FREQUENTLY ASKED QUESTIONS
(For selling goods into Mexico and the recovery of debt)
What is the best way of securing payment when selling goods into Mexico
on open account credit terms, without a formal written contract?
What other formal means of securing payments are available in Mexico?
Under what situations would it be wiser to choose Mexican Law as governing
law in my contracts for the sale of goods into Mexico?
What exactly is the Convention on Contracts for the International Sale
of Goods (CISG or the Vienna Convention) and how does it affect my contracts?
Will the Vienna Convention govern all aspects of the transaction and every
detail in the relationship between buyer and seller, or is there any aspect
of domestic law that should be considered?
Under what circumstances would it be more convenient to rely on Mexican
courts for the direct recovery of debt, choosing therefore and including
a Mexican venue provision in our contract (to be subject to the jurisdiction
of Mexican courts)?
Will consumer protection laws govern the sale of goods to a Mexican party
even if I am outside Mexico?
What other type of regulations or procedures should be considered upon
importing goods into Mexico?
What are the requirements for the international assignment of receivables
from a debtor in Mexico (either an international assignment or an international
How can I appoint a representative to act on behalf of my company in Mexico?
What legal recourse do I have in Mexico if buyer defaults payment?
According to Mexico’s basic rules on jurisdiction, when will it be considered
that a foreign Judge has proper jurisdiction to decide upon a claim, such
as to consider a following resolution as valid and enforceable in Mexico?
What is the general process of commercial court litigation in Mexico (overview)?
What judicial prejudgment remedies are available to creditors in Mexico?
How does Mexican law regulates a fraudulent conveyance of assets?
How can I enforce a foreign judgment in Mexico?
What is an Amparo?
Can I recover even if I don’t have a signed contract?
Does it make a difference how long the account has been overdue?
I’ve heard it’s easier to collect when there are checks, promissory notes
or bills of exchange signed, why is that?
Can I secure an international transaction with checks, promissory notes
and bills of exchange according to my country’s laws, or do I need to
comply with different legislation from Mexico?
How much time do I have to enforce checks, promissory notes and bills
of exchange in court?
What will it cost me to collect through Court?
How long will it take me to collect through court, and how efficient is
the Mexican Judicial System as to this date?
What places in Mexico does your Firm cover collection matters?
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1. What is the best way of securing payment when selling goods into Mexico
on open credit account terms, without a formal written contract?
Although a written agreement is not necessary in Mexico to consider a
commercial transaction or a related contract as valid and enforceable in
court, documentary evidence IS going to help you bring a stronger case
upon collection, and maybe even relieve you from having to bring witnesses
into trial, which makes for shorter proceedings.
why we have to support the sale of goods with a formal written contract or
at least try to sustain every detail about our transaction with the use of
relevant documents; details such as: 1) the debtor’s identity; 2) terms of
sale; and 3) fulfillment of the parties’ obligations. Such conditions can be
achieved by implementing the following:
Credit application. This represents the most essential document to
support our claim. It will be important to include —among other things—
terms of sale, considering CISG as well as Mexican law (in some cases);
and debtor’s identity, including authorized personnel to make purchase
orders, and personal guarantees by key shareholders. An original signed
copy of such application must be requested at some point during the
initial stages of the transaction.
· Purchase orders (PO’s).
Equally important is to have documents that prove that certain goods where
requested (thoroughly specified), that buyer promised to pay on certain
terms, and to received such goods on a specific location. Such
PO’s are only to be considered if submitted and signed by
appropriate personnel (as authorized in the credit application), and must
be requested by fax or mail. (The carrier can also help request the
· Receipt of goods sold.
This requirement is fulfilled by handling and requesting a proper bill of
lading by the carrier. It is important to instruct the carrier to specify
the date of delivery, and to obtain the full name of the person receiving
the goods, besides his signature. If there is no carrier in the picture
because buyer is taking care of freight or transportation, a receipt for
such goods must still be considered.
· Promissory notes.
It is a good idea to have debtors sign promissory notes (pagarés) for past
due accounts. This helps by limiting defensive arguments and excuses a
debtor may have in responding to a claim in court. This also enables a
creditor to obtain an immediate writ of attachment upon filing his
complaint. (Please contact us and request the free brochure “Simple Steps
to Drawing Up a Pagaré that will be Enforceable in
It includes an example form).
2. What other formal means of securing payments are available in Mexico?
During the last couple of years Mexican Commercial Laws have evolved in
considerable fashion to the extent of giving us useful tools for securing
payment in financed sales. During this section we will point out only the
few devices that we believe are more common, and those that will more
likely help during the sale of goods:
· Commercial Pledge.
The pledge is a device that helps secure a loan by creating a security
interest on debtor’s personal or “movable” property (such as goods
recently acquired out of an international sale). For years, Mexican law
had followed traditional Roman Law principals which required that goods
securing a loan be delivered to the lender (seller). Not anymore. Recent
amendments to the Negotiable Instruments and Credit Transactions Law on
May, 2000 have made it possible for lenders to retain an interest in the
pledged property while debtors retain possession. Another main feature
of this new pledge is the possibility of creating a security interest in
present and future collateral, as well as to secure present and future
obligations. (Future collateral include after-acquired property,
proceeds, account receivables, etc.)
The mortgage agreement allows a creditor to establish a security
interest in the debtor’s real property (real estate) to secure payment
of any loan with priority over other creditors. Upon default of the
obligation secured, the creditor has the right to request the
foreclosure of the mortgage before a judicial court and pay indebtedness
with the proceeds derived from the foreclosure.
Through this device seller reserves title to the goods sold until buyer
completes full payment. This method has proven very effective when the
goods sold can be identified and can also be recorder in the City’s
Public Registry of Commerce (in buyer’s place of business). Proper
recording allows a seller immediate repossession of the goods sold
should buyer default payment, even in bankruptcy or strike proceedings.
· Bond and Guaranty.
Through this mechanism the issuer of a bond or guarantee undertakes to
be responsible for the fulfillment of a contractual obligation in the
event of a default by the buyer. Bonds can be granted by individuals,
but are usually furnished by bonding companies. On the other hand, a
guarantee is often granted by either individuals or companies in
general, and is also known as a personal guarantee, or an unconditional
guarantee endorsement. The grantor of this last device is jointly and
severally liable for the debt, and can be sued directly regardless of
the action against the original debtor being exhausted or not (it so
happens with bonds).
· Letter of Credit.
Through a letter of credit the issuing bank commits up front to pay on
behalf of buyer a specified amount of money to the seller when presented
with a specified set of documents: invoices, packing list, bills of
lading, etc. Although this is the safest way of securing payment, it is
also the more difficult to get since buyer will have to secure a line of
credit from the issuing bank. A letter of credit issued by a Mexican
bank and dishonored can usually be enforced through summary proceedings.
3. Under what situations would it be wiser to choose Mexican Law as
governing law in my contracts for the sale of goods into Mexico?
If you are not including an arbitration clause in your contract, and you
are also not considering to subject claims or controversies arising out of
the commercial relationship to a foreign court (your country’s courts for
example), you should seriously consider including Mexican Law as governing
law for your contract.
Because foreign law is not mandatory in Mexico and not recognized within
our system and institutions, a plaintiff whose cause of action is based on
foreign law is going to have to prove to the court in detailed manner what
does the particular and applicable foreign law provides and which are the
particular provisions deemed relevant to the controversy. That creates the
unnecessary task to perfectly cite in the plaintiff’s complaint all the
provisions pertinent to your case, and later on prove them in court
through the use of expert witnesses or public reports from the foreign
country officials (with the help of letters rogatory). The lack of these
formalities will not only hurt you against a well-advised debtor, but also
in an uncontested lawsuit.
Another thing to consider when choosing Mexican Law as governing law for
your sales transaction is the different scenario that such regulation will
create for both buyer and seller with respect to their contractual and
non-contractual liability, as well as the legal remedies provided for
under our system. For instance, punitive damages are not recognized in
Mexico’s legislation and therefore never awarded.
With respect to torts law, most Civil Codes in Mexico provide a maximum
amount cap an injured person can receive for actual damages sustained,
generally far less than what they would be in the United States.
Lastly, while Mexican courts will provide for a specific performance
remedy under all situations in civil matters, it is doubtful whether such
rule is to apply in commercial cases. This posses some treat to buyers in
situations where seller fails to deliver goods, since there will be much
uncertainty as to the remedies available. As to the parties’ rights and
duties, the situation will likely remain the same since Mexico is part to
the Vienna Convention on Contracts for the International Sale of Goods (CISG),
making such international law binding under most circumstances unless
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4. What exactly is the Convention on Contracts for the International Sale
of Goods (CISG or the Vienna Convention) and how does it affect my
The Vienna Convention is an International Treaty to which more than 60
Countries are part (just to mention a few: USA, Canada, Mexico, Australia,
Argentina, most western European countries except England, etc.), and
contains international set of rules designed to provide clarity to
international sales contracts by regulating them in almost every aspect
including: parties’ rights and obligations, parties’ liabilities, contract
formation, remedies available against non-compliance, etc.
The CISG will govern every sales contract in which buyer and seller are
located in different Countries which are signatories to the CISG, unless a
specific provision in said contract excludes the application of the
Convention. The CISG will not apply however in the following cases:
International consumer sales (sales bought for personal, family or
· Specific kind
of sales like auctions;
regarding specific kind of goods like stocks, electricity, ships,
hovercraft, and aircraft;
distribution agreements, because they govern “future” sales of goods;
· Sale of goods
where the buyer supplies a substantial part of materials needed for
5. Will the Vienna Convention govern all aspects of the transaction and
every detail in the relationship between buyer and seller, or is there any
aspect where domestic law (law of either the seller or the buyer’s
country) comes in and should be considered?
There are very important aspects of an international sales contract that
are not regulated by the CISG, and one must rely on domestic law. These
· CISG is not concerned
with the VALIDITY
of the contract, its provisions, or any usage. This means that in order to
examine the capacity of the parties who entered into a contract, or to
determine whether a party was induced into signing a contract by fraud,
domestic law is going to be looked upon by a court if a controversy should
· CISG excludes
questions of effect on PROPERTY.
As such, a third party who claims to have an interest in the goods that
are sold, is going to have to rely in domestic law to find relief. Buyer
is also going to have to look upon that area of domestic law which governs
his situation in regard to that third party who could claim a “better”
right in the goods sold.
· The CISG does
not apply to the LIABILITY
of the seller for death or personal injury caused by the goods to any
person. A very serious question is indeed the case of torts law and
liability. Like we said earlier (2), torts law in Mexico differs quite a
lot than that from common law jurisdictions, and therefore should be
Under what circumstances would it be more convenient to rely on Mexican
courts for the direct recovery of debt, choosing therefore and including a
Mexican venue provision in our contract (to be subject to the jurisdiction
of Mexican courts)?
Much of this decision has to do with practical reasons, that is, when will
a Mexican court provide for faster, less expensive and still safe
proceedings for your recovery of debt.
Generally, a non-complex contested commercial case will take approximately
one year to be resolved in a Mexican court, without adding an appeal
process and any constitutional injunction proceedings, which could ad up
another 9 to 12 months. That time could very well double in a complex
commercial dispute or a collection case involving a large amount of money.
It is probably only in these two last scenarios where you could consider
choosing a foreign court or arbitration for resolving your disputes
instead of a Mexican court, but not in the first mentioned, because of
Just to get an idea, the following costs should be considered when
thinking about bringing a claim to a foreign court or an arbitration
According to the International Chamber of Commerce (ICC), costs add up
to $5,875 dollars for a $25,000 dollars case, and $13,000 dollars for a
$100,000 dollars case, for arbitrators’ fees (one, and not including his
expenses) and administrative expenses. In Mexico, the Arbitration Center
of Mexico (CAM) charges around $7,700 dollars for arbitrators fees (also
one, and not including expenses) and administrative expenses for any
lawsuit of up to $100,000 dollars.
· Counsel’s fees for
arbitration. Lawyers involved in arbitration generally
will charge an hourly fee for their services, and not a fixed fee or a
Costs for service of process.
If you are going to bring a case in a foreign court and your debtor is
located in Mexico, you will still have to comply in strict manner with
Mexican procedure rules for proper service of process in Mexico. That
means you will have to go through a Mexican court to serve the defendant
properly once a formal request has been done through a letter rogatory
from the foreign court. Failure to do this will invalidate your judgment
and will make it unenforceable. This service will require the help of
counsel in Mexico, who will generally charge an hourly fee. (It is also
recommended to at least substantially comply with Mexican procedure
rules for the service of process during arbitration. Failure to do this
could allow a defendant to argue infringement of his fundamental rights
provided under the Mexican Constitution).
· Costs for enforcing a
judgment. Again, you are going to need the help of
counsel in Mexico to enforce a judgment. They can charge either hourly
fees or based on contingency.
up all these costs (without considering pre-judgment remedies), you would
realize that a recovery for a modest amount of money may not result in a
profitable business after all if filing suit outside of Mexico or commencing
this reason, we believe that collection cases worth
$100,000.00 dollars or less
are best pursued directly through a Mexican court.
should be confident that Mexican courts are each day more and more reliable
and efficient, especially for these kinds of cases. Retaining a counsel in
Mexico for collection will waive all the above-mentioned costs, since they
usually charge a contingency fee.
7. Will consumer protection laws govern the sale of goods to a Mexican
party even if I am outside Mexico?
of all, consumer protection laws govern the sale of goods only when buyer
is recognized by the Consumer Protection Federal Law (CPFL) as a
“Consumer”. For these purposes, a Consumer is either a company or
individual who buys such goods for a personal use, that is, as a final
user of said products. A buyer who is buying goods for a production or
manufacturing process or for commercial purposes is not a Consumer, and
therefore such sale is not going to be affected by consumer protection
Secondly, because the CPFL’s main purpose is to defend consumers’ rights in
Mexico, the CPFL will govern your sale of goods to a Mexican Consumer. Under
such scenario, the CPFL provides regulation through articles 53 to 55 for
sales made through television, telephone, mail service or any other means
which do not allow for direct contact with Consumer, and through article 76
bis, which specifically regulates sales made through internet. (For closer
look into these regulations please contact us for a free brochure on
“Consumer Protection Regulations for E-Commerce in Mexico, and Tips for
Avoiding Falling within the Scope”).
8. What other type of regulations or procedures should be considered upon
importing goods into Mexico?
are several regulations that should be complied with in order to avoid
problems during the import process, namely:
NOMS. These are
official technical standards issued by the Ministry of Economy describing
specifications on products sold in
b) LABELS. All
imported goods should include labels that allow identifying its general
information as required by the Ministry of Economy.
c) HEALTH. There
are several health regulations that control and restrict the import of
certain products for sanitary measures.
these regulations, you should keep in mind that only those who have obtained
an import permit from the Ministry of Economy are allowed to import products
into Mexico. That means that in order to import any product, you should
establish presence in Mexico through a legal entity and obtain an import
permit (it is possible through a distributor).
Generally it is the buyer who takes care of the import process, either by
him or through the use of a commercial house (comercializadora).
In either case, you should make sure that the legal commercial relationship
is kept with the buyer and not any third person.
this is settled, you will need an import declaration (pedimento)
completed by a Mexican customs broker or forwarding agent, along with the
commercial invoice, packing list and the bill of lading. If the goods are
imported form a country with which Mexico has a trade agreement, you should
also include the relevant certificate of origin.
9. What are the requirements for the international assignment of
receivables from a debtor in Mexico (either an international assignment or
an international account receivable)?
Notification of an assignment or a payment instruction to debtor will be
effective every time debtor acknowledges such notice either by express or
implied means such as complying with the new terms of payment. However,
whenever debtor does not acknowledge such notice, does not agree with new
payment terms to the assignee or just defaults payment with no cause, a
formal notification will have to be done in strict compliance of Mexico’s
390 of Mexico’s Commercial Code provides that the assignment of receivables
is to be done with proper notification of debtor before two witnesses.
However, it is a common practice in Mexico to give notice to debtor with the
help of a Notary Public
instead of the two required witnesses. This is what we call a “formal
notification”, and there is much more to it.
order for the notice to be valid, it has to be done through a legally
appointed representative of the creditor or assignor. That means that a
power of attorney will have to be furnished to the creditor’s representative
in Mexico, and such power of attorney will have to strictly comply with
Mexican laws on issuance of powers of attorney. This document will also have
to be furnished to the debtor at the time of notice.
Furthermore, notice will have to be provided in Spanish language or proper
translation of documents will have to be provided at such time. It is also
highly recommended that all documents pertaining to the assignment are
furnished to debtor, making sure he is well informed of such operation, and
that the rights of the assignee are justified. This step should be taken to
avoid future problems assignee may have when trying to collect such
receivables in court.
10. How can I appoint a representative to act on behalf of my company in
your company intends to pursue legal actions in Mexico, or is either
entering into formal contracts within the Mexican territory, a
representative must be legally appointed to act on its behalf through a
formal power of attorney.
of attorney to be utilized in
must be carefully drafted, and must also conform with either of the
following International Treaties:
The Washington Protocol on the Uniformity of Powers of Attorney Which are
to be Utilized Abroad of 1940; or
· The Panama
Inter-American Convention on the Legal Regime of Powers of Attorney to be
Used Abroad of 1975.
these treaties provide for a handful of legal requirements and conditions
that will have to be satisfied and strictly complied with in order to have
full binding effects in Mexico. Some of the basic requirements include:
Certification and attests by a Notary Public (that the company granting
power of attorney was duly formed and is legally existing; that the
individual acting on behalf of the company has proper representation and
authority to delegate special and general powers of attorney; etc.);
· Purpose and
extent of the power of attorney (it must determined in precise fashion,
e.g., for lawsuits and collections, to buy and sell goods, to manage the
company’s business, etc.)
(power of attorney is to be executed in Spanish, or provide proper
translation of all documents pertaining to the same);
and legalization of power of attorney (Notary’s signature and
certification must be asserted by a Government official as valid, and an
Apostille for such official certification must be obtained);
· Filing (it is
recommended that general powers of attorney are filed in the Public
Registry of Commerce, in such City or State where the power of attorney is
to be used).
are just some of the main requirements provided under the International
Treaties. You should therefore seek further legal advice from counsel in
Mexico to make sure that every condition and all requirements are met.
11. What legal recourse do I have in Mexico if buyer defaults payment?
are several options available to pursue a collection in court, each
according to a different strategy and dependent upon how the commercial
transaction was conducted and documented.
either file a complaint for an ordinary proceeding or for an executive
proceeding. If an executive proceeding is not available due to its strict
nature and constraints, there is a preliminary proceeding available that can
further enable the executive proceeding. There is also the possibility of
obtaining a prejudgment judicial remedy but that will be discuss in a
following question. For now, we will try to explain how these particular
· Ordinary proceedings.
These proceedings accommodate for most of the cases where an international
business transaction is disputed. This is mainly because they do not rely
on a credit instrument or a special title document (título ejecutivo) and
therefore, do not allow for immediate interim measures to secure proper
execution of a final judgment unless, strict guidelines for prejudgment
remedies are followed including the posting of a required bond. Some of
the most important features of the ordinary proceedings include the fact
that it’s a relatively longer proceeding, it allows you more time and
opportunity to prepare and request the admission of evidence in court, and
it also provides wider opportunities to counterclaim.
· Executive proceedings.
Plaintiffs find more reliable and comfortable to sue with an executive
action rather than through an ordinary proceeding. Reasons are plenty.
First of all, the special title (título ejecutivo) on which the proceeding
is based creates a presumption that the claim exists and that it’s legally
valid, therefore, turning the burden of proof to the defendant. Secondly,
the same title gives a preliminary certitude of the plaintiff’s claims,
allowing therefore, an immediate ex parte prejudgment attachment order
without placing bond. Thirdly, it is rather a summary proceeding in which
evidence admission and proposals are limited to the initial stages through
complaint and answer’s briefs. This makes for a shorter and faster
proceeding in which a final resolution is usually going to be rendered in
less time. The drawback to this proceeding is that is not always available
to all creditors since they must account for a título ejecutivo, which can
be a credit instrument, a judgment, or a judicial acknowledgment of debt
—among other possibilities.
· Preliminary proceedings.
The main purpose of a preliminary proceeding —within the
collection process— is to obtain a judicial acknowledgment of debt that
will enable an executive action instead of following an ordinary
proceeding. It usually starts with a formal petition from creditor in
which facts relating to the debt are stated and a subpoena or citation for
debtor is requested. The court will setup a hearing date in which debtor
will have to respond as to whether he owes the creditor or not. If debtor
fails to show up at the time of the hearing, the Judge will consider the
stated claim as legally acknowledged by debtor. The supporting documents
to the acknowledged debt will constitute a título ejecutivo that can be
enforceable through an executive proceeding.
12. According to Mexico’s basic rules on jurisdiction, when will it be
considered that a foreign Judge has proper jurisdiction to decide upon a
claim, such as to consider a following resolution as valid and enforceable
According to the Federal Code of Civil Procedure (FCCP) —which most
States’ Codes have followed, proper venue will be recognized to a foreign
court such as to enforce its judgments, when rules on jurisdiction taken
into account are compatible with those requested for in
These are the following:
Forum selection clauses will be valid and enforceable if there is no
actual obstacle or denial of justice, considering the circumstances
involved and its relations among parties;
2) Forum selection clauses will not be valid when the right to
select a forum works exclusively in favor of one of the parties;
3) If there is no forum selection clause, territorial jurisdiction
is conferred to the court of either:
a) The place designated by the defendant to be notified or
summoned for an action or requirement for contract enforcement;
b) The place where the fulfillment of the obligation in a
contract was agreed to; and
c) The address or place of residence of the defendant.
13. What is the general process of commercial litigation in Mexico
general process of commercial litigation is comprised of five main stages
for both the executive (EP’s) proceedings and the ordinary proceedings
(OP’s). The main difference in these two types of proceedings —as we
mentioned before, is the shorter or longer periods of time available to
parties for executing any and all procedural actions within a given
proceeding. Some of the main features of each stage or phase are the
following (considering a contested lawsuit):
1) Exhibition stage.
The process of litigation is generally commenced by filing a formal
complaint, and by proper service of process upon defendant, allowing him
from 5 to 9 days to file a formal written answer. After the answer is
filed, the plaintiff is given a 3-day period to reply to any argument made
by the defendant, and 9 days to reply to any counterclaim that the
defendant might sustain in an OP.
It is during this
stage that an attachment order will be executed in EP’s, mainly during the
service of process phase and without placing bond. The service of process
itself is a very important act and almost considered a sacramental one.
Service of process must be executed through an official court clerk, and
most fully comply with local civil procedure rules.
2) Probatory stage.
any piece of evidence that might support our cause of action (documents,
witnesses, experts, etc.), must be first proposed to the court (asked for
its admission) for its later rendering. Such proposal must be made in the
same complaint and answer briefs, during EP’s, and once allowed they
should be rendered within 15 days. During OP’s, parties must request for a
10 day period to file a petition proposing evidence, after which they will
have 30 days to render all evidence in full, including having such
evidence ready for the appointed hearing.
It is important
to consider that in
there is no pretrial discovery phase or proceedings, so a party commencing
a lawsuit will need to have everything ready upon filing its claim: facts,
proofs and supporting arguments. Also, the procedure itself is mainly
conducted in written fashion. The nature, purpose and extension of the
hearings are very different from the “hearings” or “trial” in common law
3) Conclusion stage.
After all evidence has been rendered and the probatory stage has ended,
parties are given a 3-day period each to make allegations, which will
again have to provide and filed through formal briefs. Unlike common law
jurisdictions, there is no opportunity to give final oral statements that
will be kept on record and later on considered. Following the allegation
period, the Judge will have 15 days to decide its case on OP’s, and 8 days
4) Objection stage.
After a judgment has been rendered, there is a 9-day period to file a
petition for an appeal process —by which the proceedings or the judgment
itself can be reviewed by a Court of Appeals (generally the State Superior
Court). Each respondent in an appeal process is given a 3-day period to
reply to arguments and allegations made in the appellate brief. Again,
there are no oral arguments in this phase, and every allegation will have
to be made in writing.
Within 3 days
after the Court of Appeals has received the case file, it will decide
whether to admit the appeal process or not. Following this period, it will
have 15 days to enter a decision and issue a resolution either affirming
or reversing the lower court’s decision. (Also important to consider is
the possibility of a constitutional injunction proceeding, which can be
filed against the Court of Appeals’ decision)
5) Executive stage.
The final step in any proceeding will be executing the judgment. This will
only be possible when the resolution is final (no appeal or amparo
pending) and has the force of res judicata. During this phase there is
generally a 5-day period granted to the defendant to voluntarily comply
with the judgment. After such period has expired, an execution process
will begin, starting with the seizure of defendant’s property and proper
sale by judicial auction.
remedies are limited to very specific situations during the execution
process, and there’s a chance that the defendant might seek amparo relief.
Nevertheless, an amparo against execution is also limited and generally
only permitted to the judicial auction itself.
14. What judicial prejudgment remedies are available to creditors in
Mexican Commercial Code provides for several precautionary measures,
including a seizure of goods order (embargo
or secuestro), which has both features of the attachment and
garnishment orders. Such remedy —which we will call throughout this
calling attachment order—,
will therefore allow us to seize property in the control of the debtor or
to levy on real property by an act of recording, and also to levy on the
debtor’s tangible personal property in the possession of a third party or
to levy on an intangible obligation owed to a debtor (including bank
Although the remedy is fairly available to all creditors, there are certain
conditions and requirements that must be fully complied with, since the
measure is granted as an ex parte
Firstly, the petition for an attachment order as a precautionary measure has
to be well supported by documents or witnesses showing that 1) petitioner
has a prima facie
underlying claim on the merits; and 2) there’s a potential risk that debtor
will hide or transfer ownership rights on his real or personal property.
Secondly, once the attachment order is granted, the creditor must post a
bond that will indemnify the debtor for damages if there’s any wrongful
attachment, or if creditor fails to obtain judgment in the suit. The
attachment will be then executed only after the bond is posted. (The amount
required for the bond is left to the court’s discretion, and generally
ranges from 10 to 20% of the claim).
Thirdly, since the attachment is a remedy ancillary to a suit, the same will
be ineffective if there’s no suit filed within three days of the execution.
Such term can be extended if the suit has to be filed or followed in any
15. How does Mexican law regulate a fraudulent conveyance of assets?
most countries that come from a
Civil Law Tradition,
laws within each State provide for remedies against fraudulent conveyance
of assets through the actio pauliana.
Federal Civil Code —which most States have followed, provides that any
transaction made by debtor to harm or with prejudice of his creditor can be
annulled, if there is evidence that proves: 1) that debtor’s insolvency
resulted from such transaction, and 2) that the credit that originated the
annulment request took place prior to the transaction. If the transaction
was onerous, there has to be proof that the transaction was conducted in
bad faith (fraud) by the
parties involved. Creditor will be relieved from this burden of proof
however, only in cases where debtor has sold goods (onerous transaction)
following either a judgment or an attachment order (embargo) issued against him.
16. How can I
enforce a foreign judgment in Mexico?
process involved for the recognition and enforcement of foreign judgments
in Mexico —called “homologación”,
is quite a rigorous one. It is a process in which both local and federal
rules of procedure come into play, and one that goes hand in hand with
another procedure on Letters Rogatory. According to article 571 of the
Federal Code of Civil Procedure —which most States have followed,
recognition and enforcement of a foreign judgment will take place only
when the following conditions are met:
I. All formalities
for Letters Rogatory are satisfied.
II. Judgment is not the result of an In
III. The court rendering the judgment had proper jurisdiction to try the
matter and to pass judgment on it.
IV. Service of process has been completed upon defendant in due legal
V. The judgment must be final and have the force of
VI. There must be no case tried by a Mexican court which is a result of
the same legal actions.
VII. The judgment must not be contrary to Mexican public policy (ordre
VIII. The judgment must fulfill all the formal requirements necessary to
be deemed authentic.
process for “homologación”
requires that defendant is given a nine-day period to file an answer to the
request for enforcement and to make allegations or to bring evidence in
court. After the court has decided which evidence proposals are admitted, it
will set up a hearing date for its reproduction. Once the evidence is fully
rendered, the court will be ready to issue a judgment either granting the
enforcement or denying it. An appeal process is also available to both
parties, for which a five-day period is granted. (To take a closer look of
requirements to enforce a foreign judgment including recommendations please
contact us for a free brochure on “Avoiding Pitfalls with the Enforcement of
a Foreign Judgment in Mexico”).
17. What is an
brief terms, an amparo
is a constitutional injunction proceeding that can supersede any other
type of proceeding or resolution. An action for
amparo can be filed whenever
a fundamental human right provided under our Federal Constitution is
allegedly infringed by any government agency, including courts in general.
not a legal remedy within a certain civil, criminal or commercial case but
instead; it’s a totally different and independent proceeding. Acts that give
rise to an amparo action
and proceedings are numerous, ranging from arrest warrants to final
resolutions in civil and commercial cases, but these proceedings and cases
are very technical in nature and thus, few
amparo awards are granted.
Only in those cases where there is clear and overpowering evidence that
there was an infringement of fundamental rights will a district court grant
an amparo award. This
denial however, doesn’t stop the delay that such
amparo proceedings bring along, although they tend to be
faster and more efficient each day.
18. Can I recover even if I don’t have a signed contract?
Modern legislation in Mexico legally binds a party to a commercial
transaction even when no written agreement has been executed, or no
documentary evidence is accounted for. In support of such trend, the
Vienna Convention provides that no international transaction will need to
be executed in writing or that upon controversy written evidence will be
required. If you can show that you honored your end of the bargain, we can
usually enforce your rights to recover.
offset to this situation is that witnesses will be most dependable for your
cause of action in a contested lawsuit. Sometimes when there is enough
documentary evidence to support your claim, a witness testimony will not be
necessary, especially when debtor has recognized the exhibited documents as
true and correct.
19. Does it make a difference how long the account has been overdue?
The statute of limitations in
for enforcement of commercial transactions made within the country is one
year for retail sales and ten years for wholesale. On international or
cross-border sales, the statute of Limitations is four years according to
Vienna Convention. For a criminal matter where a debtor committed fraud to
obtain credit or merchandise, the Statute of Limitations is one year upon
time of notice or acknowledgement of such crime, extendable to two years
on special cross-border matters.
legal constraints, collectability has much to do with how fast our actions
are, and how fast the claim is pursued when compared with other creditors.
The premise “first come, first served” is proven to be true when a debtor
has hit financial crisis. Undercapitalized businesses are common in Mexico
(maybe everywhere), so the few assets a company has to pay its debts with
will be allocated to those who seize assets first, and execute upon them.
addition, it is common to see how debtors in Mexico very easily transfer the
company’s property (assets) to another business without a proper liquidation
process. Although there is legal recourse against fraudulent conveyance of
goods, this usually carries a longer and complex proceeding that prevents an
immediate recovery. Therefore, it is highly recommended to act fast and
execute upon debtor’s property even faster.
20. I’ve heard it’s easier to collect when there are checks, promissory
notes or bills of exchange signed, why is that?
indeed faster and probabilities to effectively collect are higher when
there are promissory notes, checks, or bills of exchange duly signed. Such
documents allow creditors for an immediate writ of attachment (resolution
allowing seizure of debtor’s property), without placing bond. Any
procedure based these “credit instruments” are generally shorter and the
collection process is consequently faster.
big advantage of pursuing a collection through a credit instrument is that
the defendant is not going to be allowed to bring in arguments relating to
the commercial transaction or the parties’ rights or obligations derived
from such business. They only allegations that will be relevant in such
proceedings will be generally those relating to payment and validity of such
credit instrument. These will be important factors since debtor will have
very few defenses against a complaint, and there will practicably no need to
bring in witnesses to support our claim.
21. Can I secure
an international transaction with checks, promissory notes and bills of
exchange according to my country’s laws, or do I need to comply with
different legislation from Mexico?
Credit instruments were develop from ancient merchants since medieval
times, and therefore are well known today and regulated in almost every
country across the world generally in the same way. However, there will be
certain requirements that the laws of each and every country are going to
provide differently. Thus, it will be necessary to comply with the rules
of such country where we are most likely to enforce it.
are going to secure a debt from
through any credit instrument, you should make sure that the credit
instrument duly complies with the regulations and requirements provided
under the Negotiable Instruments and Credit Transactions Law. Failure to
comply with these requirements is going to invalidate your credit instrument
and will have no binding effect whatsoever. For instance, the promissory
note must bear on the front the word “pagaré” for it to be consider a lawful promissory note and
thus, is can be enforceable in court.
need assistance on drafting a credit instrument to secure a debt in Mexico,
we can help you review your documents free of charge to see if they do
comply with Mexico’s legislation on credit instruments. Please feel free to
contact us at your convenience. You can also reach us to request the free
brochure “Simple Steps to Drawing Up a
Pagaré that will be
Enforceable in Mexico”.
22. How much
time do I have to enforce checks, promissory notes and bills of exchange
Statute of Limitations in Mexico for enforcing checks is six months after
your debtor’s bank rejects them for insufficiency of funds (considering
that such checks were presented within the legal period of up to three
months when the drawer is in Mexico and the drawee out of the country);
one month when both parts are within the country but in different cities;
and fifteen days on operations made locally.
promissory notes and bills of exchange the Statute of Limitations is
generally three years after the account is overdue, and four years under the
same conditions for international promissory notes and bills of exchange
executed in accordance to the United Nations Convention on International
Promissory Notes and International Bills of Exchange.
23. What will it cost me
to collect through Court?
firm will pass along certain court related expenses that will be needed to
file a complaint and to secure all expenses that are likely to generate
throughout proceedings. These expenses relate firstly to obtaining and
executing an attachment order (including all tasks necessary for proper
seizure of debtor’s property); and secondly, to preparing all
documentation and evidence in general that needs to be rendered in court.
considerable expenses include traveling to other nearby cities’ courts of
appeals and district courts in case of parallel proceedings, as well as
office expenses in regard to your case. All of the expenses made on your
behalf will be reflected in a detailed monthly statement that will be
provided according to a previous services agreement that will be executed
on the terms and conditions for collection handled by our firm (posted on
our web site), we will not charge initial non-contingency fees —such as suit
fees. Essentially the financial risk goes to us. If we don’t recover, we
don’t get paid.
24. How long
will it take me to collect through court, and how efficient is the Mexican
Judicial System as to this date?
Scholars and legal practitioners throughout the country have generally
agreed that a non-complex contested commercial case will take
approximately one year to be resolved, without adding any appeal process
or constitutional injunction proceeding which could ad up another 9 to 12
months. That time could very well double in a complex commercial dispute
or a collection case involving a large amount of money.
time pointed out for non-complex cases could also be slightly increased in
certain jurisdictions where the Judicial System has been rated below the
average performance throughout the country. In this regard, the National
Banker’s Association of Mexico prepared a study which aimed at ranking the
Judicial Authorities of all 31 Mexican States (published in the national
financial newspaper “El Financiero”, April 15, 2002), based on 1)
professionalism, 2) quick outcomes, 3) staffing resources, and 4) quality of
actual enforcement action. The study came out as follows:
Executability (EC) ratings by State
EC2 Superior rating
EC3 Average rating
EC4 Below average rating
EC5 Worst rating possible
A “+” or “promising rating” within EC2, EC3
and EC4 denotes a higher or more promising standing within the rank.
25. What places in
does your Firm cover collection matters?
Although our firm is based in Tijuana, Baja California, Mexico, we cover
the entire country.
firm has cast an excellent network of affiliated local attorneys in major
cities of Mexico (see our section on "places
we cover" for a full list of cities) who
help us file complaints and oversee the litigation process and progress of
each case on a day to day basis. Still, HMH keeps the litigation strategy
the main advantages of our federal system in Mexico is that it allows a duly
licensed lawyer to practice in any State within Mexico, without any need to
be authorized by each State in separate fashion. This allows us to reach
into other States and better represent our clients with their cases
throughout the country. We want to make our clients feel confident that
their accounts will be mainly handled by the very team that they placed
their trust on: HMH Legal.