Leer en Español: La Suprema Corte de Justicia de México Aclara los Limites en Materia de Poderes Generales

HIGHLIGHTS:

• The First Chamber of Mexico's Supreme Court of Justice has decided on a conflicting line of precedent set by federal courts, a decision that clarifies a long-standing point of controversy in Mexican law regarding powers of attorney.
• The main issue from which the conflicting precedents arose derives from an interpretation based on the principle of qui potest plus, potest minus, i.e., that the broader authority would necessarily include the more limited authority. Thus, the argument goes, a power of attorney allowing greater authority would grant, implicitly, a power with a more limited authority.
• The Supreme Court concluded by stating that a power for acts of management is different from, and therefore cannot encompass, a power for litigation and collections. The Court reached this conclusion utilizing different lines of interpretation of the text of Mexico's Federal Civil Code and other similar Mexican state codes.

The First Chamber of Mexico's Supreme Court of Justice has decided on a conflicting line of precedent set by federal courts, a decision that clarifies a long-standing point of controversy in Mexican law regarding powers of attorney. This Holland & Knight alert reviews the most salient points of the decision, which was reached in the Supreme Court's Jan. 31, 2018, session and that was recently published.

Introduction

The Mexican legal system contains different categories of representation. Specifically, for purposes of the Supreme Court's decision, it is important to note article 2554 of Mexico's Federal Civil Code, which states that there are three types of general powers of attorney: 1) general power of attorney for acts of ownership; 2) general power of attorney for acts of management; and 3) general power of attorney for litigation and collections.

Generally speaking, the power for acts of ownership grants full authority to the representative to act as if he or she were the owner of the property or assets, thus having the power to sell, transfer, dispose of and defend any assets of the principal. The power for acts of management grants the authority to administer and manage property, interests or assets. Finally, the power for litigation and collections grants authority to represent the principal in a dispute before judicial or other authorities.

The main issue from which the conflicting precedents arose derives from an interpretation based on the principle of qui potest plus, potest minus, i.e., that the broader authority would necessarily include the more limited authority. Thus, the argument goes, a power of attorney allowing greater authority would grant, implicitly, a power with a more limited authority. Specifically, in its decision, the Supreme Court analyzed whether it was true that a power for acts of ownership included a power for litigation and collections in accordance with article 2554 of the Federal Civil Code and other similar Mexican state codes.¹

The Supreme Court concluded by stating that a power for acts of management is different from, and therefore cannot encompass, a power for litigation and collections. The Court reached this conclusion utilizing different lines of interpretation of the text of the Civil Code.

The Contradicting Precedents

A. Thesis I.12o.A.3 K

The ruling came from the Twelfth Collegiate Tribunal in Administrative Matters for the First Circuit. In this case, administrative proceedings were initiated and ultimately dismissed because the authority considered that the terms of the representation were insufficient. A writ of amparo was filed, which was turned to the Collegiate Tribunal. The Tribunal decided that the text of the civil code reflects a gradation or hierarchy between the types of powers. Thus, the power for acts of ownership contains the power for acts of management as well as for litigation and collections. In turn, the Tribunal held that the power for acts of management includes the power for litigation and collections.

B. Thesis IV.2o.A.81 K

The precedential decision in this case was issued by the Second Collegiate Tribunal in Administrative Matters for the Fourth Circuit. Here, an amparo was filed based on a general power for acts of management and then was dismissed by the federal judge. This was then challenged and turned to the Collegiate Tribunal. The party representative argued that the power for management included a power for litigation and collections as per the gradation and hierarchy interpretation of the Civil Code. The Tribunal, however, rejected this argument. The Tribunal interpreted the Civil Code literally and determined that it contains different categories of powers for distinct purposes and, therefore, grants different types of authority. Because the law did not expressly state any hierarchy, the Tribunal refused to infer a presumption of gradation.

The Supreme Court's Ruling

Faced with the previous conflicting precedents, the Supreme Court set out the following question: "In accordance with article 2554 of the Federal Civil Code and the relevant provisions in the civil codes of the states. Is there a gradation or hierarchy between the general power for acts of management and the general power for litigation and collections, through which one can deduce that granting a general power for acts of management of goods grants the representative, implicitly, an authority that is inherent to the general power for litigation and collections?"

The Court began its interpretation by looking at the law from a literal or grammatical perspective. The Court shared the Second Tribunal's logic in that the text of the codes did not present any hierarchy. Additionally, each of the powers had its own nature, objective and purposes for which they were employed. The Court went on to state that, in accordance with the representation rules of the Mexican legal system, the agent must act in accordance with the rules set out by the principal. Therefore, if the agent is granted a general power for management, it cannot be understood as encompassing power for litigation as well because both powers depend on the express instructions of the principal.

The Court then provided a functional interpretation. It is understood that the principal grants authority to an agent based on the agent's knowledge, skill or capacity. For example, it would be logical to grant a power for litigation to an attorney. Accordingly, stating that a power for acts of management includes authority granted through a power for litigation would violate the sought-out functionality because each power has specific characteristics.

The Supreme Court concluded its ruling by expressly defining the terms of the jurisprudential precedent: "General Power for Acts of Management. Its granting does not implicitly carry an authority that is characteristic of the general power for litigation and collections, since there is no gradation or hierarchy."

Considering the Supreme Court ruling, it is recommended that clients review the powers of attorney they have granted to make sure their agents have the proper authority to act on their behalf.

Notes

¹ In this decision, the Supreme Court expressly references the Federal Civil Code, the Civil Code for Mexico City and the Civil Code for Nuevo Leon.