MEXICO: An Introduction to Dispute Resolution: Monterrey

Recent Developments of Civil Liability Law in Mexico

In recent years, the law of civil liability in Mexico has experienced significant changes stemming from various precedents established by the courts, particularly by the First Chamber of the Supreme Court of Justice.

Given this context, obtaining proper legal advice in this field is crucial for risk prevention and claims neutralisation, especially given the noticeable increase in the filing of such lawsuits. This trend is evident to legal advisers in this area and is confirmed by the number of judicial decisions on this matter in recent years.

We will now discuss the judicial precedents that, in our opinion, have significantly contributed to the rise of these cases.

Civil Compensation Claims Cannot Be Waived 

In January 2022, the Supreme Court ruled that the compensation for harm caused by the commission of a crime in criminal matters, and its acceptance by the victim, is independent of the civil action that the latter must seek compensation for regarding extra-contractual civil liability for the same act. Thus, accepting the first compensation does not extinguish the second, as one cannot validly renounce it.

Since its issuance, this binding precedent for courts nationwide has led to an increase in civil lawsuits stemming from traffic accidents, explosions, etc, causing harm, injury or even death – cases that previously concluded with the payment of criminal damage compensation, and that are now being pursued by the victims or their families for additional compensation.

However, the legal provisions and the standards of proof applicable to criminal damage compensation and to extra-contractual civil liability differ, so the acceptance of one does not necessarily imply acceptance of the other.

Moral Damage as Part of the Right to Comprehensive Compensation

Another precedent set by the Supreme Court in December 2022 holds that moral damage – the immaterial harm caused to a person’s feelings, affections, beliefs, dignity, honour, reputation, private life, physical appearance, or the way others perceive them due to an unlawful act – cannot be excluded from objective civil liability; that is, liability arising from the use of mechanisms, instruments, devices or substances that are dangerous in themselves, due to their speed, explosive or flammable nature, the energy of the electric current they conduct or other similar causes.

Following this criterion, nearly all civil lawsuits filed since – where an individual or their family members has sought compensation for accident-caused harm – included a claim for moral damages. The amount of compensation is to be determined by the judge, who has broad discretion in doing so; this, in turn, increases the risk of defendants being condemned to pay high compensation.

Guidelines for Quantifying Moral Damage 

Given the proliferation of cases of this nature, the substantial sums often sought by affected individuals and their families through judicial claims, the uncertainty for defendants regarding these claims and the quantification judges may assign to them, in August 2023 the Supreme Court issued jurisprudence comprising general guidelines from various prior judicial precedents for determining the monetary compensation for moral damage. This aims to limit judicial discretion and to prevent the issuance of excessively high judgments.

These guidelines established that while there should be no legal limits or caps on compensation for moral damage and it should be comprehensive, equitable and fair, it should not:

• be excessive;

• duplicate the financial damage caused;

• lead to unjust enrichment of the plaintiff; or

• impose an oppressive burden on the liable party according to their economic situation.

Furthermore, a distinction should be made between compensation in cases of subjective civil liability (where there is intent to cause harm) and compensation derived from objective civil liability (where such intent is absent). Finally, equal cases should have equal compensation.

Non-applicability of Moral Damage Exclusion in Mandatory Civil Liability Insurance Policies

This trend has also affected insurance companies that offer civil liability coverage to their insureds, which comes into play when the insured causes harm to a third party.

It is common for such insurance policies to exclude coverage for moral damages caused by the insured, making the insured the only party liable to the damaged third party, and not the insurer.

However, the Supreme Court recently determined that in a mandatory vehicle insurance contract the civil liability coverage must be comprehensive and must include both material and moral damages, up to the amount insured. Therefore, it is unconstitutional for an auto insurance contract with third-party civil liability coverage to exclude moral damages.

Punitive Damages 

Another significant development in recent years is the incorporation into Mexican law of the concept of punitive damages – which, although not present in legislation, was recognised by the Supreme Court in a 2014 precedent and has since been developed through precedents in Mexico.

In December 2022, the Supreme Court determined that such damages, which constitute an exemplary sanction with preventative purposes, are not applicable in every case of extra-contractual, objective or subjective civil liability, but only when the severity of the conduct deserves a high degree of social reproach justifying such a sanction.

This implies that special attention must be paid to the degree of responsibility of the party causing the damage, to determine whether a case merits the imposition of punitive damages.

Extension of the Statute of Limitations Period in Cases Affecting Health or Personal Integrity

Additionally, in a precedent published in October 2023 the Regional Civil Panel for the Central-South Region determined that the two-year statute-of-limitations period set by the Civil Code for the Federal District, applicable to Mexico City, for seeking reparations for harm from wrongful acts, where the rights infringed are the human right to health and the human right to personal integrity, is not reasonable and, therefore, is unconstitutional. Consequently, it must be understood that the applicable statute of limitations in these cases is the generic ten years.

Ex Officio Examination of Punitive Damages in Claims for Moral Damage

Finally, the Supreme Court has also determined that, when there is a claim for moral damage, courts must examine on their own initiative whether the amount of compensation awarded for such a claim should be increased when the conduct that caused the damage is of such severity that it justifies its imposition, even if compensation for punitive damages has not been expressly sought by plaintiff.

Conclusion 

In our view, handling these types of matters and moderating the quantification of compensation that may arise from them will require a high degree of specialisation in this branch of civil law – which, given its growth, is already starting to constitute its own branch of law, similar to what tort law represents in the United States.

Therefore, it is of utmost importance that, in addition to having civil liability insurance, those conducting business in Mexico also have specialised legal advice to address and prevent litigation in this area.