OF CARTS AND HORSES: IS THERE ROOM FOR ATTACHMENT OR ENFORCEMENT AHEAD OF RECOGNITION OF ARBITRAL AWARDS IN MEXICO?
In countries that follow the UNCITRAL Model Law on International Commercial Arbitration, including Mexico, this phased approach is associated with the requirement for “recognition” of arbitral awards as separate from ‘enforcement’. As provided in Article 35(1) of the Model Law, and Article 1461 of the Mexican Commerce Code, “[a]n arbitral award … shall be recognized as binding and, upon application in writing to the competent court, shall be enforced…” (emphasis added). In other words, no recognition (or pending recognition) frequently means no enforcement – the enforcement cart cannot go ahead of the confirmation horse.
In Mexico, as in many other countries, this situation can create an uncertainty of enforcement. The concern is all the more acute given that recognition proceedings in this country can take anywhere between a few months and several years. Will the petitioner be able to sustain the requirements for provisional relief during the pendency of the recognition action? If not, will there be assets available at the end of the proceedings? While there are remedies available under Mexican law in the event of dispersion of assets, including civil and criminal actions, the need to resort to such remedies is likely to be considered a last resort (and possibly a near-worst case scenario) by most litigants.
Oct-Dec 2013 issue
White & Case LLP