Mexico’s Federal Criminal Code and the new General Law of Administrative Responsibility (PART 2)

Mexican Gavel & Law Book

On our previous blog post we provided the general outline and background behind Mexico’s National Anticorruption System. On this post, we will go further into the weeds of both the 2016 amendments to the Federal Criminal Code and the compliance provisions of the General Law of Administrative Responsibility as these laws apply to legal entities. Although these amendments are generally discussed separately, we believe that these laws, as amended, complement each other and the provision of one can help understand the other. This bifurcated enforcement is in some ways similar to how the FCPA is enforced by the DOJ and the SEC in the U.S. (i.e. through separate but complementary criminal and civil/administrative actions).

With this in mind, we turn our attention to how these laws impact legal entities.

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Mexico’s Anticorruption Legislation and its Impact (PART 1)

Washing Mexican Flag

Beginning in 2015, Mexico has been promulgating sweeping anticorruption legislation. Mexico first laid the groundwork with amendments to the Federal Constitution that created the National Anticorruption System. Then in 2016, Congress passed the National Anticorruption System’s implementing legislation through a series of new laws and important amendments to existing ones.

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Western Hemisphere – An Evolving U.S. Policy

Earth Night LightsDuring his trip to the Western Hemisphere in early February 2018 – which included stops in Mexico City, Mexico; San Carlos Bariloche and Buenos Aires, Argentina; Lima, Peru; Bogotá, Colombia; and Kingston, Jamaica – U.S. Secretary of State Rex Tillerson stressed the continued importance of the region to the United States. In a speech that he made in Texas before travelling south, Secretary Tillerson highlighted the benefits of increased hemispheric energy trade, which may be the lens through which the Trump Administration views its policy for the Western Hemisphere:

“Building greater prosperity by integrating the wealth of energy resources within the hemisphere is an opportunity that is unique in the world to the Americas.”

Secretary Tillerson further stressed: “By 2040, North America is expected to add more oil production to the global markets than the entire rest of the world combined and more gas production than any other single region. … Our continent has become the energy force for this century, thanks in large part to rapid expansion in natural gas and tight oil production.”   He also called for opening energy market economies in the hemisphere, saying:

“Between now and 2030, Latin America is expected to spend at least $70 billion on new electric power generation plants to fuel economic growth. … By building out a more flexible and robust energy system in our hemisphere, we can power our economies with affordable energy. … And we can make our hemisphere the undisputed seat of global energy supply.”

Energy, however, is not the only driver for improved circumstances in the Western Hemisphere, as Secretary Tillerson advocated for more market-based economies in general. He spotlighted Argentina’s recent reforms, including its own tax overhaul, as opening the Argentine economy, driving down the high inflation rate, and attracting investments. The Secretary recognized that economic development and security are not mutually exclusive.

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Protection of personal data in the EU and Mexico

Data ProtectionProtecting the personal data of individuals has become a major concern worldwide. As a result, several countries have adopted new regulations that aim to provide or enhance such protection. Here, we will briefly present some of the most relevant features of the data protection regulations recently adopted by the European Union (“EU”) and Mexico, two important business partners to the United States.

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Costa Rica Elections: Populism vs. Establishment

Costa Rican Ballot BoxThere were 13 candidates in the running for the presidency in Costa Rica until last Sunday, when Costa Ricans narrowed the pool two candidates. Among the 13 presidential candidates were several lawyers who are also politicians, including:

  • Antonio Álvarez (National Liberation Party) – Lawyer, businessman and veteran legislator who twice served as President of the Costa Rican Legislative Assembly (1995-1996; 2016-2017). As a lawmaker, he is known for having promoted legislation against sexual harassment, domestic violence, smoking, and protecting people with disabilities.
  • Juan Diego Castro (National Integration) – A defense lawyer by profession, Castro served as Minister of Public Safety (1994-1997) and later Minister of Justice (1996-1997). Castro positioned himself as an anti-establishment and anti-corruption candidate.
  • Rodolfo Piza (Social Christian Unity Party) – A lawyer, former justice of the Costa Rican Supreme Court (2009-2013), and Executive President of the Costa Rican Department of Social Security (1998-2002), Piza was the candidate of the Social Christian Unity Party.
  • Otto Guevara (Libertarian Movement Party) – Lawyer, professor, and founder of the Libertarian Movement Party. He previously served in the legislature between 1998-2002 and again since 2014.

None of the aforementioned, however, remain in the presidential race. Last Sunday, a quarter of Costa Ricans that went to the polling booths voted for Fabricio Alvarado, a non-politician who is a former television anchor and influential evangelical singer. Another 22% voted for Carlos Alvarado, a politician who previously served as Minister of Labor and Social Security (2016-2017) and secured the nomination of the Citizens’ Action Party, which is the political party of outgoing Costa Rican President Luis Guillermo Solís.

Fabricio Alvarado’s rise in the polls is largely attributed to his campaign rhetoric against an Inter-American Court of Human Rights (IACHR) advisory opinion that notes member states “must recognize and guarantee all the rights that are derived from a family bond between people of the same sex.”[1] His meteoric rise appears to have tapped a dormant wellspring of conservatism among Costa Rica’s voters that heeded the call to defend the country’s sovereignty against external foreign tribunal decisions.

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Puerto Rico Announces Plan to Privatize Its Power Utility

Puerto Rico PowerThe government of Puerto Rico announced its plan to privatize the Puerto Rico Electric Power Authority (PREPA) as part of a 18-month process that is expected to culminate with the sale of PREPA’s generation facilities and a private concession to operate and manage its transmission and distribution facilities. PREPA is the government-owned utility with sole authority to provide electric power in Puerto Rico, and has been at the center of attention and controversy since Hurricane Maria devastated Puerto Rico last year.

Governor Ricardo Rosselló announced the government’s plan to privatize PREPA in a televised speech on January 21, promising that PREPA would “cease to exist as it deficiently operates today.” The process described by the governor would take place in three stages within an 18-month period:

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The ICC’s Expedited Procedure- How can Latin America Benefit?

South America PopulationThe ICC’s Expedited Procedure found under Article 30 and Appendix VI of the ICC Rules of Arbitration generally applies to arbitration agreements concluded after March 1, 2017; where the amount in dispute does not exceed US $ 2 million; and where the parties have not formally opted-out. However, parties are also allowed to opt-in, regardless of the date of the agreement or the amount in dispute. It is on that opt-in basis that many parties last year started requesting the “Expedited Procedure.”

While Latin American parties were not the first to take advantage of the Expedited Procedure,[1] they can benefit from some of the changes. Accordingly, we will discuss the new provisions and their potential appeal to Latin American parties:

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Dominican Republic’s Law No. 57-07 and it’s Incentives for the Development of Renewable Sources of Energy

Solar PanelSince the enactment of Law No. 57-07 on incentives for the development of renewable sources of energy on May 2007 (“Law No. 57-07”), the Dominican Republic has experienced a significant surge of investments in the renewable energy sector. For example, from 2011 to 2016, the country’s National Interconnected Electric System (“SENI”) added1,018 megawatts (“MW”) of new installed generation capacity, 19% of which came from renewable energy sources.[1] Moreover, the Minister of Energy and Mining recently indicated that the SENI generates approximately 800 MW of power exclusively from non-conventional energy sources such as from hydropower, wind power, solar-photovoltaic power, and biomass.[2]

It is important for potential investors to determine which power-related investments fall within the scope of Law No. 57-07 and which incentives apply to such investments. Pursuant to the law, all public, private, mixed, corporate and/or cooperative power or bio-fuel production projects can benefit from the incentives if they fall under one or more of the following categories:

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The Concept of Salary under Dominican Law

Termination of EmploymentThe salary under Dominican law is not limited to the financial compensation regularly paid to employees for their services. Instead, under Dominican law, the salary also includes all fixed benefits that employees recurrently receive from their employer (e.g. cost of living, diet, telephone, gas and others).

Moreover, under Dominican law, upon termination of a labor contract, the employer must pay to the employee the severance provided by law. The two main factors taken into consideration when calculating the employee’s severance package are the duration of the contract and the “ordinary salary”. In a global and changing business world, with diverse employment areas, it is important to understand the concept of “ordinary salary” in order to avoid errors in the calculation of severance.

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Key Aspects of Sales Representation, Agency and Distribution Agreements in Brazil

Brazil in Business

Agency, distribution and sales representation agreements are commonly used means for a business to expand its geographical reach without setting up a permanent establishment in a foreign country. While there are many elements to creating a successful commercial relationship, from a legal standpoint, knowledge of the legal framework in each target jurisdiction is essential to lower the risks of producing unintended consequences, which may ultimately affect the success of the relationship and create additional liability to your company. This becomes even more important in Latin American countries, such as Brazil, due to protective laws affecting the relationship with distributors, agents and sales representatives.

In Brazil, agency and distribution relationships are governed by Chapter XII of the Brazilian Civil Code, whereas the Brazilian Sales Representation Law (Law No. 4,886/65, amended by Laws No. 8,420/92 and No. 12,246/10), governs a sales representation relationship.

When determining the nature of the relationship, Brazilian courts will look at the facts, and not at the title of the agreement. For that reason, understanding the legal definition and characteristics of each category is fundamental.

An agency relationship will exist when an agent assumes, in a non-occasional basis and without any dependency, the obligation to promote, on behalf of another person, in exchange for remuneration, the performance of certain transactions, within a given area. A distribution relationship will exist when the agent is in the possession and control of the item to be transacted.

In contrast, a sales representative is legal entity or individual, without an employment relationship, who acts as an intermediary, in a non-eventual basis, on behalf of one or more people, for the conduct of commercial transactions, soliciting and mediating proposals or orders, to transmit them to principals, whether carrying out acts related to the performance of the transactions.

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