Mexico: Force Majeure - Hardship in relation to Conflict and Sanctions

There is no specific legislation or provisions addressing the effects of war or related sanctions. Nevertheless, civil legislation in Mexico contemplates the concept of force majeure, which may be applicable under such circumstances.

Although there exists no specific definition of force majeure or fortuitous events (acts of God) in the Federal Civil Code (under Mexican law, both concepts are treated and considered the same), the concept is widely used as a valid exception to avoid the performance of an obligation, avoid liability or a means to terminate an agreement without liability. 

The Federal Civil Code provides examples of possible events of force majeure for lease agreements over rural properties, such as fires, wars, disease, sudden flooding, earthquakes or other unforeseeable event that the parties to the agreement would not have been reasonably able to prevent. These examples can be used as a base to define the generic force majeure.

Furthermore, Mexican courts and tribunals have several jurisprudence and precedents that have defined force majeure and fortuitous events (acts of God) as any event, caused by man, nature or even an authority that cannot be foreseen or avoided and renders an obligation impossible to perform.

Yes, considering the above, war can be a case of force majeure in Mexico.

Regarding sanctions, such could be considered an authority act or “Fait du Prince”, which would also lead to force majeure. 

Furthermore, it is standard practice when drafting agreements in Mexico to include force majeure clauses. In most cases, such clauses include a declarative non-limited and open list of possible situations that could be considered as force majeure for the avoidance of doubt or misinterpretation by the parties. It is common practice in Mexico to include war and other armed disturbs.

Mexican civil law contains the force majeure concept and as such, parties of a contract would benefit from it even if not contained in the agreement. However, it is advisable and standard practice to include force majeure and acts of God clauses in agreements.  

Article 1,796 of Mexico City’s Civil Code allows for a party to an agreement to request to balance its obligations under an agreement if such obligations become extremely onerous due to unforeseen circumstances, which are defined under such provision as extraordinary events of a national relevance that cannot be foreseen and that causes any obligating of one of the parties to become more onerous. 

Nevertheless, it must be noted that such provision is not contained in the Federal Civil Code, but only in certain states, including Mexico City (in Mexico, each state has its own civil code) and does not entail nor allow the concept of force majeure, as it does not make the obligation impossible to fulfil. Therefore, the concept of unforeseen circumstances and its consequences is usually agreed upon or specifically regulated by the parties to an agreement. 

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Such event would most likely constitute a force majeure event for either party. Nevertheless, in case of a dispute, it would be left to the courts or a tribunal to declare that the nonperformance of the obligation was caused due to a force majeure event. If the court or tribunal upholds such a decision, the breaching party cannot be held liable for the nonperformance of its obligations.

Under Mexican civil law, the impossibility to perform an obligation or terminate an agreement without any liability is possible due to the effects of war or sanctions imposed on one of the parties. Nevertheless, as the concept of force majeure and what it may entail is not expressly defined in Mexican Civil Codes. Therefore, it is advisable to include a force majeure or unforeseeable events clause in agreements in order to establish a range of events that may be considered as force majeure and also to establish the proceedings or mechanisms to avoid or regulate the effect of a force majeure event or an unforeseen circumstance in an agreement.