Economic activity is undergoing an unprecedented disruption due to the current health emergency, and the measures being adopted to face it. Such disruption is having immediate repercussions in civil, business and financial relations. It is reasonable to expect a sharp rise in legal disputes among private parties.
Past economic crises led to litigation that, when resolved by our highest courts, generated important judicial precedents, such as that relating to the possibility of capitalizing interest derived from the 1994 and 1995 crisis, or that Economic activity is undergoing an unprecedented disruption due to the current health emergency, and the measures being adopted to face it. Such disruption is having immediate repercussions in civil, business and financial relations. It is reasonable to expect a sharp rise in legal disputes among private parties. which explains how the plaintiff may evidence its standing to file for a summary commercial proceeding (juicio ejecutivo mercantil) to claim the benefits set forth in a securitized bond (certificado bursátil), derived from the 2009 crisis.
In the current situation, we deem it relevant to state that Mexican judges, when resolving contractual disputes, are increasingly accommodating to principles such as contractual equilibrium, equity and good faith. Our Supreme Court has been clear that fundamental rights have two attributes: (i) as public subjective rights imposed on the public authorities; and (ii) as objective elements that permeate in all legal relationships.
Given this, an isolated analysis of the context of a contract, or of the agreements between the parties, for example, as to what will be understood as Act of God or Force Majeure is a good start, but it is insufficient, especially when preparing for litigation in court. Based on recent judicial precedents, we consider that Mexican judges will be especially sensitive towards claims and defenses that have the purpose of bringing an agreement to compliance in accordance with equity or releasing a debtor that reasonably argues and evidences that the relevant cause for its default is the health emergency.
In accordance with the relevant rulings of the Supreme Court: ““the autonomy of private intent is manifested as follows: (i) in the existence of contractual freedom subject to special restrictions where, for example, fundamental rights are at stake; (ii) the exercise of the autonomy of intent and contractual liberty is understood to pursue not only private interests, but also public interests and the common good; (iii) the State is entrusted with intervening to control the production of legal or economic effects for the purpose of avoiding rights abuse; (v) the role of the Judge consists in seeking the effective protection of the rights of the parties, without exclusively addressing the intent of the parties to the agreement.”
Lastly, it is important to note that, in addition to concepts such as act of god, force majeure, and the theory of unforeseen contingencies, there are legal concepts that are under-developed in Mexico, but that international experience shows that they could be validly developed in a court based on the different principles that govern contractual relations, such as frustration of the purpose of the agreement, default with cause, impossibility, or supervening ineffectiveness, among others.
In this respect, it is relevant to understand the current judicial context, since it would allow for litigation being tried in our courts to be argued in the most comprehensive manner, on the understanding that these will generate the judicial precedents that will continue modeling our legal system for the coming years.