Proceso Electoral); and other special courts. Local administrative courts include the Administrative Court of Contentions (Tribunal Contencioso Administrativo), the Justice of the Peace Courts (Tribunales Calificadores) and others of minor importance.
The tendency in Mexico's judicial system is to increase the base of specialized administrative justice more than so called ordinary justice. Administrative proceedings are faster than ordinary proceedings, simplified and normally help avoid confrontations between the parties, given that the state or some governmental agency is sued or brings a complaint or action in this type of proceeding.
C. Litigation in Mexico.
Generally, there is not as much civil litigation in Mexico as in the U.S. The main reasons for this fact are that in Mexico litigation is expensive, there are no punitive damage awards, parties must pay for their own attorney's fees and costs, and the litigation process is very lengthy. Accordingly, litigation in Mexico is not practical unless absolutely unavoidable to accomplish a vital business objective. Note that although there are no strictly punitive damage awards in Mexico, awards for "normal damages" (da�os morales) are possible under certain circumstances set forth in the Civil Code. These awards, however, never amount to the astronomical figures often seen in U.S. decisions.
Other characteristics of litigation in Mexico are that no jury trials, which is a fundamental right in most U.S. cases, formal, written declarations are used more frequently than the oral hearings commonly used in the U.S. courts; negotiation and mediation are encouraged, which is also a growing trend telephone calls or written communications.
In U.S. litigation, the "discovery" process (gathering evidence) is monumentally significant, controlled primarily by attorneys, and constitutes much of the expense and time associated with litigation. In Mexico, however, the judge controls his process. Mexican judges have a much more active role in developing a case than do U.S. Judges. They help narrow the legal and factual issues, select witness and gather evidence. This may be a disadvantage if a party wants the lawyer to have more control over a case, as is the U.S. tradition.
Excluding administrative proceedings, most litigation is settled for the above stated reasons and because in Mexico, judgments are often difficult to enforce against even a solvent defendant, given that judgments can be contested in a separate amparo proceeding, which can drag on for several years. Further, in Mexico a party can file an interlocutory, or intermediate, appeal on evidentiary and other issues at various stages of a case. For obvious reasons, the authors recommend that people and companies doing business in Mexico avoid litigation by using creative and sincere negotiation; incorporating arbitration provisions into their contracts in case of irreconcilable conflicts; adequately securing obligations where possible; and, more importantly, knowing the parties with whom they are dealing.
D. Criminial Law.
Mexican criminal law has several interesting and distinctive features. In Mexico, one is deemed guilty until proven innocent. No death penalty exists in Mexico, a feature Mexico shares with most Latin American countries for historic reasons. In Mexico, the commission of fraud is a criminal offense, unlike most fraud in the U.S., which is usually considered a civil "tort". In virtually all Mexican prisons, prisoners are allowed regular conjugal visits, and greater freedoms within the confines of the prisons, than in most U.S. penitentiaries. Mexican law never allows parole or bail on personal recognizance. An individual charged with a criminal offense must post a financial bond to be released on bail, which may not be available if the potential sentence in years surpasses a certain limit under a formula set forth in Mexico's Constitution.
KEY LEGAL ELEMENTS
THE MEXICAN LAWYER
Mexican lawyers are highly educated and many speak English. In Mexico, students enter law school after 11 years of formal education. Law school is 5 years, includes liberal arts related courses and is broader and more formal and theoretical in scope and focus than is law school in the U.S. After graduating from law school, the individual usually works for a firm or government agency as a clerk (pasante) until he or she presents an oral exam to become licensed (licenciado en derecho), after which he or she is addressed as licenciado or licenciada, abbreviated as "Lic." when written before the attorney's name. Mexican lawyers are licensed to practice throughout Mexico, not in individual states as in the U.S. There is no integrated bar or requirement to join a bar association. Some Mexican lawyers continue to study after becoming licensed and obtain their Masters in Law or Doctor of Law Degree. Like in the U.S. Mexican lawyers are slowly becoming more specialized as the volume and complexity of Mexican law grows.
THE MEXICAN NOTARY PUBLIC
In Mexico, a "notary public" (Notario Publico) is much different than what is referred to as a notary public in the U.S. A Mexican notary public is, in fact, a lawyer who is also a public official appointed by a Mexican state (or Federal District), or by selection after a rigorous application process and examination. Such an appointed is considered a delegation of governmental authority for the certification or official recognition of certain acts and documents. Mexican notaries are also allowed to practice law in some states. Their public duties and authority include authenticating facts which become irrebuttable, unless the notary is proven to have committed fraud; conducting title searches (not unlike many of the functions performed by U.S. title companies); acting as public recorder, and examining wills and contracts as to proper form. The position of notary public in Mexico is much coveted, and one acquires it only after years of apprenticeship under the guidance of another notary public. People who do business in Mexico will undoubtedly come in contact with a Mexican notary public when they incorporate Mexican companies, record certain types of contracts, buy or sell land, authenticate power of attorney, or engage in other business.
U.S. AND MEXICAN CONTRACT LAW
Many similarities exist between U.S. contract law and Mexican contract law. As in most legal systems, the general principle of freedom of contract between individuals and entities is the backbone of contract law in both countries. The common fundamental principles of contract law include the initial offer; negotiation of the terms, acceptance; formalization of the contract, including the establishment of liquidated damages or other penalty provisions and conditions of default; and termination of the contractual obligations.
The most important differences between U.S. and Mexican contract law surround the fundamental U.S. concept of consideration, which for a valid contract requires that one party receive something of value or that the other party suffer a lost, take on a responsibility, or give up an opportunity. Absent such consideration, a contract is not valid, although generally U.S. law is evolving away from this requirement. In Mexico, the validity of and compliance with a contract depend only on the existence of the agreement between the parties. The parties need not present "legal consideration" to bind themselves their intent to agree is sufficient. However, in Mexico, just as in the U.S., freedom of contract depends on "the legality of the subject of the contract", and accordingly, contracts involving illegal activities are void.
Another important difference between U.S. and Mexican contract law is the degree of formality required of contracts. Because it is derived from Roman and European law, which historically are formalistic. Mexican contractual law imposes many formalities that are not required in the U.S. One example of these formalities is the requirement to appear before a Mexican notary public to certify the legality of certain types of contracts, such as contracts to buy and sell real property. This certification process is much more involved and formal than the US requirement that a Notary Public acknowledge signatures on a deed, for example. The presence of witnesses to contracts in Mexico is an almost sacramental practice. Further, the system of public registries for the registration of contracts so that the acts of the contracting parties will be binding on third parties is a peculiar characteristic of Mexican law.
Finally, one should recognize the difference between the structure of U.S. guarantee agreements and Mexican guaranty agreements. In Mexico, such contracts are "secondary contracts" because they require the prior existence of a principal contract, a special characteristic of Mexican law. One example of this is the case of a mortgage contract (contrato de hipoteca) which cannot be granted without a prior contract that gives rise to the obligation or obligations to be guaranteed or secured by the mortgage. In the U.S. guaranty agreements are more flexible and independent, and can exist without a prior principal contract, as in the case of a standard security agreement.
People and companies doing business in Mexico, and attorneys who represent them, should take time to learn about Mexico's legal system and how it differs from the U.S. system. This learning process also encompasses the study of Mexico's interesting history and culture. The best source of information regarding specific legal questions is an experienced Mexican lawyer.
The following information is provided as a general and informative background to Mexico, and should not be considered legal advice or your sole source of information. Wherever possible you are encouraged to utilize the services of a professional, such as listed below.
Law Offices of Jaime B. Berger Stender,
Tijuana, Baja California, Mexico.