Punitive damages in Mexico: the economic impact of negligent conduct

Traditionally, in matters of civil liability, the primary purpose of compensation has been to repair the damage caused. However, in certain cases, financial compensation can serve an additional function: discouraging particularly serious and socially reprehensible conduct. This dimension of reparation is known as punitive damages.

This figure is especially relevant, since, for example, a bad cost decision can be much more expensive than expected, particularly when reducing expenses on safety, maintenance or regulatory compliance results in serious damage.

In Mexico, punitive damages are not expressly regulated by law. Their development has been primarily jurisprudential, based on rulings issued by the Supreme Court of Justice of the Nation (“SCJN”). The best-known precedent is the so-called Mayan Palace case, in which the First Chamber of the SCJN analyzed the civil liability arising from the death of a guest as a result of serious deficiencies in security measures and a delayed reaction to a relevant risk.

In that case, the Supreme Court of Justice of the Nation (SCJN) held that compensation need not be limited to compensating for the harm suffered, but may include an exemplary element when the responsible party's conduct reveals a serious breach of their duty of care. Based on that precedent, the concept of punitive damages has been progressively defined and applied within the Mexican civil liability system.[1]

Other relevant matters -such as Direct Amparo number 36/2017 (Buenavista del Cobre and Grupo México) and Direct Amparo in Review number 992/2014 (CMR, SAB de CV)- These factors have contributed to the development of punitive damages in Mexico. Furthermore, the existence of pending proceedings has also played a role. -such as the cases against Google Mexico or Cabify- They show that the deterrent function of compensation, even without being expressly provided for in the law, is in full application and evolution.

From this perspective, the Supreme Court of Justice of the Nation (SCJN) has indicated that the right to “just compensation” is not limited to the mere reparation of damages, but may include an additional component when the seriousness of the conduct so warrants. This component serves as a form of social censure and prevention, sending a clear message that certain behaviors cannot be treated as mere errors without significant consequences.

Thus, punitive damages serve a dual purpose. On the one hand, they allow the victim to see their expectation of justice satisfied, by demonstrating that the harm suffered has real consequences for the perpetrator. On the other hand, they play a preventive and deterrent role, sending a clear message of social disapproval and discouraging the repetition of similar conduct in the future. [2]

In some cases, limiting compensation to strictly compensatory damages may be insufficient, for example, when reducing costs in security, maintenance, or regulatory compliance is more economically advantageous than assuming the risk of eventual repairs. In this scenario, punitive damages aim to prevent non-compliance from becoming a profitable decision.

For example, if a company decides to cut costs on machine maintenance and, as a result, an employee is injured due to a failure caused by this omission, punitive damages aim to penalize this negligent conduct. The logic is simple: to prevent paying compensation from becoming more advantageous than complying with minimum safety standards. By increasing the total amount payable, punitive damages can exceed the savings achieved by not performing maintenance, creating a real incentive for the company not to repeat such negligent decisions.

However, the Supreme Court of Justice of the Nation (SCJN) has been clear in stating that punitive damages are not automatic or applicable in all cases. Their imposition requires a careful analysis of the specific circumstances, the degree of responsibility of the person causing the damage, and the severity of their conduct. In this sense, compensation can be entirely just even without including a punitive component. [3]

Furthermore, punitive damages do not constitute an independent sanction, but an increase within the total amount of compensation, closely linked to the proven civil liability and applicable only to the person who actually caused the damage.[4] Nor are they appropriate when the defendant is the State, since an exemplary economic penalty would ultimately fall on the taxpayers.[5]

In conclusion, punitive damages in Mexico constitute an exceptional and carefully defined tool within the civil liability system. Their purpose is not to impose excessive punishments, but rather to reinforce a culture of responsibility, prevent noncompliance or negligence from becoming economically advantageous options, and ensure that compensation is truly just in the most serious cases. Applied prudently and with due justification, punitive damages contribute to a more robust balance between reparation of harm, social censure, and prevention of future misconduct.

Therefore, a poor cost-cutting decision can end up being far more expensive than anticipated. Reducing expenses in security, maintenance, or regulatory compliance may generate immediate savings, but it can also expose companies to significantly greater liabilities when such decisions result in serious harm.

[1] See the criterion issued by the First Chamber of the SCJN, with digital registration number: 2006959.

[2] See the criterion issued by the First Chamber of the SCJN, with digital registration number: 2006958.

[3] See the jurisprudence issued by the First Chamber of the SCJN, with digital registration number: 2025569

[4] See the criterion issued by the Third Collegiate Court in Civil and Labor Matters of the Fifth Circuit with digital registration number: 2029049.

[5] See the criterion issued by the First Chamber of the SCJN, with digital registration number: 2018607.