The Courts in Baja are backlogged with approximately 10,000 cases pending. Sometimes it can take 5-10 years to get a decision. There is an economical and speedy alternative in Baja…..Mediation. Statistically disputing parties that go to mediation usually resolve their differences and reach a written compromise over fifty percent of the time. If an agreement cannot be reached during mediation most often the parties continue to arbitration where a binding decision is reached by an arbitrator and that decision is entered in the Courts as a judgment.
There are 6 steps to a formal mediation; 1) the parties chose a mediator they both agree on, 2) statement of the problem by the parties to the mediator, 3) information gathering time by the mediator, 4) identification of the problems by the parties and mediator, 5) bargaining and generating options, and 6) reaching an agreement with the help of a trained mediator.
Unlike the Courts in Baja, where the judge may have little knowledge of the subject matter of the dispute, in mediation the parties can choose a mediator with specific knowledge of the laws and subject matter of their dispute. The mediator will endeavor to find common ground between the parties and help them reach a compromise agreement in writing signed by all parties. The mediator can be an attorney, accountant or engineer. Whichever would have the best expertise to help resolve your dispute. The mediator can be a Mexican, American or Canadian.
How do you set up a mediation? The best method is to include a mediation clause requiring mediation if there is a disagreement in the real estate or business contract. That means the parties have agreed in advance should a disagreement occur, it will be resolved by mediation. That paragraph is most often combined with an agreement to arbitrate the dispute if not agreement can be reached in the mediation proceeding. The second best method if there is a problem that the parties cannot resolve between them is to enter an agreement to mediate.
Due to the high cost of litigation and the lengthy time required, in the US the majority of real estate, and business contracts have an mediation and arbitration clause written in before they are signed. There are specific laws in Mexico that allow for mediation and arbitration are in some situations are even better than those in the US.
When you enter into your next business agreement or real estate contract, you should request a mediation and arbitration clause be included. In the unlikely event your deal goes bad, these provisions can save you many years of stress in Court and hundreds of thousands of dollars in legal and court fees. If you email the author of this article at the email address below, he can provide you with suggested wording for the mediation and arbitration paragraph.
The Author: Don D. Nelson is a US Attorney and retired CPA with over 35 years experience in business, real estate, estate planning and tax law. He lives in Los Cabos. He can be reached at firstname.lastname@example.org