Santamarina Steta

Legal Report Mexico 2021: First Part

The most redeemable of the year

Among the many lessons that the pandemic is leaving us, in addition to an economic crisis and various legislative nonsense, is the growing interest in promoting and defending the exercise and rule of law.

We started 2021 in an environment of pressure that led to strikes that had not been seen for several years. The press followed these events punctually to monitor respect for the legal channels for resolving said controversies. On the other hand, Mexico's commitment to the T-MEC led us to reduce the historical lag in minimum wages.

At the same time, we reviewed the dangerous edges of the initiatives to reform the Bank of Mexico Law, which established legal bases for money laundering and put its autonomy and, with it, the country's financial stability at risk.

On the business side, we saw a scenario of mergers and acquisitions arrive that injected foreign currency into the Mexican economy. We attend various forums to combat stigmas that prevent the development of promising industries, such as cannabis, which has faced late, flawed, and confusing regulatory initiatives.

Our labor experts have been very busy analyzing initiatives and advising key industries. The law that now prohibits insourcing and outsourcing in Mexico was drawn up throughout the year with great tension. The changes curbed the flawed practices of some companies but also ended up eliminating some good practices and, with it, made the country less competitive at the worst moment.

Restructuring, bankruptcies, and company bankruptcies would not take long to come to light either. We make it clear to productive society that the Mexican bankruptcy law is a strategy that protects companies, as in other parts of the world. Its purpose is the survival of the companies, keeping most of the employees and the supplier staff, and the emergence of a new relationship with creditors. The most significant companies in the world have turned to these legal resources to change their skin, and are now healthier and more stable. We also noted throughout the year that judges' rejections of bankruptcy requests have increased dramatically, mainly due to a lack of training and resources. Specialized courts are urgently needed.

In 2021, it was expected that an environment of breaches and controversies would prevail that saturated the courts, which reduced their operations due to the sanitary provisions that the pandemic forced. On this point, we have been very insistent on spreading the message that there are alternative dispute resolution mechanisms (MASC), which are very effective, expeditious, and provide options to put disputes in the hands of experts from the corresponding industry. They are effective even to act at the first outbreak of conflict between companies and thus prevent cases from growing and getting bogged down in lengthy processes in which time and a lot of money are wasted.

Jorge León Orantes

Partner and Chairman of Santamarina + Steta