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Labor Exploitation Excessive Working Hours

Written by Santamarina + Steta en June 14th, 2024. Published in Updates.

Executive Summary:

On June 7, 2024, a reform was published to the General Law to Prevent, Punish and Eradicate Crimes Related to Human Trafficking, in force since June 8. This reform adds as labor exploitation the hours that exceed those stipulated by law.
Penalties include 3 to 10 years in prison and significant fines, with harsher penalties for indigenous and Afro-Mexican communities. Investigation and punishment of these crimes falls to criminal authorities, with possible additional sanctions from labor authorities.

On Friday, June 7, 2024, the Decree amending and adding various provisions of the General Law to Prevent, Punish and Eradicate Crimes in the Matter of Human Trafficking and for the Protection and Assistance of the Victims of these Crimes was published in the Official Gazette of the Federation, which is of high impact for employers in Mexico and requires immediate attention. The reform came into effect on Saturday, June 8, 2024.

Since its enactment in 2012, this General Law included a definition labor exploitation, this occurs when a person obtains, directly or indirectly, an unjustifiable benefit, economic or otherwise, in an illicit manner, through another's work, subjecting the person to practices that violate their dignity, and in relation to this, three specific assumptions were established, including:

Dangerous or unhealthy conditions, without the necessary protections in accordance with labor legislation or existing regulations for the development of an activity or industry.
Existence of a manifest disproportion between the amount of work performed and the payment made for it.
Salary below the legally established level.

It should be noted that, before this reform, we were not aware of the use of the criminal figure of labor exploitation.

Now, as a result of the published reform, a fourth express assumption of labor exploitation is added: working hours above those stipulated by law.

Among the reasons put forward in the legislative process, it was argued that excessive working hours violate the dignity of workers, perpetuating economic and social inequality and damaging health.

We will need to remain vigilant and act to remedy any potential violation that may occur regarding the length of the workday, given that it already constitutes positive law, as well as the criteria that is upheld as to what will be considered “above what is stipulated by the Law”, because as we know, even today we have different interpretations between the IMSS and the labor authorities when referring to the limits of the Federal Labor Law. It is important to anticipate that at this time the investigation, prosecution and punishment of such crimes corresponds to the criminal authorities of the federative entities or of the Federation, not to the labor authorities, without prejudice to the latter being able to apply the sanctions provided for in the Federal Labor Law.

As for the possible consequences, the general law described provides that whoever exploits one or more people in the workplace will be punished with a penalty of 3 to 10 years in prison, and a fine of 5 thousand to 50 thousand UMAs daily (2024 – each UMA is worth $108.57 MN). In the case of people belonging to indigenous and Afro-Mexican peoples and communities, the penalties provided will be from 4 to 12 years in prison, and from 7 thousand to 70 thousand UMAs.

Reform of the Judicial Branch of the Federation

Written by Santamarina + Steta en June 13th, 2024. Published in Updates.

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Executive Summary:

In the context of the recent elections and the upcoming formation of the Congress of the Union, the discussion on the constitutional reform proposal presented on February 5, 2024 to reform the Judicial Branch of the Federation has been revived.
The initiative, in its current form, represents a significant risk to the separation of powers, the independence of the judiciary and the rule of law.

As a result of the recent election and the possible formation of the next legislature of the Congress of the Union, the discussion on the constitutional reform initiative presented on February 5, 2024 to “reform” the Judicial Branch of the Federation was reactivated.
The main axes on which this initiative is based are the following:

A new integration of the Supreme Court of Justice of the Nation (“SCJN”). The number of Ministers is reduced from 11 to 9, so that they function only in Plenary Session.
Election by popular vote of Ministers, Magistrates and Judges. Extraordinary election in For Ministers, Magistrates of the Electoral Tribunal and Magistrates of the Disciplinary Tribunal, the following would be proposed:
- 10 candidates for the Executive Branch
- 5 candidates for each chamber of Congress
- 10 candidates for the SCJN Plenary (by majority of 6 votes)

The rest of the Magistrates and Judges from 6 candidates per position (2 for each Power of the Union).

Eliminate the Federal Judiciary Council, replacing it with a Judicial Disciplinary Court (5 elected Magistrates) and a Judicial Administration Body (5 people appointed, one by the President, one by the Senate and three by the SCJN).
Procedural rules. A maximum period of 6 months is established for the resolution of tax matters and 1 year for criminal matters. It is prohibited to grant suspensions against laws with general effects in amparos, constitutional controversies and actions of unconstitutionality.

It has been announced that discussion of this initiative will begin as soon as the new legislature takes office (September 1, 2024), with a view to its approval, if appropriate, in the first session. There is also the proposal to convene various sectors (universities, bar associations, business sector, members of the Judiciary, etc.) to discuss the proposal and dialogue on the best way to reform the Judiciary.

We believe that the initiative, as it stands, poses a serious risk to the separation of powers, the independence of the judiciary and calls into question the rule of law as we know it.
We will be closely monitoring the development and progress of this process, keeping you informed of it. If you have any questions about how the above may impact particular matters, we will be happy to advise you.

New International Bar Association (IBA) Guidelines on Conflicts of Interest in International Arbitration

Written by Santamarina + Steta en June 10th, 2024. Published in S+S Litigation Newsletter.

Executive Summary:

The IBA published updated Guidelines on Conflicts of Interest in International Arbitration in February 2024. These address new areas such as social media and third-party funding, ensuring that they adapt to the changing landscape of international arbitration.
The IBA Guidelines are a non-binding but widely accepted framework used in Mexico and globally to identify and manage potential conflicts of interest in international arbitration. The 2024 update strengthens this framework and improves the overall practice of arbitration.

The IBA (International Bar Association) is a global organisation that brings together legal professionals and bar associations. Its mission is to strengthen international legal cooperation.

The Guidelines. To achieve this goal, the IBA periodically develops and publishes guidelines in various fields, including arbitration. These guidelines reflect internationally accepted practices and serve as authoritative standards and best practices.

IBA Guidelines on International Arbitration. Independence and impartiality are fundamental pillars of international arbitration. Failure to disclose a conflict of interest (absence of independence and/or impartiality), which compromises these principles, may lead to the annulment of an award or to its refusal to be enforced.

Despite their non-binding (soft law) nature, the IBA Guidelines on Conflicts of Interest in International Arbitration (hereinafter “the 2024 Guidelines”) have been, for many years, the globally recognised framework for identifying and managing potential conflicts of interest on the part of arbitrators, experts and lawyers, with the aim of ensuring the neutrality of arbitration proceedings.

New Guidelines. February 2024 marked the tenth anniversary of the first review of the IBA Guidelines on Conflicts of Interest in International Arbitration. Following the usual practice of the IBA Arbitration Committee, an evaluation and update of the Guidelines was carried out. A dedicated working group was formed to identify issues that might require revision and a survey was launched to gather the views of practitioners around the world.

As a result, the following areas of opportunity were identified:

(i) Disclosure of information by referees
(ii) Third-party funding
(iii) Issue conflicts
(iv) Models of organisation of legal professionals in different jurisdictions (for example, bar associations, etc.)
(v) Experts
(vi) Sovereigns or their agencies and instrumentalities
(vii) Non-lawyer arbitrators
(viii) Social media

The 2024 Guidelines maintain the structure of their predecessor, organizing the content into two main parts: Part I sets out the key pillars governing the management of conflicts of interest, the obligation of disclosure by the arbitrator, the power of the parties to object to or withdraw from an arbitrator, the scope of the Guidelines, the relationships that may give rise to conflicts of interest, the duty of the parties and the arbitrator to act in good faith and transparency, and the responsibility of the parties in identifying and managing conflicts of interest. An explanation of each of these general rules is included.

Part II contains the so-called “traffic light”, a practical tool that facilitates the identification and management of conflicts of interest in international arbitration. The traffic light consists of a series of hypothetical scenarios organized into four categories: non-waivable red list, waivable red list, orange list and a green list.

For example, an event that clearly creates a conflict of interest would be eligible for updating the scenarios described in the red list (either non-waivable or waiverable), while the orange list describes scenarios where the conflict of interest might not be apparent but still requires attention and possible management (i.e., possible disclosure), while the green list indicates situations where no significant conflicts of interest are identified.

As an example, the 2024 Guidelines include modifications to the scenarios described in the orange list. Specifically, sections 3.1.6 to 3.1.8 were added within section 3.1 (“Professional services provided to a party prior to arbitration or other involvement in the case”).

Section 3.1.6 addresses the arbitrator's role as an expert for one of the parties in an unrelated matter within the previous three years.
Section 3.1.7 deals with services provided by the arbitrator's law firm or company to one of the parties without the involvement of the arbitrator and without these services being related to the ongoing dispute.
Section 3.1.8 refers to a law firm or organization that shares significant revenues with the arbitrator's firm and provides services to one of the parties before the Arbitral Tribunal.

With the 2024 Guidelines, the IBA demonstrates its commitment to relevant and adaptable international arbitration. The additions and adjustments made ensure that the IBA Guidelines reflect a current factual and legal landscape. This proactive approach is crucial to maintaining the Guidelines as one of the most relevant frameworks for managing conflicts of interest in arbitration.

What impact does the above have on practice in Mexico? The IBA Guidelines are widely used in arbitrations seated in Mexico, as well as in arbitrations where the parties are Mexican. In this context, the 2024 Guidelines constitute a significant advance for both global and national arbitration, which translates into important progress for arbitration practice.

If you would like more information on this subject, please do not hesitate to contact our experts:

Draft Decree to Reform the Regulatory Law of Sections I and II of Article 105 of the Political Constitution of the United Mexican States

Written by Santamarina + Steta en June 7th, 2024. Published in S+S Litigation Newsletter.

Executive Summary:

On October 25, 2023, a draft Decree was presented to the Chamber of Deputies that modifies the Regulatory Law of Sections I and II of Article 105 of the Political Constitution of the United Mexican States. The objective of this initiative is to limit the scope of the judgments of constitutional controversies or actions of unconstitutionality with regard to the admissibility - or inadmissibility - of the amparo trials that are brought against the same act.
We consider that the reform constitutes a regressive measure against the human rights recognized by the Federal Constitution, specifically the right to access justice.

During the first months of this year, the Senate of the Republic worked on the Draft Decree Initiative that seeks to issue the National Code of Civil and Family Procedure.

The reform proposes to modify the second paragraph of article 42, the first paragraph of article 72 and to add a new paragraph to article 43 of the Regulatory Law of Sections I and II of Article 105 of the Political Constitution of the United Mexican States. With these modifications, the effects of the sentences issued in constitutional controversies or actions of unconstitutionality are sought.

According to our legal system, there are various means of constitutional defense, among which are constitutional controversies, unconstitutionality actions and amparo trials. These means of defense, although they are aimed at challenging, among others, actions that are considered contrary to our Federal Constitution, are considered by our normative system as independent procedures, with the purpose of guaranteeing the existence of multiple ways to defend the legality of the actions of public power and, consequently, the rights of those governed.

In this regard, the purpose of the draft decree under analysis is (i) to establish that judgments on constitutional disputes and/or actions of unconstitutionality that do not obtain a vote from at least 8 ministers - qualified majority - may not be invoked by various jurisdictional authorities to base their actions (even when there is a simple majority), as well as (ii) to provide that no amparo trial or other recourse will proceed against said acts or general rules.

While it is true that our legal system requires a qualified majority to issue a general declaration of unconstitutionality, which expels the act or norm from our legal system, the reform seeks to limit the cases in which a resolution issued through a constitutional controversy or unconstitutionality action reaches the so-called simple majority. This is because, even without a general declaration of unconstitutionality, there may be a majority that considers the act or norm unconstitutional, which could be used by other people in amparo trials.

Therefore, in those cases where the action or controversy raised is resolved by a simple majority, it must be considered that there are sufficient elements for, through an amparo trial, the unconstitutionality of the act to be declared, considering that it was contrary to the Federal Constitution. In this way, the arguments raised establish precedents for requesting amparo if there are substantial similarities between both cases.

For the above reasons, and pending the submission of the bill to the Justice Committee of the Chamber of Deputies for analysis, we consider that, if this reform is approved, the right to constitutional defense enshrined in favor of citizens would be violated. By preventing the admissibility of the amparo trial even when the sentence has obtained a simple majority, this measure would constitute a step backwards in the human rights and individual guarantees recognized by the Political Constitution.

Given the President's insistence on reforming general regulations with the aim of strengthening his public policies and implementing measures in this regard, it is essential to analyze the repercussions of this modification. With it, the affected individuals will be deprived of their right to file an amparo lawsuit, even if the violation of their rights is evident and has been endorsed by a simple majority of the Ministers of the Supreme Court of Justice of the Nation.

If you would like more information on this subject, please do not hesitate to contact our experts:

Digital Justice in the National Code of Civil and Family Procedures

Written by Santamarina + Steta en June 7th, 2024. Published in S+S Litigation Newsletter.

On June 7, 2023, the National Code of Civil and Family Procedures (“CNPCF”) was published in the Official Gazette of the Federation, a legislative instrument that, among other things, seeks to privilege the use of information technologies in judicial processes. (available here).

One of the major innovations of the CNPCF is the adoption of digital justice, as it is expected that all procedures can be processed online with the aim of having more efficient, transparent and agile processes.

In terms of Book Eight “On Digital Justice” of the CNPCF, the parties have the right to voluntarily choose to have proceedings processed digitally and online.

This issue may be raised in the initial written complaint and in the written response, respectively. This is without prejudice to the fact that the parties, at any stage of the proceedings, may request that the procedure be changed so that, in the future, it is processed online and digitally.

The CNPCF assigns to the jurisdictional authorities, through the competent areas, the obligation to carry out all the acts necessary to integrate the actions, hearings, proceedings, promotions and other records of an online procedure in a single electronic file.

Likewise, the Judicial Branches, through the Judicial Council or the competent authority indicated in their respective Organic Law, are obliged to implement and maintain updated and functional digital justice systems in order to have online court records, digital services, electronic notifications, as well as the technologies necessary to make digital justice accessible to all people.

Now, what implications and/or benefits does the processing of a judicial process online have for those seeking justice?

Firstly, the CNPCF grants the same probative value or legal value to documents, proceedings, files, hearings and other similar documents issued in electronic form as those that the CNPCF establishes for in-person proceedings and written instruments. So much so that in no case will a declaration under oath be required that the digitalized documents are a faithful and unaltered copy of the physical documents.

In addition, the CNPCF introduces virtual hearings and proceedings, as well as a digital justice system that will allow the submission of documents, promotions and annexes electronically or through digitized documents.

In this regard, it is important to consider that when, due to unforeseen circumstances, force majeure or technical failures, the operation of one or more of the digital justice systems that depend on the jurisdictional authority is interrupted, and this makes compliance with the deadlines established in the CNPCF unfeasible, the parties must notify the corresponding jurisdictional authority in the same time-bound motion. The Judges must then request a report from the head of the respective administrative unit and, in the event that it is determined that there was an interruption in the system, the deadlines will be suspended only for the duration of the interruption.

On the contrary, any failures that the computer, device, equipment or internet connection of the parties may suffer will in no way interrupt the deadlines established in the CNPCF.

Considering the above, we share some of the actions that the parties in the trials will have in their favor with the entry into force of the CNPCF:

Submit your documents, promotions and annexes electronically or through digitalized documents authenticated by advanced electronic signature.
Hold any hearing and proceedings provided for in the CNPCF under the virtual hearing and proceedings modality.
Receive and request electronic notifications.
Consult the proceedings in the corresponding judicial process through the electronic file.
Promote electronic communications addressed to authorities, such as requests to the Public Prosecutor's Office, Public Prosecutors or Social Representation, requests to authorities, experts and other official assistants.

While the introduction of digital justice in the CNPCF is a great step forward in the processing of judicial proceedings in Mexico, it is also true that its application poses a great challenge. For example, how will jurisdictional authorities implement digital justice in those cities where there is no internet or where they do not have sufficient systems and devices?

Taking the above into consideration, we list some recommendations that companies can explore to get the most out of digital justice:

Adopt technological means to store documents and information and make periodic backups on external devices, as these may be necessary tools in the event of a trial.
Have an automated file management system that categorizes different types of information and/or documentation in order to facilitate their identification (for example, regarding certain transactions and/or clients).
Process and/or update the electronic signatures of officials and/or legal representatives, as this is one of the identification mechanisms in judicial proceedings processed online.

The implementation of digital processes undoubtedly represents a significant step towards the modernization of the Mexican judicial system, promising to increase its efficiency, transparency and accessibility, benefiting all actors involved. However, its success will depend on the ability of the authorities to overcome the technological and infrastructure challenges that exist in various regions of the country. Thus, companies and law firms that proactively adopt these new technological tools will be better positioned to navigate the new judicial landscape and take full advantage of the benefits of digital justice.

If you would like more information on this subject, please do not hesitate to contact our experts:

The advantages of bankruptcy with a prior restructuring plan

Written by Santamarina + Steta en June 7th, 2024. Published in S+S Litigation Newsletter.

The Mexican Commercial Bankruptcy Law (“LCM”) establishes the commercial bankruptcy procedure as a fundamental tool for preserving companies and maximizing their value. This process, directed by a District Judge specialized in bankruptcy matters and specialists from the Federal Institute of Commercial Bankruptcy Specialists (“IFECOM”), is designed to protect the rights of merchants against widespread breaches of their obligations.

The application for bankruptcy may be filed when there is a general failure to pay obligations of at least two creditors, as established by the LCM. This failure occurs when the overdue obligations represent at least 35% of the merchant's total liabilities and are at least 30 days past due, or when the assets do not cover at least 80% of the overdue obligations.

It should be noted that the LCM also allows for filing for bankruptcy provided that these conditions are met within the next 90 days, by means of a declaration under penalty of perjury.

The commercial competition consists of three stages: the first is a preliminary stage called “Visit”, followed by “Conciliation” and finally “Bankruptcy”.

During the Visit phase, an IFECOM specialist analyses the company's financial situation to determine its state of insolvency and/or illiquidity. Subsequently, in the Conciliation stage, agreements are sought to be reached with creditors to restructure the company's debts; if this is not achieved, the Bankruptcy stage is carried out, the purpose of which is the orderly liquidation of the assets.

The bankruptcy procedure with a prior restructuring plan, introduced in the reform of December 27, 2007 to the LCM, allows companies to request this procedure together with creditors representing at least the simple majority of their debts. This request must be accompanied by a plan that proposes the restructuring of the company's liabilities and, under penalty of perjury, must state that it falls within one of the assumptions of generalized non-compliance with its obligations or that it is imminent.

This process facilitates early negotiation of debts and the agile processing of bankruptcy proceedings. It is particularly useful for those companies that detect financial problems in advance, allowing them to strategically approach their creditors and seek specialized financial and legal advice on restructuring.

Therefore, the Pre-Agreed Commercial Insolvency becomes an effective tool to address and resolve financial problems proactively at an early stage of insolvency or illiquidity.

The main advantages of this process, among others, are:

Elimination of the visit stage: The lengthy analysis of insolvency and illiquidity during the inspection stage is avoided, speeding up the start of the bankruptcy procedure and offering immediate protection to the merchant. In practice, this stage can be delayed, leaving the company without the benefits of bankruptcy and running the risk that the inspector will conclude that the conditions for bankruptcy are not met. Avoiding this stage represents a great advantage.
Taking advantage of previous agreements: Approaches and agreements with previous creditors allow for rapid progress in the conciliation process, reducing the time needed to reach a definitive agreement.
Positive message to society: Although in Mexican practice the fact that a company enters or requests bankruptcy may be frowned upon, requesting it with a prior restructuring plan demonstrates a proactive attitude towards solving financial problems. This action offers a vision of possible business recovery and stability, demonstrating the commitment of the company and the majority of its creditors to resolve its financial difficulties in an orderly manner and with a focus on the future.
Requests for precautionary measures: Preliminary measures may be requested at a single time and jointly by creditors and the merchant. This is positive because the merchant and its creditors can reach an agreement to request those measures that suit all parties. In practice, it is common for the measures requested by the merchant and those requested by the creditors to be incompatible.

Once the merchant's bankruptcy is declared, the process continues based on the ordinary rules established by the LCM, with the exception that the restructuring plan displayed in the application must be submitted for judicial voting and approval.

Some of the most recent success stories in which, through a bankruptcy with a prior restructuring plan, the approval of a bankruptcy agreement and thus the restructuring of its debts has been achieved are that of the construction company Ingenieros Civiles Asociados (ICA) and Mexican Commercial Controller (The Eating).

In conclusion, bankruptcy with a prior restructuring plan is a valuable tool for companies facing financial problems, allowing for a quick and coordinated response with creditors, improving the chances of recovery and stability. By addressing financial difficulties in an early and orderly manner, companies can avoid bankruptcy and continue operating with a clear plan for their future.

If you would like more information on this subject, please do not hesitate to contact our experts:

Mexican Official Standard that establishes the limits of radioactive contamination and criteria for its control

Written by Santamarina + Steta en May 31th 2024. Published in Updates.

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Executive Summary:

On May 24, 2024, the Mexican Official Standard establishing the limits of radioactive contamination and criteria for its control (“NOM-008-NUCL-2024”), issued by the Ministry of Energy (“SENER”) (the “NOM”), was published in the Official Gazette of the Federation (“DOF”).
The purpose of this NOM is to establish limits and criteria to control radioactive contamination in nuclear and radioactive facilities, protecting personnel and minimizing risks.

The NOM establishes permissible limits for radioactive contamination, both on the surface and suspended in the air, covering all nuclear and radioactive facilities in the country. These limits are essential to protect occupationally exposed personnel and ensure operational safety.

Contaminated areas must be clearly marked and delimited to prevent accidental transfer of radiation. It also requires the mandatory use of appropriate personal protective clothing and equipment to minimize exposure to radiation. The NOM also includes specific measures for monitoring and minimizing radioactive contamination, ensuring that all activities are carried out under strict safety controls.

SENER, through the National Commission for Nuclear Safety and Safeguards (CENSNA), will be the entity responsible for monitoring and ensuring compliance with this standard. Conformity assessments will be carried out through visual and documentary verifications, supplemented by interviews, to ensure that all provisions are properly complied with.

Additionally, it is important to note that the NOM details the methods for measuring surface radioactive contamination, both fixed and removable, using calibrated and appropriate equipment for the measurements. These procedures are essential to ensure the accuracy of the measurements and to obtain a true reflection of the contamination levels.

The NOM includes several appendices that provide additional and specific information:

Specific values for surface contamination: Clear limits are established for different types of radionuclides.
Criteria for the selection of protective clothing: The conditions under which each type of protective clothing should be used are described.
Examples of effective dose equivalent estimates: Practical examples are included to illustrate the calculation of effective dose with and without respiratory protection equipment.
Detailed procedures for direct and smear measurements: Detailed methods are provided for the measurement of radioactive contamination, ensuring the accuracy and consistency of the results.

Therefore, this NOM establishes a clear and detailed framework for the management and control of radioactive contamination in nuclear facilities, guaranteeing the safety of personnel and compliance with established standards. The NOM is essential to maintain high levels of radiological safety and protect both workers and the environment from the risks associated with radiation.

Link to the note:

https://dof.gob.mx/nota_detalle.php?codigo=5728406&fecha=24/05/2024#gsc.tab=0

The Council of Europe adopts the first international treaty on Artificial Intelligence

Written by Santamarina + Steta en May 29th 2024. Published in Updates.

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Executive Summary:

In May 2024, the Council of Europe adopted the first international treaty on artificial intelligence, entitled “Council of Europe Framework Convention on Artificial Intelligence and Human Rights, Democracy and the Rule of Law” (hereinafter the “Convention”).
The Convention aims to ensure that activities within the life cycle of artificial intelligence systems are aligned with respect for human rights, democracy and the rule of law.
The Convention can also be ratified by countries that are not part of the European Union and that participated in its drafting, such as Mexico, the United States, Canada, Japan, among others.
The Convention must be signed by the States before it can enter into force.

The Convention is the first multinational agreement ensuring that Artificial Intelligence (AI) respects human rights, and was drafted with the support of different countries. The agreement seeks to harness the benefits of AI while reducing its risks. The Council of Europe's Committee on Artificial Intelligence led its development over a two-year period.

Scope and Application: The Convention sets out guidelines for the use of artificial intelligence systems, through which two ways are envisaged for its signatories to comply with its principles and obligations: (i) they can choose to be bound directly by the provisions of the Convention; or (ii) they can adopt other measures, as long as they comply with the provisions of the Convention. This flexible approach is considered necessary due to the differences between the legal systems of the signatory States.
Transparency, Oversight and Reporting Requirements: The Convention establishes transparency and oversight requirements tailored to contexts and risks, including the identification of content generated by Artificial Intelligence. Signatory States will be obliged to submit a report to the Conference of the Parties, which will be held periodically. This report will aim to inform about the measures adopted to comply with the Convention, as well as to address the risks and impacts arising from activities within the life cycle of Artificial Intelligence.
Legal Resources: Signatory States must implement effective legal remedies for victims of human rights violations arising from the use of Artificial Intelligence, which are required by international law and must be consistent with their local law in order to ensure their real accessibility.
Monitoring Mechanism: The Convention establishes the obligation for each signatory State to establish an independent supervisory body, responsible for monitoring compliance with the Convention. This body will exercise its functions independently and impartially, having the necessary powers, expertise and resources to effectively carry out its tasks of monitoring compliance with the obligations set out in the Convention.

To whom will the Convention apply?

To all countries that ratify it, which will mainly be members of the Council of Europe, members of the European Union and other non-member countries that have participated in drafting the Convention.

Links to the note:

https://search.coe.int/cm#{%22CoEObjectId%22:[%220900001680afb11f%22],%22sort%22:[%22CoEValidationDate%20Descending%22]}

National Infrastructure Fund capitalizes more than 15 billion pesos in the Perote – Xalapa Highway Concessionaire, SA de CV

Written by Santamarina + Steta en May 28th 2024. Published in Deal Announcements.

Santamarina and Steta, SC, partner-led Sergio Chagoya and Diego Ostos, and by the senior associate Pablo Ortiz Monasterio, with the support of Karla Cordoba and Rebecca Chaidez, acted as external legal advisor to the National Bank of Works and Services, SNC, Development Banking Institution, in its capacity as Trust Institution of trust number 1936 called “National Infrastructure Fund”, in the capitalization of more than 15 billion pesos, through the subscription of 49% of the shares representing the capital stock of the commercial company called “Perote – Xalapa Highway Concessionaire”, S.A. de CV, holder of the concession granted by the Secretariat of Infrastructure, Communications and Transportation (formerly Secretariat of Communications and Transportation), dated February 14, 2008, for the construction, operation and maintenance of certain sections of the highway “Perote – Banderilla” and the "Xalapa Bypass” in the state of Veracruz, Mexico.

DACG's to authorize the Inspection Units that will verify Regulatory Compliance in the areas of generation, transmission and distribution of electric energy

Written by Santamarina + Steta en May 22th 2024. Published in Updates.

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Executive Summary:

At the ordinary session held on March 26, 2024, the Governing Body of the Energy Regulatory Commission (CRE) approved Agreement No. A/054/2024. This agreement establishes the regulatory bases for authorizing inspection units that evaluate compliance with the technical requirements for the connection of load centers and the electrical industry to the National Electric System. The agreement also defines the procedure for carrying out inspections and the operating conditions of the inspection units.
Article 2 of the Electricity Industry Law (LIE), amended by decree published in the Official Gazette of the Federation (DOF) on November 6, 2020, establishes that the electricity industry includes, among other activities, the generation, transmission and distribution of electric energy, as well as the control of the National Electric System. The law also declares that these activities are of public interest.
Article 8 of the LIE establishes that the generation, transmission, distribution, marketing and supply of primary inputs for the electrical industry will be carried out independently of each other and under conditions of strict legal separation.
Article 12, sections XXXVII, XL, XLVII and XLIX of the Electricity Industry Law (LIE) establishes that the Energy Regulatory Commission (CRE) is empowered to:
- (I) Issue and apply the necessary regulations regarding efficiency, quality, reliability, continuity, security and sustainability of the National Electric System (SEN).
- (II) Define the terms for the approval of the verification units and inspection units referred to in section IV of article 33 of the LIE and issue the corresponding forms.
- (III) Verify compliance with the LIE, its regulations and other applicable administrative provisions. To do so, it may order and carry out verification visits, require the submission of information and summon members of the electrical industry to appear. These actions are intended to supervise and monitor, within the scope of its competence, compliance with the applicable legal provisions.
- (IV) Issue and monitor compliance with general administrative provisions in relation to the powers conferred by the LIE.

This Agreement is issued for the purpose of issuing the General Administrative Provisions that establish the regulatory bases for authorizing inspection units for load centers and the electrical industry in the areas of generation, transmission and distribution of electrical energy, as well as the procedure applicable to the inspections and the operating conditions of the inspection units.

These general Administrative Provisions seek to specify the processes for authorization, modification, renewal and updating of Inspection Units. In addition, they include provisions for the authorization and operation of Inspection Units that:

Certify satisfactory compliance with the performance tests required for the entry into operation of Power Plants and Load Centers
Certify compliance with the required performance tests, established in the Manual for the Interconnection of Power Plants and Connection of Load Centers, and in accordance with the procedure for the Declaration of Entry into Operation of Power Plants.
Evaluate compliance with the technical requirements established by the Grid Code for Load Centers connected to the National Electric System.

It is important to know the requirements that the Inspection Units must meet so that they can assist the Energy Regulatory Commission (CRE) in the following functions:

Validate the program for starting and completing works for the electricity generation permits granted by the CRE.
Monitor compliance with other regulated activities of the facilities, in accordance with their description and technical characteristics under which they were designed, built, operated and maintained.
Supervise the activities of: generation, transmission and distribution of electric energy, in accordance with the authorizations granted by the CRE.

Likewise, the legal, regulatory and administrative provisions that will serve as a basis for the inspection acts are detailed below: I) Electricity Industry Law (LIE); II) Regulations of the Electricity Industry Law (RLIE); III) General Administrative Provisions regarding open access and provision of services in the National Transmission Network and the General Electricity Distribution Networks (Open Access and Service Provision Provisions); IV) General administrative provisions containing the criteria of efficiency, quality, reliability, continuity, security and sustainability of the National Electricity System: Grid Code (Grid Code); V) Manual for the Interconnection of Power Plants and Connection of Load Centers; VI) Operating Procedure for the Declaration of Entry into Commercial Operation of Power Plants and Load Centers; as well as the criteria for establishing the specific characteristics of the infrastructure required by CENACE or the Distributor, as appropriate, Mexican standards, reference standards, international standards, standards and reference technical specifications.

The Provisions contemplate three types of Inspection Units:

Power Plant Interconnection and Load Center Connection Inspection Units.
Inspection Units for Performance Testing of Power Plants and Load Centers.
Inspection Units for Technical Requirements of the Grid Code for Load Centers.

Each type of Inspection Unit has a specific area of competence and is qualified to carry out the verifications corresponding to the type of activities it is going to verify.

By issuing the Provisions and establishing specific requirements, regulated entities are guaranteed that the entities issuing either the Certificate of Compliance or the Grid Code assessment document have sufficient technical capabilities to carry out inspections and assessments in accordance with the corresponding regulatory provisions, including the Grid Code, for generation, transmission and distribution activities.

Among the instruments provided for in the Provisions is the Certificate of Compliance. This document is issued by the corresponding Inspection Unit through the Electronic Parts Office (OPE) portal.

It certifies compliance with the infrastructure, works and installations of Generators, Transporters and Distributors of Electric Energy, as well as to certify installations for the interconnection of Power Plants or the connection of Load Centers to the National Transmission Network or to the General Distribution Networks, or the performance tests of Power Plants or Load Centers.

It is worth noting that the Provisions detail the complete evaluation process that the Energy Regulatory Commission will carry out to determine whether the Inspection Unit and its inspectors meet the requirements and pass the corresponding evaluation. Candidates will have two opportunities to pass the evaluation.

If the candidate for inspector does not pass the evaluation in accordance with the terms established in the Provisions, he/she may reapply for an evaluation process after twelve months have elapsed since the notification of the Commission's resolution containing the respective refusal. To do so, he/she must prove that he/she has received the corresponding training and instruction.

It should be noted that the Provisions establish a 3-year term for authorization as an Inspection Unit. This term begins to count from the notification of the Authorization Resolution and may be renewed.

Additionally, the Provisions require Inspection Units to have a valid civil liability insurance policy.

Failure to comply with any of the obligations established for inspection units may lead to sanctions ranging from temporary suspension to permanent revocation of the authorisation, including disqualification from acting as an Inspection Unit for a period of three years.

Links to the note:

https://sidof.segob.gob.mx/notas/5727366

Agreement No. A/023/2024 of the Energy Regulatory Commission by which Agreement A/064/2017 is modified, which recognizes the members of a self-supply company or an electric energy cogeneration permit, the right to directly request the exclusion of their load centers from the permit and the respective legacy interconnection contract

Written by Santamarina + Steta en May 17th 2024. Published in Updates.

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Executive Summary:

On April 23, 2024, Agreement No. A/023/2024 of the Energy Regulatory Commission was published in the Official Gazette of the Federation (“DOF”), modifying Agreement A/064/2024, which recognizes the right of members of a self-supply company or an electric power cogeneration permit to directly request the exclusion of their load centers from the permit and the respective legacy interconnection contract.

This agreement was modified during the ordinary session held on February 28, 2024 in the governing body of the Energy Regulatory Commission.

The First, Second and Third Agreements were modified, and a second paragraph was added to the Fourth Agreement of Agreement A/064/2017 of the Energy Regulatory Commission, which refers to the exclusion of load centers from legacy interconnection permits and contracts in the energy sector, specifically in the area of self-supply and cogeneration of electric energy. Now, members of self-supply companies or electric energy cogeneration permits have the right to directly request the exclusion of their load centers from the respective legacy interconnection permit and contract.

The procedure to carry out such exclusion involves submitting an application to the Energy Regulatory Commission, complying with certain requirements detailed in the Agreement, and following an evaluation process that involves various actors in the energy sector, such as the intermediary generator and the National Energy Control Center (CENACE).

The main objective of these amendments is to facilitate and regulate more efficiently the process of excluding load centres, ensuring an adequate electricity supply in compliance with current regulations. The Agreement establishes clear deadlines and procedures for the exclusion of load centres and sets out the responsibilities of each party involved in the process.

The Agreement also provides that applicants must comply with certain specific requirements when submitting an application for exclusion of load centres. For example, detailed information on the load centre in question is required, such as its Permanent User Registry (RPU), maximum authorised demand, location, and details on associated self-supply or cogeneration permits. In addition, the submission of powers of attorney of the applicant's legal representative is required, and in some cases, documentation supporting changes in the corporate name or denomination of the beneficiary partners.

In the process of evaluating the application, the Energy Regulatory Commission may require additional information, conduct additional investigations, gather information from other sources and hold hearings if it deems it necessary to resolve the exclusion request.

Finally, the Agreement establishes specific deadlines for each stage of the process, from the submission of the application to the resolution by which the Load Center is excluded. In addition, the Agreement establishes that the Load Center will continue to receive Basic Supply until it complies with all the requirements established to receive electricity from the Wholesale Electricity Market.

Links to the note:

https://www.dof.gob.mx/nota_detalle.php? codigo=5724250&fecha=23/04/2024#gsc.tab=0

Modifications to the validity of NOM-044-SEMARNAT-2017

Written by Santamarina + Steta en April 26th 2024. Published in Updates.

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Executive Summary:

The Ministry of Environment and Natural Resources (SEMARNAT) published an agreement that revokes the extension granted for the start of compliance with some points of NOM 044.
To comply with NOM 044, it is essential that the country has ultra-low sulfur diesel (ULSD).

On April 25, 2024, SEMARNAT published in the Official Gazette of the Federation (DOF) the agreement by which the agreement that modified the validity of the period established in the notes of tables 1, 2 and 4, of numerals 4.1 and 4.2, exclusively with regard to the AA Standards, of the Mexican Official Standard NOM-044-SEMARNAT-2017 (Version 2017) is repealed. This standard establishes the maximum permissible emission limits of carbon monoxide, nitrogen oxides, non-methane hydrocarbons, non-methane hydrocarbons plus nitrogen oxides, particulate matter and ammonia from the exhaust of new engines that use diesel as fuel and that will be used for the propulsion of motor vehicles with a gross vehicle weight greater than 3,857 kilograms, as well as from the exhaust of new motor vehicles with a gross vehicle weight greater than 3,857 kilograms equipped with this type of engines. This agreement was originally published on November 26, 2021.

As its name indicates, the main objective of this Agreement is to invalidate several aspects of NOM 044 Version 2017 that regulate the moment of its entry into force.

What has been the history of NOM 044 2017?

Previously, the automotive industry that imported or manufactured diesel-powered vehicles weighing more than 3.857 kg was governed by NOM-044-SEMARNAT-2006 (Version 2006), which had objectives and guidelines similar to those of Version 2017, but with considerably more lax pollution limits.

Since then, NOM-044 Version 2006 established that for the manufacture or importation of this type of motors it was necessary to obtain a “NOM Compliance Certificate” from the Federal Attorney for Environmental Protection (PROFEPA), a document that certified that the motor complied with NOM-044. The lack of this certificate implied significant fines and sanctions.

Later, in 2018, NOM-044-SEMARNAT-2017 was published in the Official Journal of the Federation (DOF), with the aim of updating the standards applicable to new diesel engines to comply with the EPA 2010 regulation of the United States of America and the Euro VI regulation of the European Union. These regulations establish procedures to certify diesel engines that significantly reduce the emission of gases into the atmosphere.

In addition, NOM-044 Version 2017 establishes that PROFEPA must issue a “NOM Certificate”, which is the new name for the previous “NOM Compliance Reports”. The lack of this certificate could result in the imposition of various sanctions.

It is important to note that Version 2017 repealed Version 2006 of NOM-044.

In addition, NOM-044 Version 2017 established three standards for diesel engines, namely: A, AA and B, with A being the most polluting and B being the least polluting.

Within the framework of energy transition policies, NOM-044 Version 2017 imposed a restriction on the production and importation of motors with A and AA standards until the end of 2020. However, according to the provisions of NOM-044 Version 2017, until that date, AA motors would be regulated by less strict regulations, until DUBA is fully available in the country.

On November 11, 2020, SEMARNAT published in the DOF an agreement extending the entry into force of some provisions of NOM-044 Version 2017 referring to the AA standard, establishing the new compliance date for the end of 2021. It was highlighted that the applicable guidelines would continue to be more flexible for this type of engine.

This extension was again extended until the end of 2024 through another agreement published in the DOF by SEMARNAT on November 26, 2021. Therefore, the applicable guidelines, including the procedure for obtaining the NOM Certificate, would continue to be more lax.

It is important to note that these extensions were necessary because, in order to comply with the NOM-044 Version 2017 standard, the country must have ultra-low sulfur diesel (ULSD). However, to date, ULSD is not fully available throughout the country.
Despite the sensitivity of this situation, a non-governmental organization (NGO) filed a claim for protection against the SEMARNAT agreement that extends the entry into force of NOM-044 Version 2017 until the end of 2024. They argued violations of the right to a healthy environment and to health.

This appeal was resolved in favor of the NGO, and the corresponding ruling stated the following: i) SEMARNAT must revoke the extension of the deadline for the entry into force of NOM-044 Version 2017; ii) diesel engines that are imported or manufactured must comply with the guidelines established in Version 2017, having a period of 60 days for this purpose, during which SEMARNAT may not impose sanctions; and iii) once this period has concluded, the applicable regulations will be NOM-044 Version 2017.

What is the problem?

Companies dedicated to the manufacture or import of vehicles with this type of engine are the main ones affected by this decision. Although they have been complying with the NOM Certificate, as established by NOM-044 Version 2017, the reality is that said compliance has been carried out according to more lax standards.

It is important to note that in the amparo trial between the NGO and SEMARNAT, the companies holding NOM Certificates were not considered. These companies, which were not summoned, will be affected by the early entry into force of the 2017 Version.

The recent publication of SEMARNAT in the DOF, which nullifies the extension for the entry into force of the provisions of Version 2027, does not establish the 60-day period that the automotive sector should have to regularize itself, as indicated in the ruling of the amparo. It only left the agreement to extend the period “inoperative.”

Likewise, this new agreement does not establish what will happen to the NOM Certificates obtained under the extension agreement that is no longer in force.

Given the impossibility of ensuring the supply of DUBA, applying the standards of NOM-044 Version 2017 suddenly will mean that many companies will not be able to comply with it.

What are the next scenarios?

First of all, we must consider that it is the obligation of all parties involved to take care of the atmosphere and commit to the environment. The automotive sector has shown openness and willingness to comply with this standard, as long as there are sufficient inputs to make it possible, especially the DUBA.

Now, we must analyze the effects of this 'non-existence' decreed by SEMARNAT, given that it was extremely limited and the limits, scope and other legal implications were not clearly established. In particular, what will happen with the NOM Certificates in force to date?

Given this scenario, the automotive sector may attempt to file amparo lawsuits, basing its main arguments on: 1.- the brevity and limitations of the 'non-existence' agreement; and 2.- that they were not summoned to the trial brought by the NGO against SEMARNAT, despite having a legal interest in it.

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