Background
Pursuant to article 170 of the General Negotiable Instruments and Credit Transactions Law (the “Law”) a promissory note is a negotiable instrument that must contain the following elements to be valid:
I. The word pagaré (promissory note) inserted in the text of the document.
II. An unconditional promise to pay a given sum of money.
III. The name of the payee.
IV. The date and place of payment.
V. The date and place where the document is issued.
VI. The signature of the obligated party or his or her legal representative.
In this note we will address a Federal Court’s decision regarding whether or not it is necessary to insert in a promissory note a competent court of a place or jurisdiction.
Facts
A federal judge (the “Judge”) declined jurisdiction to resolve an oral commercial executive trial, arguing that the promissory note didn’t contain the parties´ submission their disputes to a specific court of competent jurisdiction. In addition, because the defendants had different domiciles in states other than the Judge’s domicile. Therefore, it concluded that there was not an express submission to the Judge’s jurisdiction so he can hear the case.
Court’s rationale
The fourth Collegiate Tribunal in Civil Matters of the First Circuit (the “Court”) determined that promissory notes do not need to contain the writing designation of an express submission to a court of a given place or jurisdiction, since it is sufficient that it contains the requirements contemplated in the Law [1] to become it valid, which allows to define the jurisdiction by territory in a trial. [2]
According to the Court, the promissory note is valid even if it does not have such express submission to a court, because that is not a legal requirement. The parties who draft a promissory note are not obliged to include such a requirement.
In addition, the court of competent jurisdiction may be the court of the place where the amount of the promissory note is to be paid, otherwise it may be determined in terms of article 1104 of the Commercial Code. [3]
Therefore, it is illegal the Judge’s decision to dismiss a lawsuit on the grounds that the promissory note did not indicate the express submission to a given jurisdiction, as it disregards the right of access to justice provided for in article 17 of Mexico’s federal constitution.
Conclusion
The promissory note must contain the place of payment, as required by the law because in a possible lawsuit by inserting this requirement, the plaintiff would be able to determine which the competent Court to hear the case is.
According to the Court’s decision, the lack of an express submission to a court in a promissory note does not invalidate its legal force, as there are legal provisions which regulate it, such as the aforementioned article of the Commercial Code. Therefore, the Judge before whom a lawsuit is filed must consider them to accept or decline his jurisdiction.
[1] Article 170 of the General Negotiable Instruments and Credit Operations Law.
[2] https://sjfsemanal.scjn.gob.mx/detalle/tesis/2026499″
[3] Article 1104 of the Commercial Code.
By: Monserrath Bustamante
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