December 2018 Handle with care | Page 32

Special report: Arbitration ‘Reliability and honesty’ of arbitrators appealing to clients Arbitration is less rigid than litigation and consequently an increasing number of Mexican clients are adopting it as there preferred method of resolving disputes Alfonso Sepúlveda The flexibility of arbitration, in addition to the “reliability and honesty” of arbitrators means that it is becoming an increasingly popular method of resolving disputes in Mexico, according to Alfonso Sepúlveda, partner at law firm Sepúlveda Díaz Noriega, which is based in Mexico City. Sepúlveda believes that arbitration offers a more flexible, modern approach to dispute resolution than traditional court proceedings. “Arbitration lacks the inflexibility and rigidity of litigation, which is subject to a range of formalities,” Sepúlveda explains. “Unfortunately, these persist in Mexican court proceedings, even though sometimes they verge on the absurd.” He continues: “And an additional advantage is the reliability and honesty of arbitrators, both in their thinking and actions.” Sepúlveda says the increase in the use of arbitration for dispute resolution in Mexico has been an ongoing trend since the country incorporated the United Nations’ Model Law on International Commercial Arbitration into its legislation in 1993. Meanwhile, Mexico is a signatory to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, which has been signed by more than 140 countries. “This has facilitated the acceptance, recognition and execution of final arbitration awards in practically any jurisdiction in the world,” Sepúlveda says. He adds that the use of arbitration in Mexico is growing. “There has been a marked increase in arbitration proceedings in recent years, and now close to 50 per cent of disputes are heard before Mexican or international arbitration tribunals,“ Sepúlveda says. He adds that arbitration institutions should be credited with having played a key role in establishing arbitration as an alternative to litigation. “Arbitration institutions have made great efforts in this respect, for example by organising seminars and training programmes attended by judges and magistrates,” Sepúlveda explains. “This has improved knowledge of arbitration among Mexico´s legal community,” he adds. Furthermore, Sepúlveda points to the fact that there are many legal 30 • THE LATIN AMERICAN LAWYER • December 2018 precedents in Mexico that favour arbitration. “Judges are highly respectful of submission to arbitration agreements and of provisional and final orders made by arbitrators,” he says. Meanwhile, for clients, arbitration offers a number of advantages that traditional litigation proceedings do not, according to Sepúlveda. These include the expedient resolution of cases and, more importantly, the fact the parties involved can appoint an arbitrator with expertise in a particular area. Big incentive Sepúlveda explains: “One of the big incentives offered by arbitration is that the parties are often allowed to select an arbitrator who has specific expertise. This is crucial to understand, and successfully resolve, complex disputes.” Meanwhile, another advantage of arbitration is the privacy it allows. “This encourages negotiation between the parties, and also prevents the breakdown of commercial relationships, both while proceedings are ongoing and once the dispute has been resolved,” he says. Sepúlveda Díaz Noriega has handled a significant amount of work related to commercial arbitrations, before both Mexican and international tribunals, Sepúlveda says. “The only limits to commercial arbitration in Mexico are those set out by the law on freedom of contract,” he explains. “Therefore, we have handled a very wide range of disputes, both as arbitrators or as counsel acting for one of the parties involved.” For example, the firm recently advised on a number of commercial, civil and administrative disputes, and it has particular expertise in the resolution of conflicts in the agricultural sector, and this type of work is on the rise, Sepúlveda says. He adds that disputes have increased as a result of the “execution of energy projects, which required the installation of pipelines for the transport and distribution of hydrocarbons”. There are also a significant number of product liability disputes and product recalls, while law firms are also advising on the enforcement of international arbitration awards.