A TREATISE FOR LEGAL PRACTITIONERS
AND
INTERNATIONAL INVESTORS
   
 
RECENT DEVELOPMENTS IN MEXICAN LAW
In the Areas of
Business, Investment and International Trade
 
   
ELECTRICITY INDUSTRY: Policy Proposal for Structural Reform of the Mexican Electricity Industry
Secretariat of Energy (Secretaría de Energía), 1999;

Presently a legislative bill (Iniciativa Presidencial) submitted to Congress.
   
  The Federal Executive has submitted to Congress a legislative bill to amend Articles 27 and 28 of Mexico's Federal Constitution. The proposed amendment is intended to provide a basis for Aprofound structural reform of the national electricity industry in order to assure an adequate supply of reliable, high quality and competitively priced electricity in the long term.
   
  With the purpose of informing all interested parties as to the scope of the constitutional reform initiative presented by the government, Mexico's Secretary of Energy has outlined a policy proposal regarding this important question in a document titled: Policy Proposal for Structural Reform of the Mexican Electricity Industry. This document may be consulted at the web site of Mexico's Presidencia, and is available in English, French and Spanish.
   
  The Proposal consists of 75 pages, and it is divided into the following sections: I Overview (pages 3-13); II The Current Structure of the Industry (pages 14-24); III The New Electricity Industry (pages 25-37); IV The Electricity Market (pages 38-48); V Regulatory Framework (pages 49-61); VI Reform Process (62-69); VII Transition and final structure of the industry (pages 70-74), including a Glossary (page 75).
   
  The legislative bill that President Zedillo submitted to Congress generated a strong opposition from both PAN and PRD representatives.  It is expected that this bill will be discussed and debated (and probably amended) at the forthcoming an extraordinary session of Mexico's Federal Congress to take place from the end of May until mid-June, 1999.
   
COMMERCIAL CIVIL AVIATION: Regulations to the Civil Aviation Act.
Diario Oficial of December 7, 1998.
It entered into force the following day.
   
  The Regulations to the Civil Aviation Act (Reglamento de la Ley de Aviación Civil) were formulated by the Secretary of Communications and Transportation. They were based upon the Federal Public Administration Act (Ley Orgánica de la Administración Pública Federal) and the Civil Aviation Act (Ley de Aviación Civil). The regulations aspire to update and modernize the structure of Mexico's aviation industry. Their principal objective is to regulate civil aviation activities throughout Mexico, without adversely affecting those international treaties on civil aviation matters to which Mexico is a party.  More specifically, the regulations set forth changes to public air transportation services, in particular passenger, cargo, and mail flights. The new enactment subjects public flights to fixed routes, itineraries and radio frequencies, and imposes tariffs and taxes to be paid for the operation of private (commercial) airlines.  Furthermore, the regulations include a number of safety measures that must be followed by private commercial airlines intended to insure the safety of those individuals who fly in Mexico, whether Mexican nationals or foreigners. Other articles enunciate the rules for international flights who enter into the Mexican Airspace.
   
  The Regulations repealed (1) Regulations to Article 320 of the General Act of Means of Communication; (2) Regulations for the Establishment of Priorities for Aerial Transports; (3) Regulations for the Operation of Civil Airplanes; (4) Regulations for Search and Rescue and Investigation of Airplane Accidents; (5) Regulations on Airplane Hangars and Workshops; (6) Regulations on Air Traffic; (7) Regulations for the Licensing of Technical Air Personnel; (8) Regulations for Technical Schools of Aeronautics; (9) Regulations for Aerial Meteorological Services; and (10) Regulations on Aeronautic Telecommunications and Radio-Aids for Aeronautical Navigation.
   
  The Regulations are composed of 198 sections (Artículos), divided into seven titles: I. General Provisions (Artículos 1-2); II  Aero-Transportation (Artículos 3-72); III  Aeronautic technical personnel, and of Technical Centers for the Development and Training of Personnel (Artículos 73-97); IV  Civil (Private) airplanes, and their Operations and Maintenance (Artículos 98-151); V  Services of Aeronautical Navigation and Air Traffic Rules (Artículos 152-174); VI  Search and Rescue Operations, and Investigations of Airplane Accidents (Artículos 175-190); VII  Verification and Formulation of Air-Traffic Control Rules and Sanctions for violations (Artículos 191-198).
   
COPYRIGHT LAW: Regulations to the Federal Copyright Act.
Diario Oficial of May 22, 1998.
It entered into force the following day.
   
  On May 22, 1998 Mexico enacted  Regulations to the  Ley del Derecho de Autor (Mexico=s Federal Copyright Act). These regulations were formulated by the Secretary of Public Education. In general, their objective is to detail and expand the provisions of the Federal Copyright Act. The enforcement of both of these federal enactments corresponds to the Secretariat of Public Education (Secretaría de Educacion Pública) through the National Institute on Copyright (Instituto Nacional del Derecho de Autor) and, in certain cases enunciated by the law, to the Mexican Institute of Industrial Property (Instituto Mexicano de la Propiedad Industrial).  In effect, the new regulations amended or repealed all the previous legislative enactments which use to govern copyright law in Mexico.
   
The Regulations repealed (1) The Regulations for the Recognition of Exclusive Copyrights of Authors, Translators, and Editors; (2) Any other provisions contrary to the newly enacted regulations.
   
  The Regulations are  composed of 184 sections (Artículos). The Regulations are  divided into 14 Titles: I. General Provisions (Artículos 1-4); II. Copyright questions (Artículos 5-15); III. Transfer of Rights (Artículos 16-26); IV.  Protection of the Copyright (Artículos 27-37); V. Limitations to the Copyright (Artículos 38-46); VI. Rights regarding National Symbols and Popular Cultures (Artículos 47-48); VII. Other related rights (Artículos 49-52); VIII.  Registry (Articulos 53-85); IX.  International Numbers (Artículos 86-102); X. The National Institute on Copyright (Artículos 103-107); XI.  Collective Rights (Articulos 108-136); XII.  Settlement of Controversies (Artículos 137-155); XIII.  Administrative Proceedings (Artículos 156-173); XIV.  Violations of Commercial Materials (Artículos 174-184).
   
MAQUILADORA INDUSTRY: Decree for the Promotion and Operation of the Maquiladora Industry.
Diario Oficial of June 1, 1998;
It entered into force the following day.
   
  This decree was enacted by President Zedillo and its major objective is to promote the establishment and regulate the operation of legal entities known as AMaquiladoras@ which are partially or fully devoted to the export of  manufactured goods. The decree repealed a previous decree on the same subject published on December 22, 1989.
   
  The decree, formulated by the Secretariat of Commerce and Industrial Development (SECOFI), is composed of 32 sections (Artículos) and is divided into three chapters: I. General Provisions (Artículos 1-3); II.  The Manufacturing Export Programs (Artículos 4-27); and  III. Task Force for the Maquiladora Industry (Artículos 28-32). Chapter one is devoted to legal definitions.  Chapter two describes the process of registering a Maquiladora by SECOFI, also outlining certain rights and duties applicable to the Maquiladora industry. The final chapter sets forth the creation of a Task Force made up of government officials whose purpose is to rigidly apply and enforce the rules contained in the new decree.
   
FOREIGN INVESTMENT: Regulations to the Foreign Investment Act of 1993 and to the National Register of Foreign Investments
Diario Oficial of September 8, 1998;
It entered into force 20 days later,
(Except for Paragraph 4 of Articulo 18 which entered into force sixth months later).
   
  On September 8, 1998, the government of Mexico through the Secretariat of Commerce and Industrial Development (SECOFI) enacted the Reglamento de la Inversion Extranjera y del Registro Nacional de Inversiones Extranjeras. The purpose of this legislative enactment by Mexico=s Executive Power is to regulate the volume,  type and domestic behavior of foreign investments in Mexico.
   
  Since the enactment of the new Foreign Investment Act in 1993 (D.O. of December 28, 1993), business persons, investors and legal practitioners within and outside Mexico awaited  patiently for over five years for regulations to detail  the 1993 Act. Prior to the enactment of the current 1998 regulations, the provisions of the 1993 Act were to be interpreted pursuant to the preceding Regulations which, although enacted in 1989, formally Acomplemented@ the 1973 Act to Promote Mexican Investment and Regulate Foreign Investment. In reality, the now old 1989 Regulations were formulated to advance a new and more flexible legal regime to govern foreign investment; a regime which run contrary to the rigid and nationalistic regime based on 1973 Foreign Investment Act. Legal scholars have pointed out the unconstitutionality of the 1989 Regulations. However, no legal action was ever taken against these important regulations because of the favorable and modern regime that they established welcoming and promoting foreign investment. In many respects, the 1989 Regulations Bnow finally repealed by the current 1998 RegulationsB, may be characterized as the direct source and legal basis for the 1993 Foreign Investment Act, still in force.
   
  The 1998 Regulation are composed of 49 sections (Artículos) divided into eight titles. I General Provisions (Artículos 1-4), sets forth general definitions of legal terms used in the Act; in addition, it enumerates specific industries not subject to the rules and principles of the Act, such as freight, warehousing, and some activities associated with the generation of electricity and oil. II Of the Acquisition of Real Estate, the Exploitation of Mines and Water, and of Trusts (Articulos 5-12). This title governs the acquisition of real estate in Mexico, both in the Restricted Zone and elsewhere, for commercial and residential purposes. Interestingly, contrary to Article 27 (I) of the Federal Constitution, the new regulations detail how a Mexican corporation with foreign investment may acquire the direct ownership of real estate anywhere in Mexico, even in the Restricted Zone, when said acquisition takes place for commercial purposes. Trust contracts, known as AFideicomisos@  and now valid for fifty years, must continue to be used for residential purposes. III Of Societies (Companies,  Artículos 13-20). This title enunciates the rules foreigners must comply with to invest and participate in Mexican legal entities, in particular when the company in question does not contain the so-called AExclusion of Foreigners Clause@ (Cláusula de Exclusión de Extranjeros).  IV Of the Investment by Foreign Legal Entities (Artículo 21). This sets out the manner in which foreign corporations must register with the Mexican government to be authorized to conduct business in Mexico. V Of Neutral Investments (Artículos 22-25). It establishes the requirements needed to obtain authorization from the Mexican government  to establish or modify neutral investments. VI Of the National Commission of Foreign Investments (Comisión Nacional de Inversiones Extranjeras, Artículos 26-29). This title enumerates the legal and administrative duties imposed upon this National Commission, including its internal rules of procedure. VII Of the National Register of Foreign Investments (Registro Nacional de Inversiones Extranjeras, Articulos 30-46), sets out the organization, activities, and basic inscriptions to be made by the Registry, whose major objective is to organize,  keep and maintain an official register of all foreign investments in Mexico. The Register is divided into three Asections:@ 1) Foreign individuals and foreign legal entities; 2) Societies (Companies); and, 3) Trust contracts (Fideicomisos). VIII Of Supplementary Provisions (Artículos 47-49).
 
   
LABOR LAW: 1998 General Rules for the Inspection and Application of Sanctions for Violations to the Federal Labor Act (Ley Federal del Trabajo).
Diario Oficial of July 6, 1998.
It entered into force the following day.
   
  On July 6, 1998 Mexico enacted the Reglamento General para la Inspección y Aplicación de Sanciones por Violaciones a la Legislación Laboral. These federal regulations were formulated by the Secretariat of Labor and Social Welfare (Secretaría del Trabajo y Previsión Social).  In general, the regulations= objective is to enunciate the procedure to be followed in the conduct of inspections and the application of sanctions for violations committed to Mexico=s Federal Labor Law in specific workplaces.  More specifically, these regulations establishes the requirements for becoming labor inspectors, enumerates their duties as well as the types of industries subject to inspections.  Furthermore, the regulations also specify the different sanctions that may be imposed for violations committed in workplaces.  The final title describes the proceedings that may be directed against a given company, the contents of said proceedings and the administrative avenues that a factory or company owner may use in court to challenge the imposition of sanctions.
   
  These regulations repealed (1) the Regulations for Federal Labor Inspections (Reglamento de Inspección Federal del Trabajo); (2)  Regulations Establishing the Procedure for the Application of Administrative Sanctions for Violations to the Federal Labor Act (Reglamento que Establece el Procedimiento para la Aplicación de Sanciones Administrativas por Violaciones a la Ley Federal del Trabajo).
   
  The Regulations are divided into the following Titles: I. General Provisions (Articulos 1-6); II  Inspection Visits, with chapter 1 on labor inspectors (Articulos 7-11); chapter 2 on the practice of inspections (Articulos 12-27), and chapter 3 on the responsibilities of inspectors (Articulos 28 & 29);  III Administrative Procedure for the Application of Sanctions, with chapter 1 on the initiation of proceedings (Articulos 30-32), chapter 2 on the substance of the proceedings (Articulos 33-36), chapter 3 on resolutions (Articulos 37-41), and chapter 4 on the means of contesting (Impugnación) (Articulo 42).
   
 
NOTE:
Last Updated: May 14, 1999
   
 

Author & General Coordinator:
JORGE A. VARGAS
Professor of Law,
University of San Diego School of Law
Published by ©West Group (1998)
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The Seven Appendices  
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Synopsis 21 thru 40  
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Volume 3 Preface  
Volume 3 Introduction  
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Volume 4 Introduction  
     
 
Dictionary Description  
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1. Introduction  
1.1 Overview of Mexico's Legal System  
1.2 Mexican Law Information in Spanish  
1.3 Mexican Law Information in English  
     
2. Legislative Enactments  
2.1 No Mexican Federal Statutes in English  
2.2 Mexican Federal Statutes in Spanish  
2.3 Mexico's Major Codes in Spanish  
a. Federal Civil Code  
b. Code of Commerce  
c. Code of Civil Procedure  
d. Federal Code of Criminal Procedure  
e. Federal Criminal Code  
f.  Fiscal Code of the Federation  
2.4 Mexico's Diario Oficial de la Federación  
2.5 The Federal Constitution of 1917  
a. Mexico: A Federal Republic  
b. The Executive Power  
c. The Legislative Power  
d. The Judicial Power  
     
3. International Treaties and Conventions  
3.1 Secretariat of Foreign Affairs (SRE)  
3.2 List of International Treaties and Conventions on conflict of laws,
business and environmental questions to which Mexico is a party
 
3.3 International Judicial Cooperation  
     
4. Mexico's Federal Government  
     
5. State Governments  
5.1 Specific State legislation (i.e, State Constitution, codes, laws, etc.)  
     
6. Legal Background and History of Mexico  
     
APPENDIX I Mexico's Federal Legislation  
APPENDIX II Mexico's 18 Secretariats of State Web Sites  
APPENDIX III Web Sites of Mexico's 31 States  
APPENDIX IV Compendium of the Best Mexican Law Web Sites (5 in English and 6 in Spanish)