Under Mexican law, professionals are obliged to act diligently in accordance with their expected skills. Individuals are bound by a general duty of care; however, Mexican law recognises, in statute and precedent, that professionals are held to a higher standard. Regardless of whether professional service obligations arise from a contract, professionals are liable if they fail to observe this higher standard of diligence.
The first part of this chapter sets out the general legal framework applicable to professional liability. To that end, it explains the different types of liability that individuals may face in the exercise of their profession, the procedures applicable when claims of professional liability are brought, and the direct and immediate damages and lost profits that the service receiver may recover for the professional's misconduct.
The second part of this chapter sets out examples of professions with particular regulations, authorities and sanctions; these laws generally relate to areas of social interest and public policy.
Finally, the chapter outlines recent and future developments with respect to case law derived from the recent Mexican educational reform, the new regulation on corporate liability, the possible introduction of punitive damages in Mexico, the increasing attempts to make bar association affiliation mandatory, the effects of the 'new' corporate liability and the tendency towards orality in judicial proceedings.
i Legal framework
Article 5 of the Mexican Constitution provides for the right to perform any profession, industry, business or work. This right may only be revoked by a court decision or by government order when third parties' rights or society's rights are infringed, respectively. Thus, the right to perform a profession contains certain limits and restrictions.
According to the Regulatory Law of Article 5 of the Mexican Constitution concerning the Exercise of Professions in the Federal District (the Regulatory Law), which applies to professionals in Mexico City and on a federal level, a professional service includes the rendering of any service specific to a particular profession, and includes the use of cards, announcements, plaques, badges or other means2 to indicate the characteristic features of a particular profession.
To exercise a profession, the individual is required to: (1) be in full exercise of his or her civil rights; (2) hold a duly registered degree; and (3) hold a permit to exercise the profession issued by the General Directorate of Professions.3 A professional is obliged to put all scientific knowledge and technical resources into practice at the service of their clients, as well as to perform the work that was agreed upon by the parties.4 Also, a professional is obliged to keep strict secrecy regarding the matters entrusted to them.5 Unlike in other countries, Mexican law does not provide for mandatory allegiance to a bar association.
Individuals may exercise their profession on their own or as employees. Professionals who exercise their profession as employees are subject to the Federal Labour Law.6 Governmental professional employees are also subject to other administrative laws.
In the exercise of their profession, individuals are subject to the applicable laws – whether general or specific to their professions (e.g., lex artis)7– as well as to the contracts they conclude with the service receivers. Professionals should act diligently in accordance with their professions. Breaches of contract or of law expose them to different types of liability.
All 32 states of the Mexican Republic have their own civil code, most of which mirror the Civil Code of Mexico City.8 Also, all 32 states have their own code of civil procedure.9 The Federal Civil Code of Mexico (the Federal Civil Code) serves as gap filler for federal laws, but the regime it promulgates is almost identical to that of the Civil Code of Mexico City. For the purposes of this chapter, we will refer to the provisions of the Federal Civil Code, which are almost identical to the local civil codes.
Article 1910 of the Federal Civil Code establishes that anyone acting unlawfully or against good practices who causes damage to another shall repair the damage. This Article enhances the core premise of civil responsibility. Under this premise, civil liability arises whenever the following elements are met: (1) commission of an unlawful act; (2) direct and immediate damage; and (3) a causal relationship between the unlawful act and the damage caused.
Acts are unlawful when they violate a specific legal rule or good customs.10 Mexican law requires that damage must be the 'direct and immediate' consequence of the unlawful act.11 Mexican case law has dealt with what should be understood by the terms 'direct and immediate'. The benchmark is that the damage will be the direct and immediate result of a cause when it is the 'effective cause'. The effective cause analysis states: had the unlawful act not occurred, the damage would not have occurred.12
Civil liability may arise from two sources: contractual liability and extra-contractual liability (known as 'tort' in other jurisdictions).
Contractual liability derives from a breach of an agreement or contract. As a general rule, the parties to a contract may agree on the terms and obligations that they freely choose, as long as the subject matter is lawful. However, the law also establishes certain limitations to the freedom of contract taking into consideration the nature of the contract and the rights at stake.13
For example, with respect to professional services, the Federal Civil Code provides that the individual who exercises any profession without the proper licence will lose the right to charge remuneration for the professional services rendered.14 Also, when a professional can no longer render services, he or she should promptly notify the client and will still be liable for damage and loss of profits caused by the withdrawal of the services.15
A claim on breach of contract has two main requirements: (1) that the non-breaching party is in compliance with its obligations under the relevant contract to seek relief (i.e., 'clean hands'); and (2) that the breaching party has indeed breached the contract.
Extra-contractual liability under Mexican law may be considered as premised on the principle of alterum non laedere, which states that everyone has the duty not to inflict harm upon others.16
Therefore, extra-contractual liability or tort may arise independently of any contractual relationship between the parties. Extra-contractual liability may be: (1) objective, which exists independently and the conduct of the agent was not guilty or negligent; and (2) subjective, which necessarily constitutes unlawful, negligent and damaging conduct.17
The degree of guilt or fault will be determined depending on the type of responsibility or duty of care that the agent has towards the victim. In Mexican law, there are several types of guilt. The degrees of guilt are not defined in statute but are referenced in precedent and doctrine.
Guilt stricto sensu exists whenever the damage would have been foreseeable and could have been avoided had the agent acted diligently.18 Wilful misconduct exists when the agent intentionally wants to damage the victim. Gross negligence constitutes extreme negligence, recklessness or incompetence, for not being able to foresee or understand what a normal person foresees or understands, omitting the most elemental care, diligence, etc.19 Ordinary negligence is the omission of diligence of an ordinary person in the conduct of his or her affairs; and slight negligence, is the omission of diligence of a person who is extremely diligent.20
The professional should be diligent in accordance with his or her expected professional skills. For example, in a recent precedent, the Supreme Court found employees of a school liable for damage caused by bullying between students, since the teachers were expected to act diligently and in accordance with their profession, which includes actively preventing and detecting any acts of bullying.21 There was a subsequent decision by the Supreme Court that found that schools and their staff have the obligation to generate an adequate school environment and create instruments to protect the students against bullying.22
Specifically, the Supreme Court ruled that the unlawful act was the consequence of two sources: (1) the breach of an obligation to act in accordance with a certain legal provision; and (2) the breach of a general duty of care expected of a professional.
Coexistence of contractual and extra-contractual liability
The Mexican Supreme Court rendered a decision whereby it recognised that a contractual and extra-contractual liability may coexist when dealing with medical malpractice. The Supreme Court reasoned that even if the patient has a social security contract or a contract for professional services with a physician, the doctor is still bound to act diligently in accordance with his or her profession. In this case, the Supreme Court found that even where the patient had given consent regarding the administration of anaesthesia, damage caused by the negligent administration of this medical component gave rise to an extra-contractual liability or tort independent of the contractual relationship between the parties.23
In a different decision, the Supreme Court also established that, in a contractual relationship, the client can accept certain risks regarding the rendering of the services. However, if the harmful event occurs because of the negligence or omission by the service provider, there will be extra-contractual liability, since that damage cannot be accepted in a services agreement.24
Liability for lack of diligence in professional services
Apart from identifying whether a contractual or extra-contractual liability may arise within a professional service relationship, it is important to assess who is the responsible individual.
Article 2615 of the Federal Civil Code establishes that whoever renders professional services is only liable towards the persons that he or she is serving, for negligence, lack of skill or wilful misconduct, regardless of sanctions that may apply in the event of a crime.
This legal provision can be construed in different ways: the first is that a professional is not liable to third parties that are not clients; the second is that a professional is liable to clients only for negligence, lack of skill or wilful misconduct. There is no legal precedent that answers this question.
However, to obtain relief under a suit for damage and lost profits arising out of negligence, a claimant has to prove that the defendant had a duty of care, that the alleged negligent actions of the defendant breached the duty of care, and that the actions resulted in, as a direct and immediate consequence, the damage and lost profits that the plaintiff is seeking, otherwise a Mexican court would not find for the plaintiff. Plaintiffs will need to demonstrate the necessary connection between the alleged negligent action or omission and the direct and immediate damage and lost profits. The available types of damages and redress for lost profits are explained in Section I.iv.
Title XII of the Federal Criminal Code of Mexico considers that certain conduct or acts constitute a crime within the arena of professional responsibility. Chapter I of Title XII provides that professionals, artists or technicians and their assistants will be responsible for crimes committed in the exercise of their profession, and without prejudice to liability contained in regulations applicable to the specific profession.25 The individuals who commit such crimes are subject to, among other things: (1) one month to two years' suspension from exercising the profession, and (2) reparation of the damage caused. This is applicable to physicians who without cause stop the treatment of an injured or sick person.
The directors, managers or administrators of any health centre may be subject to imprisonment (of two months up to two years) and fines for any of the following conduct: (1) preventing the departure of a patient, when he or she or family members request it, on account of debts of any kind; (2) unnecessarily retaining a newborn, on account of debts of any kind; or (3) delaying or denying for any reason the delivery of a corpse – except when an order from a competent authority is required. The same sanctions apply to managers, employees or dependants of a pharmacy who substitute medicine specifically prescribed with another medicine that causes damage or is evidently inappropriate for the condition for which the original medicine was prescribed.26
Chapter II provides that lawyers, representatives and litigators are subject to penalties, including two to six years' imprisonment, fines and disqualification or suspension from the exercise of their profession for two to six years if they engage in the following conduct:
- allege false facts or non-existent or repealed laws;
- use certain illegal dilatory tactics;
- base their action or defence on false or worthless documents or witnesses; or
- simulate a legal act or writ, alter evidence and present it at trial, to obtain a ruling, resolution or administrative act contrary to the law.27
In addition to the above-mentioned sanctions, lawyers, representatives and litigators may be subject to three months' to three years' imprisonment for:
- sponsoring or assisting diverse contenders or parties with opposing interests, in the same or a related business;
- abandoning the defence of a client or business without just cause; and
- accepting the position of defence counsel but merely requesting the cautionary freedom of his or her client without presenting further evidence.28
Chapter VII of Title XIII of the Federal Criminal Code of Mexico, among other things, regulates conduct and applicable sanctions in connection with the exercise of a profession without the corresponding title or authorisation issued by the competent authorities. The applicable sanctions for this crime range from one to six months' imprisonment and a fine.
Moreover, the Regulatory Law also provides several kinds of conduct or acts that constitute a crime by professionals or individuals who present themselves as professionals. The Regulatory Law provides administrative sanctions for these crimes; however, while describing criminal conduct, this Law almost always refers to the applicable articles of the Federal Criminal Code of Mexico with reference to a specific type of conduct and the corresponding sanction.29 However, criminal sanctions may also be provided for in legislation other than the criminal codes (see Section II for legislation applicable to specific professional activities).
Administrative liability may also arise in certain cases. Some professions (e.g., the medical and finance professions) are regulated by their lex artis, which establishes specific obligations, competent authorities and sanctions. Specifically, all health industry professionals, technicians and auxiliaries who provide medical services in the public and social security sectors are subject to administrative liability.30
In addition, individuals may exercise their profession on their own account or as employees. Professionals who exercise their profession as employees are subject to the Federal Labour Law. Public officers are also subject to other administrative laws.
ii Limitation and prescription
As a general rule, and unless specified as an exceptional case, the right to enforce a judicial action is only extinguished upon the expiry of a 10 year-term from the date on which the right became effective.31
Notwithstanding this, a two-year statute of limitations applies to civil liability arising from unlawful acts that do not constitute a crime.32
Both Article 1161-V and Article 1934 of the Federal Civil Code provide a two-year statute of limitations for claims arising from unlawful acts. However, pursuant to Article 1161-V, the statute of limitations starts running on the day that the act takes place, while according to Article 1934 the statute of limitations starts running on the day that the damage is caused. Therefore, these provisions are apparently contradictory.
While analysing Article 1934 of the Federal Civil Code, the Mexican Supreme Court issued a binding precedent stating that it is necessary to consider the moment at which the affected person becomes aware of the damage so caused for the statute of limitations to start running. Therefore, it seems that Article 1934 of the Federal Civil Code should apply with respect to when the statute of limitations starts to run.33
In addition, the Supreme Court has also established (in non-binding precedent) that the two-year statute of limitations is only applicable to patrimonial damages. However, when the damage is caused to life or integrity, the applicable statute of limitations must be the general rule (i.e., 10 years).34
The Federal Criminal Code establishes specific rules for the statute of limitations of crimes. There are four main criteria for the determination of the statute of limitations in criminal actions:
- for crimes punishable only by a fine, the statute of limitations for a criminal action expires after one year;35
- for crimes punishable by imprisonment, the statute of limitations is equal to the arithmetical average punishment term;36
- for crimes punishable only by removal from post, suspension or disqualification from office, the statute of limitations is two years;37 and
- for crimes that can only be prosecuted following a complaint by the aggrieved party, the statute of limitations for a criminal action expires after one year.38
These terms may vary according to the applicable lex artis.
iii Dispute fora and resolution
As noted in the previous sections, professional liability is mainly governed by civil law and, to a lesser extent, by provisions in criminal law for specific crimes.
In this context, professional liability claims arising from contractual or extra-contractual liability should be brought before a civil court in the state in which the offence was committed. Likewise, the commission of a crime must be heard by a criminal court.
Nonetheless, Mexican case law dealing with professional liability is largely based on medical malpractice.
In light of the growing number of lawsuits against doctors, the Mexican government decided, in June 1996, to create, by a presidential decree, an independent national institution attached to the Ministry of Health to resolve conflicts between doctors and patients using alternative dispute resolution methods with the intervention of medical experts – the National Medical Arbitration Commission (CONAMED). As a result, the majority of professional liability claims alleging medical malpractice are brought before CONAMED.
CONAMED deals only with acts or omissions derived from the rendering of health services and medical malpractice. It does not have the authority to decide matters involving the commission of crimes, matters that are already being litigated in civil courts, labour matters, or matters in which the only relief sought is the penalisation of the medical professional.39
Professional liability claims brought before CONAMED are decided through arbitration, in accordance with the CONAMED Rules of Procedure for the Attention of Medical Complaints. As the process takes the form of an arbitration proceeding, an arbitral agreement is required for a complaint to be resolved by CONAMED.
The proceeding before CONAMED begins with a conciliatory stage. If the parties do not reach an agreement, CONAMED presents a settlement proposal. If a settlement is not possible, CONAMED, or another person appointed as arbitrator, decides the arbitration through an arbitral award,40 which, despite not being a judicial resolution, has the authority of res judicata.41
All proceedings (arbitral proceedings or proceedings of a different nature) are free of charge.42
There are also some recent precedents regarding the burden of proof on medical negligence cases. In 2016, a circuit court ruled that, since the state is bound to protect the human right to health, it is the burden of the Mexican Social Security Institute to prove that its medical staff provided the patient with the adequate treatment.43 There is a similar precedent for all medical professionals by the Mexican Supreme Court that states that there is a reversal of the burden of proof where the medical professional must prove their diligent action.44
iv Remedies and loss
Under the Federal Civil Code, the governing principle in damages cases consists in the restoration of the damaged item to its previous condition. If restoration is impossible, the responsible party must then pay for the corresponding damage and losses.45
'Damage' is the loss or lessening of someone's patrimony as a result of a failure to comply with an obligation,46 and 'loss' is the preclusion from obtaining lawful gains that would have been received in the future if the unlawful act had not taken place.47
Damage and losses must be the direct and immediate consequence of the failure to comply with the obligation, whether they have already occurred or will necessarily occur.48
Civil liability may be entirely regulated by the contract between the parties, except for liability for damage caused by gross negligence. The parties may stipulate in the contract a set penalty (in the form of compensation) whenever certain contractual obligations are not met as set out in the contract and are, therefore, breached.49 Therefore, Mexican law permits limitation of liability clauses. These clauses are normally valid, unless bad intent is found, which could render the clause null and void.
The Federal Civil Code stipulates that, in the presence of conventional penalties, the non-breaching party cannot seek other compensation for damage and losses, but can only obtain the compensation specified in the agreed clause.50
Reparation for moral damage is also available for the victim. Moral damage is understood as the detrimental impact suffered by a person in her or his feelings, affections, appearance, honour, reputation, private life, physical integrity and physical aspect, or in the opinion that others have of him or her. When an unlawful act causes moral damage, the offender has the obligation to repair it by means of monetary compensation. This is independent of any other compensation that may arise as a result of material damage.51
In a moral damage claim, in determining the amount of the monetary compensation, the judge takes into account the nature of the injury, the degree of responsibility and the economic situation of the offender and the victim, as well as other circumstances of the case.
Although, under Mexican law, damages have traditionally been limited to compensatory damages, in a tort case decided by the Mexican Supreme Court in 2013 (the Mayan Palace case) moral damages were awarded to compensate a victim for the 'damage so suffered'. The Supreme Court noted that moral damage redress must be fair and sufficient to compensate the victim. Likewise, the judgment provided that damage redress should be sufficient to be 'dissuasive', to prevent further damage. This ruling has been construed by some practitioners as an implicit recognition of Mexican courts' ability to award 'punitive' damages when necessary.
Under a binding judicial precedent, issued on April 2017 by the First Chamber of the Mexican Supreme Court, limiting liability by fixing a monetary cap implies unfair compensation of damage. Thus, judges should quantify damages fairly, on a case-by-case basis.52
In short, these kinds of punitive damages (more adequately moral damages) will probably start being awarded in contractual liability cases by Mexican courts.
ii SPECIFIC PROFESSIONS
In Mexico, lawyers are not obliged to belong to a professional bar, nor is there a binding code of ethics or conduct applicable to the legal profession. There are three main private bar associations in Mexico: the Illustrious and National Lawyers Bar Association of Mexico; the Mexican Lawyers Bar Association; and the National Association of Company Lawyers. All these associations try to standardise legal practice and have specific codes of ethics. While many legal professionals adhere to these bar association codes, affiliation to a bar association is not mandatory.
Regardless, there have been many attempts in recent years to make affiliation to a bar association mandatory for Mexican lawyers. For example, in 2004, the ex-president Vicente Fox filed an initiative before the Senate requesting a certification mechanism for defence attorneys in criminal proceedings.53 The National Development Plan of 2007–2012 had as one of its objectives, to 'promote a culture of legality'.54 A possible standard by which to measure the achievement of this goal was mandatory affiliation to a bar association. Later, in 2010, there was a proposal to amend the Constitution, establishing that there should be a mandatory affiliation to a bar in all professions directly linked to life, health, security, freedom and patrimony of people.55
In 2016, the Federal Economic Competition Commission (COFECE) issued a non-binding opinion suggesting 'disregarding the mandatory affiliation as one of the mechanisms to regulate the exercise of a profession, for the effects that this particular mechanism could generate on the process of competition and free access'.
At present, there is no mandatory professional ethics code for lawyers, and any breach of the existing codes of ethics is hardly punishable because of their voluntary nature.
ii Medical practitioners
The medical industry is perhaps the most regulated one in terms of professional liability in Mexico. Article 79 of the General Health Law requires that medical professionals hold a professional title or a specialisation certificate. In cases where a medical professional causes harm to a patient, the medical professional is exposed to administrative, civil and criminal liability.
Administrative liability may arise regardless of whether damage was caused or not. This type of responsibility arises from violations of the General Law of Health and particularly from violations of the regulatory law of the General Law of Health, which governs the rights and obligations of the users of medical services and establishes provisions in connection with consulting services, hospitals, maternal and childcare, family planning, mental health, rehabilitation and auxiliary diagnostic and treatment services, in private, public and social fields.
Health authorities are responsible for sanctioning violations of the above-mentioned provisions. Administrative sanctions may extend to an admonition with warning; a penalty fee; temporary or definitive closure; and arrest for up to 36 hours.
Health professionals in the public sector are subject to the duties of legality, honesty, loyalty, impartiality and efficiency that govern public service, and they may be also subject to sanctions established in the Federal Law of Administrative Responsibility.
Litigation arising from civil liability in medical practice may be resolved by a judicial process before a civil judge or through alternative dispute resolution proceedings before CONAMED.56 In the case of a civil court proceeding, as well as civil liability for malpractice, the aggrieved party can also claim moral harm.
There are also some precedents that regulate the allocation of civil liability when there is a group of medics on a case. These precedents provide that when there are several doctors that treat a patient, without forming a team, they are all jointly liable for the damage caused. This has certain exceptions, for example, when there is a specialist (e.g., an anaesthetist), he or she can incur direct liability.57 This is also the case for the team leader that is aided by medical assistants.58
Finally, the actions of medical professionals can also give rise to criminal liability for crimes of professional responsibility. Criminal liability is personal, thus the medical professional may face imprisonment. Should the medical professional have malpractice insurance, it will only serve to indemnify for the harm caused.59
iii Banking and finance professionals
Both securities brokers and investment advisers, and individuals holding managerial positions in financial institutions, are subject to administrative, criminal and civil liability for professional malpractice.
In connection with administrative liabilities, the National Banking and Securities Commission (CNBV) is authorised to remove members of a board, directors, managers, securities brokers and investment advisers from their positions and suspend them from occupying a position within a financial entity or a publicly traded company for a term of up to five years; these measures can be taken in addition to economic sanctions provided under the Securities Exchange Act (LMV) and the Credit Institutions Law.
The LMV provides that securities brokers will be accountable for direct damage caused if they breach broker–client confidentiality. Furthermore, pursuant to the LMV, investment advisers and securities brokers must be certified by a self-regulatory organisation, prior to rendering their services. Self-regulatory organisations are in charge of issuing conduct manuals and implementing conduct standards among their members to strengthen the ethical conduct of their members and related persons. These self-regulatory organisations are also empowered to impose sanctions provided under their internal rules. Certification of banking professionals (who are subject to ethics codes of the banking self-regulatory organisation) may also be required if so determined by the CNBV.
Furthermore, managerial positions within financial entities entail higher levels of responsibility and accountability, such as being considered jointly liable with the financial entity in certain circumstances (e.g., failure to communicate to the auditing committee irregularities of which they were aware). Professional liability insurance is not mandatory for banking and finance professionals, but directors' and officers' insurance and professional liability insurance is permitted, and it is common practice to take out such insurance.
iv Computer and information technology professionals
In Mexican law, there is no specific regulation of professional liability of computer and information technology professionals. However, certain norms may apply specifically to information technology professionals.
For example, Article 67 of the Federal Personal Data Protection Law sets out a criminal penalty for a breach of database security by individuals authorised to work with personal data.
Also, regarding information leaks, the Federal Criminal Code provides that professionals or technicians who leak an industrial secret are subject to a criminal penalty: imprisonment from one to five years and suspension from the exercise of their profession.60 Also, individuals who leak, disclose or misuse information or images obtained through an unlawful interception of private communications are subject to imprisonment of between six and 12 years.61
The Federal Criminal Code contains a chapter titled 'Unlawful access to computing systems', which refers to conduct and applicable sanctions for the unauthorised modification, destruction, loss, accessing, collection, copy or use of individuals' or state information contained in computing equipment and protected by security mechanisms.62
Finally, Articles 119 to 122 of the Fintech Law, which recently came into force in Mexico, provides criminal penalties for those individuals who wrongfully use, obtain, transfer or divert resources, e-payment funds or virtual assets owned by clients of financial technology institutions.
v Construction professionals
Construction professionals must observe a substantial duty of care. They are liable for many obligations, established by law, in respect of the owner of a construction.
Articles 2617 and 2634 of the Federal Civil Code provide that construction professionals are liable to the owner during and after the construction. The constructor has responsibility for any defect caused by irregularities in the construction process, low quality of the materials used or of the ground where the project is built. Moreover, the constructor is liable for the actions or omissions of the personnel under its authority when these cause defects in the construction.63 Finally, the constructor is answerable to the owner and has responsibility for any defects in the construction for six months after completion.64
Construction professionals will be criminally liable if the construction licence is breached during construction and a prison sentence of four to six years can be imposed in such cases.65
vi Accountants and auditors
A distinctive mark of the accounting profession is acceptance of the responsibility to serve the public interest; therefore, a public accountant is responsible not only for satisfying the needs of a specific client or of the entity that he or she works for.
The public accountant is bound to disassociate himself or herself from reports, relations, communications or other information that he or she believes causes confusion or mistakes through the omission or concealment of facts, data or circumstances.66
The diligence required of public accountants encompasses the responsibility to act according to the requisites of a particular task, carefully, thoroughly and in a timely fashion. 67
Regarding tax reports, Articles 52 and 52-A of the Federal Tax Code (the Tax Code) provide that tax authorities are empowered to request any information and documentation regarding expert opinions prepared by certified public accountants (e.g., external auditors).
The public accountant (i.e., external auditor) who prepares an audit report may be required by tax authorities to:
- provide any information that the Tax Code, its regulations, the Omnibus Tax Ruling and the Mexican Financial Reporting Standards require to be included in financial statements;
- provide the working papers prepared in connection with the audit related to the report (the working papers are understood to be the property of the public accountant); and
- provide any information considered relevant to ensure that the taxpayer's tax obligations have been fulfilled.
A registered public accountant who fails to comply with the provisions of the Tax Code or its regulations will be subject to a warning or suspension of registration for up to three years.
In cases of repeat offences or if the accountant commits a tax offence, or fails, after receiving a request from the authorities, to file the working papers prepared in connection with an audit carried out on a taxpayer's financial statements for tax purposes, the accountant's registration shall be definitively cancelled.
In such cases, written notice shall immediately be given to the professional association and, as applicable, to the confederation of professional associations to which the public accountant belongs.
In addition to the previous penalties, if the tax authorities consider that the expert opinion rendered by a registered accountant contributes to, totally or partially, the omission of payment of any contribution in violation of tax provisions, the accountant will be subject to a fine.
vii Insurance professionals
Since the enactment in 2015 of the Insurance and Bonding Companies Law (LISF), insurance professionals68 have been subject to specific obligations in the performance of their duties.
Under the LISF, insurance and bonding entities are jointly liable for the acts of their directors, officers and employees in the performance of their duties, without prejudice to the administrative, criminal and civil liability that these persons may incur as individuals.
The National Insurance and Bonding Commission (CNSF) has the authority to impose several sanctions on insurance professionals at all levels.
The CNSF may remove or suspend (for up to five years) any officers or auditors69 from their appointments if they fail to comply with the requirements set out in the LISF or commit a violation of the LISF and its regulations.
In addition, the CNSF may ban directors, chief executive officers, statutory auditors, managers, fiduciary delegates and officers from performing any other role within the Mexican financial system – for up to five years – without prejudice to the penalties set out in the LISF and other applicable laws.
The LISF also regulates insurance and bonding agents. Agents may be individuals or companies authorised by the CNSF to intermediate insurance and bonds. The LISF, however, does not distinguish between agents and brokers, as many other jurisdictions do.
The authorisation of agents, as individuals, is valid for three years and may be renewed for an equal term. The authorisation of agents as companies may be for an indefinite term.
The CNSF may suspend or revoke agents' authorisation, without prejudice to the warnings and fines that may be imposed on them; and suspend or remove their directors, chief executive officers, statutory auditors, managers, legal representatives and officers if they fail to comply with the requirements set out in the LISF or commit a violation of the LISF and its regulations.
Pursuant to the Rules for Insurance and Bonding Agents and the Sole Provisions on Insurance and Bonding, agents must take out an errors-and-omissions insurance policy and must submit it to the CNSF.
Furthermore, reinsurance brokers are companies duly authorised by the CNSF to intermediate reinsurance. This authorisation may be for an indefinite term. Reinsurance brokers operate through reinsurance agents, who also need to be previously authorised by the CNSF. This authorisation is valid for five years and may be renewed for an equal term.
The CNSF may suspend (for up to two years) or revoke the reinsurance brokers' authorisation, without prejudice to the warnings and fines that may also be imposed on them; and suspend or remove from post their directors and officers if they fail to comply with the requirements set out in the LISF or commit a violation of the LISF and its regulations, without prejudice to the economic sanctions that may also be imposed on them pursuant to the LISF and other applicable laws.
Moreover, insurance adjusters may be individuals or companies duly registered with the CNSF and appointed by an insurance company. The insurance adjusters evaluate the reasons for a claim or loss and calculate the resultant compensation.
The duties of the insurance adjusters must comply with the LISF, its regulations and the internal manuals that include the policies and procedures applied by the insurance company.
Insurance companies are jointly liable for the acts of their insurance adjusters.
The CNSF may cancel – or suspend, for up to two years – the insurance adjusters' registration (without prejudice to the warnings and fines that may also be imposed on them) if they fail to comply with the requirements set out in the LISF or if they commit a violation of the LISF and its regulations (also without prejudice to the economic sanctions that may be imposed on them pursuant to the LISF and other applicable laws).
The LISF provides that both external auditors that evaluate financial statements and independent actuaries that evaluate the adequacy of technical reserves shall be duly registered with the CNSF and appointed by the board of directors of the insurance or bonding company.
The CNSF sets the requirements for external auditors and independent actuaries, along with the measures necessary to guarantee an adequate alternation of these professionals in the insurance and bonding companies, and it indicates the information to be presented in the reports of these professionals.
Pursuant to the LISF, external auditors and independent actuaries must keep at least five years' records.
The CNSF may suspend or cancel the external auditors' and the independent actuaries' registration (without prejudice to the warnings and fines that may also be imposed on them) if they fail to comply with the requirements set out in the LISF or commit a violation of the LISF and its regulations (also without prejudice to the economic sanctions that may be imposed on them pursuant to the LISF and other applicable laws).
External auditors and independent actuaries incur liability for damages if their report is made with malice, without considering the information provided by the insurance or bonding company and without observing the applicable rules, procedures and methods in accordance with their profession.
iii YEAR IN REVIEW
There have been two principal notable developments in the past few years. First, the 2012–2013 educational reform in Mexico created the General Law of the Professional Service of Professors, the purpose of which was to raise educational standards. To comply with the standard introduced by that law, teachers were bound to take an exam to measure their professional ability. Many teachers refused to take the exam and were removed from their jobs.
As a result of this situation, unemployed teachers filed amparo claims (constitutional challenges) requesting to be reinstalled in their jobs by means of an interim measure. In a related case, the First Chamber of the Supreme Court ruled that the interim measure could not be applied to address this issue, since education is a matter of public policy and social interest.70 This decision may have ramifications for a number of professions that deal with matters related to public policy and social interest.
The 2012–2013 educational reform was recently abrogated. On 15 May 2019, a new constitutional reform was published concerning educational matters. Among other things, the new educational reform changed the system for the evaluation of teachers. Nevertheless, even with the previous reform abrogated, the precedents of the Supreme Court will still be relevant for professions that deal with public policy and social interest matters.
The second development deals with corporate liability. In 2015 and 2016, there was a significant anti-corruption reform in Mexico. Where previously the fight against corruption was mainly focused on public servants and their possible punishments, the reform introduced a focus on the punishment of corruption by private individuals.
The reform included two main features: circumstances in which the private individual is liable for corruption (which may include negligence, among other things), and also tools for companies and individuals to obviate this liability. Article 25 of the General Law of Administrative Responsibilities provides for 'integrity policies' that may reduce the liability of corporations, and these policies include:
- an organisational manual;
- a public code of conduct;
- adequate and efficient control mechanisms;
- adequate reporting systems;
- adequate training procedures;
- procedures for 'secure' recruitment (e.g., background checks); and
- transparency and publicity mechanisms.
Some proceedings for corporate liability have been introduced as part of this reform, and the adequate implementation of the above-mentioned integrity policies will play an important role.
In the past year, there have been two developments that may have an impact on professional liability. First, the introduction of oral commercial proceedings. On 25 January 2017, a reform to the Commerce Code was approved by the Federal Congress. The most relevant change in this reform is the establishment of the oral commercial proceedings as the 'default rule'. After the reform, pursuant to Section 1390 bis of the Commerce Code, all commercial disputes shall be settled by an oral commercial proceeding, regardless of the amount claimed. As of 2017, commercial proceedings began to transition into oral proceedings in accordance with the amount in dispute. As of 26 January 2020, all commercial disputes, regardless of the amount claimed, will be settled through oral commercial proceedings.
The judgments rendered in this type of trial cannot be challenged by the parties by any ordinary means of review (e.g., appeal). Introducing oral proceedings for all commercial disputes has an evident purpose of reducing the time and costs of entering the judgment.
Although most professional liability cases will be heard and decided by civil courts, the reform of the Commerce Code may have an impact on professional liability cases where, in accordance with the jurisdiction rules, the trial will be of commercial nature, in particular in cases arising out of a commercial agreement.
Second, on 9 August 2019, the Mexican Congress enacted the National Law for Asset Forfeiture (NLAF). This law regulates Article 22 of the Mexican Constitution and provides the rules for the forfeiture of assets in favour of the state. The NLAF was enacted in order for Mexico to abide by its international commitments in the fight against organised crime, corruption and drug cartels. The NLAF abrogated the previous Federal Law for Asset Forfeiture and the local asset forfeiture laws.
Asset forfeiture is defined by the NLAF as the loss of rights in connection with an asset, as declared by a court, without receiving in exchange any type of compensation or consideration.
The NLAF contains a chapter regarding the proceedings that must be followed to forfeit an asset. Such civil proceedings are independent of any related and possibly separate criminal proceedings dealing with the responsibility for actions performed by the corresponding parties.
Such law does not regulate professional liability (civil or criminal). However, it does have an impact on the fight against corruption and civil liability for illicit actions.
IV OUTLOOK AND FUTURE DEVELOPMENTS
There are four particular matters that may affect professional liability and conduct in the future: the possibility of punitive damages in Mexico, the increasing attempts to introduce mandatory bar affiliation, the effects of the 'new' corporate liability and the tendency to orality in court proceedings.
First, as mentioned in Section I.iv, Mexican law has traditionally been understood as only allowing for compensatory damages. However, there was a 2013 landmark decision that seems to allow punitive damages under the moral harm provision in the Federal Civil Code. This decision could shortly prompt other decisions with similar interpretations of moral harm, thus expanding the degree of exposure resulting from professional liability. This new level of exposure will certainly be followed by the need for, and obligation to have, professional liability insurance.
Second, the attempts to introduce mandatory bar association affiliation have not stopped. There are continual attempts by the existing bar associations and by several practitioners to standardise practice through the introduction of compulsory affiliation to a bar association. There are many professionals who oppose such a move, but should these attempts be successful, the regulation of the legal profession (and even other professions) will undergo an important shift.
Third, there are no relevant cases yet on corporate liability, whether administrative or criminal. Nevertheless, these precedents could be set in the near future, following the changes introduced by the anti-corruption reform.
Lastly, following recent reforms to criminal procedural law and the Code of Commerce (regarding commercial cases), a tendency for orality has started to become prevalent within court procedures, as opposed to the written processes traditionally predominant in Mexico's legal system; and although professional services are a civil contract by nature, it is highly possible that this tendency towards orality will start to permeate civil cases too. In addition, the liability cases that are commercial by nature (because they arise out of a commercial contractual liability), will be tried orally in Mexico.
1 Omar Guerrero Rodríguez and Jorge Valdés King are partners and Eduardo Lobatón Guzmán is an associate at Hogan Lovells. The authors also thank Elisa Legorreta Pastor for her collaboration in the first edition of this chapter.
2 The Regulatory Law, Article 24.
3 id., Article 25.
4 id., Article 33.
5 id., Article 36.
6 id., Article 37.
7 Lex artis means the universally accepted rules for the exercise of a profession. It serves as an assessment criterion for evaluation of the level of diligence that can be demanded in the execution of a certain professional act.
8 On 29 January 2016, Mexico City began its transition towards a federal state. A political reform allowed the Mexican capital (formerly officially named the 'Federal District') to become the 32nd state of the Republic, which has been renamed as Ciudad de México. The new federal entity has managerial autonomy and its own Constitution, while continuing to be the country's capital.
9 On 15 September 2017, the Mexican Constitution experienced several amendments. Among others, Article 73 of the Constitution has a new Section (XXX) to enable Congress to legislate in civil and family procedure. Currently, each Mexican state has its own procedural legislation for civil and family matters. Mexico seeks with this reform to have a single procedural law for civil and family matters applicable to the entire country, which is intended to minimise the formalisms in judicial proceedings and to eliminate the different judicial criteria when dealing with similar procedural institutions. The new procedural code has not been published yet.
10 Federal Civil Code of Mexico, Article 1830.
11 id., Article 2110.
12 Civil liability. Burden of proof of the damage suffered by a passenger on board a transportation vehicle. Thesis: I.4o.C.P C (10 a.).
13 The Mexican Bar Association has recommended a Model of Professional Services Contract of Lawyers, which is not mandatory.
14 Federal Civil Code of Mexico, Article 2608.
15 id., Article 2614.
16 Contractual and extra-contractual liability. Their differences. Thesis: 1a. CXXXV/2014 (10.a.).
17 Civil liability. Concept and classification. Thesis: 1a. LII/2014 (10a.).
18 Asali Harfuch, Luis, Las Eximentes de la Responsabilidad Civil Extracontractual, Professional thesis, México, Distrito Federal, 2003, p. 13, citing: Mosset Iturraspe, Jorge, op. cit., Vol. I, p. 138.
19 id., p. 16.
21 Bullying at school may generate damage and losses through actions or omissions. Thesis: 1a. CCCXIII/2015 (10a.) p. 1641.
22 Bullying at school. Constitutes major social relevance the fulfilment of diligence duties by school centres. Thesis: 1a. CCCLII/2015 (10a.) p. 952.
23 Damage originating from the negligent administration of anaesthesia generates a subjective civil responsibility. Jurisprudence: 1a/J.22/2011 (10A).
24 Damage due to negligence. If it is caused, it cannot be deemed as accepted based on a services agreement. Thesis: 1a. CCXXXVI/2014 (10a.) p. 450.
25 Federal Criminal Code, Article 228.
26 id., Article 230.
27 id., Article 232.
28 id., Article 233.
29 The Regulatory Law, Articles 61–73.
30 María Teresa Ambrosio Morales, Luz María Reyna Carrillo Fabela and Bárbara Victoria González Mora. La Responsabilidad Del Médico como Servidor Público en México. Biblioteca Jurídica Virtual del Instituto de Investigaciones Jurídicas de la UNAM. México: n/d. p. 500.
31 Federal Civil Code, Article 1159.
32 Federal Civil Code, Article 1161-V and Article 1934.
33 Causes of damage in terms of Chapter V of the first title of the Federal Civil Code and the Federal District Civil Code. Thesis: 1a. /J. 113/2011 (9a).
34 Statute of limitations. Applicable terms in cases of extra-contractual civil liability derived from damage to life or integrity. Thesis: 1a. CXCVII/2018 (10a.) p. 373; Compensation for damage caused by medical negligence. When the life or integrity of persons is affected, the statute of limitations in the generic one provided in Article 1159 of the Civil Code for the Federal District, applicable for Mexico City. Thesis: 1a. CC/2018 (10a.) p. 400.
35 Federal Criminal Code, Article 104.
36 Federal Criminal Code, Article 105. The arithmetical 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 serious fraud ranges from three to 12 years under the Federal Criminal Code. Therefore, the arithmetical average is 7.5 years.
37 Federal Criminal Code, Article 106.
38 Federal Criminal Code, Article 107.
39 CONAMED Rules of Procedure for the Attention of Medical Complaints, Article 50.
40 Carlos Tena Tamayo and Gabriel Manuell Lee (eds.). Modelo Mexicano de Arbitraje México. Comisión Nacional de Arbitraje Médico. México: 2003, pp. 105–112.
41 The parties should reach an agreement; otherwise, the right to bring their cases before a civil court still stands.
42 CONAMED Rules of Procedure for the Attention of Medical Complaints, Article 6.
43 Access to health. It is the state's duty to protect this human right and, thus, the Mexican Social Security Institute has the burden to prove, in the contentious administrative trial in which it is a defendant for negligent medical attention, that the medical staff treated the patient adequately in accordance with his or her condition. Thesis: XXI.2o.P.A.18 A (10a.) p. 2725.
44 Extra-contractual civil liability in medical-health matters. Distribution of the burden of proof. Thesis: 1a. CCXXVII/2016 (10a.) p. 514
45 Federal Civil Code of Mexico, Article 1915.
46 id., Article 2108.
47 id., Article 2109.
48 id., Article 2110.
49 id., Article 2106.
50 id., Article 1840.
51 id., Article 1916.
52 Fundamental right to complete reparation or just indemnification. Its concept and scope. Thesis: 1a./J. 31/2017 (10a).
53 La Colegiación Obligatoria de Abogados en México. Biblioteca Jurídica Virtual del Instituto de Investigaciones Jurídicas de la UNAM. México: n/d, p. 93.
54 National Development Plan 2007–2012.
55 ibid., p. 94.
56 The CONAMED procedure is described in Section I.iii.
57 Civil liability for medical negligence. Its application regarding medical practitioners with scientific autonomy. Thesis I.4o.C.59 C(10a.) p. 1543.
58 Civil liability for medical negligence. Its application regarding the members of a medical team. Thesis: I.4o.C.58 C (10a.) p. 2261.
59 María del Carmen Montoya Pérez. Responsabilidad Civil Médica. Biblioteca Jurídica Virtual del Instituto de Investigaciones Jurídicas de la UNAM. México: n/d, p. 215.
60 Federal Criminal Code, Article 211.
61 id., Article 211 bis.
62 id., Articles 211 bis 1, bis 2, bis 3, bis 4 and bis 5.
63 Federal Code, Article 2633.
64 id., Article 2149.
65 Mexico City Criminal Code, Article 329 bis.
66 Ethical Code of the Mexican Institute of Public Accountants, Article 110.2.
67 id., Article 130.
68 As a consequence of the LISF implementation, (1) insurance and bonding entities, (2) insurance and bonding agents, (3) reinsurance brokers, (4) insurance adjusters, (5) external auditors and (6) independent actuaries have had to strengthen their internal control processes for the performance of their duties.
69 This includes directors, chief executive officers, statutory auditors, managers, fiduciary delegates, officers, external auditors who evaluate the financial statements and the independent actuaries that evaluate the adequacy of technical reserves.
70 Professional teaching service. It is inadmissible to grant an interim relief in an amparo proceeding filed in respect of acts issued by an authority in an administrative proceeding that have the effect of separating a teacher from a group or a teacher from his or her position; or in respect of the application of a penalty for not adhering to the process of evaluation provided in the applicable law. Thesis: PC.XXXI.J/11A (10a.).