Challenges and implications of requesting the Recognition and Enforcement of the Award before a Mexican Court when the procedure was followed in absentia

• The recognition and enforcement of an arbitration award may be denied in Mexico if there are irregularities in the notification of certain actions within the arbitration procedure, since due process –as a constitutional principle– requires that the defendant be properly notified, unlike the flexible practices of arbitration.
• The trend of the Mexican Courts prioritizes a correct notification over the flexibility that arbitration allows; when it comes to analyzing the validity of the arbitration award within a request for recognition and enforcement of the award.

The request for recognition and enforcement of an arbitration award before a jurisdictional authority implies that it must have certain characteristics that allow its validity to be concluded and, consequently, its adherence to the law in harmony with the legislation where its enforcement is sought.

Although it is true that an arbitration award enjoys a presumption of validity, article 1462 of the Commercial Code defines those scenarios in which its recognition and execution may be denied. Among the cases of invalidity, we highlight the content of section b, section I of article 1462, consisting of the improper notification of certain actions within the arbitration procedure, such as the designation of the Arbitration Tribunal, Procedural Orders or even the notification at the beginning of the arbitration procedure.

The regulations of the vast majority of regulations belonging to arbitration institutions allow notifications to be made by any possible means, as long as it can be verified that they have actually been delivered, and in some cases, it is sufficient to verify that it has been delivered to the address of the party to be notified.

That is, in contrast to Mexican legislation that regulates the location as one of the "Essential Formalities of the Procedure"where notification of the claim constitutes one of the most important acts that guarantee the defendant a true right of access to justice and that he can oppose the claims –This principle is also enshrined in due process, which seeks to ensure that the defendant has adequate means of defense.-.

And on the contrary, through the arbitration procedure, said "Essential Formalities of the Procedure"and allows for more flexible regulation, essentially due to the fact that notifications can be made by any possible means, as long as their effective delivery is recorded.

In practice, there is unfortunately a latent possibility that the Respondent may opt for a strategy of continuing the arbitration procedure in absentia if certain inconsistencies emerge from the notifications made.

Now, if one of the parties requests in court the recognition and enforcement of the award, the judge's attitude –which is initially aimed at decreeing validity and ordering its execution– may be prevented from doing so if it detects any irregularity that may compromise the validity of the award.

Among the most common reasons that are noted when the procedure was carried out in absentia, there is a potential irregularity in the notifications. For example: that it was not delivered to the correct address or that the notifications were made only by electronic means.[1].

From the jurisprudential development of the Mexican courts, the judges have adopted a protectionist position that involves ensuring due process and guaranteeing the parties the full opportunity to assert their rights –Even when the parties have waived the formalities in the notifications and have expressly submitted to the arbitration rules.-

In this sense, the conclusion that the Mexican courts have reached –and in light of the principles of due process and the guarantee of treating the parties equally and with full opportunity to assert their rights[2]– is that the arbitration award must be analyzed based on due process principles, preferring an interpretation that seeks to safeguard the defendant's potential notification rights over the flexibilities provided for in the arbitration.

Therefore, if irregularities are noted in the notifications of an arbitration procedure –or the rules provided for in the regulation are diametrically different from the lex arbitri– then there is a high risk that the award will not be recognized as valid or enforced.

[1] As an example, the articles 2.1 and 2.2. of the UNCITRAL Arbitration Rules allows notifications to be made only by email.

[2] Article 1434 of the Commercial Code: “The parties must be treated equally and each must be given full opportunity to assert its rights.”