Mexico Arbitration: Past Lessons, Present Risks, Future Strategy

(In collaboration with Fernanda Serrano)

The world of dispute resolution is undergoing a quiet but significant transformation. While the courts in Mexico and abroad face growing caseloads, longer wait times, and increasing politicization, arbitration has emerged as a strategic alternative, not just for multinational corporations but for domestic actors navigating an uncertain judicial landscape.

This shift is not theoretical. It is already happening.

Globally, the demand for arbitration is stronger than ever. In 2024 alone, the International Chamber of Commerce (ICC) reported 831 new arbitration cases involving 2,392 parties from 136 countries. That is not a trend, it is a structural shift. And Mexico is not an observer in this change, it is a protagonist. With 111 cases involving at least one Mexican party, 26 domestic disputes administered by the ICC, and 19 seated in Mexico City (placing it among the ICC's Top 10 arbitral seats globally), the country is quickly solidifying its status as a regional hub for arbitration.

The figures are just as telling when we look at the local front. The Center for Arbitration of Mexico (CAM), which has registered over 200 cases in its history, has seen nearly 50 new arbitrations in just the last three years. This trajectory reflects a rising appetite for alternatives to traditional litigation, especially as clients face rising costs and shrinking confidence in the speed and reliability of court proceedings.

A Constitutional and Institutional Foundation

Mexico is not new to arbitration. Quite the opposite: it has all the hallmarks of a world-class arbitral jurisdiction. The practice is enshrined in Article 17 of the Constitution, and the country has adopted the UNCITRAL Model Law with minimal deviation. It has been a signatory to the New York Convention since 1971 — without reservations — and ratified the Panama Convention in 1978. Local legislation, particularly Articles 1415 to 1480 of the Commerce Code, provides a comprehensive framework for commercial arbitration.

On top of this legal infrastructure, Mexico has developed a strong institutional ecosystem: sophisticated arbitral centers, an emerging bench of qualified arbitrators, and — until recently — a judiciary largely aligned with the principles of party autonomy and minimal interference.

But the Landscape Is Changing

Unfortunately, these institutional gains now stand on unstable ground. The recent judicial reforms and political rhetoric have created a climate of uncertainty. Mexico’s federal and state courts are severely overburdened, with millions of cases clogging the system each year. Despite technological upgrades and procedural reforms, delays persist. In Mexico City alone, tens of thousands of commercial cases are filed annually, many of which take years to reach resolution.

Now, with a sweeping judicial reform on the horizon — one that will subject more than 800 judicial positions to popular election in June 2025 — the stakes have changed. The risk is not just slower justice, it is justice perceived as politicized, inconsistent, or unpredictable.

This has direct implications for business. Clients are already asking: Should we rely on the courts? Should we be revisiting our dispute resolution clauses? Is arbitration not only preferable, but necessary?

Strategic Considerations: Arbitration as a Risk Mitigation Tool

It would be a mistake to view arbitration as a silver bullet. It has clear advantages: international enforceability, procedural flexibility, confidentiality, and the ability to select subject-matter experts as decision-makers. But it also has limitations: no appeal, limited coercive power over non-parties, and higher upfront costs in many cases.

Still, for many transactions, especially those involving foreign counterparties, complex technical issues, or cross-border enforcement risks, arbitration is not merely an option. It is a strategic necessity.

But the shift toward arbitration must be deliberate and well-informed. We must ask: Do Mexican arbitration centers have the capacity to absorb a wave of new disputes? Are there enough arbitrators with the right experience? Are lawyers and clients adequately trained in arbitral procedure and strategy?

If even 1% of the 3.5 million judicial cases filed annually migrated to arbitration, we would be looking at over 35,000 new arbitral proceedings per year. The infrastructure — and the legal profession — must be ready.

The Future Is Already Here

Beyond institutional reform and capacity building, the future of arbitration also lies in technological innovation. Platforms like Kleros (blockchain-based dispute resolution), Jus Mundi, Jus Connect, and the rising use of large language models are no longer novelties — they are reshaping the way we think about legal analysis, case management, and even arbitral awards.

Will AI-generated awards be enforceable? Are arbitration rules evolving fast enough to keep pace with innovations like blockchain, smart contracts, and machine-assisted reasoning? Will companies trust awards partially drafted or reviewed by algorithms? Can we preserve fairness and neutrality in a system increasingly touched by automation?

These are not distant questions. As Mario Benedetti once wrote: “When we thought we had all the answers, suddenly all the questions changed.”