|Steps to Take When Enforcing U.S. Judgments in Mexico
|Roger R. Evans
|Roger R. Evans is a shareholder in Evans & Kosut in Houston. He received his J.D. in 1972 and LL.M. in international law in 2000 from the University of Texas School of Law.He is an Adjunct Professor of International Business Law at the University of Houston-Downtown. His email address is firstname.lastname@example.org.
|This article is reprinted with permission from the February 26, 2007 issue of Texas Lawyer (www.texaslawyer.com).© 2006 ALM Properties, Inc. Further duplication without permission is prohibited. All rights reserved.|
|Steps to Take When Enforcing U.S. Judgments in Mexico
Roger R. Evans
Recent economic data from the United Nations Commodity Trade Statistics Database pegs trade levels between the United States and Mexico at an all-time high in 2005: $183 billion in exports to the United States and $118 billion in imports from the United States. This is up from a cumulative total of $197 billion in 1998, according to the 1999 Report of the Secretariat of Foreign Affairs of Mexico. Rapid growth coupled with increased individual and business interaction necessarily portends an increase in disputes between private interests in Mexico and the United States.
Given this, are the civil judgment enforcement systems of Mexico, the United States and their individual states in a position to respond to the myriad cross-border disputes that might arise out of this intensified economic exchange? They are, but the more vexing question is: Will they respond?
U.S. courts generally respond positively to requests for assistance in enforcing judgments legitimately obtained in the courts of foreign nations, particularly judgments for liquidated monetary sums. However, while Mexican laws provide mechanisms for enforcing U.S. judgments in Mexico, obtaining enforcement through the Mexican courts is improbable. There is no accord, bilateral or otherwise, between Mexico and the United States providing for enforcement of each other's judgments. Also, attitudinal and institutional obstacles exist on both sides of the border, which often frustrate efforts to enforce U.S. judgments.
Mexico is a signatory to numerous international agreements that provide for reciprocal judgment enforcement. The United States is not a party to any international agreement for recognition and enforcement of foreign judgments. The closest it has come is its agreement in 1958 to the Convention for the Recognition and Enforcement of Foreign Arbitral Awards (the New York Convention).
But this is not to suggest that there has been no effort on behalf of the United States to engage in such an agreement. Representatives of at least 61 nations, including the United States, have met to promote implementation of a Draft Hague Convention on Jurisdiction and Foreign Judgments in Civil and Commercial Matters. Their end goal has been an international agreement to achieve a workable structure and definition for determining jurisdiction and facilitating the obtaining of judgment enforcement in civil and commercial disputes between member states. Thus far, agreement has proven elusive and impediments remain to achieving an effective accord.
Difficulties in bringing an international judgment enforcement accord into force have been linked to fundamental philosophical differences among the parties, notably the U.S. practice of permitting jury awards, punitive awards, treble damages and difficulties encountered with non-negotiated computer software contracts.
This has resulted in a scaled back, more limited approach. On June 30, 2005, the Hague Convention member states reached an agreement — The Hague Convention on Exclusive Choice of Court Agreements — that provided for enforcement of judgments in the jurisdiction designated by the agreements of the parties. At this time, implementation of the convention by the member states has not occurred.
In the eyes of foreign observers, U.S. judgments can contain exaggerated and inflated damage awards, which lead to skepticism about American damage awards in general. Insurance companies and multinational corporations must recognize the potential for increased exposure if the international legal regime becomes more receptive to enforcement of U.S. judgments abroad.
An added dimension that further complicates enforcement in countries such as Mexico is that the exercise of judicial power sufficient to compel a business or an individual to comply with a judgment from a foreign country requires a cooperative legal and administrative system capable of coercing compliance. This is not a simple matter.
Studies, such as one conducted by the International Foundation for Electoral Systems (IFES) Global Enforcement Project, released in 2003, have found that in numerous countries including former Soviet Union satellite states, Mexico and Argentina, enforcement of judgments obtained internally in domestic courts is an arduous task often characterized by frustrated abandonment of the effort to enforce.
Reasons cited by IFES include: 1. postjudgment discovery, to the extent available, is often thwarted by laws prohibiting the compelling of testimony regarding personal assets by a defendant in a civil matter; 2. effective enforcement systems require sophisticated administrative personnel and procedures that are lacking at the national and local levels; 3. the oft-cited susceptibility to corruption contributes to delays; and 4. rigid procedural requirements applicable specifically to enforcement of foreign judgments (among them, the judicial procedure known as homologacion) are difficult to satisfy, particularly for an uninformed creditor from another country.
While there is some evidence that U.S. creditors may be successfully enforcing their U.S. judgments, the literature on this subject indicates that, at best, these are isolated circumstances. In spite of this, for anyone interested in trying to enforce a U.S. judgment in Mexico, there are several steps to take that may assist in the process; this list is illustrative, not exhaustive.
1. Upon commencement of a suit in the United States, where a lawyer anticipates enforcement against assets in Mexico, know that personal service and an actual opportunity to defend are essential elements in complying with the service-of-process requirements under Mexican procedural law.
2. Examine the nature of the action and the relief sought as part of evaluating whether to proceed with the litigation in the first place. Mexican law expressly excludes certain actions, such as those in rem and those involving real estate interests in Mexico, from being proper subjects of litigation in non-Mexican courts.
3. The U.S. judgment must be final and not appealable.
4. The matter in dispute cannot be the subject of concurrent litigation in Mexico.
5. The judgment must not seek to achieve objectives contrary to Mexican public policy.
6. There must be reciprocity of judgment enforcement in the jurisdiction from which the judgment originated.
Mexico does not stand alone in terms of the level of difficulty lawyers should expect to encounter when trying to enforce U.S. judgments. Other countries present similar challenges. Mexico just happens to be next door, and the burgeoning social and economic relationship with the United States cries out for streamlined mechanisms of interaction including the resolution of legal disputes.
As matters now stand, individuals and institutions on both sides of the border seem content to maintain the status quo. As Carlos Manuel Loperena Ruiz wrote in the March 2004 issue of the Florida Journal of International Law, "Finally, my conclusion is the same conclusion that is shared by some other colleagues from Central and South America who say that we do not need to change the law, we need to change the people."