ADR Around the World: Mexico

This article is the second in a four-part CPR summer series that examines the state of dispute resolution in a number of rapidly changing locales around the world. 

Mexico: A Globally Integrated Economy Moving Towards Effective Commercial Dispute Resolution

By Boaz Cohon, CPR Student Intern

Notwithstanding meager economic growth in recent years, when looking at how Mexico is situated within the global economy it is clear why the country is slated to become the 8th largest economy in the world by 2050. Mexico is fortuitously located adjacent to the world’s largest economy in the United States, which its companies have relatively unfettered access to via the North American Free Trade Agreement (NAFTA). This proximity has made Mexico “an important node in the world trading system” and situated it well in a multitude of global value chains (GVCs). Furthermore, President Enrique Peña Nieto’s financial reforms have broken up telecom oligopolies and liberalized the energy sector, creating even more incentives for multinational enterprises (MNEs) to invest.

One strategy for insuring Mexico reaches its burgeoning economic potential is to improve the efficacy of mechanisms for resolving commercial disputes. Currently, commercial dispute resolution in Mexico offers a mix of problems and potential, with some encouraging, recent improvements but options that are still lacking by international standards. Absent these effective methods, Mexico can still be a challenging place to do business for both domestic firms and MNEs.

Procedural changes to commercial litigation have—auspiciously—already been passed and begun to be implemented. In 2011 the Mexican legislature passed a series of well-received reforms including an expedited process with oral hearings for smaller monetary claims, a reduction in procedural timeframes, and a decrease in the number of appeals (writs of amparo) a disputing party can make.

If implemented, these reforms, coupled with the much larger judicial reform of 2008, would undoubtedly have a positive impact on Mexico’s rule of law and judiciary. The World Justice Project ranked Mexico 79th out of 102 countries in the most recent iteration of its Rule of Law Index, and citizens continue to be skeptical of the judicial system as a whole with 54% of respondents in a recent survey saying that the court system has a bad influence on the Mexican state.

This apparent lack of trust in litigation, even in the face of reforms, has likely contributed to a rapid rise of arbitration as the go-to mechanism for resolving commercial disputes. Mexico has adopted the UNCITRAL model law for both domestic and international arbitrations with only minor modifications, and is a signatory of the New York Convention (1958). Over time the judiciary has also become increasingly accepting of arbitration and has remained appropriately aloof from outcomes, not intervening in decisions and enforcing awards unless a clear procedural issue has been demonstrated.

Interestingly, the same upbeat tone cannot be taken when describing other forms of alternative dispute resolution (ADR) in Mexico in the context of resolving commercial disputes. Even as the business population has warmly taken to arbitration, it has, at least comparatively speaking, shunned mediation — despite its cropping up in many other areas of disagreement, such as medical malpractice suits, juvenile justice cases, and labor dispute resolution. In commercial disputes a culture of Pyrrhic victory and notions of the need to ‘win’ legal battles may be obstructing widespread acceptance of mediation in the business community.

This has remained the case even in the face of powerful drivers of change. In 2001 the American Bar Association (ABA) and Freedom House in conjunction with the United States Agency for International Development in Mexico (USAID/Mexico) pursued a program establishing 28 mediation centers. The program increased use, but only to a limited degree.  A 2008 constitutional amendment that set out principles and procedures of mediation, obligations of participants and practitioners, and created Alternative Justice Centers across the country likewise did not immediately incentivize significantly more disputants to undertake mediation to resolve commercial disputes.

Perhaps change needs to come from inside the ADR community in Mexico, and, if so, two organizations look primed to help realize such a cultural shift. The Mediation and Arbitration Center of the National Chamber of Commerce of Mexico City (CANACO) has a broad focus including arbitration and mediation and is the most well-known mediation provider in the country, and The Arbitration Center of Mexico (CAM) primarily focuses on arbitration but is looking to expand into mediation.

In sum, as the complex economic machine that is Mexico continues to gain momentum, it would no doubt benefit from lubricating the gears with a diverse array of effective dispute resolution tools for domestic and international firms.

The CPR Institute would like to thank Boaz Cohon for this contribution. Boaz, a summer public policy/legal intern at CPR, is majoring in Political Science and History at Vanderbilt.

ADR Around the World: Colombia

Throughout this summer, in part inspired by CPR’s recent activity in Brazil, “CPR Speaks” will be publishing a four-part series looking at the state of alternative dispute resolution (ADR) in a number of other rapidly changing locales. We begin with Colombia, to be followed by Taiwan, Turkey and Mexico.

Colombia: A Dynamic Economy with a Vibrant ADR Environment

By Boaz Cohon, CPR Student Intern

In 2014, market research firm Capital Economics reported that Colombia had surpassed Argentina as the third largest economy in Latin America. This economic success surprised few, as Colombia’s Gross Domestic Product (GDP) had grown close to 5% in both 2013 and 2014, despite the slowdown occurring throughout the rest of Latin America and falling oil prices (one of Colombia’s main exports), all while keeping inflation under 4%. Moreover, Foreign Direct Investment (FDI) in Colombia grew to $16,198,401,721 in 2013 from only $10,564,672,091 in 2008.

Colombia is a paragon of excellence in economic expansion for Latin America, and one factor that has helped contribute to Colombia’s stunning growth—particularly its high levels of FDI—is a corporate and legal environment conducive to international as well as domestic alternative dispute resolution (ADR). Continue reading

The Future of Online Dispute Resolution: Transformation & Preservation

On June 5, 2015, CPR President & CEO Noah Hanft delivered the keynote address at “ODR 2015,” held at Pace University Law School — an event that brought together the world’s leading online dispute resolution (ODR) practitioners, policymakers, entrepreneurs, members of the judiciary and academics.

Over the past few years, use of online dispute resolution has grown and matured in ways that are astonishing, both in the range of uses and the speed with which it has been embraced. Mediation and arbitration are rapidly moving online. Consumers, businesses and lawyers increasingly expect to be able to resolve any issues that arise 24 hours a day and 7 days a week, right from their laptops and tablets. Transactions also now routinely cross the globe, and disputants are unwilling to sort out complex issues of jurisdiction every time a problem crops up.

Enter ODR, which is the application of information and communications technology to the practice of dispute resolution. Demand is growing steadily. Continue reading

On Norton Rose Fulbright Litigation Survey: In Litigation v. Arbitration Debate, Best Answer is “It Depends”

In mid-May, law firm Norton Rose Fulbright released its 11th annual Litigation Trends Survey—the broadest the firm had ever undertaken, compiling results from more than 800 corporate counsel (primarily general counsel) representing companies across 26 countries on dispute-related issues and challenges. According to the firm survey summary, “While each country or region surveyed is unique, one common theme comes through loud and clear—corporate counsel around the world see the growing litigiousness of the  business environment as an important trend that bears watching.”

Survey results reflected significant corporate spend on litigation, with 34% of US respondents reporting litigation budgets of 1 million to 5 million, as compared to only 26% two years ago. There was also a slight increase in the companies reporting litigation budgets of $10 million or more.

One point of particular interest was the broad utilization of international arbitration, particularly for larger companies (more than $1 billion in revenue). Across all regions and industries, more than two-thirds of companies with $5 to $10 billion in revenue preferred arbitration, and were also much more likely to have been involved in an arbitration in the past 12 months (38%). Specifically, given the choice, for disputes that were international in nature, nearly half of total respondents said they preferred arbitration over litigation, with about a quarter choosing litigation and the remaining quarter answering, “It depends.” Continue reading