Issue #
January–February 2020

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Economic Indicators

On April 6, 2020, updated financial indicators reflected:

Peso/Dollar Exchange Rate: $24.6850 pesos per Dollar.

Mexican Stock Exchange: The Mexican Stock Exchange (BMV) closed at 34,381.56 points.

Interest Rates: The Average Interbank Rate (TIIE) for a 28-day period was at 6.6850%

New Amounts in Controversy Applicable in Commercial Oral Trials and Expedited Commercial Oral Trials

April 3, 2020

The reforms to the Mexican Commerce Code, published on January 25, 2017 and amended by means of a decree dated March 28, 2018, set forth the time periods for transitioning from the traditional written trial system to commercial oral trials. Beginning January 26, 2020, lawsuits with an amount in controversy of up to four million pesos (approximately $210,500 U.S. Dollars) will be tried as Expedited Commercial Oral Trials, and those with amounts in controversy above such amount will be tried as Expedited Commercial Written Trials. On the other hand, all commercial trials for which a special trial procedure is not provided by applicable law must be tried as Commercial Oral Trials, irrespective of the amount in controversy. The principal objective of both expedited and ordinary commercial oral trials is to reduce the amount of time in which a commercial dispute is resolved. Therefore, certain novel measures will be implemented, such as the inability to appeal a judgment rendered pursuant to these new trial procedures. An unfavorable judgment rendered by means of the new trial procedures may be challenged solely by means of certain procedures, such as a direct extraordinary constitutional appeal (“amparo directo”), among others. The foregoing rules are intended to consolidate Mexico’s legislative and judicial efforts throughout the last decade so that oral commercial trials become a reality in most cases, and, as a result, the time it takes to resolve a commercial dispute is substantially reduced for the benefit of commercial litigants.

Requests by Pemex and CFE to the Energy Regulatory Commission

March 27, 2020

Economic regulators exist to correct the failures of certain markets, and thus promote their efficient development. These regulatory agencies have multiplied in recent decades throughout the world in order to protect consumers and users of certain products and services against, for example, conditions involving natural or legal monopolies. The goal has been to create a level playing field for regulated companies to compete in a fair environment and to guarantee open access to network infrastructure.In Mexico, the purpose of the Mexican Energy Regulatory Commission (“CRE” by its acronym in Spanish) is to promote the efficient development of midstream and downstream activities in the hydrocarbons and petroleum sector, as well as in the value chain of the electricity industry. Despite the fact that private investment was allowed as part of the energy reform of 2013-14, the Mexican government decided not to privatize the existing public entities operating in the sector, i.e., not to sell their assets. Instead, the purpose of said reform was to convert them into productive State-owned enterprises that would compete under equal circumstances against private companies.In recent months, Mexico has seen a reaction against equal competitive conditions by its State-owned enterprises Mexican Petroleum (“Pemex”) and the Federal Electricity Commission (“CFE”). These companies have not promoted constitutional or legal reforms; rather, they have acted under the authority and tone set by the current administration and have submitted their own respective lists of requests to the CRE.After Pemex Industrial Transformation (“Pemex TRI”) officially requested a package of strengthening measures, on December 16, 2019, the CRE issued Resolution A/043/2019, which overruled the methodology to determine prices for first-hand sales of refined products and sales made at storage terminals. With this Resolution, the CRE has eliminated a measure that mitigated the dominant power of Pemex TRI in those markets. This is true despite a transitory provision of the Hydrocarbons Law mandating that asymmetric regulation should continue until “a greater participation of economic agents is achieved”. It is surprising that the CRE considered that such goal had been achieved, when, for example, in November 2019 Pemex and its subsidiaries imported 82% of gasoline and 64% of diesel through points of entry to Mexican territory.Further, at the end of December 2019, a document sent by the CFE to the CRE entitled “Petition Document” was made public. Based on the document’s contents, the Financial Times published an article with a striking headline predicting the dismantling of the Wholesale Electricity Market (“MEM” by its acronym in Spanish) in Mexico. In truth, while the Petition Document addresses certain aspects of the MEM, several of the listed actions would harm, above all, projects with contracts executed under the Electricity Public Service Law of 1992, particularly self-supply corporations.One of the most sensitive issues addressed in the Petition Document is the request to update the fees charged for electricity transmission service (“post stamp wheeling”), which the CFE applies to self-supply corporations that use renewable energy sources. Such fees were established in 2010 by the CRE to comply with the law of 2008, whereby the Mexican government determined the public benefit of deploying renewable energy and clean technologies in order to promote energy sustainability and reduce dependence on hydrocarbons. This measure, among others that were strictly regulatory in nature, was a determinant factor for the investment decisions that led to the initial flourishing of wind energy generation in Mexico (approximately 2,000 MW in operation in 2014).So far the political defense of the progress made in energy matters during the last three decades, by those who conceived them at the time, has been notably weak. In any case, if the CRE addresses certain requests from Pemex and the CFE, and thereby violates the rights of other companies, such companies would have valid legal arguments to promote or defend their interests before Mexican courts.


Mexico to Create Federal Mediation and Labor Registry Center

February 21, 2020

On January 6, 2019, Mexico’s federal congress enacted a law detailing how it will create and regulate a new Federal Mediation and Labor Registry Center (the “Federal Center”).The Federal Center is expected to begin operations during the fourth quarter of 2020. The main purpose of the Federal Center is to oversee mediation in federal labor cases involving individual workers who file claims against their employers, as well as to oversee collective bargaining issues. Additionally, the Federal Center is tasked with the following matters:

  1. Keeping registration records of unions, collective bargaining agreements and internal work rules;
  2. Assisting unions in the voting process to elect union officials;
  3. Sending voting notifications and organizing the voting process to approve union contracts;
  4. Issuing certificates of representation, which will now be required of unions to mandate the execution of union contracts;
  5. Reviewing voting results to verify that a majority of workers approve collective bargaining agreements, while monitoring voting procedures to ensure that votes are submitted directly, freely and in secret;
  6. Verifying that workers are familiar with the collective bargaining agreements signed by their union;
  7. Providing information and documentation related to the registration of collective bargaining agreements, wage schedules, names of union members, and any information they possess, when requested by a labor court judge;
  8. Making information on unions and their leadership known to the public and providing copies of their records to those who request such;
  9. Assessing applicable fines for not complying with the provisions set forth in the Mexican Federal Labor Law.

The Federal Center will be headquartered in Mexico City, with satellite offices established throughout Mexico’s 32 states. By instituting the Federal Center, the government seeks to resolve more labor disputes through mediation, thereby reducing the number of labor lawsuits.In addition to these purposes, the government intends to achieve greater efficiency and better control of unions and collective bargaining agreements by comprehensively regulating collective bargaining agreements, all while protecting workers’ rights to free union association.As the date approaches for the Federal Center to begin operations, it is important for employers to understand and comply with the new obligations and procedures to register and renew collective bargaining agreements, as well as with the registration and updating of internal work rules.

Labor and Employment

Ordinary and Default Interest – Usury

January 27, 2020

On December 13, 2019, the Plenary Third Circuit in Civil Matters issued an opinion contradictory to opinion PC.III.C.J/50 C (10a.), entitled: “Ordinary and default interest in commercial matters. Such must be analyzed independently in order to determine whether they are usurious, even when they are incurred simultaneously and, therefore, coexist.” In said opinion, the court ruled that, in commercial matters, when ordinary and default interest obligations exist at the same time, the analysis to determine the issue of whether interest is usurious must be assessed separately, that is, without adding both types of interest to each other. The court made such determination because it considered the characteristics of these types of interest to be different and because default interest, being a sanction, is usually higher than ordinary interest, which typically corresponds to the profit earned by a creditor for issuing credit.