Upcoming Dominican Republic Presidential Elections; Possible Challenges

With presidential and congressional elections scheduled to take place on July 5, 2020,[1] the President of the Dominican Republic, Danilo Medina Sánchez, announced last Sunday May 17, 2020, a set of measures for a staged reopening of the Dominican economy. This raises the question of what happens if these reopening measures result in drastic spikes of new COVID-19 cases and the elections are therefore not held on July 5, 2020.

There is a lot riding on this question as any postponement of the elections beyond the August 16 constitutional end-date of the terms of the President, Vice President and 222 legislators could result in a political, institutional and constitutional crisis. This in turn could deal a serious blow to the country’s democratic system, rule of law, and business and investment climate.

The Dominican legal system does not expressly address a situation where presidential and congressional elections cannot be held before the end of respective terms. For general guidance, one may look to basic constitutional principles and value, however, this may imply serious inconveniences. Two lines of thought of how the situation should be handled, based on interpretations of the existing Dominican Constitutional provisions, are currently being publicly debated. The first suggests the President and Vice-President should step down from office on August 16, 2020, because the Constitution provides such date as the term of their mandates. Pursuant to this line of thought, the President of the Supreme Court of Justice would provisionally act as President of the country according to the succession rules set forth by articles 126 and 129 of the Dominican Constitution or a Governance Board would temporarily manage the government until elections could be held. The second line of thought suggests that the current authorities should remain in office until their replacements are elected, based on the principle of continuity of government (a principle deriving from an interpretation of article 275 of the Dominican Constitution) and on the democratic principle considering that those authorities where duly elected. Both of these approaches, however, would require approval and implementation of certain measures by the National Congress (Senators and Deputies), the tenure of most members of which also will expire on August 16, 2020.

Another legal option under debate is an amendment to the Dominican constitution to address specifically the issue. A major hurdle to this option, however, is that the Constitution expressly prohibits any amendments being made during a state of exception[2]. Nevertheless, several proposals have been suggested, such as: (i) the modification to the presidential rules of succession to expressly include the possibility of the current authorities remaining in office until their replacements are elected; (ii) the inclusion of transitional language extending, on an exceptional basis and in light of circumstances, the current Executive and Congressional terms;[3] (iii) the inclusion of language that contemplates the possibility of some members of the National Congress assuming temporary executive functions until the elections can be held, and (iv) the inclusion of a provision holding that the Electoral Authority assumes the Executive Power until elections can be held.

These options seek to limit political influence in case elections cannot be held by August 16, 2020, and to ensure adequate governance and economic stability. The Dominican political panorama should be more clear on July 5, 2020, assuming elections are held, which are expected to conclude in a peaceful transition of power.

 

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[1] The Constitution of the Dominican Republic stipulates that presidential and congressional elections shall be held every four years on the third Sunday of May. This year, however, on April 13, 2020, the Electoral Authority passed a resolution rescheduling for July 5, 2020 these elections due to the COVID-19 coronavirus pandemic.

[2] Article 271 of the Constitution establishes that “Constitutional reform may not be made in the case of the effect of one of the states of exception given in article 262”.

[3] Article 274 of the Dominican Constitution.

Renewable Energy Projects in Mexico Dealt Another Blow by the Lopez Obrador Administration

On April 29, 2020, Mexico’s independent system operator (“CENACE”) notified generators of its decision to indefinitely suspend all legally mandated pre-operation tests for solar and wind projects in light of the COVID-19 pandemic. Such suspension purportedly seeks to safeguard the national grid against system interruptions clean intermittent energy projects could cause during the pandemic, and essentially bars any such projects from connecting to the grid until further notice. According to industry groups AMDEE and ASOLMEX, CENACE’s actions impact a total of 44 solar and wind projects (28 that are ready for commercial operation and 16 that are under construction), which represent approximately US$6.4 billion in investments.

Less than three weeks later, on Friday, May 15, the Agreement setting forth the Policy of Reliability, Safety, Continuity, and Quality of the National Electric System (“Policy”) was published in the Official Gazette of the Federation by the Ministry of Energy (“SENER”). The Policy cites as its primary objective the establishment of guidelines allowing competent authorities to guarantee the national grid’s electricity supply based on principles of reliability, insisting that clean intermittent energy poses a threat to such security and reliability. Much like CENACE’s suspension, the Policy primarily impacts those solar and wind projects not yet in commercial operation, but it may also impact in-the-fence projects that intend to connect to the national grid.

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Brazil | Coronavirus Could Push Hundreds of Companies Close to Bankruptcy

The financial constraints caused by the coronavirus has affected the world’s economy and its outlook is still unknown and gloomy. Companies from all industries worldwide have been taking all sorts of measures to mitigate losses, preserve cash flow and, ultimately, survive. Just like other companies around the globe, the coronavirus has pushed many struggling Brazilian companies over the edge and into bankruptcy.

The International Monetary Fund predicts the Brazilian GDP will fall by 5 percent in 2020 and, have a slim 1.5-percent recovery next year. The consequences are enormous or significant Due to this huge contraction for Brazil, it is estimated that around 2,500 companies in the country may be forced to turn to the courts to avoid bankruptcy. If the numbers are confirmed, that would represent an increase of 40%compared to the record of 1,800 requests in 2016, when the country’s GDP dropped 3.5 %.

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Mexico USMCA & COVID-19 Updates

On May 5, 2020, Mexican President Andrés Manuel López Obrador (“AMLO”) announced new measures to resume automotive manufacturing, mining, and construction activities amid the COVID-19 pandemic.  Mexican Minister of Economy Graciela Márquez Colín announced on May 13 a new plan to re-open the economy in three stages.  The first stage of the plan is set to begin on May 18 in those municipalities where no new COVID-19 infection cases have been reported.  The second stage is occur between May 18-31 and is focused on preparing workers, companies, and families in general for a return to work, subject to region-specific situations.  In the second stage, Mexico will also include as essential sectors:  construction, mining and the manufacture of transportation equipment, subject to strict health protocols.  The third stage will begin on June 1, and focuses on a “traffic light”-like system for a phased re-opening – similar to the United States – that accounts for:  (1) public health measures, (2) defined work activities, (3) protecting vulnerable people, (4) open and closed public spaces, and (5) educational facilities.  The first phase (“red light”) allows essential businesses to operate but continues restrictions on non-essential businesses and social activities.  The last phase (“green light”) allows for re-opening of schools and a resumption of social and recreational activities.

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Mexico and COVID-19

Over 300 manufacturing CEOs in the United States sent a letter to the President of Mexico on April 22 asking him to align Mexico’s definition of essential businesses with that of the U.S. Department of Homeland Security’s (DHS) Cybersecurity and Infrastructure Security Agency (CISA) to minimize supply chain disruptions in North America. On April 21, the Mexican Minister of Health announced an extension of the suspension of non-essential activities until May 30, with the possibility of lifting these restrictions on May 18 for those municipalities with low or no transmission of COVID-19. The Health Ministry will define transmission metrics, along with other risk factors and vulnerabilities associated with COVID-19, in addition to processes for reducing transmission between municipalities that have differing virus propagation levels.

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NOVEL CORONAVIRUS | COVID-19: Employment Maintenance Emergency Plan Enacted in Brazil

Since the declaration of the state of public calamity on March 20, the Brazilian Government has taken several measures to contain the fast spread of the novel coronavirus and to ease the negative impacts of the novel coronavirus outbreak on the domestic economy.

The most anticipated measure is the stimulus aid package, which has yet to be approved by the Congress. However, other several critical measures have been taken by the Brazilian Government, including the authorization to modify employment agreements during the state of public calamity.

On April 1st, President Jair Bolsonaro enacted the Presidential Provisional Measure no. 936/2020, which provides the Employment Maintenance Emergency Plan. In an effort to preserve jobs, workers’ income and the country’s economic activity, the Emergency Plan allows for temporary suspension of the employment contracts or reduction of working hours and workers’ salaries during the state of public calamity.

A client alert with a summary of the main provisions of the Presidential Provisional Measure no. 936/2020 is included here.

COVID-19 Measures in Central America and the Caribbean

As the coronavirus disease 2010 (COVID-19) global pandemic continues to evolve, our Latin America team has been monitoring developments in the region and tracking measures implemented by governmental entities that may affect business operations.

Our Santo Domingo office recently published a newsletter, which can be found here, covering relevant official pronouncements, decrees, and resolutions.  Our Caribbean and Central America Desk also recently published an alert, which can be found here, addressing developments and government measures in the Spanish Caribbean.

If you would like to obtain additional information on the impact of COVID-19 on business and commercial operations in this region, please contact our Santo Domingo office or the Caribbean and Central America Desk.

Public-Private Partnerships in Dominican Republic

As the Dominican Republic established itself as Latin America’s fastest-growing economy in recent times, it became paramount to design, draft, reach a consensus and pass a public-private partnership law. In that sense, the latest legal framework proposal for the governance of public-private partnerships—which was passed into law by the Dominican Republic’s executive branch on February 20th, 2020,(hereinafter, the “Law”), is a landmark legislative achievement whose objective is to rule the provision, management and operation of public goods, infrastructure and services by means of a public-private partnership mechanism. This article gives the reader a brief overview of the following topics: (i) the definition and scope of the “public-private partnership” concept; (ii) types of public-private partnerships and procedures for its implementation; and, (iii) other relevant information, including recent developments regarding the Government’s interest to develop public-private partnerships to combat the COVID-19 pandemic. Available here.

Mexico’s Health Emergency Decree

On March 30 Mexico declared a health emergency and issued a decree with strict measures to contain the fast-spreading of coronavirus “COVID-19,” on non-essential activities in the public and private sectors that would be in force until April 30.  In order to prevent the health system from being overwhelmed with the increasing number of cases, the government of Mexico announced the following measures in Spanish and English. The Mexican Health Ministry divided into five groups those essential activities: health, security, economy, social programs, and critical infrastructure.

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US Policy Prognosis: The Legislative Response to COVID-19

Our Public Policy Team is operating at the epicenter of the evolving coronavirus disease 2019 (COVID-19) global pandemic, providing clients with timely updates, guidance and resources to weather the complex uncertainties, overcome challenges, mitigate risks, enhance resilience, maintain business continuity or normalize business operations as quickly as possible. We have just issued the following publications to highlight the US legislative efforts in response to COVID-19 and to highlight some international trade-specific issues and what may come next.

USA Flag Read our US Policy Prognosis: The Legislative Response to COVID-19 in English
Spain Flag Read our US Policy Prognosis: The Legislative Response to COVID-19 in Spanish

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