ABA ● Section of International Law ● Mexico Committee MEXICO UPDATE Message from the Mexico Committee The June 2012 Mexico City program of the American Bar Association’s Section of International Law, organized through our Mexico Committee, benefitted from the collaboration and presence of the Barra Mexicana and of ANADE (Asociación Nacional de Abogados de Empresa ), each a leading bar association in Mexico. Their journals report in a warm light the experiences shared at the program among their members and ours, experiences of leading lawyers discussing current challenges and developments with the benefit of transnational perspectives. Citations to the articles, complementing the October 2012 MEXICO UPDATE, are: Angelina Hernández, La American Bar Association en México, ABOGADO CORPORATIVO 102-107 (September-October 2012) Diego Valadez Ortega, Presencia de la ABA en Mexico, LA BARRA 13-15 (AugustOctober 2012) Angelina Hernández, concluding her article, captured our motivation in organizing the program with our friends and colleagues of the Barra Mexicana and ANADE: Por último, en ese evento se destacó que la American Bar Association se mantiene entusiasta y abierta para trabajar muy de cerca con Colegios de abogados serios –como es el caso de ANADE Colegio– y de esta manera coadyuvar en el fortalecimiento del regimen jurídico y la impartición de justicia de ambos países. (Lastly, in this event it stood out that the American Bar Association maintains itself enthusiastic and open to work closely with serious bar organizations, as is the case of ANADE, and in this manner to collaborate in the strengthening of the legal system and the delivery of justice in both countries.) Issue 39, March 2013 Contents The Mexico Committee– Nurturing Committee Activity and Diversity 4 Mexican Labor Law; A Reform Much Needed in Mexico 8 Customs Review 2012 11 Recent Developments in 12 Mexico: An Update on CKDS and FIBRAS Interaction of Civil Law and Common Law Notaries: The Mexican Experience 14 We share these goals with our peer organizations, and in striving through our Mexico Committee to advance them, look forward to renewed engagement with our friends. Patrick Del Duca, Mexico Committee Immediate Past Chair A Note from the Editors This issue of MEXICO UPDATE includes publication of an essay by current co-chair Juan Carlos Velázquez de León Obregón, immediate past co-chair Patrick Del Duca, and prior co-chair Alejandro Suárez on their prioritization of the inclusion of women in the leadership and activities of the Mexico Committee. Fernando de la Garza overviews the 2012 reform of Mexico’s Federal Labor Law. Héctor Arangua L. and Gunter A Schwandt report on the launch of new securities instruments. Juan Francisco Torres Landa R. and María Angélica Nieves S. set forth challenges of the effective use of notarial services in transnational matters. Alejandro Suárez (asuarez@suarezintlaw.com), Ana Patricia Esquer Machado and Rodrigo Soto Morales, Editors © 2013 ABA all rights reserved. Issue 39 Page 2 MEXICO UPDATE About the Mexico Committee Anchored by coordinators in nine cities in Mexico and the United States, the Mexico Committee seeks to grow its members’ involvement in dialog on current and potential developments of Mexican, United States and other law relevant to their practice of law and to the establishment of sound policy. Current substantive focuses of the committee’s work include arbitration, antitrust law, criminal procedure reform, data privacy, environmental law, legal education, secured lending, and trade law. The Committee contributes to the annual Year in Review publication, publishes its newsletter in partnership with a leading Mexican law faculty, maintains its website, and actively organizes programs at the spring and fall meetings of the International Law Section. The Mexico Committee’s membership is its most important asset. We encourage all Committee members to be involved in Committee activities and to communicate freely suggestions and ideas. Upcoming Events — Save the Date Washington DC Spring 2013 Meeting April 23 –27 Mexico Committee sponsors the panels, What’s in a Name? That Which We Call a Notary, Is It the Same? Tuesday, April 23, 2:45-4:00. Civil law notaries have responsibilities distinct from those of common law notaries, but even among civil law countries the roles of notaries vary relative to matters such as real property conveyance, establishment of lien priorities, memorialization of matters in contemplation of litigation, privilege and confidentiality of information, and generation of tax revenues, as well as the allocation of responsibilities among notaries and lawyers. The panel will work through a series of typical transactions in the United States, France, Germany, Italy and Mexico to highlight the distinct contributions of notaries. Program Chairs Francesca Giannoni-Crystal/Crystal & Giannoni -Crystal, LLC Juan Francisco Torres-Landa/Barrera, Siqueiros y Torres Landa, S.C. Moderator Susanna K. Fuchsbrunner/Sibeth Partnerschaft Speakers: Patrick Del Duca/Zuber Lawler & Del Duca Hans-Michael Giesen/ Giesen Heidbrink Stéphane de Navacelle, Navacelle Avocats Juan Francisco Torres-Landa/Barrera, Siqueiros y Torres Landa, S.C. Ethical Red Flags in International Law Practice: Advising Clients and Protecting Your Reputation Tuesday, April 23, 2:30 PM - 4:00 PM How do you know your clients if they are located overseas? What do you do when you depend on your client for fact based submissions? What do you do when conflicts of interest, disagreements with clients, and unforeseen dilemmas arise in international representation? What are counsel’s ethical obligations in exercising due diligence? What are the limits and when can counsel withdraw representation? This knowledgeable panel will this timely and challenging topic. Program Chair/Moderator Sergio Karas/Karas & Associates Program Chair Cyndee Todgham Cherniak/LexSage Speakers Marcy Stras/Cozen O’Connor Carlos Velazquez de Leon/Basham, Ringe y Correa Committee Leadership 2012-2013 Patrick Del Duca Immediate Past Chair Alejandro Suárez Senior Advisor Carlos Velázquez de Leon Leslie Alan Glick Co-Chairs Barbara Aldave Vice-Chair Ana Patricia Esquer Vice-Chair Alonso Gonzalez-Villalobos Vice-Chair Joaquin Rodriguez Vice-Chair Benjamin Rosen Vice-Chair Carlos A. Sugich Vice-Chair Eddie J Varon Levy Vice-Chair Ernesto Velarde Vice-Chair Steering Group Francisco Cortina Efren Olivares Jose Sanchez-Gil Javier Soto Rodrigo Soto-Morales DISCLAIMER The materials and information in this newsletter do not constitute legal advice. MEXICO UPDATE is a publication that is made available solely for informational purposes and should not be considered legal advice. The opinions and comments in MEXICO UPDATE are responsibility solely of each author/contributor and do not necessarily reflect the view of the ABA, its Section of International Law, the Mexico Law Committee or the Universidad Panamericana. © 2013 ABA all rights reserved. Issue 39 Page 3 MEXICO UPDATE Mexico standalone program November 7 to 9, 2013 Save the Date! Following up on the Mexico Committee’s June 2012 standalone program in Mexico C i t y, Mexico Committee members are working towards a program to be held November 7 to 9, 2013 in sunny Cabo San Lucas, at the tip of Baja California. Arrangements have been made to conduct the program at the Sheraton Hacienda del Mar Golf Spa Resort Los Cabos, a venue designed to enable Committee members and friends to visit with each other not only in the course of working sessions, but also through social activities in a uniquely beautiful natural environment. Consistent with the resort venue, themes p l a n n e d f o r programming of the meeting include Foreign Investment, Trade, Real Estate, Hospitality, and Tourism. Committee members interested to participate in the planning of the program are urged to contact any of the Mexico Committee CoChairs and Section staff members Audrey Lamb and Jessica Smith who are facilitating the Committee’s work. Contributors for this edition: Héctor Arangua L. Nader, Hayaux y Goebel, S.C. Mexico City Fernando de la Garza Bryan, González Vargas & González Baz Mexico City Rogelio Cruz Vernet Basham Ringe y Correa Mexico City Patrick Del Duca Zuber Lawler & Del Duca Los Angeles María Angélica Nieves S. Barrera, Siqueiros y Torres Landa Mexico City Gunter A Schwandt Nader, Hayaux y Goebel, S.C. Mexico City Alejandro Suárez Méndez Suarez International Law PLLC Houston Juan Francisco Torres Landa R. Barrera, Siqueiros y Torres Landa Mexico City Juan Carlos Velázquez de León Obregón Basham Ringe y Correa Monterrey DISCLAIMER: The materials and information in this newsletter do not constitute legal advice. MEXICO UPDATE is a publication made available solely for informational purposes and should not be considered legal advice. The opinions and comments in MEXICO UPDATE are those of its contributors and do not necessarily reflect any opinion of the ABA, their respective firms or the © 2013 ABA all rights reserved. editors. Issue 39 Page 4 MEXICO UPDATE The Mexico Committee–Nurturing Committee Activity and Diversity by Patrick Del Duca, Alejandro Suárez Méndez, and Juan Carlos Velázquez de León Obregón “Women are not focused on transnational business matters”; “It is difficult to recruit women of sufficient practice seniority”. Obviously, we disagreed. The success of the Committee over the period of our stewardship of it is founded squarely on embrace of diversity in all the ways that our Section celebrates it, including gender diversity. From no women involved in Mexico Committee activities, the Mexico Committee has achieved significant engagement of women in all phases of its activities and leadership. Patrick Del Duca, Alejandro Suárez Méndez, and Juan Carlos Velázquez de León Obregón, authors of this contribution, served as co-chairs of the Mexico Committee of the ABA Section of International Law during a four year period of dramatic upswing in its activities, capped by a Section of International Law award for Although we had no active female members, we also had far “Most Improved Committee”. fewer than the desired number of male members as well. The The Mexico Committee’s upward secret of what we did to achieve a dynamic committee is simply trajectory is more fully evidenced to follow the well trod path of implementing the classic elements by the issues of Mexico Update, Our t h e M e x i c o C o m m i t t e e of a Section of International Law committee. newsletter, available on the implementation of this path was to value every member, Mexico Committee webpage. investing the effort to understand how the Committee could best Not by accident, the participation avail itself of the unique contributions that each could make. of women in the leadership and work of the Mexico Committee grew dramatically as The broad challenge that we faced was to create a well in this period. Indeed, as co-chairs of the community in which lawyers, male and female, would Committee we committed to gender diversity as a key be eager to take part. Although we had no active female members, we also had far fewer than the foundation of the vitalization of the Committee. desired number of male members as well. The secret Our Section celebrates diversity in its work along many of what we did to achieve a dynamic committee is dimensions, including but not limited to, under- simply to follow the well trod path of implementing represented minority groups, gender, seniority in the classic elements of a Section of International Law practice, practice context, jurisdiction and nationality. committee. Our implementation of this path was to As we began our stewardship of the leadership of the value every member, investing the effort to Mexico Committee, the ebb of the Committee’s understand how the Committee could best avail itself activity nonetheless had left glimmers of diversity on of the unique contributions that each could make. each of these dimensions, except gender. In plain Much like an American university generously claiming words, we were entirely male. its alumni as eligible for fundraising outreach, we Some of our members did not see this as a priority sought to claim every prospective member as one of challenge. Indeed, some of our members did not our own, a valued member of our community. In appreciate the importance of the celebration of DISCLAIMER: The materials and information in this newsletter do not diversity to our Committee’s work. Affirmations constitute legal advice. MEXICO UPDATE is a publication made available solely included: “We inherently count as ‘diverse’ because we for informational purposes and should not be considered legal advice. The are predominantly Mexican lawyers”; “Parochial US opinions and comments in MEXICO UPDATE are those of its contributors and do necessarily reflect any opinion of the ABA, their respective firms or the notions of diversity do not apply internationally”; not editors. © 2013 ABA all rights reserved. Issue 39 Page 5 MEXICO UPDATE doing so, we made certain not to neglect the but also in cities such as Ciudad Juarez/El Paso, This realization created recruitment and consideration of women for all phases Phoenix and Seattle. opportunities ranging from the convening of a simple of our activities. brown bag lunch to allow our local members to greet We began by holding monthly Committee calls, making each other, to organizing a formal presentation at the a display of keeping them to a half hour to avoid headquarters of the Organization of American States volunteer fatigue, and we always made sure that we had in Washington, DC on the occasion of the visit of a some topic to address, even if attendance was limited. senior Mexican official, accompanied by commentary On the poorly attended calls, we attempted to from locally-based members expert in the relevant understand the practice focus of the participants, so as subject matter. to suggest ways attractive to them, for them to participate in the committee activity. More We made sure to find roles for everyone who desired particularly, we tried to leave each participant to have a role. . . . As co-chairs we coached our on a call with a specific initial opportunity to members in every aspect of Committee opportunity. contribute to the Committee that would leave the participant feeling supported and spotlighted, without more than modest effort on the part of the We also made the effort to incorporate and recognize individuals whose position arose elsewhere in our participant. Section, but somehow related to the work of our Apart from the monthly calls, we asked each of the committee. Thus, we made sure to involve our Committee vice-chairs to take responsibility for some Section’s liaison to the Barra Mexicana in the heart of aspect of the Committee activity. Concurrently, we the Committee’s work, and we established close made sure that each of the basic committee roles was relationships with the ABA Rule of Law Initiative staff covered. Thus, we found someone other than the co- focused on Mexico. chairs to serve as the Committee webmaster. We found a member willing to provide the notices of the As co-chairs we coached our members in every aspect monthly calls and to handle the related logistics. And, of Committee opportunity. We started with coaching we found an editor for the Committee’s Year in our members on how to propose and organize Review contribution. This left us as co-chairs the time seasonal meeting panel presentations. The panel to focus on recruitment and integration of active presentations at seasonal meetings sponsored by the Mexico Committee over the last several years have Committee members. consistently shared the stage between men and We made sure to find roles for everyone who desired women. Women in senior roles at law firms, to have a role. Thus, in addition to the standard roles international organizations, and multinational of officers for communications, membership, corporations have participated as panel co-chairs, newsletter editor, special projects and policy, we moderators and speakers, as have women in the start established a point person for the Committee’s “City up phases of their careers. Moreover, as the Coordinator Initiative”, a “government relations” Committee co-chairs have coached lawyers new to officer, and a liaison from the Committee to another committee activities, lawyers on the cusp of law firm Section. By way of example of the effort to find roles partnership, lawyers early in their careers, senior for everyone, the city coordinator initiative arose from lawyers, and lawyers seeking to develop new law firms, the realization that we had clusters of members in cities among others, on the benefits and art of navigating such as Mexico City, New York and Washington, DC, the seasonal meeting program proposal and © 2013 ABA all rights reserved. Issue 39 Page 6 MEXICO UPDATE Mexico Update, our Mexico Committee newsletter. The partnership enabled us to maintain a flow of high quality content for publication, focused on the significant emerging developments of Mexican law. It also offered an interactive marriage of audience and content for practitioners and academics, for US and Mexican lawyers, all of whom valued the publication We created numerous, varied opportunities for our of cutting edge content, presented in high quality members to meet at the seasonal meetings, on the English. thought that breaking the ice and coming to know friendly faces would facilitate collaboration throughout Although we made sure never to have a negative the Committee’s work, but also give Committee interaction with any member of our committee, not members additional reason to attend the seasonal everything worked immediately. However, enough meetings of the Section. We also designated Committee members as We also, as we had the opportunity to extend invitations to “reporters” to attend any panel at a members and prospective members, to participate in committee season meeting featuring a Mexican activities, e.g. participation in a panel as a moderator or lawyer. The reporter’s duty included to meet the speaker and to speaker, made certain that we identified well-qualified women, write a short review for the Mexico as well as well-qualified men, for such opportunities. Committee newsletter. The designated members appear to have appreciated the did take root that we began to attract active members. honor of the mission, and the speaker constituted a As some of these new participants were women, we further recruit for the Committee. Of course, both made sure that they, like every other new recruit, were women and men have benefited from serving in the made to feel welcome and valued, and as consistent with their interest, able to take up leadership roles. reporter roles. We also, as we had the opportunity to extend We brought the collaboration of our Committee to invitations to members and prospective members, to appropriate events that our members were organizing participate in committee activities, e.g. participation in in the context of other organizations. Our members a panel as a moderator or speaker, made certain that involved in such organizations felt supported, and our we identified well-qualified women, as well as wellCommittee’s visibility and contacts increased. We qualified men, for such opportunities. In the annual abounded in the creation of informal, issue or task cycle of committee leadership appointments, we focused working groups, exercising what we benefited from the active support of our then considered our inherent powers as committee co-chairs Division Chair, Mark Wojcik, who readily supported to confirm the appointment of committee members as our efforts to recruit and assure the appointment of participants in such groups or as conveners of them. diverse Committee leaders from the increasingly deep Many tasks we recognized that we could not effectively bench of active Committee members. undertake on our own. We launched a newsletter We celebrated all our members’ achievements effort to afford our members writing opportunities. whenever we could, taking care not to overlook the To do so, we established a partnership with a leading achievements of our female members and the models Mexican law faculty to collaborate in the production of of success offered by women prominent in the subject presentation process, we have taken care to include women as the targets of the recruitment and leadership roles for such programs, and we have been unstinting in our efforts to assure the introduction to prospective program co-chairs of women who would enrich the program offering. © 2013 ABA all rights reserved. Issue 39 Page 7 MEXICO UPDATE matter focus of our Mexico Committee. Thus, for Mexico Committee member Rene Alva represented example when a longtime member of our Section’s the Mexico Committee at the ABA Women’s Caucus leadership, Carol Mates, was honored with the Mayre gathering held at the 2012 ABA annual meeting. His Rasmussen Award for the Advancement of Women in report to the Committee of the issues there addressed International Law, we made sure to share the good will inform the ongoing efforts of the Committee. news with the Mexico Committee membership The activity of the Mexico Committee has prospered. through the Committee newsletter, claiming her as one Diversity, in respect of gender and otherwise, has been of our own. Likewise, when the Mexico Committee essential to this prosperity. The community created held its June 2012 standalone program in Mexico City, within and around the Mexico Committee is attractive we had the honor of Justice Olga Sanchez Cordero, a to its members because it is diverse in many member of Mexico’s Supreme Court, not only dimensions, including gender as well as many more. accepting our invitation to serve as a keynote speaker And, without the attractiveness of the high level and for the gathering, delivering a substantive address on the globalization of law and the roles of The community created within and around the Mexico national and international courts in that process (published in a recent issue of Committee is attractive to its members because it is diverse Mexico Update, available on the Mexico in many dimensions, including gender as well as many Committee web page—we are proud of more. And, without the attractiveness of the high level and our Committee’s newsletter and hence quality of the Mexico Committee activity, that community mention it again), but also generously and its diversity would not be able to continue to prosper. sharing her experiences on the challenges facing women undertaking In our view, nurturing diversity is the sound path towards building a successful committee. careers in the law in Mexico. The organization of the Mexico City June 2012 standalone program offered a further opportunity for the affirmation of gender diversity in the Mexico Committee’s activity. The Mexico Committee CoChairs early in the planning process undertook that the program reflect gender diversity. The results of the program as conducted demonstrate the progress in respect of gender diversity within the Committee, but also of the opportunity for further progress. Of the 55 names mentioned in the definitive program, twelve are of women. Each panel of the eight panels was scheduled to include at least one woman. Four of the panels each included two women. As mentioned, the opening night keynote speaker for the event was Justice Olga Sanchez Cordero of Mexico’s Supreme Court. Her remarks have inspired the Committee’s launch of a women’s initiative, that we enthusiastically support. As an initial step in respect of that launch, quality of the Mexico Committee activity, that community and its diversity would not be able to continue to prosper. In our view, nurturing diversity is the sound path towards building a successful committee. And, assuring the quality of member interactions with, through and on behalf of a committee optimizes the ability to achieve diversity. We were privileged to have had the opportunity to lead the Mexico Committee in a period of growth and enriched by the diversity of its leadership and membership that grew with it. Reproduced from ABA SECTION OF INTERNATIONAL LAW DIVERSITY NEWSLETTER 7-10 (Fall 2012) © 2013 ABA all rights reserved. Issue 39 Page 8 MEXICO UPDATE Mexican Labor Law; A Reform Much Needed in 2. The concepts of harassment and sexual harassment are defined and added as grounds of termination of Mexico the work relationship. by Fernando de la Garza 3. Employment Outsourcing Services. Employment On November 30, 2012 the then President of Mexico, Outsourcing Services are newly regulated to avoid Felipe de Jesus Calderon-Hinojosa, published a decree evasion of an employer’s observation of its obligations in the Federal DIARIO OFICIAL that amended to employees and to reduce employee rights. The new Mexico’s Federal Labor Law (“Labor Law”). This rules may impose joint responsibility for labor and “new” Labor Law became effective day following its employment obligations on the outsourcing service publication. provider and the beneficiary of the services. Such The current reality and conditions of Mexico are outsourcing may not cover activities equal or similar distinctly different than those that prevailed in the to those that occur in the workplace, must be justified 1970’s when the Labor Law was last subject to by its specialized nature, and may not be used to cover substantial legislative revision. One of many purposes of the new law, and certainly a very The minor amendments to it since then failed to make it important one, is to establish more flexible hiring conditions so as relevant to the current global to promote the creation of more new jobs. With this reform, numerous circumstances that were common practice but not economic context. The new amendment to the expressly addressed in the law are now expressly regulated and Labor Law seeks to strengthen included in the Labor Law. Mexico’s labor market by establishing a more flexible legal framework to permit the entire workforce of the company beneficiary of growth and to reduce unemployment by introducing the services. Failure to comply with the new rules will new forms of employment and increasing the training cause the beneficiary of the outsourcing services to be and productivity of employees. One of many purposes deemed an employer, including for purposes of social of the new law, and certainly a very important one, is security obligations. to establish more flexible hiring conditions so as to B. Individual Labor Relationships promote the creation of more new jobs. With this 1. New forms of employment are defined, namely: reform, numerous circumstances that were common a) Seasonal Contracts are contemplated for periodic practice but not expressly addressed in the law are now work that is not continuous and related to a specific expressly regulated and included in the Labor Law. time of the year. Such contracts generally pertain to The principal changes of this reform to the Labor Law, the agricultural sector. relevant to any employer in Mexico, are here reviewed. b) Thirty-day trial periods are allowed in connection A. General Principles with contracts for permanent employment and for 1. Principles of the dignity and decency of work are work relationships meant to exceed 180 days. For defined and include prohibition of discrimination in workers engaged in managerial positions or employment based on ethnic or national origin, DISCLAIMER: The materials and information in this newsletter do not legal advice. MEXICO UPDATE is a publication made available solely disability, condition of health, immigration status, constitute for informational purposes and should not be considered legal advice. The opinions, sexual preferences, marital status or any opinions and comments in MEXICO UPDATE are those of its contributors and do not necessarily reflect any opinion of the ABA, their respective firms or the other ground that violates human dignity. editors. © 2013 ABA all rights reserved. Issue 39 Page 9 MEXICO UPDATE performing administrative tasks, the trial period may be the event of the employee’s death, the calculation of back wages ceases from the date of death. extended up to 180 days. c) An initial training period on an employer’s first hire 5. New grounds for an employee to end employment of an employee for a definite term of employment is without loss of rights include: i) the employer, relatives allowed so as to enable the employee to acquire skills or any of its representatives commits in the course of required for the job. This contract may have a the employment acts of harassment or sexual maximum duration of three months, increased to up to harassment, and ii) the employer requires conduct that six months in the case of administrative or undermines or threatens the employee’s dignity. management positions. Employment for an It is newly established that workers may be required to participate in indefinite term must in tasks related or complementary to their primary work description. general be continuous, but may be agreed otherwise when services are required for D. Work Conditions a fixed or periodic work that is not continuous, for It is newly established that workers may be required to seasonal activities or for activities that do not require participate in tasks related or complementary to their primary work description. services for the entire week, month or year. Trial and Initial Training Periods cannot be extended. E. Salary 1. Hourly Pay: Employees may be paid by the hour, C. Termination of employment 1. The following additional grounds of justified provided, however that the number of hours not termination are established: i) the employee commits exceed the maximum legal work shift and the wage actions against customers and suppliers of the paid is not below the wage corresponding to such employer ii) the employee commits acts of harassment work shift. or sexual harassment against any person in the work 2. Wages may now be paid by deposit in a bank place, and iii) the employee fails to deliver documents account, by debit card, by wire transfers or by any other electronic means. legally required in connection with the services. 2. Termination Notice: The employment termination 3. It is expressly contemplated that the employer must notice shall be personally delivered to the employee at notify the judicial authority and beneficiaries of the moment of the dismissal or notified to the Labor alimony when an employee leaves the employment, within five days following the departure. Board. 3. Severance pay must be calculated based on the F. Profit Sharing complete compensation of the employee. The Ministry of Finance and Public Credit is required 4. Back wages: Should the employer fail to establish to respond in writing to comments on an employer’s ground for termination in a labor trial, the right of back tax returns made by a relevant union or the majority wages is limited to twelve months of salary as of the of employees. date of termination. However, if the trial is not G. Employer Obligations and Prohibitions concluded within such twelve months or the employer 1. Employers must circulate and make visible in the fails to comply with a judgment issued; an interest rate workplace the regulations and the Official Mexican of 2% per month over the amount equivalent to fifteen Norms on safety, health and work environment, and months of salary must also be paid to the employee. In the complete text of the Collective Bargaining © 2013 ABA all rights reserved. Issue 39 Page 10 MEXICO UPDATE Agreement. They must also circulate among necessary changes in machinery, work organization employees information concerning the risks and and labor relationships to increase productivity and to dangers to which they may be exposed to due to improve the preparation and the training of workers, as well as to monitor the undertakings for employment. productivity. 2. When more than fifty persons are employed, an employer must have adequate facilities for persons J. Women's Work with disabilities to access the employment and to 1. In the event there is a declaration of health contingency, no woman pregnant or breastfeeding perform their activities. 3. Employers must register the work center with the may be employed. National Fund for the Consumption of Workers 2. Under certain circumstances, it may be possible to transfer up to four of the six weeks of leave prior to (FONACOT). 4. Employers must grant paid paternity leave of five child delivery, to be enjoyed after such date. The leave working days to male workers upon the birth of a child may be for up to eight weeks after the birth in the event there is proof that the child was born with a and in case of adoption of a child. disability or requires medical hospital care. Adoption 5. An employer may not: i) perform, allow or tolerate of an infant affords a six-week leave period. any act of harassment or sexual harassment against any worker or person in the workplace, or ii) An employer may not: i) perform, allow or tolerate any require the submission of medical certificates of non pregnancy for hiring, act of harassment or sexual harassment against any continuation or promotion in employment. worker or person in the workplace, or ii) require the Likewise, an employer may not dismiss a submission of medical certificates of non pregnancy for worker or coerce the worker to resign due hiring, continuation or promotion in employment. to pregnancy, change of marital status or 3. A maximum of six months is established for taking care of underage children. purposes of the nursing period, during which the H. Worker Obligations and Prohibitions employer and employee may agree to reduce the Workers may not sexually harass any person or working day by one hour. perform immoral acts in the workplace. K. Underage Employment I. Productivity, Preparation and Training of Workers Additional prohibitions for the employment of minors 1. The new law establishes the obligation of every are established. In the event of declaration of a health employer to provide its employees preparation or contingency, as well as whenever the authority so training for their work in accordance with plans and determines, minors less than age sixteen may not be programs formulated by mutual agreement with the employed. employer and the relevant union or the majority of the 2. Minors under age fourteen may not be employed workers. except within the family circle. 2. Joint Committees of Preparation, Training and L. Health Contingency Productivity, should be established in companies with more than fifty employees, to monitor among other Section XXXI of the new law establishes regulation matters, the implementation and operation of the for health emergencies related to the suspension of system and procedures established and to propose work. © 2013 ABA all rights reserved. Issue 39 Page 11 MEXICO UPDATE Customs Review 2012 M. Field Workers and Mine Workers by Rogelio Cruz Vernet New rules on work conditions for agricultural and mine workers are established to provide more suitable Long gone are the days when discussions about labor shifts and to ensure that they have the same customs and foreign trade in Mexico were always in reference to opening borders and to policies to benefits granted by the employer. promote Mexican industry’s development in a global N. Trial Procedure economy. Today focus is more and more on new 1. Mediators are now contemplated, including with topics concerning security of the supply chain and training and skills to render conciliation in labor customs compliance as the key elements that litigation more effective. determine the success of business. Therefore, during 2. The legal personnel of Conciliation and Arbitration 2012 one of the most relevant topics has been the Boards, and attorneys practicing in labor matters, are implementation of new regulations issued by the newly required to hold a law degree and an attorney Ministry of Economy to accomplish export controls, license. in accordance with the Mexican government’s 3. New means of evidence are allowed, such as international commitment to non-proliferation of photographs, films, dactyloscopic records, audio and weapons of mass destruction and their delivery video recording , and various information and systems, and restrictions on the transfer of communication technologies, such as computer conventional arms and dual-use goods, software and systems, optical electronic, fax, e-mail, digital technologies within the framework of the Wassenaar document, digital signature or password and, in Agreement and other related international treaties. general, new technology media. On the same track, Mexico has 4. The issued its first stage of its own structure During 2012 one of the most relevant topics has been AEO Program under the umbrella of the the implementation of new regulations issued by the of the former Empresa Certificada Ministry of Economy to accomplish export controls. first framework. Indeed, the Mexican hearing in Customs Administration has published and put into the ordinary procedure is modified to comprise solely operation its new voluntary security program, Nuevo conciliation, complaint and exceptions, followed by a Esquema de Empresas Certificadas (NEEC), that allows second hearing, for offer and admission of evidence. importers and exporters to be certified and to receive O. Social Security Individual Conflicts trade-related benefits in return as they adopt a security A summary procedure is created to process disputes profile covering their supply chain. Mexican concerning social security benefits, housing manufacturers already certified under the US C-TPAT contributions and benefits from the system of program, are deemed already in compliance for NEEC during this first stage, continuing the benefits granted retirement savings. by CBP, while they are also sheltered with additional P. Sanctions benefits such as prioritization of cargo during an The reform increases employer fines for non The materials and information in this newsletter do not compliance with the Labor Law, now up to the DISCLAIMER: constitute legal advice. MEXICO UPDATE is a publication made available solely equivalent of 5000 minimum daily salary, for informational purposes and should not be considered legal advice. The approximately $311,000 Mexican Pesos, corresponding opinions and comments in MEXICO UPDATE are those of its contributors and do not necessarily reflect any opinion of the ABA, their respective firms or the to about US$24,000. editors. © 2013 ABA all rights reserved. Issue 39 Page 12 MEXICO UPDATE incident, non-intrusive inspections and “extraordinary Recent Developments in Mexico: An Update on CKDS and FIBRAS services” from Mexican Customs. by Gunter A Schwandt and Héctor Arangua L. Another relevant development put into action by Mexico’s Customs Administration during 2012 is the During 2012 several developments in Mexico have recently launched Single Window for Trade (Ventanilla contributed to strengthen the nascent market for Unica, VUCE), adopted to facilitate trade and insert the CKDs and FIBRAS. country’s economy in global trends. This tool allows As a general matter, FIBRAS (fideicomisos de inversión en exporters and importers to meet government bienes raíces) represent a vehicle for the public issuance regulations on trade by instantly sending relevant of real estate trust certificates (certificados bursátiles fiduciinformation such as type of product, volume, arios inmobiliarios) that grant their holders a pro rata right destination, and mode of transportation at one time. in the assets and revenue of the FIBRA. FIBRAs are This confirms the new philosophy adopted by Mexican the Mexican equivalent of real estate investment trusts Customs in the sense that “promoting trade is not just (REITs). The FIBRA allows investors to participate in about reducing or eliminating tariff and non-tariff commercial real estate development with a favorable barriers, but also about moving increasing volumes of tax regime, along with the transparency and access to goods through the borders faster”. The Single Window information and disclosure enjoyed by investors in for Trade replaces the need for accomplishing 165 proceedings and FIBRAs are the Mexican equivalent of real estate submitting more than 200 different pieces investment trusts (REITs). . . . CKDs (certificados de of data, such as importing or exporting capital de desarrollo) are structured notes offered licenses, certifications of origin for publicly that essentially allow the creation of private products, invoices, and shipping verification orders, that formerly created a equity funds through which institutional investors, such as Mexican pension funds (afores), may invest. mountain of paper work. Last, but not least, while Mexico is negotiating entering into the TPP (Trans-Pacific Strategic Economic Partnership Agreement), a FTA that will drive trade in the Pacific region, including North America, Mexican Customs increased NAFTA origin audits during 2012. Senior Mexico customs officers indicate that this crusade will continue over 2013. Thus, it is important for traders in both sides to strengthen compliance policies toward NAFTA origin calculation and record keeping; otherwise, the enjoyment of NAFTA benefits may be disrupted by assessment of duties, taxes and fines along with findings of the invalidity of certificates of origin. Mexico’s Stock Exchange (Bolsa Mexicana de Valores). FIBRAs invest in ongoing, income-producing real estate assets that offer annual dividend-like payments and growth potential. CKDs (certificados de capital de desarrollo) are structured notes offered publicly that essentially allow the creation of private equity funds through which institutional investors, such as Mexican pension funds (afores), may invest. The funds obtained through CKD issuances are invested in projects or companies in acDISCLAIMER: The materials and information in this newsletter do not constitute legal advice. MEXICO UPDATE is a publication made available solely for informational purposes and should not be considered legal advice. The opinions and comments in MEXICO UPDATE are those of its contributors and do not necessarily reflect any opinion of the ABA, their respective firms or the editors. © 2013 ABA all rights reserved. Issue 39 Page 13 MEXICO UPDATE cordance with investment policies specifically laid out in the issuance documents. Although CKD issuances have been generally targeted at the real estate and infrastructure sectors, the regulations allow for these types of issuances in any other industry. According to Mexican Stock Exchange information, close to US$4.5 billion has been raised through twenty four CKD issuances since 2009. In 2012 alone, eight CKD issuances have come to market for an aggregate approximate amount of US$1.4 billion. There are currently a number of CKD issuances that are in the review process before the Mexican securities commission (Comisión Nacional Bancaria y de Valores) that are expected to launch during the end of 2012 and the first semester of 2013. The emergence of FIBRAs and CKDs regulations during the past few years is arguably the most significant change in structured financing that has occurred in Mexico since the year 2000. The use of FIBRA and CKD structures has become increasingly popular in recent years as they provide financing alternatives that The groundbreaking FIBRA Uno was the first FIBRA may be highly structured and allow sponsors to create to successfully issue certificates in the Mexican market for an approximate amount of US$250 million in tailor-made solutions for their capital needs. 2011. Earlier this year, FIBRA Uno made a follow on Although CKD issuances and FIBRAs are completely issuance for approximately US$700 million that was functional schemes in Mexico, there are still some re- comprised of simultaneous offerings in Mexico and in finements that will be necessary or convenient to be made to the regulatory framework in the The emergence of FIBRAs and CKDs regulations during coming years, as the market continues to develop and mature. Among other matters, the past few years is arguably the most significant it would be helpful if the securities offered change in structured financing that has occurred in through FIBRAs were independently rec- Mexico since the year 2000. . . . In August 2012, the ognized by law as a specific instrument and first issuance of CKDs with a capital call structure the law were reformed to permit FIBRAs occured. . . By the summer of 2013 there should be at to issue more than one series of trust certificates. This would allow, inter alia, the least four new FIBRAs in addition to FIBRA Uno, with transfer of mortgaged properties to the FI- many more to come. BRA with their associated financing. the United States via Rule 144A and abroad via ReguOne of the most significant amendments to CKD lation S. It is anticipated that in 2013 FIBRA Uno will regulations occurred in mid-2011. Mexican regulators return to the market for an additional offering. enacted certain amendments to allow for capital calls In addition to FIBRA Uno there are currently three and commitments. This new modality, that did not ex- FIBRAs that are expected to come to market towards ist in the original CKD regulations, has been embraced the end of 2012 or in early 2013. Two of them are foby both sponsors and investors since it will no longer cused in the hotel sector and the third in the infrarequire investors to fund the full amount of their in- structure and real estate sector. By the summer of vestment at closing, but rather operate under a more 2013 there should be at least four new FIBRAs in adtypical private equity fund structure. In August 2012, dition to FIBRA Uno, with many more to come. the first issuance of CKDs with a capital call structure occured. © 2013 ABA all rights reserved. Issue 39 Page 14 MEXICO UPDATE Interaction of Civil Law and Common Law Notaries: The Mexican Experience by Juan Francisco Torres Landa R. and María Angélica Nieves S. Here we consider how the differences between the Mexican civil law notary and the figure of notary public prevailing in the United States can trigger some difficulties in international transactions. We will list some examples of what happens in our daily activities where these differences materialize and what may be some practical recommendations. International Agreements: a. The Hague Apostille Convention (the “Convention”): The Hague Convention Abolishing the Requirement for Legalisation for Foreign Public Documents, known as the Apostille Convention, has 72 member countries. The Apostille replaces the formalities of a full legislative/ domestic certification process and is only valid when issued by a competent authority in each member country. The Apostille is used to certify the authenticity of public documents, such as birth, marriage and death certificates, extracts from commercial registers, patents, court rulings, notarial acts and notarial attestation of signatures, and academic diplomas issued by public institutions, among other documents listed in Article 1 of the Convention. The Convention’s Article 3 states that the Apostille certifies: (i) the authenticity of the signature; (ii) the capacity in which the person signing the document has acted; and (iii) the identity of the seal or stamp which it bears. It does not extend so far as to attest to the contents in the document. notarial act. Once this difference is recognized, the Mexican practitioner must assure that the inbound document meets the required certifications, even before the foreign notary provides the notarization, so that upon receipt in Mexico it will meet the local needs because the mere participation of the notary will likely not suffice. In the case of outbound documents, the foreign practitioners must know that the document will be lengthier and more complicated than usual, precisely due to the Mexican notary’s full involvement in the legal contents and accuracy. b. Protocol on Uniformity of Powers of Attorney which are to be Utilized Abroad (the “Protocol”): Countries that are parties to the Protocol are the PanAmerican Union, including the United States, Brazil, Colombia, El Salvador, Mexico and Venezuela, but not Canada. The Protocol’s Article 1 sets out the procedure to be followed in the preparation of a power of attorney on behalf of a natural person, third person, or a judicial person. This article states that the official (notary, registrar, clerk of court, judge, or any other upon whom the law of the respective country confers such functions) must certify from personal knowledge the identity of the appearing party and also that party’s legal capacity to execute the relevant instrument. If the certification of the power of attorney involves a third party representing the signer, or a legal entity, then further requirements must be fulfilled, such as certifying that: (i) the third party has the authority to represent such legal entity; (ii) the legal entity’s name, organization, home office and legal existence; and (iii) that the The usual problem that emanates from the use of The usual problem that emanates from the use of the Apostille is that the certification will not cover the Apostille is that the certification will not cover the actual contents of the document being the actual contents of the document being certified. certified. The difference is material when it comes DISCLAIMER: The materials and information in this newsletter do not to notarized documents because in the common law constitute legal advice. MEXICO UPDATE is a publication made available solely informational purposes and should not be considered legal advice. The tradition notaries usually do not certify anything but the for opinions and comments in MEXICO UPDATE are those of its contributors and do identity of the persons appearing, whereas civil law not necessarily reflect any opinion of the ABA, their respective firms or the notaries will actually certify the contents, accuracy and editors. legality of the information included in the respective © 2013 ABA all rights reserved. Issue 39 Page 15 MEXICO UPDATE purpose of the instrument is within the scope of purposes or activities of the legal entity. Moreover, the Protocol’s Article 5 which states that the powers granted in any of the member countries of the Pan-American Union, executed in accord with the rules of the Protocol, must be given full faith and credit, provided, however, that they are legalized in accordance with the special rules provided for that purpose. This provision also recognizes that notaries duly commissioned as such under the laws of their respective countries must be deemed to have authority to exercise functions and powers equivalent to those accorded to native notaries by the laws and regulations of other member nations without prejudice. This last part can cause some problems, since, on this basis, the validity of an inbound power of attorney granted by a non-lawyer U.S. notary public in principle should not be challenged in Mexico. details of the corporate chain of authority and thus the other nations will, in most circumstances, not have a problem recognizing full compliance with both the Protocol and other associated requirements to confirm the authority of the person granting the power of attorney. c. Practical Problems in Notarial Practice of Mexico and Abroad: Concerning a legal entity, the Protocol requires that the power of attorney contain a statement as to the authority of the Board of Directors to grant powers of attorney, which is a problem for common law countries, since powers of attorney are less customarily used, and as such, company by-laws will rarely make specific reference to the authority of the board to grant powers of attorney. This limitation normally leads a common law notary to either omit the topic altogether (creating a problem for an inbound power of attorney) or to make legal conclusions concerning whether the by-laws express general powers sufficiently broad to grant the authority to the Board, which is something that a nonattorney notary public rarely does and is probably not legally trained to do so, or in some jurisdictions of the United States even prohibited from so doing. Due to the above, Mexico’s Supreme Court issued a binding precedent in relation to the formal requirements that according to the Protocol should apply, stating therein that the powers granted by foreign companies in order to have effect in Mexico, must state that the notary’s function, or its equivalent, is not limited to mere references to the documentation used to grant the power Another common practice in Mexico is that powers of of attorney, but rather also must involve the examination attorney must make a specific reference to Federal Civil and legal assessment of the value of the documents Code article 2554 in order to be valid and fully shown to the notary, so that the notary’s statement thus enforceable. This reference is sometimes objected to, as constitutes a certification that the principal has sufficient a foreign notary public in a common law jurisdiction is authority to deliver the instrument, and thus meets the often reluctant to make a reference that may involve elements of the intrinsic validity of a power of attorney. having to “certify” the law of Mexico, something such a (1) The latter means that there is a further level of notary cannot do. requirements for inbound powers of attorney, as absent An additional event concerning which problems the required certification on the corporate chain of authority, the the powers granted by foreign companies in order to have document will either not be recognized effect in Mexico, must state that the notary’s function, or its or its validity will be questioned upon equivalent, is not limited to mere references to the use in Mexico. documentation used to grant the power of attorney, but rather In the case of outbound powers of attorney, the problems are less because also must involve the examination and legal assessment of the process in Mexico will involve full the value of the documents shown to the notary, . . . © 2013 ABA all rights reserved. Issue 39 Page 16 MEXICO UPDATE Clause”, is a required covenant inbound powers of attorney, . . . absent the required certification that must be included in inbound on the corporate chain of authority, . . . will either not be powers of attorney for acts that recognized or its validity will be questioned upon use in Mexico. involve the need to make such reservation, i.e., the purchase of real property, the creation of legal entities, etc., as otherwise the representation process will be limited in Mexico, and it will be necessary to re-do the power of attorney. In light of the foregoing, it is clear that the Convention and the Protocol have facilitated the notarization of documents, executed before foreign notaries for use in Mexico and vice-versa, however, numerous problems persist in practice. This situation merits an effort among countries to harmonize these differences and to facilitate international transactions among all countries, regardless of their legal system. frequently arise pertains to wills. While in the United States, only the maker’s and the witness’ signatures are necessary to validate such an instrument, in Mexico, in addition to the maker’s signature, the validation of a notary public is required. Moreover a will granted abroad will not be recognized in Mexico for in rem actions (probate proceedings related to real property) and thus a probate proceeding in which a Mexican court will ascertain the rightful heirs is required. A practical solution to this problem is the use of “mirror wills”, which are identical wills drafted in each country, so that the non recognition is not an issue, and each will only deals with the property pertaining to the country in Protocol’s Article 5 . . . powers granted in any which it is issued. Another example of problems that have arisen in of the member countries of the Pan-American Mexican notarial practice relates to Canada. As Union, executed in accord with the . . . mentioned above, Canada is not a signatory to the Protocol, must be given full faith and credit . . . Protocol. Therefore, for a Canadian individual or corporation to grant a power to be used in Mexico, there Conclusions are two options: (i) grant the power of attorney in Having seen the significant differences between the Canada in accord with the laws of the province in which notarial function of civil law and common law countries, the power is granted; or (ii) grant the power according to it is important for lawyers to gather information and Mexican law, before an officer at the Mexican Embassy accumulate experience on the subject matter. In or Consulate. A further limitation is that Canada is also particular, practitioners must devise practical ways to not a party to the Apostille Convention, which creates deal with notarial problems that may arise in any type of additional logistic problems that must be addressed. international operation, either inbound or outbound. Because the Apostille is not an option in respect of In our experience the conflicts that exist between Canada, such instruments must be legalized with the notarial practices around the world cannot be ignored. Lawyers that work in cross-border transactions cannot nearest Mexican Consulate. Mexico has asserted a reservation in respect of the overlook to recognize the complexities that the need for Protocol, concerning the provisions of its Article 4, notarial instruments triggers. Anticipating those issues stating that “aliens who are required, for the and working towards preventive solutions are most performance of certain acts, to enter into the agreement definitely advisable actions, as the consequences can be or waiver referred to in Section I of Article 27 of the quite damaging if the conflicts materialize. Political Constitution of the United Mexican States, must (1) Binding precedent of Mexico’s Supreme Court of Justice no. grant a special power of attorney, expressly including as 205452, June 1994 (Poderes otorgados por sociedades en el para surtir efectos en México. Requisitos formales que one of its provisions the agreement and waiver above- extranjero deben contener según el Artículo I del Protocolo sobre 2013 ABA all rights reserved. mentioned.” This provision, also known as the “Calvo Uniformidad del Régimen Legal de los ©Poderes).. Issue 39 Page 17 MEXICO UPDATE ABA ● Section of International Law ● Mexico Committee MEXICO UPDATE American Bar Association Section of International Law, Mexico Committee© Mexico Committee WEBSITE: http://apps.americanbar.org/dch/ committee.cfm?com=IC845000 Read all our newsletters on the website (under the newsletter archive link)! The Mexico Committee continuously seeks qualified professionals prepared to contribute their time and talents to continue developing a more active Committee. This is a prime opportunity to become involved with a community of lawyers that share an interest in Mexico and Mexican law, who are fellow American Bar Association members. The Mexico Committee welcomes any suggestions, ideas or contributions to enhance this quarterly publication. The current submittal deadline for contributions to the spring issue is April 1, 2013. Editorial Committee: Mexico Committee Patrick Del Duca Alejandro Suárez Juan Carlos Velázquez de León Obregón Facultad de Derecho, Universidad Panamericana, Guadalajara Campus Ana Patricia Esquer Machado Editorial Team: Rodrigo Soto Morales Facultad de Derecho, Universidad Panamericana, Guadalajara Campus Ricardo Valencia Camarena Prof. Ana Patricia Esquer Machado, law students Thaís Béjar Talavera and Brenda Velázquez, Prof. Rodrigo Soto-Morales, and law students Carlos Padilla de Alba and Jorge Robles Toussaint. Law students Ricardo Valencia Camarena and Lorena Martínez are not in the picture. © 2013 ABA all rights reserved.