Mexico: Recent Changes In The Mexican Practice To The Requirements Of Foreign Legal Entities-Granted Powers Of Attorney

The Mexican legal system is extremely rigid and formal. Such strictness is shown with respect to the legal representation through Power of Attorney. The Mexican legislation establishes very specific requirements to ensure the validity of such document.

The Mexican Industrial Property Law establishes in section IV of article 181 the requirements for any Power of Attorney granted by a legal foreign entity to file a contentious procedure before the Mexican Institute of Industrial Property (IMPI). According with this paragraph the Power of Attorney will be valid in Mexico if it complies with the following:

1) The power of attorney is granted under the applicable legislation of the place in which it is granted; or

2) The power of attorney is granted in accordance with international treaties.

Additionally the provision sets specifically that, when the legal existence of the legal foreign entity in which name the power is being granted is certified in such Power of Attorney, as well as the right of the grantor to confer said power, the validity of the document shall be presumed in the absence of proof to the contrary.

In the past years, this article of the Law generated legal disputes regarding its judicial interpretation. In 1998 a Federal Circuit Court established a non-binding rule which expressly mentioned that the legislator used the term "or" to emphasize that the Power of Attorney granted by a legal foreign entity must be considered valid if the same is granted by the legislation applicable in the country of its origin or if it is granted under the rules of international treaties, not being necessary to fulfill both requirements.

In fact, if one of those two options was accomplished, it was understood that the Power of Attorney did not need any additional documents or evidence to demonstrate its validity.

A recent judicial decision issued by another Federal Circuit Court after the literal, historic and systematic interpretation of section IV of said Article 181 of the Industrial Property Law, has established a new non-binding rule which states that the representation of a foreign legal entity in a contentious proceeding at the IMPI must be demonstrated with a Power of Attorney, where it is mandatory that the legal existence of the legal foreign entity is certified, and that the grantor which confers said power has the right to grant it in order to be legally valid.

The Court has therefore determined the following:

a) That it is not enough that a Power is granted under the applicable legislation of the place in which it is granted, but, also, it is necessary to attest the legal existence of that foreign legal entity, as well as that the grantor has the right to confer the power.

b) The Court's reason for its decision was that the legislator foresaw said requirements for the legal security of the interested parties in contentious proceedings before the IMPI. These indicated requirements must be fulfilled when the actions are filed by foreign legal entities. The Court considered also that such requirements were important because, if that was not the case, they would have been deemed unnecessary during the corresponding legislative proceedings.

In the author's opinion, even when the Court apparently tries to literally apply what it is established in section IV, article 181 of the Intellectual Property Law, this paragraph already expressly provides the word "when", which means that only in the case that the legal foreign entity which receives the power certifies its legal existence and the right of the grantor to confer said power is as well attested, the validity of the Power of Attorney shall be presumed.

The above requirements cannot be demanded in every Power of Attorney granted by foreign legal corporations from all the countries of the world due to the fact that the local requirements to grant a valid Power of Attorney can be completely different from those that are established in Mexico, as they depend in the laws and provisions of the country in which the Power of Attorney is granted. Moreover, there are cases in which Notary Publics in many different countries do not have the mandate or even the faculties to certify the legal existence of the entity that is granting the power or if the grantor that executed the document has the right to confer it.

Under those circumstances, this new non-binding ruling directly affects the practice to consider the validity of the Power of Attorney granted by a legal foreign entity to intervene in a contentious procedure at the IMPI, since it imposes the burden to the legal foreign corporation to prove its legal existence and the faculties of its grantor, when it completely depends on the laws and provisions of the place in which this document is executed or granted.

It will be relevant that the IMPI does not take this non-binding rule into consideration, as it is completely unjustified and could cause that legal entities must challenge this non-binding rule before the Federal Circuit Courts until there is a compulsory criterion that determines the requisites that a Power of Attorney granted by a foreign legal entity must have to be legally valid.

This article was published on BC&B Newsletter page on May 15th, 2019 which can be accessed at https://www.bcb.com.mx/publicacion/?p=changes-powers-of-attorney

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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