Tuesday, October 20, 2020

Mexico: Step by Step Toward a Range of ADR Options

The United Nations Convention on International Settlement Agreements Resulting from Mediation, also known as the Singapore Convention on Mediation, entered into force a month ago. The Convention applies to agreements that result from a mediation of a commercial dispute where at least two of the parties are in different States or that the obligations resulting from the settlement are to be performed in a different State from where the settlement agreement is rendered.

According to the United Nations Treaty Collection, by October 15, 2020, there were 53 signatories, including nations like Chile, Colombia, United States of America and Uruguay; and 6 member states parties to the convention (Belarus, Ecuador, Fiji, Qatar, Saudi Arabia and Singapore). As a Mexican law practitioner, the question is: How is Mexico doing in the area of ADR?

An issue in Mexican contractual relationships, especially in the construction industry, is the way to resolve conflicts.  Regardless of the size or amount of the project, there are generally several parties that look only to their own interests and lose sight of moving the project forward.

Mexico belongs to the civil law system which means that legal relationships are ruled, most of all, from the written law, and even when arbitration has been implemented, the practice is tied to traditional litigation to solve disputes. Additionally, jurisdictional procedures are very formalistic regarding practices like the value of the evidence (most documentary evidence shall be original or certified copy), inter alia.

The use of arbitration has been increasing considerably in complex construction, infrastructure and energy sectors which brings the certainty that a professional in the field who is familiar with the day-to-day in the construction industry will resolve such a specific dispute, rather than a judge whose expertise and knowledge in law would be invaluable, but who would not be necessarily an expert in construction.

Notwithstanding the foregoing, arbitrating during the construction project does not provide a real solution because, in general, arbitration focuses on who wins and who loses, rather than the main objective of the project and its correct performance.

It is worth mentioning that it is not my intention to undermine arbitration. I am a happy practitioner and a lover of arbitration; however, to be honest, arbitration is not always the best ADR option taking into account that in the construction industry, one of the most important objectives is to continue with the projects and avoid unnecessary suspensions or delays in the project.

For those reasons it is necessary, at least in the construction industry, to implement in contractors a culture in which the contractors themselves are the ones who actively participate in the resolution of disputes arising from the contracts to which they are a party.

In that regard, once again the question that needs to be answered: How is Mexico doing in the area of ADR?

An initiative of law has been submitted in the Mexican congress. This initiative is to render an Alternative Dispute Resolution Law, which has as its purpose a social one (as communitarian or indigenous and scholar mediation) but not exactly a commercial one (for commercial mediation is proposed to amend several articles from the Commercial Code). However, if it is approved, it will be the first step to a conciliatory culture and will have a direct impact in the commercial, and of course, construction field.

It is the job of Mexico’s young practitioners to search for new areas in which to innovate, looking around at different experiences like the Peruvian where “Dispute Boards” were used in the Pan-American Games project, helping to avoid unnecessary delays and to carry on the project in a healthy manner, and to try to reach and implement advanced ADR techniques specifically in the construction industry such as the Dispute Boards, where a board of 1 or 3 people resolve in a very quick way, technical disputes, without stopping or delaying the project and eroding contractual relationships, and its resolutions are, depending on the format of the Dispute Board, enforceable.

There seems to be a long way to go, but Mexico has taken the first step by submitting the initiative of Alternative Dispute Resolution Law. I hope that Mexico will get there, step by step, to a place where a range of ADR options are available not only through legislation but also in the contracting culture.

Author Juan Pablo Sandoval GarcĂ­a is an Associate at COMAD S.C. (www.comad.com.mx). His email address is jpsandoval@comad.com.mx.


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