LITIGATION. Partners
Armando Arenas
Alejandro Luna F.
Abraham Díaz

LITIGATION. Civil and Commercial Team
Eduardo Arana Ramírez
Andrea Damian González
Of counsel
Leonardo González

Civil Court in Mexico establishes criteria with respect to the admissibility of the exception of confidentiality of the information when expert evidence is offered in accounting.

Recently, a Civil Court ruled that the confidentiality of accounting information is not enough to prevent the admission of expert evidence when it is necessary to resolve a dispute. However, it is the responsibility of the Judge to establish guidelines to regulate the level of exposure of the information, as well as a shared duty with the designated experts to safeguard the confidentiality of the information.

The Court considered that both the Constitution and the Commercial Code establishes a set of specific rules that the judge must enforce for the experts to issue their opinion on accounting matters. At the same time, these rules must allow the conflict between the right to confidentiality versus the right to proof on the accounting material to be resolved, provided that said expert evidence is necessary, suitable and adequate.

The ruling states that the Commercial Code allows for access to the accounting of any of the parties if the review refers exclusively to the points directly related to the dispute. This premise, as well as the duty to keep professional secrecy, impose a rational protection of the information obtained to issue the opinion. Therefore, it is up to the Judge to order and impose proportional measures to protect the confidentiality of the information as much as possible, such as:

• Limit the expert to review only what was requested and only take notes of what requested, to prevent the replication or copying of the information by any means.
• Prevent the expert from revealing the information obtained, with warnings of various sanctions.
• Order that the examination of the evidence be carried out in the place where the books, records or documents are kept.
• Appoint a judicial official to accompany the expert during the investigation, to guarantee that it is carried out in accordance with the specified terms.

At OLIVARES, we remain attentive to the interpretation and application of said precedent, which is useful in the trials related to the claim for compensation for actual damages.

Civil Court in Mexico determines the way in which attorneys’ fees are to be calculated in the absence of agreement between the parties.

Recently, a Civil Circuit Court issued a criterion for calculating attorneys’ fees and unanimously resolved that, in the absence of an agreement between the parties, they must be calculated in accordance with the Civil Code for Mexico City, instead of using the parameters that regulate court costs.

Article 2607 of such body of law, states that the calculation of lawyers’ fees is based on the custom of the place, the importance of both the work provided and the case, the economic capacity of the person receiving the service and the professional reputation acquired by the person who has provided it, although the practice of law is not subject to a fee. On the other hand, article 145 of the Organic Law of the Judiciary of Mexico City regulates legal expenses and establishes a different way of calculating the expenses that the winning party could incur, particularly in litigation and commercial matters.

The Court considered that court costs and attorneys’ fees are different legal concepts, both grammatically and functionally. Therefore, in the absence of a proven agreement between the parties on attorney fees, the court ruled that it is improper to calculate them based on the criteria established in the Organic Law for court costs. Instead, attorneys’ fees are calculated following the parameters established in the Civil Code.

This criterion clarifies some confusion that existed in the professional guild regarding the calculation of professional fees not previously agreed upon, which is not subject to a tariff, but to the issues inherent to the service rendered.

At OLIVARES, we remain attentive to the interpretation of law that our Courts carry out in landmark cases that contribute to the strengthening of our legal system.

Civil Court in Mexico rules on the distinction between punitive damages and moral damages.

Recently a Civil Court ruled that the payment of punitive damages and compensation for moral damages are different legal concepts, and hence cannot be considered as one.

The Court considered that these figures are considered equivalent as a result of a criterion by the Supreme Court interpreting article 1916 of the Federal Civil Code, which already regulated moral damages, and introducing the figure of punitive damages to the Mexican civil legislation.

The Court’s ruling determined that each figure has its own elements and different purposes, which is why one does not depend on the result of the other, nor can they be considered as subsidiary claims.

The Court found that punitive damages have a clearly preventive purpose, through the forceful message the courts send out to society by the granting of important sums of money to the victim, sums which the one who harms must pay as punishment for his/hers conduct. On the other hand, non-pecuniary damages refer, in general terms, to compensation for matters inherent to subjectivism.

Therefore, it was concluded that these concepts must be claimed as specific benefits in the lawsuit and that the issues on which they are based must be justified for each one, so that the Judge is able to assess their origin.

This decision is added to others that have recently been issued by the Judiciary in Mexico and that show a clear tendency of our courts to condemn, when appropriate, the payment of punitive damages when resolving this type of matter.

At OLIVARES, we remain attentive and applying these criteria for the benefit of our clients.

The COVID-19 pandemic is a fortuitous event that allows the parties to justify the breach of contractual obligations without being liable.

Recently, for the first time, a Federal Court in Mexico analyzed and resolved a controversy where the COVID-19 pandemic has been invoked as a fortuitous event or force majeure.

The case was regarding the leasing agreement in the restaurant business. The leaseholders claimed that since they were unable to operate as usual due to the pandemic, they should be allowed to end or at least reduce the leasing cost.

In the first two instances, it was ruled that this argument was not admissible. However, in the last instance, the Federal Court determined that this exception is applicable for the following reasons:

• Article 2431 and 2432 of the local Civil Code regulates fortuitous events or force majeure. These are events that affected legal spheres, temporarily or prevented people from partially or totally complying with an obligation without any type of liability.
• The COVID-19 pandemic represented a fortuitous event, as it affected the restaurant sector, since in the early stages of the pandemic it was considered a non-essential activity and, therefore, could not operate as usual.

The Court therefore found that leaseholders should be allowed to keep the right to condonation and the reduction of rent during the time their activity was affected, as the pandemic of COVID-19 was an event that could not be prevented or avoided.

This is a precedent of transcendence since it has already been determined that the pandemic caused by COVID-19 is a fortuitous event and that it can validly be invoked as an exception to justify non-compliance with obligations without being liable. While it is true that the criterion was derived from a lease dispute, we cannot rule out that the same reasoning may be used in other types of litigation.

At OLIVARES, we remain attentive to the interpretation of law that our Courts carry out in landmark cases that contribute to the strengthening of our legal system.