Edgar Elías: “Compared to the options provided for in judicial processes, mediation offers an almost limitless number of solutions and makes it possible to save money, time and personal suffering”
Edgar Elías Azar is Chief Justice of the Federal District Court and President of the Federal Judiciary Council
Interviews
(19/09/2011)
Edgar Elías (Acapulco, Mexico, 1946) is Chief Justice of the Federal District Court and President of the Federal Judiciary Council. He has a degree in law from the National University of Mexico (UNAM) and has worked in public administration at federal and national level for almost forty years, holding a number of roles including Director General of Legal Affairs of the State Government of Guerrero, Legal Director for the National Charity Fund Administration (Administración del Patrimonio de la Beneficencia Pública), Director of Regulations and Control for the General Directorate of Acquisitions (Dirección General de Adquisiciones), Director of Legislation and Consultation for the General Directorate of Legal Affairs (Dirección General de Asuntos Jurídicos), and Finance Secretary of the State Government of Guerrero. He has worked as a lecturer and professor at several universities (Acapulco, Anáhuac del Sur, Iberoamericana, ITAM, the Free School of Law and the Institute of Legal Research at UNAM), and has also given numerous presentations and talks for public and private institutions and acted as a national spokesman in international forums. Elías has participated in legislative projects leading to major reforms of laws in the area of Justice Administration. He has published a number of books and contributed to a range of journals.
Edgar Elías Azar is Chief Justice of the Federal District Court and President of the Federal Judiciary Council
Interviews
19/09/2011
Edgar Elías (Acapulco, Mexico, 1946) is Chief Justice of the Federal District Court and President of the Federal Judiciary Council. He has a degree in law from the National University of Mexico (UNAM) and has worked in public administration at federal and national level for almost forty years, holding a number of roles including Director General of Legal Affairs of the State Government of Guerrero, Legal Director for the National Charity Fund Administration (Administración del Patrimonio de la Beneficencia Pública), Director of Regulations and Control for the General Directorate of Acquisitions (Dirección General de Adquisiciones), Director of Legislation and Consultation for the General Directorate of Legal Affairs (Dirección General de Asuntos Jurídicos), and Finance Secretary of the State Government of Guerrero. He has worked as a lecturer and professor at several universities (Acapulco, Anáhuac del Sur, Iberoamericana, ITAM, the Free School of Law and the Institute of Legal Research at UNAM), and has also given numerous presentations and talks for public and private institutions and acted as a national spokesman in international forums. Elías has participated in legislative projects leading to major reforms of laws in the area of Justice Administration. He has published a number of books and contributed to a range of journals.
On 14 June, Edgar Elías visited the University of Barcelona to give the talk “Justice Administration as a provider of just solutions”. One example of these “just solutions” is the pioneering initiative launched by the Federal District Court, through its Centre for Alternative Justice, for the management of unpaid mortgages, which has produced highly positive results thus far. Where did the idea come from?
When the Centre for Alternative Justice was created, in 2003, we looked at the possibility of offering people the chance to settle disputes without the intervention of the courts, through the assistance of a professional mediator, as a complement to standard judicial procedures. The mediation service was initially offered only for family disputes, and in 2006 it was extended to cover civil and mercantile matters. The unprecedented growth in the number of civil and mercantile disputes―largely motivated by banks and mortgage agencies―increased the courtʼs workload almost twofold in 2009 and forced us to intervene in cases brought by these groups, pushing them towards mediation so that not all instances had to come to court. Towards the end of 2008 we designed a series of synergy projects that were presented to a number of institutions including Infonavit, the largest credit provider in Mexico, and the Mexican Mortgage Association, which is formed by all of the mortgage lenders in the country. The projects were formalized through collaboration agreements aimed at channelling disputes between lenders and borrowers through a process of mediation.
What are the advantages of this management model and what solutions does it offer home-owners?
Compared to the options provided for in judicial processes, mediation offers an almost limitless number of solutions and makes it possible to save money, time and personal suffering. It can provide creative solutions tailored to the needs of both parties, through a model in which everyone is a beneficiary, rather than the winner-loser dichotomy that characterizes all levels of traditional judicial procedure. In mediation, the parties put forward alternative solutions and various scenarios are envisaged in which the original contracts can be satisfied. In contrast, in judicial processes the legal basis is derived exclusively from the terms of the contracts.Therefore, when mortgage holders and the credit provider determine a solution and set out a written agreement (which has the same value as a legal sentence), the familyʼs wealth is protected, the debt is restructured and the confidence present at the time the original contracts were signed is restored.
What exactly is Infonavit and how does it work?
The National Workersʼ Housing Fund Institute (Instituto del Fondo Nacional de la Vivienda para los Trabajadores, Infonavit) is a government agency with legal autonomy and budgetary independence; it is the largest mortgage provider in Mexico, and is chiefly concerned with making finance available to eligible, accredited workers.
Infonavit manages the Workersʼ Housing Fund (Fondo de Vivienda de los Trabajadores), which is formed by contributions from employers and workers and enables people to access mortgages at favourable rates. According to information provided by the Institute itself, last year some 475,000 loans were approved, and this year the goal is to provide 480,000 more, to ensure that the same number of families benefit from the scheme.
Could this system be implemented without the support of a civil mediator and the willingness of the banks?
Mediation is impossible without a mediator, and there are also other forms of solution, such as negotiation. However, it should be remembered that negotiation is limited in scope, since one of the parties is often far more powerful than the other, placing the weaker party at a serious disadvantage. Another problem arises when dialogue grinds to a halt, at which point each party digs its heels in and an impasse is reached. In a mediation process, the mediator channels the dialogue in such a way that each party focuses on its specific interests and requirements, which can be satisfied through a number of proposed solutions; in other words, by adopting several different positions rather than just one. In our experience, a large proportion of mortgage lenders and holders who have chosen to go through mediation have settled their disputes, which is indicative of a willingness on both sides to find a solution.
Do you think that this model could be exported to other countries? Would it work in Spain, for example?
We firmly believe that the model constructed in Mexico City has been adequately tested; well enough to have been emulated in other states across the country. Ninety-five per cent of the mediation processes in civil and mercantile matters last year involved mortgage disputes. It is very likely that our model can be of use to other countries, certainly in Spain, and it would relieve much of the social tension that has built up around disputes over property and mortgages. To adopt the model we use in Mexico the necessary legal provisions must exist; that is, its implementation must be possible within existing legal structures, so the appropriate legislative studies must first be carried out. In addition, it is very important for mortgage institutions to identify and propose alternative solutions for those affected so that a range of viable options exists in each type of dispute.
Do you think we are over the hump of the mortgage crisis?
Although I am not an expert on the matter, I would say that the global economic crisis, which began in the United States as a result of the way in which mortgages were being handled, appears to be under control, although some of its effects are still being felt. Experts point out that behind a mortgage crisis there are generally a number of other factors, such as rising unemployment, high and unstable interest rates, changes in credit policies, a lack of mechanisms for improving accounting practices, and a general lack of capitalization among mortgage lenders. In Mexico, 16 years ago we underwent a severe economic crisis that included a mortgage crisis. While we are continuing to see problems with past due loans, mortgage lenders have gradually recovered, accumulating capital and seeing a rise in the demand for credit, which is beneficial for society as a whole. As I understand it, most of the mortgages granted in Mexico over the last ten years are longer-term fixed rate loans with repayments indexed to the minimum wage and unemployment insurance, which covers monthly payments for certain periods. It is only fair to recognize that credit institutions have learned that in the event of financial crisis, it is preferable to negotiate a solution to mortgage disputes, for example through mediation, than to enter into a long and costly legal battle that causes damage to both parties in the long term and places a huge strain on the courts.
What was the root cause of the problem? Were too many loans approved? Could the whole episode have been avoided? How could this have been done?
I believe that the root of the mortgage crisis and the various factors that exacerbated it varied from country to country and according to the specific context. In Mexico, the financial crisis of 1995 led to imbalances in the economic life of the country which generated high inflation, currency devaluation, high interest rates and severe unemployment. The mortgage market is a crucial part of the economy, meaning that it was also heavily affected. However, unlike the 2008 crisis in the USA, the most influential factors in Mexico were not the indiscriminate granting of mortgages but rather the high rate of inflation and massive job losses. The drop in disposable income was enormous. Some argue that the economic crisis could have been avoided; others argue that it was simply the logical outcome of the structural problems in the way the economy was being handled. This is a debate that should be left to the economists. What I can say is that the legal crisis that we are also witnessing could certainly have been prevented if there had been a mediation system in our legal structures, as is now the case in the Federal District Court.