Amendment for the Improvement of Enforcing Settlement Agreements and Arbitration Awards by the Office of the Federal Consumer Protection (PROFECO) Prosecutor

On April 17, 2012, a Decree was published in the Official Journal of the Federation by means of which sectionVIII was added to article 1391 of the Mexican Commerce Code, increasing the list of documents to which thisregulation grants the “ripe for enforcement” characteristic; therefore, agreements reached in settlementproceedings approved by the Office of the PROFECO Prosecutor and arbitration awards issued by such authorityare expressly recognized as ripe for enforcement, and, as of April 18, 2012, it is possible to file a summarycommercial action based on any of these documents. With respect to such agreements, this amendment simplyrecognizes that which is already established in article 110 of the Federal Consumer Protection Law (LFPC),stipulating that approved settlement agreements and arbitration awards issued by PROFECO have the effect ofres judicata (“a matter already judged”) and are ripe for enforcement, the same which may be presented before acompetent court as a writ of execution or summary action based on the interested party’s choice. However, thiswas a common topic of discussion for the courts, given that a summary commercial action was not expresslyprovided for. This amendment marks the end to such discussion. As far as the second aspect of the amendment,giving the arbitration award issued by PROFECO “ripe for enforcement” status, the amendment merely reiteratesthat which was already provided by article 110 of the LFPC; however, we consider this to be a correct rulinggiven that the arbitration award is clearly a document ready for enforcement for summary commercial action. Itis believed that this amendment will only serve to benefit creditors in situations involving agreements andarbitration awards containing definite amounts that are liquidated and payable upon demand, since the benefit ofsummary commercial actions is that it allows pre-judgment attachment of assets prior to service of process. Suchpre-judgment attachment is allowed given the existence of a definite amount that is the subject matter of thelawsuit. Therefore, it is advisable to include monetary penalties in agreements that are definitive, liquidated andpayable in the event of default. However, if dealing with agreements and arbitration awards that include onlyobligations that must be performed, it is best to enforce the agreement by means of a writ of execution.