Mexican Legal Framework of Business Insolvency - White & Case

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areas as to why an entity (the Federal Institute of Specialists in Commercial Insolvency)
was implemented with the purpose of the latter to authorize those persons who meet the
requirements to serve as visitor, conciliator or receiver. However, the same LCM Bill clearly
states the idea, materialized in Article 7 of the LCM, that in the insolvency proceedings, the
judge is the central and governing body of the process, since the process requires intervention
of the judicial authority to comply with the formalities of due process. Therefore, such institute
is only an auxiliary and essentially administrative body that must be maintained at the margin
of a direct intervention in insolvency proceedings, as envisioned by the lawmaker.
a. The Judge
Only federal courts sitting in the domicile of the debtor have jurisdiction over insolvency
proceedings [LCM 17]. This jurisdiction rule raises two issues: one, on the exclusive
jurisdiction of federal courts; and another, on the domicile of the debtor.
i. Exclusive Jurisdiction of Federal Courts
While the Federal Congress has the exclusive authority to pass commercial laws
[CPM 73-X], for historic reasons federal and local courts have concurrent jurisdiction
on commercial disputes [CPM 104-I]. This situation has prompted discussion
regarding the constitutionality of the statutory exclusivity of federal courts in
insolvency matters. Ovalle (2000) presents a clear explanation of the merits of
this discussion:
To determine whether federal jurisdiction provided in Article 17 of the Insolvency Law violates
[the constitutional principle of] concurrent jurisdiction, the type of interest affected by the
insolvency process is the starting point. If one determines that only individual interests are
the subject matter of such processes, the conclusion would be that there is in fact a violation
to the alternative jurisdiction provided in Article 104, Section I, of the Federal Constitution. On
the other hand, if one determines that not only individual interests are the subject matter of
this type of process, but rather that general, public or social interests are the subject matter
thereof, then the conclusion should be that Article 17 of the Insolvency Law does not violate
the provisions of Article 104, Section I, of the Federal Constitution.