Gaela Gehring Flores and Diego Durán de la Vega Discuss Judicial Reform in Mexico on D.C. Bar Podcast The Tea on International Arbitration

Gaela Gehring Flores and Diego Durán de la Vega discuss the impending Mexican judicial reform on the most recent episode of the D.C. Bar podcast The Tea on International Arbitration: A Disappearing Act? Mexican Judicial Reform and its Impact on International Arbitration.

In the episode, Gaela, Diego and co-host Nicole Silver interviewed Mexican federal judges Angelica Ortuño Suarez, Hilda Elizabeth Plascencia Carrasco and Marlene Angeles Tovar about the sweeping judicial reform planned for the Mexican judiciary over the coming years.

The speakers discussed the planned reform for Mexico’s Federal Judges to be elected by popular vote, and the uncertainty surrounding this and other reforms.

“All judges in Mexico – that’s approximately 7,000 judges – will be subject to popular election. This includes Mexico’s Supreme Court. As you can imagine, this type of sweeping reform has caused a reasonable amount of uncertainty in and outside of Mexico,” Gaela said. “This is the part where international arbitration comes in. Uncertainty in any given country’s judicial system tends to increase the popularity and use of international arbitration as an alternative means to resolving conflict.”

The episode also covered what these reforms will mean for the current judicial bench, the future of the Mexican courts and whether this might signify a shift toward international arbitration.

“There are ways to minimize your contact with the Mexican judiciary…, but that only takes you so far,” Diego said, “because if the assets are only in Mexico, you have no other choice but to go to Mexican courts, if you’re not getting paid the award—you have to go to enforce the award in Mexico.”

According to Diego, this has led to creative solutions to minimize the instances where parties need to go to a Mexican court to enforce an award.

“A couple of examples are liquidated damages… for the lack of payment of an award, [and] an escrow account abroad… that is designed so that when one party after a month does not pay, you can automatically go and access that money... It’s about placing the incentives exactly where they need to be so that you can increase your probability of getting paid, but also avoid getting to a Mexican court. It’s sad; the game now is going to be: how do I avoid Mexican courts?” Diego said.

Listen to the episode.