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Mexico Legal System Huatulco

Mexico Legal System

Investing in Mexico Real Estate

As a result of the North American Free Trade Agreement (NAFTA) that took effect on January 1, 1994, U.S. businesspeople began trading with Mexico's businesspeople, investing in business opportunities in Mexico, and establishing business facilities in Mexico in unprecedented numbers and ways. As a result, as of 1998, Mexico and the United States achieved a level of trade that makes Mexico the United States' s second-largest trade partner, second only to Canada.

On a daily basis U.S. businesses are involved with Mexico's legal system, which, like most legal systems, is inextricably linked with its economic system and its history. Failure to understand at least the basic elements of Mexico's legal system can pose a significant barrier to U.S. businesspeople trading with or investing in Mexico, because Mexico's legal system is significantly different from that of the United States. Mexico's legal system is a civil law system, which can be traced to 16th century law brought by the Spaniards to the land that later was named Mexico. But, it is not the same civil law as exists in other civil law countries, because various aspects of Mexico's legal system can be traced to pre-Colombian indigenous law as well as to its unique history, social institutions, and economy.

In fact, use of the term "civil law" represents a generalization, because the legal system of each civil law system in the world varies according to the unique social, economic, political, and historical background of the individual country. A civil law system is a system in which, in general, laws are "codified," i.e., society relies on a legislative body (or bodies) to pass statutes spelling out their law. Those statutes are then organized, topic by topic, into codes. The codes become the primary resource (research tool) for lawyers and their clients in such a system. In Mexico, the hierarchy of laws is as follows: (1) the federal constitution, (2) legislation (found in the "Codes" or "Códigos," in Spanish), and (3) regulations interpreting the statutes. Provisions of the constitution supersede any legislation or regulations, and legislation supersedes any regulations. A final source of law in Mexico, which is least compelling in terms of hierarchy of laws, is "custom."

An important consideration for businesses dealing with Mexico is that, unlike Mexico's civil law system, the U.S. legal system is a "common law" system. In this system, the roots of which can be traced to England, the federal constitution as well as legislation and regulations are recognized as being law just as such documents set down law in a civil law system. A crucial difference between the two systems, however, is that a common law system recognizes the decisions of courts as creating "law." Thus, in the United States, our courts create rules of law to fill in the gray areas not clearly covered by legislation or regulations, and they create law where no statutes or regulations exist. For example, entire bodies of law such as tort law (which includes the law of negligence and strict liability for defective products) and contract law (other than contracts for the sale of goods) have been covered in the United States as rules of law established through courts' decisions. Thus, U.S. businesspeople are dealing with a very different way of doing things when dealing with the Mexican legal system.