Declaration of Validity of the National Code of Civil and Family Procedures in Mexico City
Executive Summary:
- A Declaration is issued in Mexico City for the entry into force of the National Code of Civil and Family Procedures.
I. Background
For context, let us remember that on June 7, 2023, a decree was published in the Official Gazette of the Federation, by which the National Code of Civil and Family Procedures (“CNPCF”) was issued.
In accordance with the provisions of the second transitory article of the aforementioned decree, the application at the local level of the CNPCF would be gradual, being subject to Declarations to be issued by the Congresses of each State, upon request of the Judicial Branch of each federal entity.
II. Entry into force in Mexico City
On May 24, 2024, the Plenary Session of the Judicial Council of the Judiciary of Mexico City issued Agreement number V-33/2024, by means of which it approved the draft Declaration of Validity of the CNPCF in Mexico City, requesting its publication by the Congress of Mexico City.
This draft Declaration provides for the date on which the Declaration of Validity will be published, as well as the start of validity and application of the CNPCF in Mexico City, detailing dates and civil and family procedural aspects that will apply in those periods.
In addition to the above, it is proposed that once the implementation of the CNPCF in Mexico City is completed, the Code of Civil Procedure for the Federal District be repealed and consequently cease to apply on the dates and matters where the CNPCF will be applicable in accordance with the provisions of the Declaration of Validity.
Below are the dates and procedural aspects raised in the draft Declaration:
1.- Civil Matter:
- As of December 1, 2024, will be processed orally: special mortgage and real estate leasing trials, as well as their preparatory procedures, appeals and means of defense.
- As of June 1, 2025, must be processed in accordance with the CNPCF: any procedure and controversy related to voluntary jurisdiction, precautionary measures, oral civil executive trials, and their preparatory procedures, resources and means of defense.
- As of November 15, 2025, will be governed by the provisions of the CNPCF: disputes and procedures processed in the ordinary civil oral procedure, enforcement procedure and other civil trials, as well as their resources and means of defense.
At the moment, on July 4, 2024, the Congress of Mexico City published an agreement, through which the Board of Directors of the Congress agreed on a text that will allow the issuance of the Declaration of entry into force of the CNPCF, which should be published on August 2 of this year in: i) the Official Gazette of Mexico City and ii) in the Official Gazette of the Federation.
On the other hand, on July 10, through the Plenary Session of the Congress of Mexico City, the promulgation of a “Block of Initiatives for the Homologation of Local Legislation with the CNPCF” was approved, in order to reform various legal systems of Mexico City. Among these, modifications to the following laws stand out:
- Provisions of the Civil Code for the Federal District, aspects such as:
- People with disabilities.
- Repeal of the “Public will opened by electronic means”
- Procedures for gender identity recognition or gender-sex concordance reassignment.
- Registry of Delinquent Alimony Debtors.
- Unilateral and bilateral divorce.
- Alternative Dispute Resolution Mechanisms.
- Organic Law of the Judicial Branch of Mexico City.
- Notarial Law for Mexico City.
- Law of the Social Prosecutor's Office for the Federal District.
- Law on the Rights of Girls, Boys and Adolescents of Mexico City.
- Transparency, Access to Public Information and Accountability Law of Mexico City.
- Registry Law for Mexico City.
- Law on Women's Access to a Life Free of Violence in Mexico City.
- Law to Prevent and Eliminate Discrimination in Mexico City.
Currently, the promulgation and publication of the aforementioned block of initiatives is pending.
III. Implications of the Declaration of Validity.
In conclusion, the Civil Procedure Code of Mexico City will be repealed, that is, it will no longer be applied in favor of the new CNPCF.
Various legal systems in Mexico City will be reformed to align them with the CNPCF.
This will not affect the procedures in progress at the time of the entry into force of the CNPCF, which will continue to be processed according to the legislation in force at the beginning of the process –depending on the type of process and the dates described above-. However, the parties may choose by mutual agreement that their case's active trials be processed in accordance with the CNPCF.
For more information on the entry into force of the CNPCF, as well as details on the new processing and operation of the procedures regulated therein, we invite you to contact our experts:
Judicial Reform Initiative: the failure to include a package of secondary reforms poses a risk to the right of access to justice and effective jurisdictional protection
Executive Summary:
- On February 5, 2024, the Initiative that reforms, adds and repeals various provisions of the Political Constitution of the United Mexican States to make significant changes to the organization and operation of the Federal Judicial Branch was presented to the Chamber of Deputies.
- We believe that the reform will update various technical, legal, economic and operational challenges regarding constitutional trials that have been initiated prior to the entry into force of the reform and that, at the time, are still pending resolution, as well as those that will be processed after the entry into force, but during the transition period until the reform is consolidated throughout our legal system through reforms to the secondary laws that are necessary.
The reform presented by the Federal Executive to the Chamber of Deputies on February 5, 2024, proposes to modify various provisions established in the Political Constitution of the United Mexican States including, among others, articles 17, 20, section B, 94, 95, 96, 97, 98, 99, 100, 101, 107, 110, 111, 116, and 122[1] with which we seek, among others[2]:
- A new integration of the Supreme Court of Justice of the Nation;
- Modify the procedure for the appointment of Ministers of the Supreme Court of Justice of the Nation, Magistrates of the Circuit Collegiate Courts and District Judges by establishing a popular election procedure to fill such positions;
- Eliminate the Federal Judicial Council and replace it with a judicial administration body and a Judicial Disciplinary Court, whose decisions will be final and unassailable;
- Provide a maximum period for issuing a resolution on matters within the jurisdiction of the courts of 6 months from the time the dispute is brought to their attention;
- The express prohibition that judgments issued in amparo trials, constitutional disputes or unconstitutionality actions will in no case give rise to the suspension of laws with general effects is raised to constitutional level.
Although the study, ruling and, if applicable, approval of said initiative by the Chamber of Deputies and, subsequently, the discussion and approval in the Senate, plus the majority of the state legislatures, are pending, we consider that if the initiative is approved in the proposed terms, it would mean the starting point of a series of reforms that must subsequently be carried out in order to homologate all the secondary laws necessary to consolidate the restructuring of the Judicial Branch proposed.[3].
In this regard, and notwithstanding that the Eighth Transitory Article of said initiative grants a period of 180 calendar days to carry out the necessary reforms to duly comply with the proposed reform, we consider that the approval and implementation of the constitutional text, without the accompaniment of a package of reforms to secondary and regulatory laws, poses a risk to the rights that it seeks to preserve, among which is the right for every person to have access to the administration of justice in a prompt, expeditious, free and impartial manner.
That is to say, although the reform seeks to protect and safeguard the right of access to justice and effective jurisdictional protection, it will be through the modification of all the corresponding secondary legislation that the constitutional reform can be materialized. This is because the proposed constitutional modification involves great operational, economic, technical and legal complexity and, therefore, entails the participation and collaboration between various authorities that, although they do not make up the Judicial Branch, will directly impact the process to change its structure and operation.
Thus, although the restructuring of the Judiciary is being carried out at a constitutional level, its implementation necessarily brings up legal needs and questions such as: Will the body in charge of calling elections be a specialized administrative unit part of the National Electoral Institute or will it be necessary to create a new administrative body for the organization and oversight of said democratic process? How will the transition of matters be carried out for which there has been no resolution and which began prior to the reform, specifically with respect to the 6-month period provided for issuing a resolution? In the event that the opening of judicial offices is required, would it be necessary to wait for the calling and holding of elections for the formation or dissolution of said unit? In the event of the closure of judicial offices, what would happen to the people who were elected by popular vote?
Based on the above, it is important to note that the approval of the reform as it is proposed would entail a fragmented and interrupted implementation of the restructuring of the Judiciary, since no proposals have been made regarding the additional modifications that must be made to the applicable laws, a situation that increases the uncertainty of how the Judiciary will function if the reform is approved.
[1] The second paragraph of article 17; the second, third, fourth, fifth, sixth, eighth, ninth, twelfth, thirteenth, fourteenth and fifteenth paragraphs of article 94; sections II, III, V and VI of the first paragraph of article 95; the first and second paragraphs of article 96; the first, second and third paragraph of article 97; the first, third and fourth paragraph of article 98; section I of the fourth paragraph, and the tenth, eleventh, twelfth, thirteenth and fourteenth paragraphs, all of article 99; the first, second, third, fourth, fifth, sixth, seventh, eighth, ninth, twelfth and thirteenth paragraphs of article 100; the first and second paragraphs of article 101; the first and third paragraphs of section II , and section X of article 107; the first and second paragraphs of article 110; the first and fifth paragraphs of article 111; the second, third, fourth, fifth and sixth paragraphs of section III of the second paragraph of article 116; and the first and third paragraphs of section IV, Section A, of article 122. A second paragraph is added to section VII, Section B, of article 20; sections I and II, as well as the third, fourth and fifth paragraphs to article 96; a second paragraph, with subsequent paragraphs being moved, to article 97; a fifth paragraph to article 98; a sixth paragraph, with subsequent paragraphs being moved, and a seventh, eighth, ninth, tenth and eleventh paragraph, with subsequent paragraphs being moved in their order, as well as a final paragraph, all from article 100; and a final paragraph to article 105 are repealed. The current second paragraph of article 95; the current second paragraph of article 98; the current tenth and eleventh paragraphs of Article 100.
[2] https://www.gob.mx/cms/uploads/attachment/file/892010/REFORMA_AL_PODER_JUDICIAL__2_CS.pdf
[3] Which, by way of example but not limitation, should include, at least, the Organic Law of the Judicial Branch of the Federation, the Amparo Law, the Regulatory Law of Sections I and II of Article 105 of the Political Constitution of the United Mexican States, the General Law of Electoral Institutions and Procedures, the General Law on Electoral Crimes, as well as the General Agreements issued by the Plenary Session of the Federal Judicial Council that regulate the judicial career, the conditions of judicial officials, the organization and operation of the Council, among others, and at the local level the Constitutions of the federal entities and the secondary and regulatory laws referring to the structure of the Judicial Branch.
Initiative to Reform the Judicial Branch of the Federation: Implications and risks of the popular election of Judges and Magistrates
Executive Summary:
- The reform initiative proposes to modify articles 94, 95, 96, 97, 99, 100, 116 and 122 of the Political Constitution of the United Mexican States so that access to the positions of Ministers of the Supreme Court of Justice of the Nation, Magistrates and Circuit Judges, Magistrates and Local Judges, Magistrates of the Electoral Tribunal of the Judicial Branch of the Federation and Magistrates of the Disciplinary Tribunal, are elected through a popular vote.reform
- If the reform is approved and implemented, the popular election of judicial officials would entail a risk to the administration of justice, legal security in decision-making and impartiality.
Currently, our judicial system is made up of 981 Circuit Magistrates and 599 District Judges at the federal level throughout the country, who resolve an average of 1 cases per year.[1]. At the state level, it is made up of 603 Magistrates and 4,398 Local Judges with an average of 1 cases resolved annually.[2].
It is important to remember that in 2021 the Judicial Career Law of the Judicial Branch of the Federation was enacted, through which a comprehensive scheme was proposed so that Magistrates and Judges are selected by technical capabilities based on rigorous evaluations of knowledge and competencies. This Law includes the implementation of mandatory competitions to advance between each position within the judicial career.
The judicial career has defined the standards for public officials who aspire to occupy the positions of Magistrates and Judges through technical examinations in the subject and continuous training with the aim of performing a specialized function, based on legal knowledge. The judicial career is also considered to have a dual function: i) Maintain continuity and efficiency in its performance; and ii) Guarantee legal security and the proper administration of justice against political or power whims.[3]
However, if the Reform is approved and implemented, a series of risks to legal security and the implementation of a true justice system are noted, since the popular election of Judges and Magistrates does not represent a better administration of justice. Implementing popular election to access positions of Judges and Magistrates would violate the principles of a judicial career based on preparation and study that allows guaranteeing the training of capable legal operators.
The principle of the administration of justice that concerns our Political Constitution of the United Mexican States is precisely to guarantee the correct application of the law and the non-transgression of the sphere of human rights through independent and impartial decision-making. There is no room to consider greater legitimacy if a Judge was or was not elected by popular vote, if his obligation is subject to an interpretation and application of laws. True judicial independence constitutes a right to the neutral administration of justice.[4]
The function of a Judge or Magistrate is exclusively the correct application of the law and the Constitution, seeking to safeguard the human rights of our society. The true legitimacy of these positions is reflected in the quality of their decision-making, with any formal legitimacy of election taking a backseat.
Formal legitimacy would only lead to people without experience and without sufficient knowledge being able to access positions as Judges and Magistrates, resulting in poor decision-making.[5].
If the reform is approved, it could trigger an imminently negative change in the independence of the Judiciary, derived from external and internal interference and conditions in decision-making. The quality of the administration of justice could be seriously undermined if judges and magistrates are appointed without sufficient training to deal with everyday situations in society that involve resolving a legal conflict.
Finally, the Reform implies a significant mobilization in the structure of all Federal and Local Magistrates and Judges, subjecting the evaluation of their performance to the ballot box. This ignores the fact that the constitutional parameter that concerns any Judge is to correctly apply the law and guarantee their human rights.
[1] National Institute of Statistics and Geography INEGI. National Census of Federal Justice Administration 2023 published by the National Institute 2023, available at: https://www.inegi.org.mx/programas/cnijf/2023/
[2] National Institute of Statistics and Geography INEGI. National Census of Federal Justice Administration 2023 published by the State Institute 2023, available at: https://www.inegi.org.mx/contenidos/programas/cnije/2023/doc/cnije_2023_resultados.pdf
[3] Nieto, Santiago. 2003. Constitutional principles of the judicial career. Institute of Legal Research of the UNAM. https://revistas-colaboracion.juridicas.unam.mx/index.php/judicatura/article/view/32054/29047
[4] Astudillo, César. 2024 The reform of the Judicial Branch. Effects on the status and mechanics of election - by popular vote of its members. Institute of Legal Research of the UNAM. Technical Analysis of the 20 constitutional and legal reform initiatives presented by the President of the Republic (February 5, 2024) available at: https://archivos.juridicas.unam.mx/www/bjv/libros/15/7483/40.pdf
[5] Supreme Court of Justice of the Nation. 2024. Analysis of the Initiative to Reform the Judicial Branch in Mexico. Center for Constitutional Studies SCJN.
The role of the Conciliator in achieving a Bankruptcy Agreement
Executive Summary:
- In the current economic context, many companies are facing serious financial difficulties that lead to insolvency, affecting shareholders, employees and business partners. The Bankruptcy Law allows companies to restructure their debts or sell assets to pay their creditors. In this process, a Conciliator appointed by IFECOM plays a crucial role, supervising the administration of the company and facilitating an agreement between the company and its creditors.
In a complex global economic scenario like the one we are currently in, companies –regardless of your industry– face major financial challenges that, unfortunately, often prove very difficult to overcome.
The above is not only a problem that affects the partners or shareholders of a company that becomes insolvent, it also has a significant impact on its employees and their families, and on all the people and companies with which the company maintains business relations.
In a case like the one described, the insolvent company or merchant –as defined by the Bankruptcy Law– you may choose to file for bankruptcy.
This process is a tool created by the legislator with the aim of giving the merchant financial viability by restructuring its debts, or if this is not possible, facilitating the sale of its assets so that it can pay its creditors. For the purposes of this article, we will focus on the first case.
Once the application for bankruptcy has been admitted by a District Judge specializing in bankruptcy matters, and the visit stage has been completed, in which a specialist from the Federal Institute of Bankruptcy Specialists ("IFECOM") analyzes the financial situation of the company to confirm its insolvency, if the necessary assumptions are met, the merchant will be declared bankrupt.
The Judge will then notify IFECOM of the ruling declaring bankruptcy so that the Institute may appoint a Conciliator.
The Conciliator is a professional with experience in financial restructuring and some of his functions are: (i) promote the credit recognition procedure, (ii) oversee the administration of the merchant, and (iii) ensure that the merchant and its recognized creditors reach a Bankruptcy Agreement.
This actor in the bankruptcy procedure knows the merchant's accounting first-hand and together with the documentation that each creditor presents to him for the recognition of his particular credit, he gathers sufficient information to be a real support in the development of an alternative solution for the restructuring of the merchant's liabilities, and then takes charge of presenting it to the recognized creditors.
To this end, the Conciliator may meet with the merchant and/or the creditors he deems appropriate and with those who request it, jointly or separately, to hear demands and proposals that lead to a conciliation or arrangement for the payment of the obligations of the bankrupt company.
It is essential that the Conciliator's performance be governed by the principles of independence, impartiality, transparency, publicity, speed and good faith. Above all, considering that the Commercial Bankruptcy Law ("LCM") provides that the conciliation stage will last 185 calendar days, counted from the day on which the last publication of the commercial bankruptcy judgment is made in the Official Gazette of the Federation.
This period may be extended for 90 calendar days for the first time, at the request of the Conciliator or of the recognized creditors representing more than 50% of the total amount of the recognized credits, and this extension may be extended for an additional 90 calendar days, if so requested by the merchant or 75% of the total amount of the recognized credits.
Without prejudice to the foregoing, the LCM is clear that in no case may the conciliation stage and its extension exceed 365 calendar days, counted from the day on which the last publication of the bankruptcy ruling is made in the Official Gazette of the Federation.
Although 365 calendar days seems to be a sufficient period, it is often not. When it comes to negotiating a Bankruptcy Agreement, there are many interests involved. In addition, the LCM establishes as a general rule that, for a Bankruptcy Agreement to be effective, it must be signed by the merchant and its recognized creditors that represent more than 50% of the amount of the recognized credits.
The latter, added to the complexity involved in properly structuring a Bankruptcy Agreement, which, by its nature, usually contains clauses that provide for reserves, reductions, delays, or even increases in share capital. Likewise, the Bankruptcy Agreement must contemplate payment to labor creditors and the treasury –Those who do not sign the Convention-, and the credits essential to maintain the ordinary operation of the company and the necessary liquidity during the processing of the bankruptcy proceedings.
In other words, the Conciliator is faced with a scenario in which definitely not all creditors –perhaps none– will receive full payment of their debts. However, they must make every effort possible to ensure that the Bankruptcy Agreement is implemented for the benefit of the merchant, as well as for the benefit of the recognized creditors who sign it –as far as possible-.
For all the reasons mentioned above, the rescue of a bankrupt company requires very fine and detailed work on the part of the Conciliator. Not only to help the merchant put together a new payment plan for its obligations that is reasonable and legal, but also to convince the recognized creditors that this option is better than the bankruptcy of the insolvent company.
The importance of the role played by the Conciliator is crucial, since in addition to everything that has already been stated, by express provision of the LCM, he will remain in office even when the bankruptcy proceedings conclude with a judgment issued by the Judge who approves the Bankruptcy Agreement.
The Mexican Social Security Institute (IMSS) issues criteria on the correct integration of the base salary for contributions in relation to the concepts of food and housing
Executive Summary:
- On July 11, 2024, Criterion 02/2024/NV/SBC-LSS-27-V was published in the Official Gazette of the Federation, which guides employers or obligated subjects on the correct integration of the base salary for contributions in relation to the concepts of food and housing, which will come into force on July 12, 2024.
- Under this criterion, room and board benefits may only be exempted from the base salary for contributions when they have been delivered to the worker in kind.
On July 11, 2024, AGREEMENT number ACDO.AS2.HCT.250624/204.P.DIR and its Sole Annex, issued by the H. Technical Council of the Mexican Social Security Institute, were published in the Official Gazette of the Federation, by which Criterion 02/2024/NV/SBC-LSS-27-V was approved, in order to guide employers or obligated subjects on the correct integration of the contribution base salary (SBC) in relation to the concepts of food and housing, which will come into force on July 12, 2024.
This criterion indicates that the benefits labeled as food or room, may only be excluded from the SBC in accordance with the provisions of section V of article 27 of the LSS, if it is proven that:
a) They were delivered in kind and NOT in cash or through deposits into the workers' accounts.
b) They were granted for a fee in accordance with the provisions of said section.
c) They are duly recorded in the employer's accounting records.
d) Were actually used for food or housing purposes.
If the above-mentioned assumptions and destination are not proven, the amounts of money given to the nominated workers as food or lodging will update the hypothesis indicated by the first paragraph of article 27 of the LSS, so they must be integrated into the SBC.
Consequently, it is considered that they carry out an improper tax practice in the area of social security:
a) Those who exclude from the SBC amounts delivered in cash to, or deposited in the account of, the worker, nominated as food or lodging.
b) Those who simulate the retention of amounts to demonstrate that food or lodging benefits were onerous, when the amounts - in reality - constitute paid remunerations that must be integrated into the SBC.
c) Anyone who advises, counsels, provides services or participates in the implementation of the above practices.
d) Issuance, by a certified public accountant, a "clean and unqualified" opinion of compliance in the opinion on social security matters of employers who engage in any of the aforementioned conduct.
Link to the publication: https://www.dof.gob.mx/nota_detalle.php?codigo=5733018&fecha=11/07/2024#gsc.tab=0
Mergers and Acquisitions in Mexico, in view of the results of the June 2 elections
- What will be the impact of the outcome of the federal and local elections in Mexico on investment to and from Mexico?
- How did 2023 end and how is 2024 going in the world and in Mexico in this regard?
Given the results of the federal and local elections in Mexico, it is a good time to pause, look back and see how 2024 started in relation to 2023, globally and also in Mexico, and see the expectations for the rest of 2024.
The world is constantly changing. The political environment, trade, immigration, and consumer behavior, among other circumstances, affect regional and global market trends and cause companies around the world to constantly adjust their business strategies. This is not only in Mexico, but globally there are also important factors to consider. To mention a few, this is a year in which there are elections in a very significant number of countries around the world, including Mexico. The war between Russia and Ukraine continues, as does the conflict between Israel and Palestine, and tensions between the United States and China are not expected to decrease in the near future; on the contrary, they seem to tend to grow. In addition to this, the results of the presidential election and certain gubernatorial elections in Mexico, as well as the integration of the Federal Congress in Mexico, will necessarily have an impact on the behavior of investments to and from Mexico.
What happened in 2023 in terms of Mergers and Acquisitions?
In 2023 we experienced a good slowdown in terms of operations, both in terms of the number of operations and their value. The value of operations during the first quarter of 2023 was the lowest in 20 years. Comparatively, in 2022 in Latin America[1], according to figures published by FTI Consulting on December 20, 2023, the value of operations (September to September) was $829 billion dollars and in 2022 $419 billion dollars; that is, about 50% less; in Mexico during the same period (September 2022 to September 2023) there were operations with a value of approximately $124 billion dollars and in 2023 $58 billion dollars. Not only was there a significant drop in the number and value of operations, but also in their size. That is, during 2023, with a few exceptions, there were no large operations like those we saw in 2022, rather there were operations of what is known as the middle market or mid market.
As for the causes of the slowdown, we can mention several. Companies had very healthy balance sheets before the COVID pandemic. When the pandemic began, companies had a lot of cash in hand, there were also government stimuli in much of the world (Mexico was one of the exceptions) and interest rates were very low.
These factors significantly triggered the global mergers and acquisitions market. Once the pandemic was over, that ended, there was less money on the balance sheets, there was less financing, interest rates rose significantly to try to control inflation and very important geopolitical problems arose, which reduced confidence in investments.
The situation in China also influenced this market during 2023. Large companies normally have a China factor in their strategy. The decline in China-related revenues had an impact on the overall balance sheet for acquisition purposes. The regulatory issue in general also had an impact; after the COVID pandemic, several countries began to close down and no longer viewed investment issues as liberally as they had before, and more restrictions were introduced regarding the government authorizations required to be able to invest. For example, in the United States, new guidelines were issued regarding concentrations that make the process for an acquisition more strict, and new guidelines were introduced to regulate US investments in certain countries in specific technology industries. In addition, in Europe, the level of compliance was tightened for sustainability purposes and, in particular, emissions reduction, which also increased costs and had an impact on the acquisition strategy.
The above factors affected non-strategic acquisitions more than strategic acquisitions. Strategic acquisitions occur when one company needs another from a strategic point of view to increase its potential and value. Non-strategic acquisitions are usually carried out by private equity acquirers (private equity) seeking to sell their stake again at a higher price after a certain period of time.
How is the market doing in this area and what are the expectations for the rest of 2024?
Starting in the last quarter of 2023, there was an increase in the number of transactional operations. This increase in activity, together with an expectation of interest rate reductions and a “soft landing” of the US economy, have allowed for greater movement in this area also so far in 2024, basically in transactions of mid marketHowever, we still do not see a clear positive trend. Rather, we see ups and downs in terms of the number of transactions, which, in general terms, represent a higher volume of transactions.
In terms of the global context, the M&A environment remains difficult due to regulatory hurdles. For example, in the United States, the regulatory body (FTC – DOJ) wants to broaden the perspective on how they view deals. The regulator is now also looking at how the deal in question will benefit consumers, so it is important that the parties to the deal are ready to respond to such questions. Also, if under the new regulation it is necessary to obtain authorization under the HSR Act[2] The time for authorization may increase significantly. Finally, some states in the country are restricting most non-compete agreements for employees.
In particular, what is expected for Mexico?
Challenges
There are interesting factors for Mexico that are worth considering. Economic growth for Mexico in 2024 is not expected to be as significant as it has been in 2023, 2022, and 2021. In Mexico, growth is expected for 2024 of approximately 2.4%, which is low compared to 3.5% in 2023, 3.9% in 2022, and 5.8% in 2021.
The exchange rate has also been a challenge, especially for exporters; the trade balance with the United States during 2023 was very good and the volume of exports was also very good, but the income received by Mexican companies for exporting with such a cheap dollar was very low. The depreciation of the exchange rate that we have recently experienced should be beneficial for the balance sheets of Mexican exporting companies.
The messages that the new government sends will be key to whether or not legal certainty is granted to potential investors, and this will make investment flow positively or rather turn towards other jurisdictions where this certainty is offered. In one way or another, there could be important adjustments in terms of mergers and acquisitions.
Competitive advantages
Mexico has important competitive advantages that are worth considering.
North America accounts for 28% of global GDP. The investment outlook for North America is very positive. Swiss bank UBS expects the family offices Mexico is investing heavily in North America, including Mexico, above the rest of Latin America and Europe. The network of treaties we have gives potential investors access to a potential market of 1,350 billion consumers. Mexican talent is unique and irreplaceable.
Contrary to what has happened in certain jurisdictions where protectionism is having an impact on M&A, Mexico continues to be quite open to this type of transactions with a clear internal legal framework backed by an impressive network of treaties that are recognized and respected as Mexican internal law with a higher hierarchy compared to local Mexican law.
As an example, and unlike in other countries, the examination of foreign investment in Mexico is quite objective and the law indicates in which cases a prior authorization is required and in which cases it is not. Merger control requirements in Mexico are also quite objective. Our Federal Economic Competition Law has very clear thresholds to determine when a prior authorization is required. Market participation is not a triggering event. These issues give certainty to investors thinking about Mexico, compared to other jurisdictions where the analysis may even have some political component.
Finally, the nearshoring, along with the new phenomenon of restoring, can bring important new investments to Mexico. The investments that there were in 2023 in terms of nearshoring They are not necessarily new investments, many of the amounts were reinvestments, which are certainly positive, but not necessarily new investments. According to an analysis carried out by Actinver as of December 2023, the investment figures related to the nearshoring The total investment in foreign direct investment for the third quarter of 2023 was estimated at approximately $32.9 billion dollars and considered 76% as reinvestment of profits, 16% as accounts between companies and only 8% as new investments. According to figures from the Ministry of Economy, during the current administration's six-year term, the participation of new investments in total Foreign Direct Investment fell to 34.8% with the current administration, from 35.7% and 50.0% of Peña Nieto and Felipe Calderón, in that order. To continue boosting the nearshoringMexico must send strong signals of legal certainty, strengthen its electrical infrastructure, also considering renewable energy sources that allow investors to meet their international commitments, telecommunications, road and rail infrastructure.
Conclusion
As discussed throughout this article, the future presents uncertainties. Our new governmental integration and the implementation of its new policies, the upcoming review of our free trade agreement with the United States and Canada, and the global environment all represent challenges. At the same time, new times present opportunities for growth in markets and sectors favored by the new political landscape. Challenging environments demand smart agreements that allow us to benefit from current trends and support growth and progress.
[1] Argentina, Brazil, Chile, Colombia, Mexico and Peru.
[2] Hart-Scott-Rodino Antitrust Improvements Act
Fras-le Mobility acquires Kuo Group's automotive business.
Santamarina y Steta, SC, led by partners Sergio Chagoya and Diego Ostos and senior associate Elias Zaga, with the support of associate Iñigo García and Rebeca Chaidez, acted as external legal advisor to Fras-le SA, in the acquisition of Dacomsa, Kuo Motor, and Fritec, subsidiaries of Kuo, SAB de CV, a leader, among other lines of business, in automotive spare parts, with a significant presence in the United States of America and Latin America.
Fras-le Mobility is a leading Brazilian company in the automotive industry, specializing in the manufacture of friction components such as brake pads and discs. This company is controlled by Randoncorp, a Brazilian public conglomerate with a global presence in more than 120 countries and with 31 strategically distributed industrial units. The shares of both entities are listed on the São Paulo Stock Exchange (B3), one of the most important stock exchanges in Latin America.
The prominent position of Fras-le and Randoncorp in the market reflects their commitment to innovation, quality and customer service, consolidating them as leaders in their respective expert sectors.
Red Arbor Holding SL acquires OCCMundial.com
Red Arbor Holding SL has acquired OCCMundial.com, one of the leading job boards in Mexico from SEEK Limited (SEEK). SEEK is a leading company in the online job board market, headquartered in Melbourne. Outside Australia, SEEK also operates in New Zealand, China, Hong Kong, Singapore, Indonesia, the Philippines, Malaysia, Thailand, Nigeria and South Africa. This strategic acquisition will allow Red Arbor Holding SL to continue strengthening its presence in the online career management market and to continue its expansion and consolidation in the sector, taking advantage of synergies and growth opportunities in the areas of technology and human resources.
The legal advisor in charge of carrying out this transaction on behalf of SEEK in Mexico was Santamarina + Steta, supported by a team headed by Jorge León Orantes, Pablo Laresgoiti, Belén Gómez, Sarahi López and Raquel Ortiz. These legal experts provided invaluable guidance and representation to SEEK in the execution of the share purchase agreement and other ancillary contracts that allowed the transaction to be definitively closed on June 20, 2024.
Termination of Civil and Family Courts of Written Procedure – Change of Jurisdiction of Commercial Executive Trials
Executive Summary:
- The Judiciary of Mexico City has decided to extinguish 24 Civil Courts and 11 Family Courts of Written Procedure, with a transition process that will end on November 29, 2024.
- As of June 17, 2024, cases will be reassigned to Oral Trial Courts, including Commercial and Oral Executive Trials, with changes in jurisdiction according to the established amounts.
On June 12, 2024, the Judiciary of Mexico City issued three General Agreements related to the extinction of 24 Civil Courts and 11 Family Courts of Written Process.
In said agreements, the Council of the Judiciary of Mexico City (“CJ-CDMX”) determined that as of June 17, 2024, cases will no longer be referred to the Civil and Family Courts of Written Process that are about to be extinguished, specifying that said transition period will end on November 29, 2024.
The formal closure of the Courts that will be extinguished will be on November 11 of this year, and then, the return of their files will begin until November 25, 2024 (that is, the sending and forwarding of files, documents, etc.).
In this regard, the cases that are currently being processed in the jurisdictional bodies that will be extinguished will be referred to the Courts of Written Procedure that will continue to operate. Here is a list of the Courts to be extinguished:
- 1st Civil Court of Written Procedure
- 2st Civil Court of Written Procedure
- 3st Civil Court of Written Procedure
- 5st Civil Court of Written Procedure
- 21st Civil Court of Written Procedure
- 22st Civil Court of Written Procedure
- 26st Civil Court of Written Procedure
- 37st Civil Court of Written Procedure
- 43st Civil Court of Written Procedure
- 48st Civil Court of Written Procedure
- 50st Civil Court of Written Procedure
- 53st Civil Court of Written Procedure
- 56st Civil Court of Written Procedure
- 59st Civil Court of Written Procedure
- 63st Civil Court of Written Procedure
- 66st Civil Court of Written Procedure
- 68st Civil Court of Written Procedure
- 69st Civil Court of Written Procedure
- 70st Civil Court of Written Procedure
- 71st Civil Court of Written Procedure
- 72st Civil Court of Written Procedure
- 73st Civil Court of Written Procedure
- 74st Civil Court of Written Procedure
- 75st Civil Court of Written Procedure
On the other hand, in response to the extinction of the aforementioned Courts, the CJ-CDMX issued a different agreement regarding the jurisdiction of the Courts of the Superior Court of Justice of Mexico City to hear Commercial Executive Trials and Oral Commercial Executive Trials (General Agreement 45-17/2024).
This agreement established that, as of June 17, 2024, the Civil Oral Trial Judges will be competent for both procedures, regardless of their amount.
It is worth mentioning that the route will not be modified, since each procedure will continue to be priced as follows:
- Oral Commercial Executive Trials will apply to disputes whose amount ranges between $851,710.18 (Eight Hundred Fifty One Thousand Seven Hundred Ten Pesos 18/100 MN) and a maximum of $4 (Four Million Pesos 000,000.00/00 MN).
- Commercial Executive Trials (written process) will apply to disputes whose amount ranges between $1.00 (One Peso 00/100 MN) and a maximum of $851,710.18 (Eight Hundred Fifty One Thousand Seven Hundred Ten Pesos 18/100 MN), as well as disputes with a value of $4'000,000.00 (Four Million Pesos 00/100 MN) and above.
It should be noted that those Commercial Executive Trials that are currently being processed before a Civil Court of Written Process, must be followed until their conclusion.
If you would like to obtain more information about the re-transfer of cases and the dynamics of the new operation of the Courts, please do not hesitate to contact our experts.