Responsibilities and immunities of arbitrators in commercial arbitration: a perspective under the Mexican legal system

GUILLERMO CORONADO AGUILAR¹

SUMMARY: I. Introduction. II. Forerunners of arbitral responsibility and immunities in international arbitration. III. Scope of responsibility and immunity by arbitrators. IV. Applicable legal framework to arbitrators’ immunity and responsibility. V. Comparative perspective under national legislations and case law. VI. The scope of responsibilities and immunities of arbitrators in the Mexican legal system. VII. Conclusion.

Abstract. The following article deals with the immunity of the commercial arbitrator and arbitral tribunals seen from the Mexican Law. A comparative perspective is given on how arbitrators enjoy broad immunities like in the US as seen as judges or whether they need to have an insurance policy like in Spain.

Meanwhile in Mexico, the system for responsibilities against arbitrators follows that of the French legal system, mainly through the Civil Code, however, the Law of Amparo (LAM) opens the window to seek reparation against private parties, to the extent that their actions are taken as governmental acts. Thus, the question that arises is whether arbitrators’ actions constitute authority like acts, thus being responsible under the LAM.

The contention of this article is that, arbitrators are immune to the Mexican Law of Amparo, since their duties are not from a top-down relationship, rather the arbitration investiture is born from the will of the parties creating a new contract, referred as arbitrator’s contract, the contrat d’investitutre or receptum arbitri, a collateral relation, therefore, arbitrators can only be held responsible under the Federal Civil Code, since from a Mexican perspective the relationship between the parties and the arbitral tribunal derives from a contractual relationship.

Keywords: Arbitration, responsibilities, arbitrators, immunity, damages.

Resumen. El presente artículo aborda el tema de la inmunidad del árbitro comercial y de los tribunales arbitrales desde la perspectiva de la Ley Mexicana. Se ofrece una perspectiva de derecho comparado sobre cómo los árbitros gozan de amplias inmunidades como en los EE.UU., donde son vistos como jueces o si necesitan tener una póliza de seguro como en España.

Mientras que en México, el sistema de responsabilidades contra los árbitros sigue el del sistema jurídico francés, principalmente a través del Código Civil; sin embargo, la Ley de Amparo (LAM) abre la ventana para buscar la reparación contra los particulares en virtud de la LAM, en la medida en que sus acciones son vistas como actos gubernamentales. Así, la cuestión que queda abierta es si las acciones de los árbitros constituyen actos de autoridad, siendo así responsables en virtud de la LAM.

El argumento de este artículo es que, los árbitros son inmunes a la Ley de Amparo Mexicana, ya que sus deberes no son de una relación de supra-subordinación, sino que la investidura arbitral nace de la voluntad de las partes que crean un nuevo contrato, llamado contrato de árbitro, el contrat d'investitutre o receptum arbitri, una relación colateral, por lo tanto, los árbitros solo pueden ser considerados responsables bajo el Código Civil Federal, ya que desde una perspectiva mexicana la relación entre las partes y el tribunal arbitral deriva de una relación contractual.

Palabras clave: Arbitraje, responsabilidades, árbitros, inmunidad, daños.

The scope of arbitrators’ responsibilities is consistent among all arbitration rules, codes and case law. However, the extent of their immunity is left almost entirely to national laws, arriving to different results, whether arbitrators have broad immunities like in the US or whether they need to have an insurance policy like in Spain.

Meanwhile in Mexico, the system for responsibilities against arbitrators follows that of the French legal system, mainly through the Civil Code, however, given the new changes to the Law of Amparo (LAM)² –which is a constitutional litigation proceeding that seeks to protect fundamental rights against acts of authority–, allowing private parties to be held responsible, if they were performing authority like acts, such created a problematic and discussions in the arbitration community in Mexico, since a discussion was whether or not arbitrators actions constitute authority like acts, thus being responsible under the LAM.

Such reparation of damages can be made through the same constitutional proceedings, upon which the Mexican courts can decide in favour to one of the parties to the arbitration proceedings, affecting or going against the Arbitral Tribunal that rendered the award, the problematic behind it, is that if constitutional protection is granted, one of the parties could seek either, restitution of their respective rights, or a claim for damages.

Even if an action can be sought under the Federal Civil Code, like France, the threshold under the LAM is much lower, since, the Law of Amparo has a natural imbalance between a party seeking the constitutional protection and the other party, which is the authority, in this case, the arbitrator or arbitral tribunal, putting the claiming party on an equal footing against an authority.

If such situation is granted against the arbitrators or the arbitral tribunal then the consequences for the arbitration in Mexico could have being disastrous, thankfully the Supreme Court and a series of case law reflected on that, concluding that arbitrators cannot be held responsible under the LAM, thus being immune to such constitutional proceedings.

The conclusion is that, arbitrators are immune to the Mexican Law of Amparo, since their duties are not from a top-down relationship, rather the arbitration investiture is born from the will of the parties creating a new contract, referred as arbitrator’s contract, contrat d’investitutre or receptum arbitri, a collateral relation, therefore, arbitrators can only be held responsible under the Federal Civil Code, since from a Mexican perspective the relationship between the parties and the arbitral tribunal derives from a contractual relationship. 

        One of the precedents of international arbitration that helped in the shaping of modern arbitration are: the Alabama Claims³ and the Jay’s treaty⁴. Even though they are important precedents, they do not envisage clearly the responsibility and immunities of arbitrators in discharge of their duties, rather, they give general guidelines on how an arbitrator must act throughout the arbitration process.⁵

Other instruments such as the Convention for the Pacific Settlement of International Disputes provides under its article 46 that ‘the members of the Tribunal, in the exercise of their duties and out of their own country, enjoy diplomatic privileges and immunities’. The exact wording can be found in article 19 of the Statute of the International Court of Justice.⁶ Nevertheless, it must be taken into account that these instruments are made for State-to-State dispute resolution mechanisms and they concern a more permanent body of adjudicators, meanwhile in commercial arbitration, it cannot be assumed that arbitrators dealing with international commercial matters will have the same benefits as adjudicators in the international public sphere, although, tracing back the origins for immunities for arbitrators, it will be a good place to depart.

           The arbitrators’ activity in commercial arbitration is a Sui Generis one, he or she are private dispute adjudicators with quasi-judicial functions. This situation makes it difficult to assess the extent of immunities and responsibilities of arbitrators in the discharge of their duties, whether they are determined directly by the law –as is the case with judges–, or they are determined by the will of the parties, recognized by the law.

The situation that gives rise to confusion is that arbitrators will decide impartially a legal dispute through the rendering of an arbitral award, somewhat similar to the responsibilities of a judge. However, arbitrators are neither officials nor held a public office whom powers are given directly by the State trough the enactment of a given law,⁷ contrariwise the power of the arbitrators is given by the agreement of the parties.⁸

Both the New York Convention⁹ and the UNCITRAL Model Law¹⁰ define the arbitration agreement. Under Article II (1) of the New York Convention, it is ‘an agreement in writing under which the parties undertake to submit to arbitration all or any differences which have arisen or which may arise between them in respect of a defined legal relationship…’. The UNCITRAL Model Law under its article 7 (1) provides for the following: ‘the arbitration agreement is an agreement by the parties to submit to arbitration all or certain disputes which have arisen or which may arise between them in respect of a defined legal relationship, whether contractual or not.’

The above referred definitions connect directly to the obligation by the parties to solve their respective dispute through arbitration, however, there are other obligations in connection to such, upon which Born identifies six general responsibilities in institutional arbitration rules and the UNCITRAL Model Law, upon which, the arbitrator must proceed within the procedure and the parties, in this sense, arbitrators ought to (a) resolve the parties’ dispute in an adjudicatory manner; (b) conduct the arbitration in accordance with the parties’ arbitration agreement; (c) maintain the confidentiality of the arbitration; (d) in some contexts, propose settlement to the parties; (e) complete the arbitrator’s mandate; and (f) be and remain impartial and independent.¹¹

It is important to clarify that the agreement to arbitrate, is different from the arbitration clause, the agreement to arbitrate is a different instrument that binds the arbitrator with the parties in the conduction of the arbitration proceedings. It must be noted that such agreement to arbitrate will be for the arbitrator and the parties, and not only between the arbitrator and the party who nominated her or him.¹²

Such contract, –referred as the arbitrator’s contract–, is the main instrument that deals with the responsibilities of the arbitrator, it will limit or broaden the arbitrator’s responsibilities against any claim by the parties in the discharge of her or his duties.¹³ However, three main obligations can be identified, (i) to render a valid award in the seat, (ii) an award subject to be reasonably expected to be recognized and enforced in any other jurisdiction, and (iii) comply with the spirit of the New York Convention.¹⁴

It is worth noting that once the arbitrator signs and accepts her or his appointment, he or she becomes subject to a legal relation with the parties, with a commitment to the arbitral process, as well as to the arbitration rules, the award that will be rendered and the legislation of the seat of the arbitration.¹⁵

When analysing the legal nature of the arbitrators’ functions, some discussion has been raised in how to treat arbitrators, whether as judges or as a pure contractual private-third-party-resolver. Irrespective the approach taken, the legal nature is a sui generis one.¹⁶ This sui generis approach also extends to the arbitrator’s contract, which is construed rarely by way of one document; conversely consists of communications within the parties, agreements within the arbitration procedure, the institutional rules and legal principles.¹⁷

If the arbitrator’s contract is insufficient in determining the extent of responsibilities and immunities by the arbitrators, the next legal instrument to apply is the arbitration rules and national law applicable to the arbitration. As it will be addressed below, many institutional arbitration rules provide a general waiver of responsibility, and the responsibilities of the arbitrators are scattered in the rules or in annexes.

        As said before, almost every arbitration institution provides for exclusion of contractual liability, i.e., waiver. Examples of this are –to name a few– the ICC, LCIA, CPR, Centro de Arbitraje de México (CAM), and the ICDR. To the contrary, the UNCITRAL Arbitration Rules do not deal with the matter.¹⁸ Even if the arbitration rules that deal with the responsibilities of the arbitrator as well as to his or her immunities, such regulation is not clearly worded within the given arbitration rules, being only a disclaimer or a waiver.¹⁹

Generally, the wording of almost all arbitration institutions is set as a limitation of liability, just one article dealing with a possible immunity, leaving to the national legislation the assessment as to the extent to which arbitrators are responsible and what is their enjoinment of certain immunities within such legal system. However, in their discharge as arbitrator for international commercial or investment arbitrations, these national legislations do not offer a clear indication to the extent of the responsibilities and immunities of arbitrators.

For example, under the ICC arbitration rules article 41, there is a limitation of liability, which reads as follows: ‘The arbitrators, any person appointed by the arbitral tribunal, the emergency arbitrator... shall not be liable to any person for any act or omission in connection with the arbitration, except to the extent such limitation of liability is prohibited by applicable law.’²⁰

The same holds true for the LCIA under article 31.1 of the recent adopted arbitration rules,²¹ upon which ‘[n]one of the LCIA…any arbitrator, any Emergency Arbitrator… shall be liable to any party howsoever for any act or omission in connection with any arbitration, save: (i) where the act or omission is shown by that party to constitute conscious and deliberate wrongdoing committed by the body or person alleged to be liable to that party; or (ii) to the extent that any part of this provision is shown to be prohibited by any applicable law.’

The LCIA goes even further in order to provide a broader immunity to arbitrators, since under article 31.2 the LCIA rules establish that after rendering the award by the Arbitral Tribunal, the parties cannot call the arbitrators or any other person related to the LCIA as witnesses being also prevented to be forced in order to make statements related to the arbitration.²²

The arbitration rules of CAM (Centro de Arbitraje de México), article 43, establish a similar worded limitation of liability clause which reads: ‘Neither the arbitrators, CAM, its General Council, its Secretary General nor the members of its Secretariat shall be liable of any act or omission in connection with an arbitration proceeding conducted under its auspices.’ A similar wording is found under article 40 of the ICC arbitration rules, however, both ICC and CAM rules established the waiver of rights if the parties continue with the arbitration without raising any objection to the proceedings and not what can happen after the proceedings are finished.²³

In addition, there are several other codes of conduct by institutions and professional organizations, which can be adopted by agreement by the parties and the arbitrators, the absence of which makes these set of rules non-mandatory. However, they still have an advisory character as they serve as guidelines, for example the IBA Guidelines on Conflict of Interest.²⁴ They could be of great influence in how the arbitrators conduct themselves within the proceedings. The parties can analyse the conduct of the arbitrators within the process, in light of such international criteria, to conclude if the arbitrator acted properly.

In spite of, let us remember that the arbitrators’ relationship with the parties is contractual, with both the arbitrator and the parties owing contractual rights and duties to one another.²⁵ Since the arbitration rules are generally silent in how and to what extent the responsibilities and immunities operate, the soft law on this matter cannot be applicable, unless there is an express agreement.

Therefore, an international conflict of laws exercise must be performed in order to provide, –absent any agreement– the law applicable to the arbitrators’ contract (also referred as receptum arbitri),²⁶ thus, the law applicable must be the one where the seat of the arbitration takes place, since it is there where the main obligations will be performed, that is the rendering of an arbitral award, it is to say the characteristic performance is the award and such takes place in the seat of arbitration. Thus, the national legislation of the seat of the arbitral tribunal will decide the extent of the responsibilities born by the arbitrators as well as to the immunities they may have.²⁷

         Some legal systems will handle the arbitrator’s duties either as a great akin with judicial duties or as a contractual function limited by the law. Whatever the point of departure is, the duty of an arbitrator is defined by the agreement to arbitrate. In this sense, it will depend on the applicable law to the arbitrators’ contract whether and to what extent enjoy immunities and the extent of their liabilities.

1. Common Law Approach

a. English legal system. English courts have ruled that arbitrators’ rights and obligations come from a mix between contracts and laws.²⁸ Section 29 of the English Arbitration Act establishes that ‘[a]n arbitrator is not liable for anything done or omitted in the discharge or purported discharge of his functions as an arbitrator unless the act or omission is shown to have been in bad faith.’²⁹ Interpreting at contrario sensu, the arbitrators will be liable only if, in the discharge of their duties, they acted in bad faith or wilful misconduct, towards one or both of the parties or the arbitration process in itself. Applying as well to the employees or agents of the arbitrator, however, if the arbitrator resigns, this section will not apply, rather, will be Section 25.

Consequently section 25, establishes that the parties and the resigning arbitrator can agree on the consequences of such resignation, the entitlement of her or his fees and any liability incurred,³⁰ absent such agreement, the arbitrator can apply to the court in order for a grant of relief of any liability³¹ and make an order to the parties granting the payment of fees or expenses or repayment of expenses already paid.³² The relief by the court is subject to the assessment of reasonability,³³ therefore, it may happen that the IBA guidelines may be taken into account. As a possible soft arbitration law.

This section is as well almost identical with section 74 related to the immunity of the arbitral institutions, notably the title of the section is named ‘Immunity of arbitral institutions’, such section establishes the immunity of the institutions when acting as appointing authority, by saying that ‘(1) An arbitral or other institution or person designated or requested by the parties to appoint or nominate an arbitrator is not liable for anything done or omitted in the discharge or purported discharge of that function unless the act or omission is shown to have been in bad faith.’

In the case Jivraj v. Hashwani, the Court of Appeal held that the relationship between the arbitrators and the parties is of a contractual nature, ‘the precise nature of the relationship between the arbitrator and the parties to the dispute is irrelevant’³⁴, the appointment of an arbitrator is similar to those of a doctor or an accountant about a tax return. Interestingly, the Supreme Court overturned such decision considering that an arbitrator cannot be considered to be subordinated to the parties; rather, arbitrators are in effect quasi-judicial adjudicators.³⁵

In the Jivraj v. Hashwani finding by the Court of Appeal, Lord Mance quoted the German Imperial Court of Justice (Reichsgericht) regarding the nature of the arbitral contract, by saying that:

It does not seem permissible to treat the arbitrator as equivalent to a representative or an employee or an entrepreneur. His office has….an entirely special character, which distinguishes him from other persons handling the affairs of third parties. He has to decide a legal dispute in the same way as and instead of a judge, identifying the law by matching the relevant facts to the relevant legal provisions. The performance expected from him is the award, which constitutes the goal and outcome of his activity. It is true that the extent of his powers depends on the arbitration agreement, which can to a greater or lesser extent prescribe the way to that goal for him. But, apart from this restriction, his position is entirely free, freer than that of an ordinary judge.³⁶

It is of no surprise that the English Arbitration Act, deals with a more quasi-judicial approach regarding. the arbitrators’ immunity just being limited to bad faith.

b. US legal system. The US legal system analyses the arbitrator’s tasks from a more judicial point of view. Section 14(a) of the Revised Uniform Arbitration Act, establishes that ‘[a]n arbitrator or an arbitration organization acting in that capacity is immune from civil liability to the same extent as a judge of a court of this State acting in a judicial capacity.’³⁷ Therefore, the immunities given by the US legal system to the arbitrators are broader than in other legal systems. Most of the US Courts recognize broad immunities to arbitrators.³⁸

Nevertheless, some arbitrators have been found to be subject to civil liability. In E.C. Ernst, Inc. v. Manhattan Constr. Co. of Texas, the Court of Appeals reasoned that an architect nominated in order to give his approval of the construction site that fails to decide or is in delay to render a decision, loses his immunity because ‘he loses his resemblance to a judge.’³⁹

a. Swiss legal system. In an interesting case, the Swiss Federal Tribunal found that the ‘arbitrator has to undertake everything that is necessary to facilitate the regular course of the arbitral proceedings and to abstain from everything that could compromise it. Consequently, the arbitrator has a pre-contractual, later contractual, duty to inform the parties to the proceedings of facts that may serve as grounds for challenge.’⁴⁰

Although this case refers to a challenge against the arbitrators, after a challenge is made under article 180 of the Private International Law Statute or Act (PILS or PILA), arbitrators could be held responsible under a contractual regime of Swiss Code of Obligations.⁴¹ The grounds for challenge are three: (i) not meeting the qualifications agreed upon, (ii) grounds for challenge under the arbitration rules or (iii) justifiable doubts to its independence.⁴²

Furthermore, scholars have interpreted that Article 100(1) Code of Obligations bar the exclusion of liability even for slight and medium negligence, thus, arbitrators cannot waive article 180 PILS for challenge when the exclusion contradicts the legal nature of the contract, which may be the case for an agency agreement (mandate),⁴³ in this sense, if there is a successful challenge against an arbitrator, the consequences of such treatment could lead to a restitution of the arbitral fees or a reduction of the same.⁴⁴

b. French legal system. The French legal system relies on a contractual point of view. To this respect there is an arbitration contract that binds the parties and the arbitrator.⁴⁵ As Maître de Boisséson referred to the term for this contractual relationship between the Arbitrator and the parties as the ‘contrat d’investiture arbitrale’.⁴⁶

Under the French legal system, the responsibilities of the arbitrator are differentiated to the duties of the judge in two main aspects, the first one is that is not a member of the judiciary and second, the jurisdiction of the arbitrator is due to the agreement by the parties.⁴⁷

But at the same time, an arbitrator cannot be sued for damages, if this claim refers to its legal reasoning that culminates in the final decision in the award.⁴⁸ Since the expectations of the parties to the right reasoning is different, given their own point of views.⁴⁹ However, there are cases upon which an arbitrator can be held liable, for example, if the arbitrator does not render the award within the time fixed for the issuance of the award resulting to be null and void.⁵⁰

As said before, this relationship could be subject to legal liability as it was ruled in some cases. In particular, a French court held that an ‘action for damages in respect of their performance can only be brought under ordinary tort or contract law’.⁵¹ In other words, the arbitrator’s liability is of a contractual nature which shall be governed under article 1142 of the French Civil Code, upon which an obligation to do or not to do, must be compensated by damages.⁵²

The threshold is to ask if the arbitrator acted in good faith and diligently in conducting the proceedings, as it is established under article 1464 paragraph three of the French Civil Code ⁵³, which is an article that applies to domestic arbitration, but by way of article 1506 such article also applies to international arbitration.

c. Spanish Arbitration Act. An interesting approach is the one given by the Spanish Arbitration Act of 2003, which was recently modified by the Law 11/2011,⁵⁴ under which, if there is bad faith by the arbitrator or arbitral institutions, parties can bring actions against them, –as it is the case with the English Arbitration Act–, recklessness or wilful misconduct, which was in the Arbitration Act of 2003.⁵⁵

The Law 11/2011 added a second paragraph on Art. 21.1, upon which arbitrators are required to ‘…take out an insurance policy to cover civil liability or make an equivalent guarantee’,⁵⁶ the arbitration institutions must provide for insurance to arbitrators seated in Spain.⁵⁷ This development of the Spanish Arbitration Act must be regarded as a safeguard to arbitrators, not the other way around.⁵⁸

        The Mexican legal system does not establish any special regulation to the arbitrators’ responsibilities and immunities, it must be understood that the duties of the arbitrator arise from the agreement of the parties,⁵⁹ and the parties can agree freely on the institution and the arbitrators who will decide the matter, whom consequently will agree on the arbitrator’s contract in order to render a final award in accordance to article 1445 of the Code of Commerce.

However, the matter regarding the responsibility and immunities of the arbitrators is not handled within the Code of Commerce, therefore the rules to be applied regarding the responsibilities and immunities must be found in the Federal Civil Code, by virtue of article 2 of the Code of Commerce, making a renvoi by establishing that in lack of any rule in such code or any other mercantile or commercial law, the Federal Civil Code will be applicable.⁶⁰

It is important to stress out, that the Mexican legal system follows the contractual approach given by the French law to the arbitration relationship with the parties, therefore, recognizes that the duties of an arbitrator arise from the agreement by the parties. Examples of this is the case Maquinaria Igsa, S.A. de C.V., were the judge ruled that arbitration is born by the agreement of the parties, where the Arbitrator has a judicial activity without the imperium of the state, which the decision is final and binding upon the parties, given that they agree freely to commit to arbitration. ⁶¹ In such a case the Court found that:

Arbitration is an institution that is born by the will of two or more parties in order to resolve the controversies…through a legal or specific procedure which must abide by the essential formalities of the process, giving the faculty to a third person to resolve the existent dispute through an award, which will be binding to the parties, as it was resolved by a Judge of the State; by the will of the parties the third person converts into a judge of such specific dispute…The arbitrator deploys a jurisdictional material activity, but lacks of imperium to enforce…Arbitration is in nature conventional…the arbitration agreement necessarily contains or remits to a process. The award that is rendered it is a material jurisdictional act, that results binding upon the parties, because they submitted a decision to a third person in the autonomy of their will, which is free, having the force to oblige…⁶²

Consequently, the liability of arbitrators is considered to be more as a contract, characterizing the activity of the arbitrator as a judge-like function however lacking imperium, therefore it will be more appropriate to deal with the responsibilities and immunities under the Federal Civil Code, more specifically under the law of general obligations, following the Swiss approach.⁶³ The Federal Civil Code provides that if contracts are not specifically regulated they will be dealt under the general rules of contracts, the agreement by the parties or with the contract upon which they have more analogy.⁶⁴

The present author is of the opinion that, the contract of arbitration or contrat d’investitutre to which has more analogy is a professional services contract comprised under articles 2606 to 2615 of the Federal Civil Code, some articles will not apply, however, other will, like in the case at hand will be article 2615 Federal Civil Code, dealing with liability and immunities for professional services, establishing that the person delivering a professional service will be only responsible if in the discharge of its duties commits: negligence, imperil and bad faith, without prejudice to the cases of criminal activity.⁶⁵ However, there must be a special regulation on the extent of responsibilities and immunities that the arbitrators and the arbitration institutions enjoy in their respective discharge of their duties, within the Code of Commerce where is placed the regulation of Commercial Arbitration, one of the possible effects will be to avoid anti-arbitration injunctions.

The Mexican Law of Amparo (LAM). The LAM is a law that introduces the writ of Amparo, which is an extraordinary action that may be filed before higher courts in order to protect fundamental rights and to guard them effectively when they are violated through the performance of acts by the State⁶⁶ or by private persons that exercised its powers resembling the latter. Examples of acts by the State are final judgments rendered by the Courts, which could be subject to writ of Amparo, similar to the French model of cassation.

Despite the contractual nature given by the Mexican legal system to the arbitration contract, in the sphere of Constitutional Law, the new Law of Amparo generated much of a debate towards the responsibilities and immunities of the arbitrators, it was not clear whether the arbitrators –from the private legal sphere– would be regarded as an authority similar to a judge –from the public legal sphere–, thus opening a window for parties to ask for compensation by way of a writ of Amparo against the arbitrators or the relationship of the arbitrators with the parties was of a pure contractual nature, having the typical claims for such discharge.

Even if the LAM brought great developments, such new developments opened the possibility for the Arbitrators to be considered as an authority whom acts could affect the fundamental rights of the parties, through the final judgment, i.e., a final award, in order to seek reparation directly against the person that created such wrong and caused such detriment.⁶⁷ In this sense, it was discussed that if an arbitrator has quasi-jurisdictional powers, who puts an end to the dispute through an award, parties could mistakenly confuse an arbitrator with a judge, and therefore seek reparation, either restitution⁶⁸ or on the other side damages⁶⁹ within the writ of Amparo.

This was one of the possible conclusions after a first judgment on the matter in the case Gilberto Contreras Zúñiga, under direct Amparo number 384/2013.⁷⁰ This case is relevant for the Mexican legal system on arbitration, for two main reasons: first, recognizes the principle of definitiveness of the award, and second, the award is excluded from the extraordinary process of Amparo.

The second reason is of particular importance, since it finds that the Awards issued by an arbitral tribunal is not a type of judgment covered ratione matariae by the law of Amparo, thus, articles 107 of the Constitution and article 170 of the Law of Amparo do not apply, being only applicable to definite judgments, awards or judicial resolutions issued by State Courts, administrative tribunals or labour tribunals.

…the new Law of Amparo, makes evident that the Collegiate Circuit Courts have jurisdiction to rule over judgments on direct amparo, which only proceed against final judgments, awards, and final resolutions that put an end to a judgment, rendered by judicial tribunals (courts), administrative courts and labour courts. In this normative context, the validity of an award issued by a private arbitrator cannot be resolved under amparo, given that a decision that is not rendered by the said courts…, a sine qua non prerequisite in order for in direct amparo could be questioned the validity of the said acts, is that they are rendered by courts of the Estate and not private arbitrators…⁷¹

Despite the great reasoning provided in such ruling and the protection given to the definitiveness of awards issued by Arbitral Tribunals, it left a window open in order to seek reparation, either by restitution or damages, through Art. 5 of the law of Amparo, by ruling that a District Court has jurisdiction to rule over the possibility that the arbitrator, as a private person whom renders an act tantamount to an authority, could be considered responsible for the effects of the writ of amparo.⁷²

Furthermore, Art. 5(II) LAM establishes that an authority is ‘with independence of its formal nature, the one that dictates, orders, executes or seeks to execute the act that creates, modifies or extinguishes juridical situations on a unilateral and obligatory fashion…’ the second paragraph extends the responsibility to private parties by establishing that ‘individuals will have the quality of responsible authority when they perform acts equivalent as to of an authority, which affects the rights in terms of this fraction, and which functions are determined by a general norm.’

The understanding of the legal nature of arbitration calls for sewing in a more delicate way in order not to mistake arbitrators for authorities within the meaning of Art. 5(II) LAM. It is true that arbitrators render final awards or issue orders equivalent to a judge order or final judgment, which affects the legal sphere of the parties. Nevertheless, the functions of an arbitrator are created by a contract with the parties, such relation is recognized by a general norm either in ad hoc arbitrations or institutional arbitrations, upon which the parties freely agree, conversely such agreement is recognized by a general norm which includes default rules absent any agreement, that could be modified by will of the parties.

Article 5(II) LAM focuses on different governmental entities that are created by way of general norms, for example, Petróleos Mexicanos (PEMEX) or Comisión Federal de Electricidad (CFE), or any other State or municipal entity, that can be regarded as having acts of a private party, which affect directly the legal sphere of the parties when deciding unilaterally, this is in line with the recent changes of such entities, that transformed from a public enterprise regulated by the administrative laws to a State Productive Enterprise regulated under the civil and commercial laws, their functions and creation are made by law and could not be opted out.

A characteristic note that differentiates a judge from an arbitrator is imperium, arbitrators as such they lack imperium, the lack of coercive powers cannot make them as a private party with equivalent as of an authority. Deciding a dispute of who has the reason or not is a matter of juris dictio –deciding the law–, much of a legal opinion by an independent lawyer, which can be voluntarily complied by the parties.

This final decision rendered by way of an award, only becomes a matter of imperium when the arbitral award is subject to recognition, being upon that stage a matter outside the sphere of the arbitrators, in this sense, given that the Judge, will review the award so it complies with the Mexican legal system, then if it is enforced, the responsibility will not be for the arbitrators, rather will be for the judges.

If Art. 5(II) LAM was to be wrongfully misunderstood by the courts, it could have opened the doors for parties allowing them to seek reparation against arbitrators alleging a possible violation of Constitutional Rights, hence reducing the immunities of the arbitrators, going from a strict contractual determination to an extra contractual obligation created by a law foreign to international arbitration.

However, in a recent case law before the Mexican courts, it was established that the legislation provided for arbitrators within the Code of Commerce was meant to have arbitration as preferred means for dispute settlement in international commerce, in accordance with the law and the treaties. The Federal Collegiate Court of the first circuit adds, by way of having this set of rules exclusive for arbitration, it was aimed for minimal intervention by the courts, for that reason the arbitration rules are restrictive, hermetic and self-contained, preventing to have resort to other general rules, including the Civil Code and the Law of Amparo.⁷³

The interpretation given by the Court is a guiding light, by virtue of this, the parties are barred to go beyond to what is regulated for in the Code of Commerce and the arbitrator’s contract, therefore parties in seeking reparation against arbitrators cannot have recourse to other laws having recourse to the arbitration agreement.

Most notably, the recent case Cecilia Flores Rueda⁷⁴ and others,⁷⁵ closed definitively the door left open by the above-referred case of Gilberto Contreras Zúñiga. In here, the Court found that articles 1 and 5(II) LAM do not apply to an arbitrator or the arbitral tribunal.

The Court reasoned that Articles 1 and 5(II) LAM, apply only to acts issued by private parties when they have the character of an act of authority. To this respect, in order to be an act of authority two main aspects must be covered, first, that the functions of the private party are determined in a general norm, and second, that such acts are equivalent from an authority.

Consequently, the Court found that it is not an act of an authority since the function of the arbitrator is private in contrast of the public interest, is not a government employee –following the French approach–, and its jurisdiction is not proper nor delegated in contradistinction to its jurisdiction by way of an agreement.⁷⁶

Therefore, the jurisdiction of the arbitrators is not born from a general norm, rather they are due to the parties agreement recognized by the law, the power of the arbitrators, therefore emanates from the will of the parties acting in the private interest and not from the interest of the State, and most important, it lacks imperium, thus the power exercise by the arbitrator is different from a judge not being an act equivalent to those of an authority under Articles 1 and 5(II) LAM, being altogether the arbitrator immune from the law of Amparo.⁷⁷

Also in a further case, a federal Court established that the acts of an authority must reunite four characteristics, (i) unilaterality, (ii) imperium, (iii) coercive power and (iv) subordination, meaning that a private party to be held responsible as an authority –departing from a constitutional standing point of view–, it is needed the presence of supra to subordinate relationship, or top-down relationship, that because of the agreement to arbitrate, such top-down relationship in the Mexican legal system is inexistent, therefore, the arbitrators cannot be held as authorities under the Law of Amparo.⁷⁸

        In a series of round tables organized by the leading young practitioner’s arbitral institutions,⁷⁹ the Supreme Court Ministers established that Art. 5(II) LAM will not apply to arbitrators, either national or international. Judges must give due regard to the legal nature of the arbitration agreement and the arbitrator’s contract.

Without a doubt Mexico is one of the most attractive venues for arbitration in Latin-America, with a great understanding and respect to the institution of international arbitration, nevertheless, the sui generis nature of arbitration, may be a calling for an independent set of rules –not included neither in a procedural law⁸⁰ nor a substantive law–⁸¹, for a clear arbitration legislation that regulates with sufficient clarity all the aspects of the agreement to arbitrate, including the responsibilities and immunities of Arbitrators.

As it has being noted, the Mexican legal system provides with sufficient immunities to arbitrators, equivalent to what can be find in the French and Swiss legal system, being only subject to gross negligence or responsible under the event of a criminal offence. In simpler terms, the chapter of the applicability or not of the LAM to international arbitration is closed once and for all. Thus, neither awards nor arbitrators are subject to the law of Amparo, most notable arbitrators are not considered to be an authority, thus being immune to the extraordinary process of the writ of Amparo.

Bibliography

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Statutory and case law

Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York, 1958) (New York Convention), adopted 22 June 1971

English Arbitration Act 1996

IBA Guidelines on Conflicts of Interest in International Arbitration, adopted on October 23, 2014.

ICC Arbitration Rules

Revised Uniform Arbitration Act 2000

Treaty of Amity Commerce and Navigation, between his Britannic Majesty and The United States of America, 1794

UNCITRAL Model Law on International Commercial Arbitration (1985), with amendments as adopted in 2006

Case 384/2013, Gilberto Contreras Zúñiga, I.5o.C.76 C (10a.), Gaceta del Semanario Judicial de la Federación, t. III, August 2014, p. 1841

Case 195/2014, Cecilia Flores Rueda and others, I.8o.C.23. C(10a)., Gaceta del Semanario Judicial de la Federación, t. III, May 2015, p. 2107

Case 195/2010, Maquinaria Igsa, SA de CV and other [2010], I.3o.C.934 C, Semanario Judicial de la Federación y su Gaceta, (9th), t. XXXIII, May 2011, p. 1018.

E.C. Ernst Inc., v. Manhattan Construction Company of Texas, May 9,1977 US App. Lexis, 13476, No. 75-1794.

Jivraj v. Hashwani [2011] UKSC 40 (27 July 2011)

Arbitration Amendment Act Law 11/2011

Ley De Amparo, adopted 03 April 2013