Clauses of express submission to a foreign jurisdiction in adhesion contracts: Are they valid?

Before getting into the subject, it is important to clarify that an adhesion contract is a pre-established agreement where a supplier draws up all the conditions –or clauses– unilaterally, without negotiation. The other party, known as the consumer or adherent, can only accept or reject those terms and conditions as stipulated by the supplier. These types of contracts are used –generally– to simplify and streamline the contractual relationship between a supplier and hundreds of thousands of people who purchase the same product or service (such as banking, insurance, telecommunications, streaming services, etc.).

In this sense, in this type of contract, the adherent is not free to configure the contractual content; they must accept or decline to sign a contract whose clauses they could not discuss or negotiate with their counterpart.

Due to the nature of adhesion contracts, the Federal Consumer Protection Law seeks to establish equity between the obligations and rights of suppliers and consumers, ensuring that the principles of justice and proportionality are respected, and prohibiting clauses in this type of contract that violate these principles.

Now, in relation to these disproportionate clauses, it is common practice for one of them to be the so-called "jurisdiction clauses." Jurisdiction clauses are contractual provisions by which the parties expressly agree on which court will have jurisdiction to hear and resolve any dispute arising from the interpretation, performance, or breach of the contract.

In adhesion contracts, suppliers often establish jurisdiction clauses based on their domicile, even if their product or service is marketed in a different country.

To counter this common contractual imbalance, the Supreme Court of Justice of the Nation ("SCJN") has determined, through a mandatory precedent, that clauses that oblige consumers to submit to foreign jurisdictions in adhesion contracts, especially those of companies that operate in Mexico through the internet, directly violate the adherents' fundamental right of access to justice and are therefore invalid.

The SCJN's reasoning for declaring these clauses in adhesion contracts invalid can be summarized in four main arguments: (i) These clauses impose a disproportionate burden on the consumer, (ii) Consumer consent is not free or voluntary for the choice of jurisdiction, (iii) These clauses directly violate the fundamental right of access to justice; and, (iv) Providers offering digital services to consumers in Mexico establish a clear economic and operational connection with Mexican territory, which justifies the jurisdiction of national courts.

• (i) Disproportionate burden on the consumer

Forcing consumers to resolve a dispute in another country means incurring high costs (which most of them cannot afford). These costs are easily affordable for suppliers, as they are companies with greater legal and financial resources.

• (ii) Consumer consent is not free or voluntary for the choice of jurisdiction

As already stated, by their nature, adhesion contracts do not allow for real negotiation of their terms; the consumer simply accepts or rejects the terms pre-established by the supplier. Therefore, when one of these clauses imposes foreign jurisdiction, it is understood that the consumer's consent is not free and voluntary regarding the choice of the place where the parties will resolve their disputes, but rather is imposed by the supplier.

This dynamic creates a situation in which acceptance of a foreign jurisdiction does not arise from a genuine choice, but rather from an imposition. The consumer is forced to "accept" a highly disadvantageous clause, or else be denied access to the service they desire or need.

This type of coerced "acceptance" vitiates consent, so the SCJN recognizes that, given the consumer's weak position vis-à-vis the provider, presuming free consent in a clause that so restricts their access to justice would be ignoring the economic and contractual reality of consumer relations.

• (iii) Violation of the fundamental right of access to justice

When these jurisdiction clauses force Mexican consumers to litigate in foreign courts, they directly violate their fundamental right to access to justice. This is because they create barriers that make the exercise of this right unfeasible: the costs and complexities of international litigation are, for many, unaffordable or impractical.

For the SCJN, allowing a company to impose such conditions in a contract of adhesion is equivalent to depriving the consumer of the real possibility of seeking redress in the event of a conflict, thus nullifying the constitutional principle that justice must be accessible to all.

• (iv) Existence of a territorial connection

When a company offers its products or services to consumers in Mexico through digital platforms, a clear territorial connection is established that justifies the jurisdiction of Mexican courts. The SCJN holds that the mere existence of a foreign jurisdiction clause cannot override the company's operational reality. Therefore, if an international company uses a website or application to conduct its business in Mexico, advertises in the country, allows payments in Mexican currency, or uses domains such as ".mx," it is creating a clear economic and operational connection with Mexican territory.

This territorial connection means that the legal consequences of their actions must be heard by the courts of the place where the damage occurred or where the consumer resides.

In conclusion, the SCJN's recent ruling sets a precedent for consumer rights in the digital sphere. Furthermore, observance and compliance with the provisions of this precedent are mandatory in Mexico.

This decision regulates commercial relationships arising from adhesion contracts, so companies operating in Mexico and formalizing the sale of their products or services through such contracts must be prepared to make the corresponding adjustments to their operations.

AUTHORS:

Julio Butrón – Associate

Pamela Balderas – Intern