According to the case file, the plaintiff – Company A [company names were removed from the published judgment] – following a public tender for the supply of protective films for vehicles, entered into a framework agreement, the Carta de Nominación, with an automotive group – Company B. This document established the general terms of the parties’ commercial relationship, while specific deliveries were to be formalized through separate purchase orders (órdenes de compra).
Some time later, the buyer notified Company A that it was terminating their cooperation. Believing this to be a unilateral, premature, and unlawful termination of the agreement, the supplier filed a civil lawsuit seeking a declaration that the master agreement had been terminated early and without justification, a finding that the defendant had violated its internal compliance program – including its Code of Conduct and Code of Conduct for Business Partners – and claiming damages, penalties, and other related costs.
The trial court dismissed Company A’s claim, finding that the Carta de Nominación was not a contract but merely a letter of intent that did not contain binding terms. The court held that obligations arose only once purchase orders were issued, and no evidence was presented that any such orders had been terminated. The appellate court agreed with the lower court’s position, clarifying that while the Carta de Nominación was indeed a valid framework contract, it did not establish specific obligations (such as the number of vehicles or supply volumes). Therefore, there had been no early termination, and alleged violations of the compliance program had no impact on contractual obligations. Both the trial and appellate courts noted that codes of conduct are internal policies of the purchasing company, binding only on the company itself and not on external counterparties. Consequently, non-compliance with such policies does not create legal consequences for the supplier and cannot serve as grounds to challenge the termination or seek damages.
The plaintiff then appealed to the Supreme Court, arguing, among other things, that:
- the defendant violated its compliance programs, including a conflict of interest in selecting a new supplier — an affiliated entity that did not meet the relevant eligibility criteria;
- such violations should be treated as bad-faith conduct giving rise to civil liability;
- the court should have taken into account international standards, including the UN Convention against Corruption (UNCAC, Articles 12 and 35), the Council of Europe’s Civil Law Convention on Corruption (Article 4), the Arab Anti-Corruption Convention, as well as domestic guidelines such as the Modelo del Programa de Integridad Empresarial issued by Mexico’s Ministry of Public Administration. The plaintiff argued that these instruments require states to ensure civil liability for companies engaging in corrupt or bad-faith practices and to guarantee compensation for affected parties.
The Supreme Court reached the following conclusions:
- a breach of a compliance program does not automatically create liability toward third parties or render a contract invalid;
- however, compliance programs may have legal significance if they form part of the contract (for example, when incorporated into contractual terms or referenced in the agreement), or if it is proven that their violation directly influenced the termination of the relationship or caused harm to the other party.
The Supreme Court referred to Mexico’s obligations under the UNCAC, which require States Parties to take measures to prevent corruption, strengthen accounting and auditing standards in the private sector, and establish sanctions for non-compliance. The Court emphasized that courts must examine these issues when the parties explicitly invoke them as grounds for their claims.
The Court also stressed that internal company policies must apply to relations with public officials, suppliers, investors, clients, and other stakeholders where corruption risks exist. It noted that companies’ own behavior, as well as their interactions with these actors, can create opportunities for corruption, thus underscoring the importance of effective compliance programs.
In this context, the Court found that Company B unlawfully terminated its contract with Company A because it engaged a supplier that failed to meet its own standards (lacked the necessary qualifications and experience and had not undergone the required selection procedure). The Court ordered a reconsideration of the legality of the termination, taking into account its conclusions regarding the legal force of the Carta de Nominación and the role of the compliance program.
The decision, as noted, brings to the forefront the need for companies to implement effective compliance programs. Based on the conclusions drawn in the case, it can be inferred that companies should not limit themselves to having such programs merely “on paper,” but must ensure their practical application and monitor whether their (potential) counterparties adhere to the same standards.
Reference: Mexico does not require companies to implement compliance programs. However, under the General Law on Administrative Liability, the existence of an adequate integrity policy or compliance program is a mitigating factor that may reduce sanctions by up to 25% if a company commits a corruption offence.
