The design of the Mexican legal framework makes asset tracking and recovery a feasible yet elaborate and tricky affair. Article 16 of the Mexican Constitution provides that no one may be asked to disclose information about their belongings without an order from an authority empowered to do so. Article 14 of the Mexican Constitution forbids being deprived of one's possessions or belongings without an express legal order. Both of these articles provide that possessions belong to the finder until a legal statement proves otherwise. While the primary intention of these provisions is to safeguard the human right to property, unfortunately, they also provide a segue to this 'finders-keepers' rule that is so often abused to hide misappropriated assets.
This chapter concerns the intricacies of tracking and recovering an asset. First, it delves into tracking assets and how to legally find the location or the person currently holding an asset of interest. Then, once the asset has been detected, the chapter explains the process to recover it. Succeeding in these activities will most certainly take some time and require tackling some challenges. However, unlike other countries, Mexico has no recognition or regulation of private investigators. Thus, certain services offered in the market could trigger a risk as to how the information was actually obtained.
Tracking an asset is mostly done through public registries in Mexico. Finding an asset may be a challenging enterprise as not all assets are recorded in a registry. Likewise, public registries are local and, therefore, the search may involve a Herculean task of dozens of filings or more, in just one state, to try to find an asset in that location. Often, zeroing in on an asset through a registry is more a stroke of luck. Tracking misappropriated money is also a testing quest. Banking secrecy is applicable in Mexico and, therefore, that secrecy can only be pierced by means of a court ruling or – in the case of criminal investigations – an order from the district attorney.
Once the asset is located, the path is clearer. Whoever is the rightful owner or possessor of an asset must file a judicial petition to secure a court order to recover the asset. A court order is the only way that a person or a company may be legally deprived of an asset currently in its possession, even if the means of possession of the asset was originally unlawful. Otherwise, ironically, repossession without a court order would be unlawful. The Mexican Constitution grants the right to a hearing before repossession definitively takes place.
Tracking and recovering a rogue asset is as difficult as the person holding it wants it to be. Naturally, if the unlawful holder is skilful enough to hide the asset through several movements, dispersion or simulations, the process to find and recover it will then be more difficult. However, the Mexican legal framework is robust enough that, if used properly, it may ultimately guarantee a successful ending.
II LEGAL RIGHTS AND REMEDIES
i Finding an asset
The method of finding an asset depends on the type of asset that is being looked for. Money, goods or real estate (finding out who holds it) all call for different procedures.
Tracking money is difficult. Credit and financial institutions in Mexico are bound by banking secrecy in accordance with applicable constitutional protections. This means that they are subject to a non-disclosure obligation with respect to their clients' information. Thus, not even a formal request evidencing the misappropriation will suffice for a financial institution to be required to reveal the location or proceeds of funds.
The only way to ask for the location and tracing of money is through a civil or criminal procedure. In this procedure, the relief sought would be an order calling for a financial institution or the Mexican Banking and Securities and Exchange Commission to inform the court of the location of the funds. A court order (in the case of a criminal investigation at the request of the district attorney) is the only mechanism to pierce banking secrecy.
Therefore, a preliminary matter would be to determine the person responsible for the misappropriation. That person or company would then become the defendant in whichever proceeding was chosen. These proceedings are described in detail in Section II.ii; however, it is relevant here to point out that the order requesting the credit and financial institutions to disclose the location of money will only be issued if the defendant fails in its case against the petitioner.2
Assets different from money
For other assets, it may not be necessary to exhaust a legal proceeding to locate them. Finding assets may be as simple as filing an application before the public registries where records of rights and properties might be available. For example, requests for information of any type of asset (including rights) under the name of a determined individual or company might be filed before the following:
- property public registries, to track real-estate property and title holders;
- the Mexican Industrial Property Institute, to track industrial property rights;
- the Merchant Navy Registry, to track ships and other types of navy equipment;
- Indeval (the Institute for the Deposit of Securities), to track securities;
- the Registry of Secured Moveable Guarantees, to find goods subject to guarantees; among others.
The above are not only useful to find assets, but also to gather information about other assets that the individual or company in question may own or possess. Of course, a successful search in any of these registries depends on the assets, individuals or companies registered in any of those public databases. Notwithstanding this, real estate presents a further hurdle as it is administered locally and there is no national registry. Thus conducting research can prove burdensome, timely and expensive, unless you have an idea of, at minimum, the possible specific location of the asset. In addition, each search request entails a filing fee, which varies according to the specific municipality.
The information obtained via public records will only be useful once a competent court has ruled in a court proceeding that the asset must be returned to its rightful owner or possessor.
ii Recovering assets
There are two main avenues through which an asset may be recovered: a criminal or civil proceeding. Each of these implies radically distinct procedures. Yet, both are clearly associated with the concept of 'damage restitution' for the victim.
In Mexico, the damage restitution principle implies that the person liable for harming someone must restore the status quo of the victim as if the damaging conduct never existed, if possible. Otherwise, the obligation is to pay monetary relief equivalent to the damage suffered.
The evolution of victims' restitution in Mexico
The history of restitution of the victim's damage in Mexican criminal law represents a long and arduous path. For a long time, this procedural institution remained ignored by the Mexican legal community.
It was not until 1993 that the victims' restitution was recognised at a constitutional level. Nevertheless, since that moment, as if it has just awakened from extended sleep and wanted to pay an old and overdue debt, the victims' rights in criminal procedure have acquired an unexpected interest in the field.3
Driven by this interest in victim's restitution, among many other issues, on 18 June 2008 the Mexican Constitution was reformed, in one of the most relevant criminal legal reforms in Mexican history. As a consequence of that reform, it was recognised at a constitutional level that:
- criminal procedure has the victim's redress as one of its objectives; and
- the victim has a right to damage restitution.
In fact, the Constitution imposes on public prosecutors the obligation to request that the judge decide on the victim's damage repair upon exercising a criminal action.4
Based on this constitutional amendment, a new National Code of Criminal Procedure (CNPP) was enacted in 2014. This Code, in line with the new constitutional principles, expressly recognises the victim's right to be compensated for damage resulting from a criminal offence.5 Thus, based on this amendment, a convicted felon could be not only imprisoned, but also ordered to pay for the damage caused by the criminal action.
These legal reforms have completely changed the victim's role in criminal proceedings. While they used to be absolutely prevented from participating in the criminal process,6 the new tendency is to ensure their active participation to affirm their legal rights.7
Victims' redress in the CNPP
Pursuant to the CNPP, repairing the damage is twofold. It can take the form of a public punishment, or it can be considered as civil liability (even in the criminal law context). It is the former when the public prosecutor is the one who requests restitution from the defendant. It is the latter when restitution needs to be requested from a third party different than the defendant.8 This second civil liability action can be exercised in the same criminal proceeding, or in the civil arena (see Section II.ii, on civil proceedings, below).
This section will only address the victims' restitution as a public punishment, as the civil liability action is not part of the main criminal proceeding but an accessory matter addressed in the following section.
The public prosecutor or district attorney has the constitutional mandate to request restitution for damage,9 and the judge cannot discharge the defendant from making restitution if he or she has been convicted for the crime.10 Under this rationale, when the restorative action is filed by the public prosecutor along with the criminal action, it forms part of the main proceeding and, under the congruence principle, it must be decided in the final judgment.11 Thus, under this new model of justice, restitution takes the form of a public punishment effectively shifting the state's aim from punishment to the overarching welfare of its citizens.
Mexico is driven by the 'principle of full compensation'. This has even been considered a fundamental human right. Restitution aims to annul the consequences of the illegal act (in this case, the criminal offence) and re-establish the condition of the offended party as if no illegality had been committed.12 Under this logic, the Federal Criminal Code (FCC) provides that the compensation must be 'full', adequate, efficient, effective and proportional, covering, at least:13
- restitution of the object obtained by the crime,14 or an equal compensation;
- compensation for the material and moral harm;
- lost profits;
- lost opportunity costs;
- an official declaration restoring the victim's dignity and reputation; and
- a public apology.
The obligation of the public prosecutor to file a restorative action, the judge's obligation to award the damage restitution and the principle of full compensation create a legal atmosphere where the victims' redress is attainable. When the compensation is sought from a person other than the defendant (e.g., ascendants, legal guardians, among others), the possibility of filing a civil liability action to obtain redress also exists (see Section II.ii, on civil proceedings, below).
Alternative outcomes: redress agreements
Another innovative aspect of the aforementioned legal reforms is that they bolstered alternate outcomes to criminal proceedings. One of the most salient alternatives is the 'redress agreement'. A redress agreement is an arrangement between the defendant and the victim to compensate the latter for the harmful consequences of the crime. The effect of such an agreement is the conclusion of the procedure once the agreement has been fulfilled.
Redress is not the sole objective of the Mexican legal system. Deterrence and rehabilitation are also much desired goals. Therefore, redressing agreements are not applicable to every criminal offence, but rather only to:
- offences prosecuted through private criminal complaint or allowing the victim's pardon;
- negligent or reckless offences; and
- property offences committed without violence.
Only if the assets were obtained through theft, fraud, or any other property offence without any violent intervention, can a redressing agreement be reached with the offender. In terms of recovering assets, redressing agreements are unquestionably a readily available opportunity to recover assets swiftly.
Alternative outcomes: conditional tolling of the procedure
The CNPP provides for another alternative in the criminal arena whenever redressing agreements are not available: the conditional tolling of the procedure. The underlying principle of this remedy is that the public prosecutor or the defendant may file a damage restitution plan and comply with a number of requirements aimed at securing the victim's rights, having the criminal action concluded as a consequence.
Just as with redressing agreements, conditional tolling is not an option that is available in every scenario. It can only be considered when:
- the arithmetic average of the punishment is equal to or less than five years;15 and
- there is no well-founded objection from the victim to said tolling.
Through this mechanism, the defendant undertakes the obligation to comply with the full reparation of the damage.16 Once the defendant fulfils all the conditions and obligations in the damage restitution plan, the criminal action is concluded. However, if any of the obligations are breached, the suspension is lifted and the criminal procedure is resumed.
Note that this is more a defendant's right than a victim's right, because the former can apply for this alternative if the legal conditions are met, and the latter has only a limited right to object. Even though this is primarily a defendant's right, it offers a plausible alternative way for the victim to obtain redress, if the court approves a proper restitution plan.
Each of the Mexican states' Civil Procedure Codes govern the proceedings to recover assets. Not all procedural codes follow the Federal Code of Civil Procedure (FCCP), although they share the same principles applicable to all proceedings. To depict how a civil proceeding looks, this chapter will use the example of the FCCP.
In general, the civil procedure starts by filing the claim memorial before the competent civil court. In this memorial the claimant must state all the facts and file all the documents that support its claim, as new facts, documents or claims will not be admitted.17 The court can admit the claim memorial, request a clarification or dismiss it.18 If the claim memorial is admitted, the defendant will be served to answer the claim within nine days.19 It is important to answer the claim, otherwise it will imply acknowledgment from the defendant.20 Once the response to the claim is filed within the legally determined period, the court will open the evidentiary stage for 30 days.21 During the evidentiary stage, the evidentiary material shall be prepared and rendered, such as witness statements, witness expert's reports and interrogatories to the parties. Once the evidentiary stage ends, the parties will have the opportunity to orally render their final pleadings22 (depending on the Civil Procedure Code, the pleadings can be rendered in written form). Afterwards, the court will have a 10-day period to issue a judgment.23 No amended complaints, extension of legal terms, discovery as in the United States or trial by jury are permitted. Mexican proceedings under the FCCP are formalistic and quite rigid, although the court has certain leeway to attenuate certain formalities.
The parties will have the right to lodge an appeal to a superior court within five days of the court's judgment,24 and the favoured party will have the right to express its position towards the appeal.25 The parties will have the right to make pleas in the corresponding hearing. When the hearing finishes, the superior court will have five days to issue a resolution on the appeal. Against the resolution issued in the appeal procedure, the parties can file a constitutional challenge within 15 days, which will be decided by a federal collegiate court: this decision cannot be challenged. Under exceptional circumstances, there is a chance to file a federal appeal before the Supreme Court of Justice when issues about constitutionality are still at stake.
In principle, the remedies described here would be filed in a civil proceeding. However, if the parties are merchants and the misappropriated asset has a commercial nature, there is an option to file it in a commercial proceeding. In this regard, Mexico is going through the implementation of a legal reform to introduce oral commercial proceedings in all types of claims.26
A compensation action could be deemed the generic action for asset recovery. The premise is simple: if a person, acting against law or morality,27 causes damage or harm to another person, the injuring party must repair the damage.28 For example, if the director of a company takes the company's funds for personal purposes, the company has suffered a detriment or loss in its wealth; therefore, the company can sue the director to obtain the damage reparation.
Through this action, the affected person seeks reparation of the damage from the liable person; reparation consists of:
- re-establishing the situation as it was before the damage was done; or
- payment of damages and lost profits (monetary relief).29
Based on these provisions, Mexican courts and scholars have interpreted that the monetary relief shall be equal in amount to the damage caused, plus the loss of profit – or in other words, 'full compensation'. This means that only restitution damages will be granted by courts – no punitive, indirect or injunctive damages will be awarded.
One of the most important principles of this action is that the damage and lost profits must be a direct and immediate consequence of the illegal conduct of a person. Therefore, the liability will be limited to the direct and immediate damage caused, and no more. Limitation of liability clauses are normally valid and enforceable.
While the damage may be caused intentionally (dolo) or by a lack of diligence (culpa), for civil liability there is no distinction. The only requirement for the claim to succeed is to prove that illegal conduct caused the damage.
The time limit to oppose this action as an extra-contractual liability is two years from when the misappropriation occurred; otherwise the action will be barred.30
This action is not established in the FCC or in the FCCP; therefore, we must resort to the local procedural codes. For the purposes of this section, the Code of Civil Procedures for Mexico City (CPC) will be used.
While the other remedies described in this article are personal actions (since they are directed against a possibly liable person), the restitution action is an in rem action. This means that it does not matter who the liable person is per se, because the action will be pursued against the person that has the possession over the right in rem (i.e., property).
The restitution action will be filed by the rightful owner – without possession – of a specific asset, against the person that has possession over the specific asset. The sought remedy will be a judgment declaring that the plaintiff is the legal owner of the asset and ordering the restitution of the asset along with its by-products and accessories.31
The action must be filed against the person that has possession of the specific asset, irrespective of whether that person possesses the asset in good or bad faith. In other words, the action can be filed against the possessor, regardless of the circumstances of that possession, whether the specific asset was misappropriated or acquired from the person who misappropriated it.
As mentioned above, because this is an in rem action, it will be used to recover the possession over specific assets such as goods or real estate (i.e., land, cars, furniture, etc.).32
For example, if the general director of a company sells, without authorisation, some land of the company to a third party (who might have knowledge of the misappropriation or not). In that case, the company can start a restitution action against the third party, possessor of the lands to get the lands back. Moreover, if the possessor of the land built any construction on the land, the company will benefit from it. Or even if the third party leased the land, the company will have the right over any payment made for rent.
The statute of limitations for such an action is 10 years.
Motion for nullity in cases of malice or fraud
Other cases of misappropriation could occur when a person – through certain illegal conduct – obtains the consent of another party to enter into a contract and that party relies on the illegal conduct or representations. In such cases, the affected party can request a court to declare the agreement null and void.
Article 1812 of the FCC provides that the consent will not be valid if it is obtained because of an error. Therefore, if the consent is obtained by such means, the consent would be deemed not to have been granted, thereby invalidating the agreement.33
The invalidity of the consent might result from two possible causes: fraud or malice. Fraud is any positive action to mislead a person into an erroneous understanding of the terms of an agreement or to keep the contracting party from realising the misunderstanding. Malice is a passive conduct involving the lack of action of one party to keep the other party from realising the misunderstanding.34 Malice or fraud will be found when the misunderstanding is about the essential elements of the agreement in question or over one of the motives determinant of a party's will.
Since the immediate objective of this action is to void the agreement, its ultimate consequence is to recover any payments made or any assets surrendered. For instance, if a person wants to buy land from a company and the company will not sell the land unless it is used for social purposes, the person might lie and state that the land will be used for a hospital, to motivate the company to sell the land. The company can claim the nullity of the purchase agreement, as it was fraudulently induced into executing it.
The statute of limitations for such an action is 60 days from when the party that suffered the fraud or malice becomes aware of it.
Defences to fraud claims
The most common defences to fraud claims are (civil and criminal):
- The elapsing of the statute of limitations established for the relevant criminal or civil action.
- A good-faith purchase by an innocent third party. In this case, the compensation for the damage caused would still be applicable, but recovery of the specific asset becomes extremely complicated, given that a superior right has to be evidenced.
- Absence of proof of intent. In accordance with Mexican criminal law, offences against property require intent (dolo) and cannot be committed negligently or recklessly (culpa). Thus, if the intent requirement is not fulfilled, a conviction might not be obtained.
III SEIZURE AND EVIDENCE
i Securing assets and proceeds
Once an asset has been located, it is critical to have that asset secured. On the criminal law side, it should be considered how to ensure that the asset can be recovered from the defendant once a conviction is reached. On the civil law side, it should be considered how to avoid the liable person hiding the funds once they have been found and an order has been issued to return those assets.
In criminal proceedings, provisional measures may be the answer. These have a dual objective. On the one hand they intend to ensure the presence of the defendant during the trial and, on the other, they aim to guarantee redress for the victim.35 Provisional measures may become essential towards assuring the asset recovery or, at least, an equivalent damage repair.
The CNPP provides, in Article 138, the provisional measures that can be ordered by the judge to guarantee the victim's damage repair. In this sense, the victim or offended party, or the public prosecutor may request the seizure of goods, or the freezing of bank accounts and other securities in the financial system.
Note that, under the CNPP, these provisional measures will only be granted if the evidence provided demonstrates that repair of the damage is possible and there is a strong possibility that the defendant is responsible for repairing the damage.
These provisional measures can also be cancelled (hence, lifting the seizure or unfreezing of bank accounts) if the defendant provides counter-security for or pays the reparation of the damage. The measures will also be cancelled if a conviction is not reached, or if the final judgment exonerates the defendant from the damage repair.
The flip side is that, if a conviction is reached and the defendant is sentenced to repair the damage caused, the provisional measure will become effective in favour of the victim or the offended party. This means that the seized or frozen assets will be used to pay the victim for their damage. Interestingly, the CNPP provides that the seizure will be governed by the rules established in the FCCP.
In civil cases, there are also provisional measures that facilitate the recovery of assets at the end of the proceeding. All the procedural codes, whether civil or commercial, provide for interim relief to safeguard the assets that will be subject to the aforementioned civil actions (see Section II.ii, on civil proceedings, above). Under the FCCP, interim relief consist of the seizure of assets to guarantee the result of the trial, or the seizure and deposit of the assets encompassing the subject matter of the proceeding.36
For example, if a company that suffered misappropriation of funds has already identified the person who misappropriated the funds and knows in which bank accounts the person might have the money, the company can request the money in those bank accounts to be frozen, either before or during the trial.
Interim relief can be requested from the court during the trial or before it begins.37 For the court to grant interim relief, the plaintiff must prove urgency, namely that there is a real possibility that the assets might be hidden or used by the defendant. The interim relief may be granted ex parte, without hearing the affected party, who will also not be able to challenge the seizure order. However, if the relief it is not granted, the plaintiff has the right to challenge the decision.38
Note that the plaintiff must provide a guarantee against the damage and lost profits that the person affected by the interim relief might suffer. On the other hand, just as in the criminal proceedings, the affected party (defendant) can offer counter-security to lift the seizure order.39
The downside of requesting the interim reliefs in a pretrial stage is the obligation imposed to the claimant of filing its claim within five days. Otherwise, the injunctive relief will be revoked.40
ii Obtaining evidence
There are no specific rules to obtain evidence in fraud proceedings. Parties must offer all evidence they deem necessary to back their claim or defence. All evidence is admissible when it is aimed at supporting claims or defences. Parties are free to submit and produce any type of evidence – documents, examination of witnesses, expert witnesses, visits to a certain site, among others – insofar as the piece of evidence is not illegal or against public morality.41
Regarding the documents, in Mexico the claims are required to include all supporting documents from the beginning of the proceedings. As a general rule, a document that has not been submitted with the parties' claim or reply to it will not be accepted considered unless said documents were unknown or did not exist at the moment of filing the claim or answer.
When a document is requested as evidence, the request must be specific enough with the document or documents requested; otherwise the court will not grant it deeming it as a prohibited inquiry according to Article 16 of the Mexican Constitution. Under Mexican law, there is very little discovery and there is no mechanism for party-directed document production or depositions.
IV FRAUD IN SPECIFIC CONTEXTS
i Banking and money laundering
In 2012, a new Anti-Money Laundering Act was enacted in Mexico.42 This is a major step forward in Mexican legislation, given the prevalent practice in the country. One of the objectives of this new regulation is the prevention of crime associated with and funded through money laundering.
While there are certain offences regulated in this Act, the offence of money laundering is governed by the FCC and is considered a serious offence. It warrants imprisonment ranging from five to 15 years and a fine of at least 1,000 and up to 5,000 times the Unit of Measurement and Update.43
These penalties are aggravated if the offending party is comprised of directors, managers, officials, employees, attorneys-in-fact or services providers of any person or company subject to the regime to prevent operations with unlawful resources. In general, persons subject to this regime are financial entities and people who perform 'vulnerable activities'.44
In the civil insolvency concept – and not a bankruptcy scenario – arguably the most common legal action is that taken against creditor fraud. When a debtor purposefully engages in conduct to become insolvent (e.g., sells or gives away its assets), the debtor's creditors can only claim the nullity of that conduct before a civil court if the credit existed prior to the conduct.45 Insolvency will occur when the debts are bigger than the assets, and the debtor will be committing fraud only when it knows it will be insolvent following the execution of the conduct in question.46
To take legal action in such a case, the following conditions must be met:
- the existence of an act that resulted in the debtor's insolvency;
- the act was made after the debt was acquired; and
- the act was committed in bad faith (if the act that results in the debtor's insolvency was an act of giving freely (e.g., a donation or gift), bad faith is not a necessary component to pursue the action).47
The effect of the nullity will be to return the assets to the original debtor.48 These do not return for the benefit of the debtor, but only to be seized by the creditors, as if they had never left the debtor's estate.
In 2015, the Mexican constitution was amended to introduce a major change in anti-corruption matters, with the creation of the National Anti-Corruption System (NAS). The NAS is a system of cooperation between citizens and the authorities to prevent corrupt practices. As part of the changes, secondary legislation was enacted and amended. One of the newly enacted laws is the General Administrative Liabilities Act (GALA).
The GALA sets out the regime of responsibility applicable to public officers, former public officers, and private parties (companies or individuals). The law deems fraud and embezzlement of public funds, among other activities, to constitute corruption.49
As public funds may be diverted as a result of corrupt acts, this money must be tracked and recovered. The GALA solves the problem of tracking and recovering public funds by imposing fines on the liable individuals, companies or public officers. Such fines can amount to up to twice the monetary benefit obtained through the corrupt acts.50
Criminal matters such as fraud are not arbitrable under Mexican law. However, civil claims could be solved through arbitration should an arbitration agreement exist.
Mexican arbitration law per se, does not provide for any special procedure or relief when the claim is related to fraud or misappropriation. As for the merits of the claim, the same remedies outlined above could be brought to arbitration. The merits will remain the same and the only change would be the venue.
v Fraud's effect on evidentiary rules and legal privilege
In certain areas of Mexican law, attorney–client privilege is regulated. In criminal matters, the CNPP foresees that a defendant's communications may be legally intercepted; nevertheless, interception of communications between the defendant and his or her attorney is forbidden.51
In the same vein, Mexican courts have established in both a binding and a non-binding precedent that client–attorney communications cannot be seized by an antitrust authority during a dawn raid when those communications come from an external attorney for legal advice purposes. On the basis of these precedents, and considering due process and privacy human rights, it can be deemed that client–attorney communications in all matters are privileged.52
V INTERNATIONAL ASPECTS
i Collection of evidence of proceedings abroad
There are no special rules for collecting evidence in Mexico for fraud proceedings abroad. The procedure shall be conducted according to international treaties Mexico is part of – specifically, the HCCH Convention on the Taking of Evidence Abroad in Civil and Commercial Matters 1970 (the Hague Evidence Convention) and its regional equivalent, the OAS Inter-American Convention on the Taking of Evidence Abroad 1975.
When relying on the Hague Evidence Convention, the central authority to which the letter of request must be sent is the Directorate-General of Legal Affairs of the Ministry of Foreign Affairs. The request can be sent either through diplomatic or consular channels or directly to the competent judicial authority. The request must be in Spanish and meet all the requirements in the Hague Evidence Convention.
One important thing to note is that Mexico made a reservation to Article 23 of the Hague Evidence Convention. Through this reservation, Mexico:
[S]hall only be able to comply with letters of request issued for the purpose of obtaining the production and transcription of documents when the following requirements are met:
- that the judicial proceeding has been commenced;
- that the documents are reasonably identifiable as to date, subject and other relevant information and that the request specifies those facts and circumstances that lead the requesting party to reasonably believe that the requested documents are known to the person from whom they are requested, or that they are in his or her possession or under his or her control or custody; and
- that the direct relationship between the evidence or information sought and the pending proceeding be identified.
ii Enforcement of judgments granted abroad in relation to fraud claims
As with collecting evidence, there are no special rules for executing in Mexico a foreign judgment related to a fraud claim. The applicable rules are contained in the Federal Civil Code, in the Code of Commerce and in the State Civil Codes where the judgment will be enforced. Additionally, Mexico is part of many international conventions for enforcement of foreign judgments, which will apply when the judgment was issued in a country that is a signatory to the following conventions:
- the Inter-American Convention on Extraterritorial Validity of Foreign Judgments and Arbitral Awards, Montevideo, Uruguay, 8 May 1979; and
- the Inter-American Convention on Jurisdiction in the International Sphere for the Extraterritorial Validity of Foreign Judgments, La Paz, Bolivia, 24 May 1984.
Mexico's enforcement procedure is divided in two steps: homologation and enforcement.
Homologation is the process whereby a Mexican court assesses whether a foreign judgment should be recognised and enforced according to Mexican law. The court conducting the homologation procedure cannot look into the merits of the case, because the homologation procedure only recognises rights already acquired in a foreign proceeding.
Once the homologation has been granted, the judgment will be considered a Mexican judgment and therefore will be executed in accordance with domestic procedure. In general terms, the claimant requests the court to enforce the judgment and the court requests the defendant to fulfil the obligation. If the obligation is not fulfilled, the court can order the attachment of assets to be sold in public auction.
The defendant has many ways of defending himself or herself against the homologation and enforcement procedure, given that the burden to prove that the foreign award is enforceable in Mexico and is on the applicant and not on the party subject to the enforcing action.
VI CURRENT DEVELOPMENTS
In criminal matters, the new CNPP, in the context of the larger constitutional reform on the subject, represents an important breakthrough in Mexican legislation, aiming to create a more effective and faster procedure. Along with the new and unexpected interest in providing redress for victims, it creates a beneficial atmosphere for asset recovery or, at least, damage repair when assets are misappropriated through fraudulent activities.
The new Anti-Money Laundering law also improved the regime for the prevention, prosecution and sanctioning of these kinds of operation. If this law is realised as intended, it will become a significant addition to the asset tracking and recovery toolkit.
Mexico is making big effort to eradicate corruption. The 2015 constitutional amendment and the creation of the NAS are proof of this determination. The enforcement of these legal changes has resulted in the investigation of many corruption cases (e.g., Odebrecht), with 21 former state governors being investigated for corrupt acts and action being taken to recover public funds.
1 Juan Francisco Torres-Landa Ruffo and Luis Omar Guerrero Rodríguez and Jorge Francisco Valdés King are partners and Jacobo Enrique Rueda Fernández and Eduardo Lobatón Guzmán are associates at Hogan Lovells.
2 Actually, the petitioner – although not necessarily – would also normally include seizure of the money as part of the relief to actually recover. Otherwise, a separate proceeding would have to be exhausted to have the money recovered.
3 Julio Antonio Hernández Pliego, La Reparación del Daño en el CNPP. Instituto de Investigaciones Jurídicas de la UNAM. Mexico: 2015, pp. 342–343.
4 Article 20 of the Mexican Constitution.
5 Article 109, Section XXIV of the CNPP.
6 Under the argument that a 'private vengeance' was not desirable.
7 Julio Antonio Hernández Pliego, La Reparación del Daño en el CNPP. Instituto de Investigaciones Jurídicas de la UNAM. Mexico: 2015, pp. 342–343.
8 Article 34 of the Federal Criminal Code.
9 Public prosecutors may even be fined for not exercising this option.
10 Article 20 of the Mexican Constitution.
11 Article 403 of the CNPP provides that the final judgment has to include the decisions regarding the damage restitution and the amount of compensation. Additionally, Article 406 of the CNPP provides that if a conviction is reached, the trial court will also convict to the damage restitution.
12 Fundamental Right to a Full or Fair Compensation. Its Concept and Scope. Period: Tenth Period; Registry Number: 2014098; Authority: First Chamber; Type of Thesis: Jurisprudence; Source: Weekly Federal Judiciary Official Gazette; Fields; (Constitutional); Thesis: 1a./J. 31/2017 (10a.).
13 Article 30 of the Federal Criminal Code.
14 For the purposes of this chapter, the traced asset.
15 The arithmetic average is the sum of the minimum imprisonment time set for a specific crime, plus the maximum imprisonment time (both in years), divided by two. For example, imprisonment for major fraud ranges between three and 12 years under the Federal Criminal Code. Therefore, the average is seven and a half years.
16 Established in Article 195 of the CNPP.
17 Articles 322, 323 and 324 FCCP.
18 Article 325 FCCP.
19 Article 327 FCCP.
20 Article 332 FCCP.
21 Article 337 FCCP. The procedural terms may vary depending on the type of proceeding and the applicable legislation.
22 Articles 342 and 344 FCCP.
23 Article 347 FCCP.
24 Article 241 FCCP.
25 Article 252 FCCP.
26 The reform was published on 25 January 2017. It will be in full force in 2020.
27 The concept in Spanish is 'buenas costumbres'.
28 Article 1910 of the FCC.
29 Article 1915 of the FCC.
30 Article 1934 of the FCC.
31 Articles 4 and 9 of the CPC.
32 Article 8 of the CPC.
33 Article 1795 of the FCC.
34 Article 1815 of the FCC.
35 Ruth Villanueva Castilleja, Medidas de Protección y Providencias Precautorias. Instituto de Investigaciones Jurídicas de la UNAM. Mexico: n/d, p. 24.
36 Article 389 of the FCCP.
37 Article 384 of the FCCP.
39 Article 391 of the FCCP.
40 Article 397 of the FCCP.
41 Articles 79 and 93 FCCP.
42 Official name: Federal Law for the Prevention and Identification of Operations with Illegally Acquired Funds (Ley Federal para la Prevención e Identificación de Operaciones con Recursos de Procedencia Ilícita).
43 The Unit of Measurement and Update is an economic reference value or benchmark used by the Mexican state to determine the amounts payable derived from payment obligations established in Mexican statutes.Until recently, fines and other economic sanctions were established and determined based on the minimum wage. However, the reference was modified at a federal level to incorporate as a replacement the 'Unit of Measurement and Update for the quantification of the economic sanctions imposed by the Mexican State'. Therefore, although the Federal Criminal Code still bases fines on the minimum wage, these fines are set in terms of Units of Measurement and Update.
44 Examples of vulnerable activities are: gambling activities, issuance of credit cards and commercialisation of precious metals, among others.
45 Article 2163 FCC.
46 Article 2167 FCC.
47 Articles 2164 and 2165 FCC.
48 Article 2168.
49 Articles 49 to 73 GALA.
50 Articles 78 and 81 GALA.
51 Article 294 of the CNPP.
52 Client–attorney communications during an antitrust investigation. Effects of the stay order during an amparo proceeding when authorities did not exclude certain information from the investigation materials. Period: Tenth Period; Registry: 2016913; Authority: Collegiate Courts; Type of Thesis: Non-binding precedent; Source: Weekly Federal Judiciary Official Gazette; Fields: Common; Thesis: I.1o.A.E.228 A (10a) and Antitrust. An amparo procedure is admissible against the seizure of client–attorney communications during a dawn raid. Period: Tenth Period; Registry: 2016180; Authority: Collegiate Circuit Courts; Type of Thesis: Jurisprudence; Source: Weekly Federal Judiciary Official Gazette; Fields: Common; PC.XXXIII.CRT J/12 A (10a).