May 8, 2015

Theory of Punitive Damages in Mexico

By Armando Quintana Freg

Due to the constitutional reform published in the Official Journal of the Federation on June 10,
2011, the protection of human rights was expanded, through the “Pro Homine” principle, to
include provisions which require that international treaties be observed when they result in a
favorable outcome. The foregoing applies despite the fact that prior to such reform, article 133 of
the Constitution already incorporated the provisions of the treaties to which Mexico was a party
under Mexican law. One of the international agreements that is of significant importance in this
area is the American Convention on Human Rights, also known as the Pact of San Jose. Article
63 of said convention establishes the fundamental right to “total reparation” or “fair
compensation”, where the State must take the necessary actions to ensure that any violation of
fundamental rights, including ones caused by individuals, is repaired entirely or compensated in
a fair manner given the damage caused.
The concept of reparation consists of restoration of the victim to their situation prior to the
violation of their rights. Fair compensation applies when reparation is not possible, and consists
of reparation through monetary compensation that is sufficient given the damage caused.
Based on the fair compensation of fundamental rights, the Mexico’s Supreme Court Justice has
begun to issue criteria which lay out the process for incorporating the theory of “Punitive
Damages” into Mexican law.
As its name indicates, the theory of punitive damages can generally be defined as an economic
punishment imposed on the party responsible for said damage, by the judge, in an extraordinary
amount, as a result of acting in bad faith or with malicious conduct. The theory has two
objectives: (i) to provide relief for the victim and punish the responsible party for their conduct;
and (ii) at the same time, to serve as an example.
Traditionally, the notion of “damages” that has prevailed in Mexico has been limited to the
reparation for direct and immediate consequences of harmful conduct against the victim, without
any other objectives.
Accordingly, by means of the two recent criteria issued by the First Chamber of the
MexicanSupreme Court of Justice, Mexican law has been extended to allow for the issuance of
punitive damages.
It remains to be seen if Mexican courts will be cautious when applying these criteria, given that
the expansion to allow for punitive damages may result in an increase of frivolous lawsuits.
Additionally, it is desirable that legal reforms be enacted to provide for civil provisions on such
damages, thereby establishing the guidelines for the application of the theory of punitive
damages in Mexico.

Sources of information and disclaimer: The following sources of information, among others,
have been used in preparing this document: Official Journal of the Federation, the Bank of
Mexico, Supreme Court of Justice of the Nation, Department of Finance and Public Credit. The
CCN MéxicoReport ™ does not constitute legal or tax advice and should not be used for
purposes other than as purely informative for the general public. For more information on the
CCN MéxicoReport ™, any of the issues mentioned therein or to inquire about legal services,
please contact Rob Barnett (rbarnett@ccn-law.com) or Mario Melgar (mmelgar@ccn-law.com),
phone (210) 222-1642.


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Issue 130–May 2015