Copyright (c) 2010 Cacheaux, Cavazos & Newton, L.L.P http://www.ccn-law.com The CCN Mexico Report™ is a free online publication prepared and distributed monthly by the international law firm Cacheaux, Cavazos & Newton (www.ccn-law.com), and contains updates on Mexico business, politics and legal issues of interest to investors doing business in Mexico. The CCN Mexico Report™ is prepared for general information purposes only and is not legal advice. en-us 09/09/2010 04:35:09 PM 60 http://www.ccn-law.com/index.php?option=com_content&task=section&id=1&Itemid=23&hd=ccnmexicoreport&hd=ccnmexicoreport&lid=en&aid=979   Mexico’s President, Felipe Calderon, met on August 10 with representatives from various political parties to discuss the federal government’s policy on internal security and the so-called war against organized crime. President Calderon stressed that the federal government is winning this war; however, reality seems to have overtaken all political rhetoric. The companies and industrial conglomerates with industrial facilities in the Mexican Republic are concerned about the lack of safety that seems to have spread from coast to coast and from border to border. The real question is the following: How dangerous is it to enter and leave the country and visit industrial facilities, especially those located in border areas and in sparsely populated areas? The United States consulates in Monterrey, Nuevo Laredo and Ciudad Juarez have issued several warnings for American citizens who live in and visit Mexico that advise them to be careful and take extra precautions when visiting and traveling within Mexico. How unsafe is it and what precautions should be taken when visiting industrial plants? In reality, unfortunate incidents that result from the lack of safety do not occur everywhere in Mexico or on a daily basis. These are isolated incidents that lead to unfortunate situations that are sometimes linked to involvement with members of the underworld. From a practical standpoint, if proper precautions are taken, the risk of facing problems during visits to industrial facilities can be significantly reduced. Some general recommendations for these visits include the following: (i) avoid travel or night-time travel in isolated places where there is little traffic; (ii) refrain from wearing dress suits to not draw attention  (iii) avoid unaccompanied travel from industrial facilities to hotels or other places; (iv) plan to travel on federal highways and toll roads as much as possible; (v) cooperate with personnel manning checkpoints;  (vi) do not to carry large sums of money or require managers or employees at the facility to carry large sums of money; (vii) place security guards at facility entrances and strengthen identification procedures and access to such facilities; (viii ) hire services from well known companies and verify their references; (ix) do not carry firearms for personal safety; (x) to the extent possible, seek the company of local people that are familiar with local practices and the location of the intended destination when traveling to a facility; (xi) refrain from making cash transactions and receiving large sums of cash; (xii) attempt to stay in places where there is a good number of people around; and (xiii) in case of an unfortunate incident, report it to the nearest consulate. If these precautions are taken, the risk of being involved in a bad incident will be reduced. It appears that Mexico’s state of the insecurity will continue for the foreseeable future, thus, it will be important to stay vigilant at all times. This does not mean that investments by industrial groups are in danger or that there is a justifiable rush for such groups to leave the country due to the Mexico’s insecurity. Mexico has been and will continue to be a country of peace and harmony. These are times of transition and cleansing beyond prediction. In the future, companies and industrial conglomerates will have to factor in safety conditions in selecting the location of their industrial facility. http://www.ccn-law.com/index.php?option=com_content&task=section&id=1&Itemid=23&hd=ccnmexicoreport&hd=ccnmexicoreport&lid=en&aid=979 http://www.ccn-law.com/index.php?option=com_content&task=section&id=1&Itemid=23&hd=ccnmexicoreport&hd=ccnmexicoreport&lid=en&aid=980 A global pollster conducted a survey to identify the countries with the happiest population. Mexico was one of the countries whose inhabitants show traits that make them one of the people who enjoy life the most. Recent times have been difficult. The road to a complete and full development has been surrounded by difficulties. The most conspicuous difficulties are the lack of safety caused by crime, social inequality, corruption, poverty, unemployment and absence of opportunities for young people. These structural problems were compounded by the economic crisis from abroad, particularly the recession in the United States of America and the health crisis of 2009, with the AH1N1 influenza epidemic. The damages and losses caused by this year’s meteorological phenomena have left thousands of families homeless. With this heavy burden, Mexico prepares to celebrate two hundred years of independence and a hundred years of the beginning of the Mexican Revolution. Some pessimists have doubts about the reasons for celebrating. The reasons are many and just by reviewing the country's daily life and the way it faces adversity, it is enough to realize that there are plenty of reasons to celebrate. Mexico has gone a long way to build a country with a large international personality, whose political system, though imperfect, bet on democracy as a means of resolving disagreements and inherent rivalries of a society that is lively, pluralistic, multiethnic, open and free. It is important that the country celebrates two hundred years of independence and a hundred of its revolution.  Nevertheless, it is more important for the political, social, cultural and economic leaders to reflect on what has been achieved, which is plentiful and clear, and in particular, to reflect on what should be the country’s trajectory for the following years to come. Mexicans have reached the age of majority, and it is time to continue as one of the happiest people in the world, but also to make a new plan to shape a better future for Mexico and Mexicans.  http://www.ccn-law.com/index.php?option=com_content&task=section&id=1&Itemid=23&hd=ccnmexicoreport&hd=ccnmexicoreport&lid=en&aid=980 http://www.ccn-law.com/index.php?option=com_content&task=section&id=1&Itemid=23&hd=ccnmexicoreport&hd=ccnmexicoreport&lid=en&aid=984   The Official Journal of the Federation published on July 29, 2010 an amendment to article 17 of the Constitution of the United Mexican States to create in Mexico the legal concept of class action lawsuits, i.e. lawsuits brought by a group of people that meet a uniform set of conditions arising from the same cause that resulted in losses or claims. The constitutional reform limits class action lawsuits to proceedings regarding federal law, such as those relating to consumers, users of financial services and matters concerning the environment, and grants federal judges exclusive jurisdiction to hear such cases. It is also important to note that Mexico’s Congress will have one year to issue secondary legislation on how to regulate class action lawsuits. Rules on class actions are nothing new, since countries like the United States, Spain, Colombia, Brazil, Argentina and Chile, among others, already have rules on this type of collective actions at a constitutional and secondary level of legislation. With the constitutional amendment to Article 17, the scope of a ruling on class actions lawsuits would be valid for a group of people who are in an identical situation to that of any plaintiff who has filed a lawsuit against an institution or entity. Additionally, this amendment will compensate victims that sustain damages resulting from monopolies, unfair claims, abuse and fraud and other causes of action that give rise to a class action lawsuit. It is estimated that the success of this legal concept will depend largely on secondary legislation approved by Mexico’s Congress. Up until this constitutional reform, the only class action available at the federal level could be filed only by the Federal Office of Consumer Protection (“Procuraduría Federal de Protección al Consumidor” or “PROFECO”) against companies that defrauded customers, but its effectiveness and scope was limited and was subject to the willingness of the authority to prosecute any given case. Last May, Mexico’s Supreme Court ruled for the first time on class action lawsuits brought by PROFECO, , and held that the benefits of a judgment from such lawsuits must accrue to all affected consumers, not just those who joined in the lawsuit. http://www.ccn-law.com/index.php?option=com_content&task=section&id=1&Itemid=23&hd=ccnmexicoreport&hd=ccnmexicoreport&lid=en&aid=984 http://www.ccn-law.com/index.php?option=com_content&task=section&id=1&Itemid=23&hd=ccnmexicoreport&hd=ccnmexicoreport&lid=en&aid=985 Recently, the Second Chamber of Mexico’s Supreme Court of Justice (SCJN) issued a ruling on labor matter number 2a./J.100/2010 under the heading, Notice of employment termination. The affidavit, in which delivery of such is made to the employee, constitutes sufficient proof to satisfy the requirement provided in Article 47 of the Federal Labor Law. In this regard, Mexico’s highest court ruled that it is appropriate to deliver the notice of employment termination by and before a Mexican notary public. Mexico’s Federal Labor Law requires only that the termination notice be made in writing and made known to the employee, but such law does not provide for the appropriate means of delivery of such notice. Additionally, the SCJN analyzed in its opinion various provisions set forth in the Federal Labor Law and the Notary Law for the Federal District as to what documents are public in terms of such laws.  Based on its analysis, the SCJN concluded that an affidavit stating the delivery of a notice of employment termination is a public document with effective evidentiary validity, which renders unnecessary its ratification before the Labor Board. The foregoing holding is still pending publication in the Judicial Weekly of the Federation.    http://www.ccn-law.com/index.php?option=com_content&task=section&id=1&Itemid=23&hd=ccnmexicoreport&hd=ccnmexicoreport&lid=en&aid=985 http://www.ccn-law.com/index.php?option=com_content&task=section&id=1&Itemid=23&hd=ccnmexicoreport&hd=ccnmexicoreport&lid=en&aid=986 According with the provisions of Mexico’s Industrial Property Law (LPI), inventions are patentable if: 1) they are the result of a creative activity; 2) have an industrial application; 3) and, are new. Five exceptions to such provision are set forth in Article 16 of the LPI. Additionally, Article 19 of the LPI provides cases for which inventions cannot be considered for registration. Similarly, legislation in this area provides that once a patent application is filed with the Mexican Institute of Industrial Property (“Instituto Mexicano de la Propiedad Industrial” or “IMPI”) an administrative review must be carried out.  Such administrative review basically consists of a formal examination of the filed application documents, which is followed by the publication of the patent application in the Official Gazette of the IMPI, usually within 18 months from the filing date (such publication can occur before such 18-month period upon request to the IMPI). This has been the normal patent registration process for a long time. As of last June, however, a decree was published in which several articles were added to the LPI.  The highlight of such decree, among others, is the new Article 52a, which states that within six months, counted from the date of publication of any patent application published in the Official Gazette, the IMPI may receive public comment concerning the application’s compliance with the provisions set forth in Articles 16 and 19 of the LPI (conditions for obtaining a patent on inventions that are considered patentable). Comments that the IMPI receives pursuant to Article 52a do not mandate the IMPI to rule in a certain way. Nevertheless, this is the first time that Mexico considers the possibility of allowing an interested third party to submit some sort of “opposition” to the granting of a patent. This may be an important step (and with time these “oppositions” may occur more often) that could spread to other areas of industrial property, including trademark registrations, as in many other countries.Sources of information and legal notice: In preparing this document, the following sources of information, among others, have been utilized: Diario Oficial de la Federación, Bank of Mexico, Suprema Corte de Justicia de la Nación. The CCN Mexico Report should not be considered as legal or tax advice or used for any purposes other than as a source of information for the public at large.  For more information about the CCN Mexico Report, the topics contained therein or to inquire about legal services, please contact Robert M. Barnett (rbarnett@ccn-law.com) or Mario Melgar (mmelgar@ccn-law.com) at (210) 222-1642. © Copyright 2010, CCN. All Rights Reserved. http://www.ccn-law.com/index.php?option=com_content&task=section&id=1&Itemid=23&hd=ccnmexicoreport&hd=ccnmexicoreport&lid=en&aid=986 http://www.ccn-law.com/index.php?option=com_content&task=section&id=1&Itemid=23&hd=ccnmexicoreport&hd=ccnmexicoreport&lid=en&aid=981 The outcome of the mid-term elections resulted in a victory claimed by all politicians involved. In a way, all of them triumphed in the elections of July 2010, and, in particular, democracy won. It was thought that such a strong political clash would end in a confrontation, if not violent, at least legally contested in court. It was not the case. Except for a pending dispute over the elections in Durango, politicians have accepted the victory of the election winners. The President himself, in an unusual but republican and democratic act, congratulated the winners, regardless of their political party, by receiving them at the presidential residence of Los Pinos. The National Action Party (PAN) won by interrupting the Institutional Revolutionary Party’s (PRI) continuous rule in Puebla and Oaxaca, which are densely populated states that will play an important role in the presidential election of 2012. The Democratic Revolutionary Party (PRD) also won, as it became part, with the PAN, of the triumphant alliances in Puebla, Oaxaca and Sinaloa, the latter state in which the PRD did not have much influence. The PRI won by maintaining important states like Veracruz, Tamaulipas, Quintana Roo, Hidalgo, Chihuahua, and winning Aguascalientes, which the PRI snatched from the PAN, and taking Zacatecas and Tlaxcala from the PRD. Additionally, the PRI had a resounding victory in municipalities of Baja California, including Tijuana, and in such state’s Congress. Small parties also won, like the Green Party, the Labor Party (PT), Convergence and New Alliance, which received numerous votes that will allow them to consolidate their registrations and benefits provided by electoral laws. These mid-term elections validated the use of political alliances as a strategy to contend in elections for public office. There is a political principle, which states that in politics everything goes, even renouncing principles. The renouncement of ideologies and principles was anticipated as the highest cost to the alliances between the left and the right in Mexico. Nevertheless, we will have to wait for the government plans of the elected governors in Puebla, Oaxaca and Sinaloa to confirm or discard this certainly calculated risk. The alliances are now seen as a politically appropriate way to run for public office. Such alliances are already apparent, for example, in the upcoming 2011 gubernatorial races for the three states that will hold elections (Guerrero, Nayarit and the State of Mexico), where candidates for the PAN/PRD alliance are likely to challenge the PRI’s candidates. These upcoming elections will provide an indication of what may be expected from the 2012 presidential election, the mother of all elections in Mexico. http://www.ccn-law.com/index.php?option=com_content&task=section&id=1&Itemid=23&hd=ccnmexicoreport&hd=ccnmexicoreport&lid=en&aid=981 http://www.ccn-law.com/index.php?option=com_content&task=section&id=1&Itemid=23&hd=ccnmexicoreport&hd=ccnmexicoreport&lid=en&aid=982 National flagship airlines such as American Airlines, Air France, Japan Airlines and Lufthansa each have a brand that links them to the country where they originate and from where they operate their home offices.  Mexicana Airlines or Mexicana is one of them and shares such distinction with Aeromexico. Mexicana has recently encountered serious financial problems that forced it to seek protection under the new Mexican bankruptcy laws. A Mexican federal judge has accepted Mexicana’s petition for bankruptcy, which will be closely monitored by the business world, financial analysts and Mexicana’s customers. At this stage, which is still uncertain, the union representing pilots and flight attendants, the Unionized Association of Airline Pilots (“Asociación Sindical de Pilotos Aviadores” or “ASPA”) and the Unionized Association of Flight Attendants (“Asociación Sindical de Sobrecargos de Aviación” or “ASSA”) have captured the spotlight with the maturity that such unions have shown. Both unions have agreed to participate in a dialogue with the company and Mexico’s labor authorities, such as Mexico’s Department of Labor and Social Welfare, in order to find solutions to the problems that afflict the airline and its employees. The solidarity of Mexicana’s employees has resulted in an agreement not to collect wages in the short term while moving towards a proposed solution. Clearly, poor planning, economic recession and fluctuations in the passenger markets are the major contributing factors that affected the Mexican airline. The head of the Business and Economics Department at the Monterrey Technological Institute of Superior Studies (“Instituto Tecnológico de Estudios Superiores de Monterrey” or “ITESM”), José Luis de la Cruz, says that wages for pilots, in conjunction with other factors, have already caused losses of 4,100 million pesos (approximately $315 million U.S. dollars) in the last four years, which led to Mexicana’s filing for bankruptcy and its request for an urgent restructuring plan. Mexicana Airlines has suspended the sale of tickets and changed flight schedules. Its subsidiaries, Mexicana Click and Mexicana Link, are currently maintaining their normal operations; however, analysts estimate that sooner or later their operations will be affected if a bailout for Mexicana, the older sister, does not materialize.  http://www.ccn-law.com/index.php?option=com_content&task=section&id=1&Itemid=23&hd=ccnmexicoreport&hd=ccnmexicoreport&lid=en&aid=982 http://www.ccn-law.com/index.php?option=com_content&task=section&id=1&Itemid=23&hd=ccnmexicoreport&hd=ccnmexicoreport&lid=en&aid=983 The following are economic indicators as of August 13, 2010:  Pesos/Dollar Exchange Rate: $12.7256 pesos per dollar.  Mexican Stock Exchange: The Mexican Stock Exchange (BMV) closed at 32,099.75 points. Interest Rates:  The Average Interbank Interest Rate (TIEE) for a 28-day period was at 4.8750 %. http://www.ccn-law.com/index.php?option=com_content&task=section&id=1&Itemid=23&hd=ccnmexicoreport&hd=ccnmexicoreport&lid=en&aid=983