Protection of arbitration against precautionary measures: a judicial criterion that reinforces the continuity of the arbitral process

Executive Summary

A Collegiate Court of the First Circuit ruled that judicial precautionary measures that halt arbitration proceedings can be suspended through an Amparo proceeding. This ruling strengthens the constitutional protection of arbitration as an alternative dispute resolution mechanism and limits the abusive use of precautionary measures to obstruct validly agreed-upon arbitration processes.

The problemPrecautionary measures that halt arbitrations agreed between the parties

Imagine the following scenario: two companies agree to submit their disputes to arbitration. However, when a conflict arises, one of them goes to a civil court and obtains an injunction ordering the arbitration proceedings to be halted, preventing the issuance of the award, or restricting activities related to the arbitration. Can the other party do anything to protect the continuity of the process they both agreed upon? According to a recent judicial ruling, the answer is yes.

What did the Court determine?

The Tenth Collegiate Court for Civil Matters of the First Circuit issued thesis I.10o.C.2 K (12a.) in which it resolved that suspension is appropriate in the Amparo Proceeding against judicial precautionary measures that prevent the continuation of an arbitration or the issuance of the award. The Court's central reasoning rests on three fundamental pillars.

First, the Court reiterated the principle of minimal judicial intervention in alternative dispute resolution mechanisms. According to this principle, the State's courts must refrain from interfering in the conduct of arbitration proceedings, except in cases expressly provided for by law.

Second, the Court reasoned that halting arbitration through precautionary measures distorts the arbitral mechanism. In other words, when a judge orders the suspension of arbitral proceedings, they are not “preserving the subject matter of the dispute.”which is the general purpose of a precautionary measure-.

Third, and as a consequence of the foregoing, the Court concluded that these measures violate public order and the right to effective judicial protection. This is because arbitration enjoys constitutional recognition as a mechanism for accessing justice, protected by Article 17 of the Political Constitution of the United Mexican States.

Why is this relevant for businesses?

This criterion is a positive sign for those who include arbitration clauses in their contracts. Although it is an isolated thesis –not mandatory for all courts– It is significant that the courts are beginning to issue guiding criteria that interpret arbitration as a true alternative dispute resolution mechanism that cannot be easily undermined by judicial precautionary measures.

In practice, we have observed that precautionary measures aimed at halting arbitrations are often used as a strategy whose sole purpose is to obstruct an arbitration process validly agreed upon by both parties. This criterion represents a check on such practices.

We must acknowledge that judicial protection of arbitration in Mexico is a path that has been built over years through various judicial criteria. However, to date, respect for arbitration agreements continues to be questioned by some courts that distort the scope and effects of such agreements.

From our perspective, these types of resolutions strengthen arbitration in Mexico and provide greater certainty to companies when deciding between arbitration or judicial courts as a mechanism to resolve disputes in their contracts.

Although it is an isolated and merely guiding criterion, we consider it a positive and relevant development for the arbitration field in Mexico.

If your company uses arbitration clauses in its contracts –or is considering doing soIt is essential to have a strategy in place to protect the effectiveness of these agreements against potential legal challenges. Our dispute resolution team can advise you on drafting robust clauses and defending against any arbitration proceedings.