TITLE FOUR
COMMERCIAL ARBITRATION

CHAPTER I
GENERAL PROVISIONS

ARTICLE 1415.- The provisions of this title shall aplly to domestic commercial arbitration and to international commercial arbitration when the place of arbitration is situated in the national territory, except as otherwise provided in the international agreements to which Mexico is a party or in any other law that establishes a different procedure or states that certain disputes are not capable of settlement by arbitration.

The provisions of articles 1424, 1425, 1461, 1462 and 1463 shall apply even if the place of arbitration is outside the national territory.

ARTICLE 1416.- For the purposes of this title:

I.- Arbitration agreement means the 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. An arbitration agreement may be in the form of an arbitration clause in a contract or in the form of a separate agreement;

II.- Arbitration means any commercial arbitration procedure whether or not before a permanent arbitral institution;

III.- International arbitration means an arbitration where:

a) The parties to an arbitration agreement have, at the time of the conclusion of that agreement, their places of business in different countries; or
b) The place of arbitration, determined in, or pursuant to, the arbitration agreement, the place where a substantial part of the obligations of the commercial relationship is to be performed, or the place with which the subjet-matter of the dispute is most closely connected, is situated outside the country in which the parties have their places of business.

For the purposes of this section, if a party has more than one place of business, the place of business is that which has the closest relationship to the arbitration agreement, and if a party does not have a place of business, reference is to be made to his habitual residence;

IV.- Costs means the fees of the arbitral tribunal; travel and other expenses incurred by the arbitrators; the costs of expert advice and of other assistance required by the arbitral tribunal; the travel and other expenses of witnesses, to the extent such expenses are approved by the arbitral tribunal; the costs of legal representation and assistance of the successful party, if such costs were claimed during the arbitral proceedings and only to the extent that the arbitral tribunal determines that the amount of such costs is reasonable; and fees and expenses of the appointing institution.

V.- Arbitral tribunal means a sole arbitrator or a panel of arbitrators appointed to resolve a dispute.

ARTICLE 1417.- Where a provision of this title:

I.- Leaves the parties free to determine a certain issue, such freedom includes the right of the parties to authorize a third party, including and institution, to make that determination, except as provided in article 1445;

II.- Refers to an agreement of the parties, such agreement includes any arbitration rules referred to in that agreement,

III.- Refers to a claim, it also applies to a counter-claim, and where it refers to a defence, it also applies to a defence to such counter-claim, except as provided in section I of article 1441 and subsection a) of section II of article 1449. This shall be without prejudice to the arbitrators decision on their own jurisdiction to hear the claim and the counter-claim.

ARTICLE 1418.- The following shall apply to notice and calculation of periods of time:

I.- Unless otherwise agreed by the parties:

a) Any written communication is deemed to have been received if it is delivered to the addressee personally or if it is delivered at his place of business, habitual residence or mailing address, if none of these can be found after making a reasonable inquiry, a written communication is deemed to have been received if it is sent to the addressee´s last-known place of business, habitual residence or mailing address by registered letter or any other means which provides a record of the attempt to deliver it;
b) The communication is deemed to have been received on the day it is so delivered.

II.- The provisions of this article do not apply to communications in judicial proceedings.

ARTICLE 1419.- For the purposes of calculating a period of time under this title, such period shall begin to run on the day following the day when a notice, notification, communication, or proposal is received. If the last day of such period is an official holiday or a non-business day at the place of residence or place of business of the addressee, the period is extended until the first business day which follows. Official holidays or non-business days occurring during the running of the period of time are included in calculating the period.

ARTICLE 1420.- A party who knows that any provision of this title from which the parties may derogate or any requirement under the arbitration agreement has not been complied with and yet proceeds with the arbitration without stating his objections to such non-compliance without undue delay or, if a time-limit is provided therefor, within such period of time, shall be deemed to have waived his right to object.

ARTICLE 1421.- In matters governed by this title, no judicial intervention shall be required, except where so provided in this title.

ARTICLE 1422.- When judicial intervention is required, the first instance federal or state judge of the place of arbitration shall have jurisdiction.

If the place or arbitration is outside of the national territory, the competent judge for recognition and enforcement of the award shall be the first instance federal or state judge of the domicile of the person against whom enforcement is to be made or, absent such domicile, the place where the goods are located.

CHAPTER II
ARBITRATION AGREEMENT

ARTICLE 1423.- The arbitration agreement shall be in writing, and be contained in a document signed by the parties or in an exchange of letters, telex, telegrams, facsimile or other means of telecommunication which provide a record of the agreement, or in an exchange of statements of claim and defence in which the existence of an agreement is alleged by one party and not denied by another. The reference in a contract to a document containing and arbitration clause constitutes an arbitration agreement provided that such contract is in writing and the reference is such as to make that clause part of the contract.

ARTICLE 1424.- The judge before whom an action is brought in a matter which is the subject of an arbitration agreement shall, when requested by a party, refer the parties to arbitration unless he finds that the agreement is null and void, inoperative or incapable of being performed.

Where an action referred to in the preceding paragraph has been brought, arbitral proceedings may nevertheless be commenced or continued, and an award may be made, while the issue is pending before the judge.

ARTICLE 1425.- Even if there is an existing arbitration agreement the parties may, before or during arbitral proceedings, request a judge to take an interim measure of protection.

CHAPTER II
COMPOSITION OF ARBITRAL TRIBUNAL

ARTICLE 1426.- The parties are free to determine the number of arbitrators. Failing such determination, there shall be only one arbitrator.

ARTICLE 1427.- The following shall apply to the appointment of arbitrators:

I.- No person shall be precluded by reason of his nationality from acting as an arbitrator, unless otherwise agreed by the parties.

II.- The parties are free to agree on a procedure of appointing the arbitrators, subject to the provisions of sections IV and V of this article.

III.- Failing such agreement:

a) In an arbitration with a sole arbitrator, if the parties are unable to agree on the arbitrator, he shall be appointed, upon request of a party, by the judge;
b) In an arbitration with three arbitrators, each party shall appoint one arbitrator, and the two arbitrators thus appointed shall appoint the third arbitrator; if a party fails to appoint the arbitrator within thirty days of receipt of a request to do so from the other party, or if the two arbitrators fail to agree on the third arbitrator within thirty days of their appointment, the appointment shall be made, upon request of any party, by the judge;

IV.- Where, under an appointment procedure agreed upon by the parties, a party fails to act as required under such procedure, or the parties, or two arbitrators, are unable to reach an agreement expected of them under such procedure, or a third party, including an institution, fails to perform any function entrusted to it under such procedure, any party may request the judge to take the necessary measures, unless the agreement on the appointment procedure provides other means for securing the appointment; and

V.- A decision on a matter entrusted by section III or IV of this article to the judge shall be subject to no appeal. The judge, in appointing an arbitrator, shall have due regard to any qualifications required of the arbitrator by the agreement of the parties and to such considerations as are likely to secure the appointment of an independent and impartial arbitrator. In the case of a sole or third arbitrator, he shall take into account as well the advisability of appointing an arbitrator of a nationality other than those of the parties.

ARTICLE 1428.- When a person is approached in connection with his possible appointment as an arbitrator, he shall disclose any circumstances likely to give rise to justifiable doubts as to his impartiality or independence. An arbitrator, from the time of his appointment and throughout the arbitral proceedings, shall without delay disclose any such circumstances to the parties unless they have already been informed of them by him.

An arbitrator may be challenged only if circumstances exist that give rise to justifiable doubts as to his impartiality or independence, or if he does not possess qualifications agreed to by the parties. A party may challenge an arbitrator appointed by him, or in whose appointment he has participated, only for reasons of which he becomes aware after the appointment has been made.

ARTICLE 1429.- The parties are free to agree on a procedure for challenging an arbitrator.

Failing such agreement, a party who intends to challenge an arbitrator shall, within fifteen days after becoming aware of the constitution of the arbitral tribunal or after becoming aware of any circumstance that give rise to justifiable doubts as to his impartiality or independence, or if he does not possess qualifications agreed to by the parties, send a written statement of the reasons for the challenge to the arbitral tribunal. Unless the challenged arbitrator withdraws from his office or the order party agrees to the challenge, the arbitral tribunal shall decide on the challenge.

If a challenge under the preceding paragraph is not successful, the challenging party may request, within thirty days after having received notice of the decision rejecting the challenge, the judge to decide on the challenge, whose decision shall be subject to no appeal. While such a request is pending, the arbitral tribunal, including the challenged arbitrator, may continue the arbitral proceedings and make an award.

ARTICLE 1430.- If an arbitrator becomes de iure or de facto unable to perform his functions or for other reasons fails to act without undue delay, his mandate terminates if he withdraws from his office or if the parties agree on the termination. If a controversy remains, any party may request the judge to decide on the termination of the mandate, whose decision shall be subject to no appeal.

ARTICLE 1431.- Where the mandate of an arbitrator terminates under articles 1429 or 1430, or because of his withdrawal from office, or because of the revocation of his mandate by agreement of the parties or in any other case of termination of his mandate, a substitute arbitrator shall be appointed according to the rules that were applicable to the appointment of the arbitrator being replaced.

CHAPTER IV
JURISDICTION OF ARBITRAL TRIBUNAL

ARTICLE 1432.- The arbitral tribunal may rule on its own jurisdiction, including any objections with respect to the existence or validity of the arbitration agreement. For that purpose, an arbitration clause which forms part of a contract shall be treated as an agreement independent of the other terms of the contract. A decision by an arbitral tribunal that the contract is null and void shall not entail ipso jure the invalidity of the arbitration clause.

A plea that the arbitral tribunal does not have jurisdiction shall be raised not later than the submission of the statement of defence. A party is not precluded from raising such a plea by the fact that he has appointed, or participated in the appointment of, an arbitrator. A plea that the arbitral tribunal is exceeding the scope of its authority is raised as soon as the matter alleged to be beyond the scope of its authority is raised during the arbitral proceeding. The arbitral tribunal may, in either case, admit a later arbitral proceedings. The arbitral tribunal may, in either case, admit a later plea if it considers the delay justified.

The arbitral tribunal may rule on a plea referred to in the preceding paragraph either as a preliminary question or in an award on the merits. If the arbitral tribunal rules as a preliminary question that it has jurisdiction, any party may request, within thirty days after having received notice of that ruling, the judge to decide the matter, whose decision shall be subject to no appeal. While such a request is pending, the arbitral tribunal may continue the arbitral proceedings and make an award.

ARTICLE 1433.- Unless otherwise agreed by the parties, the arbitral tribunal may, at the request of a party, order any party to take such interim measure of protection as is necessary in respect of the subject-matter of the dispute. The arbitral tribunal may require any party to provide appropriate security in connection with such measure.

CHAPTER V
CONDUCT OF ARBITRAL PROCEEDINGS

ARTICLE 1434.- The parties shall be treated with equality and each party shall be given a full opportunity of presenting his case.

ARTICLE 1435.- Subject to the provisions of this title, the parties are free to agree on the procedure to be followed by the arbitral tribunal in conducting the proceedings.

Failing such agreement, the arbitral tribunal may, subject to the provisions of this title, conduct the arbitration in such manner as it considers appropriate. The power conferred upon the arbitral tribunal includes the power to determine the admissibility, relevance, materiality and weight of any evidence.

ARTICLE 1436.- The parties are free to agree on the place of arbitration. Failing such agreement, the place of arbitration shall be determined by the arbitral tribunal having regard to the circumstances of the case, including the convenience of the parties.

Notwithstanding the provisions of the preceding paragraph, the arbitral tribunal may, unless otherwise agreed by the parties, meet at any place it considers appropriate for consultation among its members, for hearing the parties, witnesses or experts, or for inspection of goods, other property or documents.

ARTICLE 1437.- Unless otherwise agreed by the parties, the arbitral proceedings in respect of a particular dispute commence on the date on which a request for that dispute to be referred to arbitration is received by the respondent.

ARTICLE 1438.- The parties are free to agree on the language or languages to be used in the arbitral proceedings. Failing such agreement, the arbitral tribunal shall determine the language or languages to be used in the proceedings. This agreement or determination, unless otherwise agreed, shall apply to any written statement by a party, any hearing and any award, decision or other communication by the arbitral tribunal.

The arbitral tribunal may order that any documentary evidence shall be accompanied by a translation into a language agreed upon by the parties or determined by the arbitral tribunal.

ARTICLE 1439.-Within the period of time agreed by the parties or determined by the arbitral tribunal, the claimant shall state the facts supporting his claim, the points at issue and the relief or remedy sought, and the respondent shall state his defence in respect of these particulars, unless the parties have otherwise agreed as to the required elements of such statements. The parties shall submit with their statements all documents within their control or add a reference to the documents or other evidence they will submit.

Unless otherwise agreed by the parties, they may amend or supplement their claim or defence, unless the arbitral tribunal considers it inappropriate to allow such amendment having regard to the delay in making it.

ARTICLE 1440.- Subject to any contrary agreement by the parties, the arbitral tribunal shall decide whether to hold oral hearings for the presentation of evidence or for oral argument, or whether the proceedings shall be conducted on the basis of documents and other materials. If the parties have not agreed that no hearings shall be held, the arbitral tribunal shall hold such hearings at an appropriate stage of the proceedings, if so requested by a party.

The parties shall be given sufficient advance notice of any hearing and of any meeting of the arbitral tribunal for the purposes of inspection of goods, other property or documents.

All statements, documentary evidence, expert reports or other information supplied to the arbitral tribunal by one party shall be communicated to the other party.

ARTICLE 1441.- Unless otherwise agreed by the parties, if, without showing justified cause:

I.- The claimant fails to communicate his statement of claim in accordance with the first paragraph of article 1439, the arbitral tribunal shall terminate the proceedings;

II.- The respondent fails to communicate his statement of defence in accordance with the first paragraph of article 1439, the arbitral tribunal shall continue the proceedings without treating such failure in itself as an admission of the claimant´s allegations, and

III.- Any party fails to appear at a hearing or to produce documentary evidence, the arbitral tribunal may continue the proceedings and make the award on the evidence before it.

ARTICLE 1442.- Unless otherwise agreed by the parties, the arbitral tribunal may appoint one or more experts to report to it on specific issues and may require any party to give the expert any relevant information or to produce, or to provide access to, any relevant documents, goods or other property for his inspection.

ARTICLE 1443.- Unless otherwise agreed by the parties, if a party so requests or if the arbitral tribunal considers it necessary, the expert shall, after delivery of his written or oral report, participate in a hearing where the parties have the opportunity to put question to him and to present expert witnesses in order to testify on the points at issue.

ARTICLE 1444.- The arbitral tribunal or a party with the approval of the arbitral tribunal may request from a judge his assistance in taking evidence.

CHAPTER VI
MAKING OF AWARD AND TERMINATION OF PROCEEDINGS

ARTICLE 1445.- The arbitral tribunal shall decide the dispute in accordance with such rules of law as are chosen by the parties. Any designation of the law or legal system of a country shall be construed, unless otherwise expressed, as directly referring to the substantive law of that country and not to its conflict of laws rules.

Failing any such designation by the parties, the arbitral tribunal shall determine the applicable law taking into account the characteristics and connections of the case.

The arbitral tribunal shall decide ex aequo et bono or as amiable compositeur only if the parties have expressly authorized it to do so.

In all cases, the arbitral tribunal shall decide in accordance with the terms of the contract and shall take into account the usages of the trade applicable to the transaction.

ARTICLE 1446.- In arbitral proceedings with more than one arbitrator, any decision of the arbitral tribunal shall be made, unless otherwise agreed by the parties, by a majority. However, questions of procedure may be decided by a presiding arbitrator, if so authorized by the parties or all members of the arbitral tribunal.

Article 1447.- If, during arbitral proceedings, the parties settle the dispute, the arbitral tribunal, shall terminate the proceedings and, if requested by the parties and not objected to by the arbitral tribunal, record the settlement in the form of an arbitral award on agreed terms.

Such award shall be made in accordance with the provisions of article 1448.

Such an award has the same status and effect as any other award on the merits of the case.

ARTICULO 1448.- The award shall be made in writing and shall be signed by the arbitrator or arbitrators. In arbitral proceedings with more than one arbitrator, the signatures of the majority of all members of the arbitral tribunal shall suffice, provided that the reason for any omitted signature is stated.

The award shall state the reasons upon which it is based, unless the parties have otherwise agreed or the award is an award on agreed terms under article 1447.

The award shall state its date and the place of arbitration as determined in accordance with the first paragraph of article 1436. The award shall be deemed to have been made at that place.

After the award is made, a copy signed by the arbitral tribunal in accordance with the first paragraph of this article shall be delivered to each party.

ARTICLE 1449.- The arbitral proceedings are terminated by:

I.- The final award; and

II.- An order of the arbitral tribunal when:

a) The claimant withdraws his claim, unless the respondent objects thereto and the arbitral tribunal recognizes his legitimate interest in obtaining a final settlement of the dispute;
b) The parties agree on the termination of the proceedings; and

c) The arbitral tribunal finds that the continuation of the proceedings has for any other reason become unnecessary or impossible.

The mandate of the arbitral tribunal terminates with the termination of the arbitral proceedings, subject to the provisions of articles 1450, 1451 and 1459.

ARTICLE 1450.- Within thirty days of notice of the award, unless another period of time has been agreed upon by the parties, a party, with notice to the other party, may request the arbitral tribunal to:

I.- Correct in the award any errors in computation, any clerical or typographical errors or any errors of smilar nature.

The arbitral tribunal may correct any of these errors to on its own initiative within thirty days of the date of the award;

II.- Give an interpretation of a specific point or part of the award, if so agreed by the parties. If the arbitral tribunal considers the request to be justified, it shall make the correction or give the interpretation within thirty days of receipt of the request. Such interpretation shall form part of the award.

Article 1451.- Unless otherwise agreed by the parties, a party, with notice to the other party, may request, within thirty days of receipt of the award, the arbitral tribunal to make an additional award as to claims presented in the arbitral proceedings but omitted from the award. If the arbitral tribunal considers the request to be justified, it shall make the additional award within sixty days.

The arbitral tribunal may extend, if necessary, the period of time within which it shall make a correction, interpretation or an additional award under the preceding paragraph or under article 1450.

The provisions of article 1448 shall apply to a correction or interpretation of the award or to an additional award.

CHAPTER VII
COSTS

ARTICLE 1452.- The parties may adopt, directly or by reference to arbitration rules, rules relating to the arbitration costs. Failing such agreement, the provisions of this chapter shall apply.

ARTICLE 1453.- The arbitral tribunal shall fix the costs of arbitration in its award.

ARTICLE 1454.- The fees of the arbitral tribunal shall be reasonable in amount, taking into account the amount in dispute, the complexity of the subject-matter, the time spent by the arbitrators and any other relevant circumstances of the case.

The fees of each arbitrator shall be stated separately and be fixed by the arbitral tribunal itself.

When a party so requests and the judge consents to perform the function, the arbitral tribunal shall fix its fees only after consultation with the judge, who may make any comment it deems appropriate to the arbitral tribunal concerning the fees.

ARTICLE 1455.- Except as provided in the following paragraph, the costs of arbitration shall be borne by the unsuccessful party. However, the arbitral tribunal may apportion each of such costs between the parties if it determines that apportionment is reasonable, taking into account the circumstances of the case.

With respect to the costs of legal representation and assistance, the arbitral tribunal, taking into account the circumstances of the case, shall determine which party shall bear such costs or may apportion such costs between the parties if it determines that apportionment its reasonable.

When the arbitral tribunal issues an order for the termination of the arbitral proceedings or makes an award on agreed terms, it shall fix the costs of arbitration in the text of that order or award.

No additional fees may be charged by an arbitral tribunal for interpretation or correction or completion of its award.

ARTICLE 1456.- The arbitral tribunal, on its establishment, may request each party to deposit an equal amount as an advance for the fees of the arbitral tribunal, travel and other expenses incurred by the arbitrators, the costs of expert advice and of other assistance required by the arbitral tribunal.

During the course of the arbitral proceedings, the arbitral tribunal may request supplementary deposits from the parties.

When a party so requests and the judge consents to perform the function, the arbitral tribunal shall fix the amounts of any deposits or supplementary deposits only after consultation with the judge, who may make any comments to the arbitral tribunal which it deems appropriate concerning the amount of such deposits and supplementary deposits.

If the required deposits are not paid in full within thirty days after the receipt of the request, the arbitral tribunal shall so inform the parties in order that one or another of them may make the required payment. If such payment is not made, the arbitral tribunal may order the suspension or termination of the arbitral proceedings.

After the award has been made, the arbitral tribunal shall render an accounting to the parties of the deposits received and return any unexpended balance to the parties.

CHAPTER VIII
SETTING ASIDE OF THE AWARD

ARTICLE 1457.- An arbitral awards may be set aside by the competent judge only if:

I.- The party making the application furnishes proof that:

a) A party to the arbitration agreement was under some incapacity; or the said agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under Mexican law;
b) The party making the application was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present his case;
c) The award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration, or contains decisions on matters beyond the scope of the submission to arbitration. However, if the decisions on matters submitted to arbitration can be separated from those not so submitted, only that part of the award which contains decisions on matters not submitted to arbitration may be set aside; or
d) The composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties, unless such agreement was in conflict with a provision of this title from which the parties cannot derogate, or, failing such agreement, was not in accordance with this title; or

II.- The judge finds that, under Mexican law, the subject-matter of the dispute is not capable of settlement by arbitration, or the award is in conflict with the public policy.

ARTICLE 1458.- An application for setting aside shall be made within three months from the date on which the party making that application received notice of the award or, if a request had been made under articles 1450 and 1451, from the date on which that request had been disposed of by the arbitral tribunal.

ARTICLE 1459.- The judge, when asked to set aside an award, may, where appropriate and so requested by a party, suspend the setting aside proceedings for a period of time determined by him in order to give the arbitral tribunal an opportunity to resume the arbitral proceedings or to take such other action as in the arbitral tribunal´s opinion wil eliminate the grounds for setting aside.

ARTICLE 1460.- The setting aside proceedings shall be conducted in accordance with the provisions of article 360 of the Federal Code of Civil Procedure.

The decision shall be subject to no appeal.

CHAPTER IX
RECOGNITION AND ENFORCEMENT OF AWARDS

ARTICLE 1461.- An arbitral award, irrespective of the country in which it was made, shall be recognized as binding and, upon application in writing to the judge, shall be enforced subject to the provisions of this chapter.

The party relying on an award or applying for its enforcement shall supply the duly authenticated original award or a duly certified copy thereof, and the original arbitration agreement referred to in articles 1416, section I, and 1423 or a duly certified copy thereof. If the award or agreement is not made in Spanish, the party shall supply a translation by an official expert.

ARTICLE 1462.- Recognition or enforcement of an arbitral award, irrespective of the country in which it was made, may be refused only when:

I.- The party against whom the award is invoked, furnishes to the competent judge of the country where recognition or enforcement is sought proof that:

a) A party to the arbitration agreement was under some incapacity; or the said agreement is not valid under the law to which the parties have subjected it or, failing any indication thereon, under the law of the country where the award was made;
b) Such party was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings or was otherwise unable to present his case;
c) The award deals with a dispute not contemplated by or not falling within the terms of the submission to arbitration, or it contains decisions on matters beyond the scope of the submission to arbitration. However, if the decisions on matters submitted to arbitration can be separated from those not so submitted, that part of the award which contains decisions on matters submitted to arbitration may be recognized and enforced;
d) The composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties or, failing such agreement, was not in accordance with the law of the country where the arbitration took place; or
e) The award has not yet become binding on the parties or has been set aside or suspended by a judge of the country in which, or under the law of which, that award was made; or

II.- The judge finds that, under Mexican law, the subject-matter of the dispute is not capable of settlement by arbitration, or the recognition or enforcement of the award are contrary to the public policy.

ARTICLE 1463.- If an application for setting aside or suspension of an award has been made to a judge of the country in which, or under the law of which, that award was made, the judge to whom recognition or enforcement is requested may, if he considers it proper, adjourn his decision and may also, on the application of the party claiming recognition or enforcement of the award, order the other party to provide sufficient security.

Recognition and enforcement proceedings shall be conducted in accordance with the provisions of article 360 of the Federal Code of Civil Procedure. The decision shall be subject to no appeal.