MEXICO Law and Practice Contributed by: Carlos de la Garza, Raúl Acosta and Enrique Tamez, De la Garza & Acosta Abogados, S.C.
2. Jurisdiction and Choice of Law 2.1 Choice of Law in Insurance Contracts Direct Insurance Party autonomy is relatively limited in direct insur- ance. Under the Insurance and Surety Institutions Law (LISF), insurance operations entered into in Mexican territory are subject to Mexican law. Accordingly, poli- cies covering Mexican risks and issued by insurers authorised to operate in Mexico will generally be gov- erned by the Insurance Contract Law (LCS), together with the applicable provisions of the LISF. Mexican law generally recognises the parties’ ability to select the governing law of a contract. In insurance, however, that freedom cannot be used to circumvent mandatory Mexican insurance regulation or public- policy provisions. The LISF also restricts the place- ment of certain Mexican risks with foreign insurers, including life and health, liability and property risks occurring in Mexico. There are sector-specific exceptions. Maritime insur- ance, for example, is principally governed by the Navi- gation and Maritime Commerce Law, which contains its own substantive insurance regime. Reinsurance Party autonomy is considerably broader in reinsur- ance. Cedants and reinsurers may generally agree on the law governing their contract, including foreign law in cross-border arrangements. This flexibility is nev- ertheless subject to Mexican regulatory requirements applicable to Mexican insurers, including those gov- erning the use of foreign reinsurers. Accordingly, the principal distinction is not gener- ally between individual lines of direct insurance, but between regulated direct insurance covering Mexi- can risks and reinsurance or genuinely cross-border arrangements, where greater contractual autonomy is recognised. 2.2 Jurisdiction and Forum Selection Direct Insurance Jurisdiction clauses are commonly included in Mexi- can insurance policies, but their effectiveness is sub- ject to significant statutory limitations. Under Article
277 of the LISF, territorial jurisdiction in insurance disputes is determined, at the claimant’s election, by reference to the domicile of any CONDUSEF office, and any agreement contrary to this rule is void. Accordingly, clauses requiring an insured or benefi- ciary to litigate exclusively before a court selected in advance by the insurer will generally not override the claimant’s statutory choice of forum. This rule applies broadly across direct insurance lines, including life and health, property and liability insurance. Forum Selection in Practice The breadth of Article 277 of the LISF has increas- ingly been used strategically by claimant-side coun- sel. Because the provision does not expressly require any connection between the chosen forum and the parties, the policy or the insured event, proceedings may be commenced in jurisdictions entirely unrelated to the underlying dispute. This can materially increase defence costs and pro- cedural complexity, particularly where witnesses, documents, experts or the insured property are located elsewhere. It may also complicate the taking of evidence through the need for judicial assistance between different jurisdictions. 2.3 Cross-Border Disputes and Conflicts Issues Applicable Law and Jurisdiction Cross-border disputes most commonly arise in multi- national insurance programmes, reinsurance arrange- ments and losses involving risks in more than one jurisdiction. Mexican law generally recognises the parties’ choice of governing law in international con- tracts, subject to mandatory Mexican law and public- policy limitations. In direct insurance, however, this autonomy is sig- nificantly restricted. Mexican insurance legislation imposes mandatory requirements on risks located in Mexico and limits the circumstances in which such risks may be insured directly by foreign insurers. As a result, a foreign governing-law or jurisdiction clause will not necessarily displace mandatory Mexican insurance rules merely because it forms part of an international insurance programme.
178 I NSURANCE L I T IGATI O N 2026
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