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NEWS

"Mexican Energy Reform - Business Oportunities"

With the purpose of modernizing the energy sector in Mexico, without privatizing the State-owned companies dedicated to the production and profit of hydrocarbons and electricity, at the end of the year 2013, the Mexican government set forth the basis of the energy reform by amending the Federal Constitution in this subject-matter. In accordance with such amendment, on August 11, 2014, were published in the Federal Official Gazette: i) the Hydrocarbons Law, ii) the Electric Industry Law, iii) the Geothermic Energy Law, iv) the Law of the Coordinate Controlling Agencies in the Energy Sector, v) the Petroleos Mexicanos Law, vi) the Federal Electricity Commission Law, vii) the Hydrocarbon Income Law, viii) the Law for the National Agency of Industrial Safety and Environmental Protection of the Hydrocarbon Sector and ix) other amendments to various laws, e.g. the Foreign Investment Law.

The aforementioned published laws establish the terms in which the private sector, whether domestic or foreign, may perform energy related activities and investments, which were beforehand prohibited. Such participation will be defined through the “Rounds” as commented below, being Rounds One and 0.5 the opportunities for private participation in the energy sector.

Round Cero. The majority of the proven reservoirs were assigned to Pemex for its exploitation.

Round One. Pemex and the private companies, including foreign companies, may compete in tenders corresponding to this round, which has already initiated.

The Ministry of Energy estimates to assign to the private sector 169 areas which include profound waters, non-conventional resources, shallow waters, heavy oils, Chicontepec and land reservoirs for hydrocarbon production and exploration in Mexico.The aforementioned areas represent an estimate of 3,782 million crude oil barrels.

It is expected that in November 2014 the draft of the terms for the public tenders will be published. It is also estimated that the final terms for the tenders will be released in February-April 2015.

Round 0.5. Pemex will announce the sectors in which it will associate with third parties to increase its production. These projects include mature fields (land and marine), extra heavy crude reservoirs, gas development and profound waters.

As mentioned, the Energy Reform represents an opportunity for private investment, whether domestic or foreign, in various hydrocarbon exploration and exploitation activities.

"Chacón & Rodríguez, S.C., winner of the 2014 M&A Awards as Mexico´s Aviation Law Frim of the Year"

Chacón & Rodríguez, S.C., was selected as winner of the 2014 M&A Awards as Mexico’s Aviation Law Firm of the Year by Acquisition International.

The 2014 M&A Awards are sponsored by Al Global Media, Acquisition International Magazine and DealFlow Source.

The winners of the 2014 M&A Awards are determined by three factors: (i) the number of votes received; (ii) in-house research; and (iii) supporting documents provided by nominees.

"3rd Sino-Foreign Economic and Trade Projects Exchange Conference"

Chacón & Rodríguez / Yingke Mexico participated in the 3rd Sino-Foreign Economic and Trade Projects Exchange Conference held last December 14th, 2012, in Beijing, China. This conference was hosted by China Association of International Trade and supported by the Chinese Ministry of Commerce.

"4th China Overseas Investment Fair"

Chacón & Rodríguez / Yingke Mexico participated in the 4th China Overseas Investment Fair held in the World Trade Center in Beijing, China, on December 4-5th, 2012. As the outbound investment window of Chinese enterprises, this fair has become one of the main professional platforms for covering outbound investments. This fair was hosted by China Industrial Overseas Development & Planning Association (CIODPA) and China Development Bank (CDB).

"Strategic association between the law firms Yingke and Chacón & Rodríguez"

On October 2, 2012, one of the largest Chinese Law firms, Yingke, established formally a strategic association with Chacón and Rodríguez Law Firm. From this association, Yingke Mexico emerged with the aim of advising local clients aspiring to expand into China and Chinese clients interested in doing businesses in Mexico. The signing ceremony took place at the exclusive Club Piso 51 located in The Torre Mayor at Mexico City, where the manager directors from both firms hosted a cocktail with clients, diplomats, government officials, business people and media.

"6th China-Latin America and Caribbean Business Summit"

Chacón & Rodríguez/Yingke Mexico participated in the 6th China-Latin America and Caribbean Business Summit held in the City of Hangzhou, China, on October 17-18, 2012. This Summit is an outstanding business platform between China and Latin America and was organized by the China Council for the Promotion of International Trade (CCPIT), the Inter-American Development Bank (IDB), People’s Bank of China as well as Hangzhou municipal government.

"Law Reforms 2012"
New Act on Public Private Partnerships

On January 17, 2012, the new Act on Public Private Partnerships (PPPs) entered into force. This Act establishes a form of Public-Private Partnership in which the private investor, as requested by the public body, provides a public service, with a partially or totally private infrastructure, based on a long-term contract, with the objective to increase social welfare and investment in the country. The bond between the public body and the private investor is merely consisting regarding the contractual obligations of the project in question, without founding a state-owned company or any other kind of entity. Therefore, the public body is able to dispose of its budgetary resources on various projects simultaneously, by means of payment of long-term contracts with the private sector. The private investor may recover its investment and make a profit over the life of the project. Thus, job creation, economic growth and the development of the infrastructure of the country will be encouraged. Hence.

"ABA conference in Mexico City, June 14 - 16, 2012"

The American Bar Association’s Section of International Law in cooperation with collaborating organizations in Mexico will host a two-day conference in Mexico City on June 14-16, 2012. Chacón & Rodríguez Partner Joaquín Rodríguez will co-host the event of this stand alone program.

The event showcases opportunities for international practitioners in connection with global integration of Mexico’s economy, predicted as seventh largest by 2025, focused on hot topics of Mergers & Acquisitions, Secured Lending, International Trade, Competition Law and key sectors such as renewable energy.

Prominent experts will review current developments, provide guidance on legal practice areas of growing relevance, and debate with participants the future direction of law reforms. The conference will also afford participants time for debate and dialogue with leading experts and ample networking opportunities with colleagues.

(Newsletter February 2012 of the Mexico Committee of the American Bar Association)

"Note of Public Private Partnerships Act"

The publication of the Public Private Partnership Act ("Act") aims at expanding private investment in the long term for creating productive infrastructure or the provision of public services in the country. The aim is more efficient use of resources and ensure the transparency of its management, risk sharing, resources and objectives between the public and private sectors. Mexican law already has forms of financing such as PIDIREGAS, service delivery projects (PPS) and the works associated with infrastructure projects (OPAPIS), the difference with PPPs is that the Act regulates more certain legal risks acquired by each of the parties.

The Act allows individuals to propose projects for the provision of services or for the creation of infrastructure, which should be approved by the appropriate agency or entity will receive government support for their creation. The scope of the Act is to the departments and agencies of the federal government, public trusts federal parastatals not considered persons under public law and federal, independently derived from the Constitution, also applies to states, municipalities and both public entities, provided they are federal resources.

The form of long-term investment raised by the Act, and is applied in several Mexican states such as Baja California, Mexico State, Nayarit, Nuevo Leon and Tamaulipas in which there has been a boost in the state's infrastructure by Through the aid of individuals.

Summary of Law

On January 16, 2012 was published the Public Private Partnership Act ("Act") in order to regulate the Draft PPP ("Projects") that occur under any scheme, to establish a contractual relationship long term between public sector bodies and private sector for the provision of services to the public sector or the end user and the infrastructure that is used wholly or partly provided by the private sector with the aim to increase social welfare and levels of investment in the country.

It also incorporates the projects undertaken with partnership scheme to develop productive investment projects, applied research and / or technological innovation, institutions and agencies decide that higher education institutions and research centers will develop the project [1].

As requirements are established for projects, as follows:

  • Full justification of the project.
  • Specify the social benefit is sought.
  • Demonstrate financial advantage over other financing.
  • The Law applies to projects carried out by:

  • The agencies and entities of the Federal Public Administration.
  • Not considered public trusts federal parastatals [2].
  • Constitutionally autonomous bodies.
  • The states, municipalities and public bodies of women and men, with federal funds in accordance with agreements concluded with departments or agencies of the Federal Government.
  • It excludes enforcement of Acquisitions, Leases and Services Public Sector and the Public Works Act and Related-Services in the Projects.

    Schemes PPP Act are optional and may be applied in activities to private sector participation. Under no circumstances will benefit schemes in public-private partnership in which activities are to exclude the participation of individuals.

    Information on the projects can be found in a separate section of CompraNet [3].

    To start a project that requires the following:

    I. The conclusion of a long-term contract, which establish the rights and obligations of the contracting public entity, on the one hand and those of the developers or to provide services and, if necessary, execute the work, on the other;

    II. Where necessary, the provision of one or more permits, licenses or authorizations for the use and exploitation of public goods, the provision of the respective services, or both, and

    III. In the case of projects related to innovation and technological development, it will also require the approval of the Scientific and Technological Consultative Forum foreseen in the Law on Science and Technology. For the analysis and approval of these projects the Scientific and Technological Consultative Forum shall conform to the guiding principles of support for Scientific Research, Technological Development and Innovation under the Act.

    It highlights the inclusion of convenience for entities or agencies of using a public-private partnership scheme to replace other funding through a cost-benefit analysis, project profitability and relevance of the term opportunity that will start.

    For the start of projects in addition to the statement of viability of the institution or agency to which appropriate, requires the authorization of the Interministerial Commission on Public Expenditure, Financing and Privatization.

    Be deemed accepted prior authorizations for the start of the execution of projects, if the competent authority does not respond within 60 working days from the date of receipt of the request. The same term is set for authorizations contemplated in the General Law of Ecological Balance and Environmental Protection [4].

    In order for the constructive approval must state that the petitioners requesting authorization refers to public private partnership projects.

    The priority projects and inclusion of a chapter of the Expenditure Budget should be analyzed in terms of Article 34 of the Federal Fiscal Responsibility Act, which regulates the scheduling of resources for investment programs and projects.

    Unsolicited Projects

    The agencies and entities may publish in the Official Journal of the Federation or its website, projects that are ready to receive, specifying the sectors, sub-sectors, geographical areas, project types and other elements, in order that any interested to present its proposal to them.

    The presentation only entitles the applicant that his project is analyzed and evaluated, if he is found not appropriate, not proceed any instance or any means of defense because it is considered as an act of authority.

    After the project is presented, the entity or agency shall issue the bases for the contest and the sponsor must submit a certificate in Project which established the conditions for reimbursement of expenses incurred for the project studies, above in the event that the Promoter can not be the winner or not to participate in it. After delivery of the certificate all rights relating to the studies presented will the domain of dependence or organizing body.

    The developer will sign a unilateral, irrevocable, which determine the following:

  • 1.Otorgue all information relating to the project, which is requested by any bidder in the competition.
  • 2.Ceder rights in copyright and industrial property in favor of the winner.
  • The project sponsor is entitled to an award in the evaluation of the bid, which will be established on the bases, the award may not exceed the equivalent of 10% in relation to the above criteria for awarding the contract.

    If the contest can not be held for reasons attributable to the project promoter, he loses all rights to the studies presented in favor of the agency or entity convener and will make the guarantee established by regulation.

    Contests

    Any person or entity, domestic or foreign can participate in contests, except for the following:

    I. Those in which a public servant involved in any stage of the recruitment process has a personal interest, family or business, or which may be of some benefit for himself, his spouse or relatives by consanguinity or affinity to the fourth degree , or civil, or others with whom you have professional relationships, employment or business, or for members or companies in which the public servant or persons referred to above form or have been part during the two years preceding the date of execution of the procurement in question;

    II. Those convicted by final judgment within three years immediately preceding the date of the call, for breach of contracts with federal agencies or entities;

    III. Those who, for reasons attributable to themselves, any federal agency or entity upon them administratively terminated a contract, within the calendar year immediately preceding the announcement;

    IV. Which for reasons attributable to themselves are in arrears in meeting their obligations in contracts with federal agencies or entities;

    V. Those that are disabled by the Ministry of Public Service under the terms of Title VII of the Public Works Act and Related-Services, the sixth title of the Procurement Act, Leasing and Public Sector Services, or Section four of chapter eleven of this Act;

    VI. Those who take service of any kind, if it is found that all or part of the consideration paid to the service provider, in turn, are received by public servants themselves or through another person, regardless of whether those who have received or not relation to recruitment,

    VII. Those that have been declared insolvent, or

    VIII. Other than for any reason are prevented from doing so by operation of law [5].

    Participants in contests must grant a security, which may not exceed 10% of the total estimated value of the investments to be made to carry out the project.

    The person or persons that are winning are obliged to form one or more entities, in which objects must be referred, exclusively, the activities required for the corresponding project. It may, within the social order of society participation in the respective contest. In the contest to be issued by the entity or agency, shall specify the minimum fixed capital with no withdrawal rights, statutory limitations and other requirements to be met by the company or trust that was established [6].

    Proposals

    Participants must submit their proposal in a period not exceeding 20 days from the publication of the notice must be in sealed envelopes to be included in the technical and economic.

    Not required for the submission and opening of proposals that participants demonstrate their personality, you will need only a brief in which manifest under oath that they have the necessary powers to do so.

    Evaluation of Proposals and Fault Competition and Contracts

    The entities and after analyzing the proposals, the project awarded to the participant whose proposal is solvent. Where two or more proposals are suitable for the development of the Project, subject to the following:

  • 1.Se awarded to the proposal to ensure better economic conditions. If still equal conditions;
  • 2.Se award the project to the bidder that offers greater use of both human resources and the use of goods or services from national and indigenous to the region in question.
  • The opinion to draw the entity or agency to base its decision, setting out the reasons to support them or discard them and compare them with the elements of the project that was awarded to the winner.

    After delivery of the Judgment, the contracts or public-private partnership should be formalized by the deadline for the contest.

    Contracts should contain at least the following:

    I. Name, identifying information and legal capacity of the parties;

    II. Personality of the legal representatives of the parties;

    III. The subject of the contract;

    IV. The rights and obligations of the parties;

    V. Product features, specifications, technical standards, performance and quality levels for the execution of the work and service delivery;

    VI. The relationship of the properties, assets and rights allocated to the project and their fate to the termination of the contract, in accordance with the provisions in Article 123 of this Act and the obligation to maintain that relationship to date;

    VII. The project's financial system, with the considerations in favor of the developer;

    VIII. The mention of the property, assets and rights of the project can only be affected in terms of Article 93 below;

    IX. The terms and conditions under which the developer must negotiate with their creditors, in the event of default against them, the temporary transfer of control of the company itself developer it's creditors, subject to authorization of the contracting agency or entity;

    X. The risk-sharing arrangements, technical execution of the work, financial, by accident or force majeure or any other nature, between the parties, which in any case must be balanced. The agencies and entities can not guarantee developers no payment for risks other than those specified in the contract or established by mechanisms other than those specified in this law and its regulations;

    XI. The deadline for the commencement and completion of the work, for the start in the provision of services and the term of the contract and, where appropriate, the regime to extend them;

    XII. The indication of approval to the project;

    XIII. The assumptions of withdrawal and early termination of its effects, and the terms and conditions to implement them;

    XIV. The conventional system of penalties and sanctions for breach of the obligations of the parties;

    XV. The dispute settlement procedures, and

    XVI. Other that, where appropriate, the law provides.

    For the purposes of this Act, the contract and its annexes are the instruments that bind the parties to their rights and obligations. The terms of the contract shall not contravene the terms and conditions of the contest and those indicated in the clarification meetings.

    The contracts will be subject to: (i) the provision of the services of the Project or (ii) the execution of the infrastructure work necessary for the provision of those services.

    The life of the contracts with their extensions shall not exceed, as a whole, 40.

    The Project Developer may assign its rights the contract, in whole or in part, prior authorization of the contracting agency or entity, provided it is allowed by the contract.

    Exceptions to Competition

    Under its strict liability, the agencies may omit the procedure for tenders and award the project by inviting at least three people or direct award, in the following cases:

    I. No options exist sufficient infrastructure development or equipment, or that in the market there is only one potential bidder, or the case of a person who holds the exclusive patent, copyright, or other proprietary rights;

    II. It made for purely military or navy, or competitive recruitment jeopardize national security or public safety, in terms of the laws of matter;

    III. Circumstances exist that may cause significant losses or additional costs, measurable and verifiable;

    IV. It has terminated a project awarded through competition, before the start, in which case the project may be awarded to the contestant who obtained the second or subsequent locations, provided that the difference in price with the winner initially proposed does not exceed ten percent.

    In the case of competitions and percentage points for evaluation, may be charged to the proposal to continue qualifying for the winner;

    V. Whether it is the replacement of a developer for reasons of early termination or cancellation of a proposed public-private partnership in place, and

    VI. Appropriate credit is holding a strategic alliance to carry out the agencies with entities engaged in engineering, research and development and technology transfer, to implement technological innovations in the national infrastructure.

    Unsolicited projects that are submitted to the agencies or entities may not be directly awarded.

    Goods necessary for Projects

    In the event that required properties, assets and rights for the execution of projects, the responsibility to purchase may fall on the agency or entity convener on the developer or both.

    The acquisition can be performed in two ways:

  • 1.Convencional. To surrender possession of the property the entity or agency could cover up a deposit of 50% of the agreed price. In addition to the rightful owner, you may negotiate with other real rights holders, tenants, possessory rights, litigation rights or other legitimate title to put on.
  • 2.Expropiación.
  • Implementation of Projects

  • 1.Ejecución of the work. The Project Developer will be responsible for the following:
  • a.La construction, equipment, maintenance, and repair of the infrastructure that are necessary for the provision of services.
  • b.Observar the provisions of environmental protection, preservation and conservation of the ecological balance, human settlements, urban development and other provisions that are applicable to project implementation.
  • 2.Prestación services. The service provider should be developer-continuously, even and regular. Require prior approval of the contracting entity or agency for the commencement of the provision of services, which depend on the technical verification that the facilities meet safety conditions set out in the Project and the applicable provisions.
  • Intervention Project

    The agency or entity is authorized to intervene at any stage of development of the Project, if the following:

  • 1.The developer default on its obligations for reasons attributable to it.
  • 2.Se seriously jeopardize the development of the Project.
  • If the Project Developer fails to remedy the deficiencies in the term given by the agency or entity, the latter continue with the execution of the work or the service.

    The project developer may recover by showing the entity or agency that corrected the causes of failure and is likely to continue. Otherwise terminate the contract early.

    Extension Projects

    Government entities and deemed to grant extensions, material conditions, technological and economic, may terminate the grant of the extension or the call for a new contest. Such extensions shall be requested prior to the expiration of the term of the original contract.

    Termination of PPPs

    The grounds will be determined in each contract depending on its purpose, in addition to these the law states the following:

  • 1.La cancellation, abandonment or delay in the execution of the work, in the cases provided for in the contract.
  • 2.La not provide the contracted services, their provision in terms other than those agreed, or stopping them for more than 7 consecutive calendar days without cause.
  • 3.La revocation of licenses in case the project requires them.
  • Settlement of disputes

  • 1.Comité expert.
  • In case the parties relating to the contract disagree about the terms of technical or economic nature and not reach an agreement during the negotiation stage agreed by them, must submit their dispute to a committee of three experts matter.

  • 2.Procedure arbitration and conciliation.
  • a) Reconciliation. The parties can go to the Ministry of Public Service to submit their differences by submitting a request for conciliation [7].
  • b) Arbitration. The parties may agree to submit disputes to arbitration and establish the terms for its solution [8]. It excludes the application of this procedure for withdrawal of concessions or authorizations, nor any official act different.
  • Federal jurisdiction. Apply for the settlement of disputes arising from the application or interpretation of the law

    [1] shall apply the guiding principles of the Law on Science and Technology.

    [2] The Public Enterprises Act provides that the following to be considered public trusts parastatals: Article 40. - The public trusts that are established by the federal government, to be organized similarly to the decentralized agencies or companies majority state, they are intended to assist the Executive by performing priority activities, shall be deemed parastatals under the provisions of the Organic Law of Federal Public Administration and be subject to the provisions of this Act

    [3] The website is: compranet.funcionpublica.gob.mx

    [4] Article 35 bis of the Act provides as follows: Article 35 bis. - The Secretariat within sixty days from receipt of the environmental impact statement shall issue the corresponding resolution. The Secretariat may request clarifications, amendments or additions to the content of the environmental impact statement submitted to it, the term suspended restare to finish the procedure. In any case the suspension may exceed sixty days,

    counted from which it is declared by the Secretariat, and as long as he is given the required information.

    [5] Article 42 of the Law

    [6] Article 91 of the Law

    [7] The Act brings us to the procedure laid down in Chapter II of the Law on Public Works and services related to them (Article 95 onwards) or Chapter II of the Law of Acquisitions, Leases and Services Public Sector (Article 77 onwards).

    [8] The requirements of section 139 of the Act are as follows: i) the applicable laws are Mexican, ii) it is in Spanish and iii) the award shall be binding and final, only the amparo proceeding.

    "China Outbound Investments"

    We are pleased to inform that the reference book “China Outbound Investments”, so far published by CCH Hong Kong Limited (Wolters Kluwer Group) in English, will be published additionally in Chinese at the beginning of 2012. Joaquín Rodríguez and Samuel Chacón are co-authors of this reference book which offers practical and reliable guidelines for Chinese investors and their advisors, as well as for readers in actual and potential target countries of Chinese investment activities.

    "Chacón & Rodríguez arbitration team at International Commercial Arbitration contest"

    The Arbitration team of Chacón & Rodríguez, S.C. lead by Joaquín Rodríguez is pleased of having prepared the case study for the eleventh Inter-University contest of International Commercial Arbitration hosted by the Arbitration Center of Mexico (CAM).

    "Chacón & Rodríguez and Samuel Chacón acknowledged as "Recommended Law Firm" and "Recommended Attorney" 2011 by Global Law Experts"

    As part of a recommendation and reference service of leading lawyers in various practice areas of law in over 110 countries, Global Law Experts, awarded in early 2011, Chacón & Rodríguez recognition as a recommended law firm ("Recommended Law Firm") and Samuel Chacón recognition as a recommended lawyer ("Recommended attorney") in the field of project finance in Mexico.

    " Chacón & Rodríguez collaborates in the writing of the reference book "China Outbound Investments" "

    Chacón & Rodríguez is involved in the research and writing of the Mexico Chapter of the reference book "China Outbound Investments" which will be released in mid 2011 by CCH HK Ltd., with support from the Chinese University of Hong Kong. This book is a practical legal guide that will give Chinese investors and lawyers a concise overview of a wide range of legal systems aimed at China investment projects abroad.

    The Mexico chapter includes the following topics:

  • 1. Governmental
  • 2. Authorizations and requirements of records
  • 3. Investment vehicles
  • 4. Rules for Mergers and Acquisitions
  • 5. Financing
  • 6. Monetary Policy and Exchange Control
  • 7. Patrimonial Law
  • 8. Intellectual Property
  • 9. Labor Law
  • 10. Investor Responsibility
  • 11. Dispute Resolution
  • 12.Taxes
  • "First Bilateral Business Summit in Querétaro, September 12, 2011"

    The second chapter of the First Bilateral Business Summit Germany/México 2011, organized by ProMéxico and others, took place on September 12, 2011 in Querétaro and was inaugurated by Erwin Feldhaus. The German Ambassador Dr. Edmund Duckwitz gave a speech and highlighted the possibilities and chances of the Mexican economy. He praised Mexico for its qualities as a major industrial site in the future, especially with regard to the aviation industry. More than 200 business people and companies from Germany and Mexico participated in lively presentations and panel discussions on business topics related to Mexico and Germany. Speakers included: German Ambassador Dr. Edmund Duckwitz, Tonatiuh Salinas Muñoz (Secretary of Sustainable Development, State of Querétaro), Louise Goeser (CEO, Siemens Mesoamerica), José Ignacio Mariscal (Member of the Board of Directors and Chairman of the Finance and Planning Committee, Grupo Bimbo S.A. de C.V.; CEO Grupo Marhnos), Dr. Jorge Sias (Country HR Director, Robert Bosch S. de R.L. de C.V.) and Joachim Elsäßer (Representative in Berlin of the Industry Association of Baden-Württemberg).

    The event offered the attendees plenty of possibilities to expand their business network and exchange experiences in the German and Mexican market and was the start of a regular business summit which is planned to be held annually. The next event of this German/Mexican Business Summit will presumably take place in Cologne,

    "First Bilateral Business Summit Germany/Mexico in Querétaro"

    Chacón & Rodríguez, S.C., is pleased, to announce that the "First Bilateral Business Summit Germany México 2011" organized by ProMéxico will take place on September 12, 2011 in Querétaro, Mexico.

    The objective of this event is to gather German and Mexican entrepreneurs and business men - with a focus on small and medium-sized enterprises (SME’s) – in order to exchange their respective experiences and to establish new networks and cooperation schemes in both the Mexican and the German markets.

    Both Mexican and German experts will present their experiences in two plenary sessions that will be followed by panel discussions. In the afternoon special workshops will offer the participants the possibility to get first-hand information and to discuss with experts about financial, legal and accounting aspects as well as about market expansion and the talent pool.

  • Basic information:
  • Date: Monday, September12, 2011
  • Time: 8:30 - 18:00
  • Location: Querétaro, Mexico
  • Lecture Language: English
  • Registration: possible until August 30, 2011
  • "First Bilateral Business Summit Germany/Mexico in Dresden"

    Chacón & Rodríguez, S.C. (C&R) co-sponsored the first of the two events of the "First Bilateral Business Summit Germany Mexico 2011" held in Dresden, Germany on June 27, 2011. ProMéxico as the organizer presented a program, which gave the participants the opportunity to exchange views with experts on economic, legal and accounting aspects and room for discussions.

    Joaquín Rodríguez, founding partner of C&R, not only participated in this congress but also served as moderator of the workshop “Legal, tax and accounting".

    The second event of the "First Bilateral Business Summit Germany Mexico 2011" will take place on September 12, 2011, in Querétaro, Mexico.

    "Corporate Compliance obligations during the first quarter of 2011"

    The General Law of Commercial Companies provides for certain obligations that corporations must meet annually. Companies must hold a General Shareholders’ or Partners’ Assembly at least once a year, within 4 (four) months following the closing of each fiscal year (before April 30).This Assembly must address: (i) the report of the Board of Directors, or of the Board of Managers, on the operations of the corporation during the preceding fiscal year, (ii) To approve the financial statements and the report of the Commissioner, if the latter is applicable, (iii) remove, appoint and/or re-elect board members, as well as the Statutory Auditors of the company.

    "New Of Counsel at Chacón & Rodríguez, S.C."

    Chacón & Rodríguez, S.C. is pleased to announce that attorney/former partner of Rich Mueller, S.C., Ricardo Gómez-Palacio has joined our law firm in July 2011 as Of Counsel. He is a recognized expert lawyer in the fields of Finance, Banking and Real Estate and has extensive experience with mayor financial projects. His legal experience encompasses a broad variety of financial investments including asset-backed securitizations, diverse funds and investments in connection with the acquisition, financing and development of high-end tourist destinations, resorts and condominiums. His legal excellence has been acknowledged by Chambers and Partners (2011) and Who’s Who Legal (2011) honoring him as a prominent attorney specialized in real estate.

    "Now International Desk available at Chacón & Rodríguez, S.C."

    Since July 2011 Chacón & Rodríguez, S.C. (C&R), has an International/German Desk available, which is attended by our German lawyer and is focused on the growing number of International and German clients. C&R is pleased to complement its services offering its clients an integrated counseling, which takes into account our clients’ specific needs and is at the same time in line with an excellent relationship management and good communication.

    PUBLICATIONS

    "SOME ISSUES REGARDING THE LEGAL NATURE OF MEXICAN HYDROCARBONS ONCE LEGALLY EXTRACTED"

    ENERGY REFORM. SOME ISSUES REGARDING THE LEGAL NATURE OF MEXICAN HYDROCARBONS ONCE LEGALLY EXTRACTED, IN LIGHT OF THE CONSTITUTIONAL AND LEGAL ENERGY REFORM.
    This article deals with some aspects of an interesting matter of great importance due to the terms of the Constitutional and legal Energy Reform: the legal nature of assets such as oil and other hydrocarbons, once they are legally extracted from the Mexican subsoil.

    1.- The Constitution of Mexico provides in its Article 27, first paragraph, that “Ownership of the lands and waters within the boundaries of the national territory is vested originally in the Nation, which has had, and has, the right to transmit title thereof to private persons, thereby constituting private property…”. It further stipulates in the fourth paragraph thereof that “The Nation has direct title to all natural resources of the continental shelf and the submarine shelf of the islands;...; solid mineral fuels, oil and all solid, liquid or gaseous hydrocarbons;…”.

    2.- In the relevant part of the sixth paragraph of the Constitution, prior to the Energy Reform, it read as follows: “In the cases established in the two hereinbefore paragraphs [fourth before cited and fifth omitted], the domain of the Nation is inalienable and not subject to the statute of limitations, and the exploitation, use and enjoyment of the resources in question by individuals or companies incorporated under Mexican law may be undertaken only through concessions granted by the Federal Executive…….. . In the case of oil and solid, liquid or gaseous hydrocarbons…….no concessions or contracts will be granted,...”.

    3.- After the Energy Reform implementation, the paragraph seventh of the Mexican Constitution, deals with the case of oil and other hydrocarbons –previously dealt with specifically in the sixth one, as before mentioned-, and provides in its relevant part as follows: “Concerning petroleum and solid, liquid or gaseous hydrocarbons in the subsoil, the ownership of the Nation is inalienable and not subject to the statute of limitations, and no concessions will be granted. With the purpose of obtaining income for the State that contributes for the long term development of the Nation, this will perform activities of exploration and production of hydrocarbons through assignments to State productive enterprises or through contracts with these or with private persons, in terms of the Regulatory Law……… In any case, hydrocarbons in the subsoil are owned by the Nation, and so it shall be affirmed in the assignments or contracts.”

    4.- On the other hand, the Hydrocarbons Law, regulatory of said paragraph seventh of article 27 of the Constitution –among others-, sets forth in reflection of the constitutional mandate, that Mexico’s ownership of hydrocarbons in the subsoil, is inalienable and indefeasible (articles 1st and 11 thereof). The same language is used by the new PEMEX Law, regulatory of paragraph fourth of article 25 of the Constitution, in its article 7. In light of the foregoing, one can clearly state that the Mexican Nation has direct title to oil and all solid, liquid or gaseous hydrocarbons and that Mexico’s title to said assets in the subsoil, is inalienable and indefeasible.

    5.- It is crucial in the instant case- related to the legal nature of said assets once legally extracted therefrom, as before mentioned- to note that the Constitution as amended, clearly limits the scope of the aforementioned inalienable and indefeasible ownership of hydrocarbons, to the ones that are located in the subsoil, in abrupt contrast with the previous constitutional language thereon; which means that said assets not in the subsoil –produced assets- which are already undergoing the industrial process, are to be exploited in accordance with the Regulatory Law. In this regard, there should be a rational balance between preservation of resources of nonrenewable nature for the benefit of future generations on one hand, and a prudent exploitation of said produced assets, for the benefit of the present needs of the people, on the other.

    6.- According to the new PEMEX Law –article 5- and in light of the constitutional mandate that the Nation perform activities of exploration and production of hydrocarbons through assignments (entitlements) to State productive enterprises (as one of the two respective regimes therefor), and in view of article 3rd of the Hydrocarbons Law, PEMEX is empowered to carry out said exploration and production (extraction) of hydrocarbons, pursuant to the applicable laws. Its task as a productive enterprise is to develop commercial, industrial, economic and managerial activities in the aforementioned upstream sector.

    7.- PEMEX also may, pursuant to its respective objective, enter into any kind of acts, agreements, contracts and guaranties, and sign negotiable instruments (article 7 thereof). In this respect, it is very important to take into account that the agreements related to exploration and production of hydrocarbons shall be governed by the Hydrocarbons Law and its regulations, and as supplementary, by commercial and common laws (article 22 of the Hydrocarbons Law).

    8.- In connection therewith, the second paragraph of the above mentioned article 7 of the PEMEX Law, provides that the agreements entered into by PEMEX, may include any of the permitted terms of the commercial and common legislation.
    Accordingly, PEMEX -with full capacity to sell the products resulting from the hydrocarbons extraction, pursuant the applicable laws- when selling hydrocarbons, functions as a merchant, and like the private parties to whom agreements to explore and to extract are granted, is subject in the terms of the Hydrocarbons Law, to the relevant laws of commerce.

    9-. As a consequence of the foregoing and as conclusion, once PEMEX, the other State productive enterprises or the private parties, develop activities of exploration and production of hydrocarbons through assignments or contracts (the Hydrocarbons Revenues Law provides for the economic aspects relating to each of the contract models mentioned in article 18 of the Hydrocarbons Law), such extracted –produced- hydrocarbons become commercial assets and fungible goods for trade and subject therefore, to the respective commercial and common applicable laws, as stipulated by the Hydrocarbons Law in its relevant part before commented. The key of this sensitive matter is the political and economic prudence and rationality with which the production and trading of oil and other hydrocarbons shall be undertaken, in view of the general good of present and future Mexican generations.

    Finally, it is important to bear in mind that the contracts to explore and extract hydrocarbons shall only be granted through a competitive bidding process, in terms of the regulatory laws; and that the Hydrocarbons Law, the PEMEX Law and the Hydrocarbons Revenue Law, which were cited in this text, are part of a set of secondary new laws that implement the constitutional Energy Reform.

    C&R
    October 21, 2014
    With the collaboration of Mauro González-Luna Mendoza

    "Energy Reform"

    On December 20, 2013 the Federal Constitution was amended regarding energy. In terms of such reform, the Congress was obliged to issue the necessary secondary laws and to modify the legal framework according to the amended constitutional text.

    On August 11, 2014, were published in the Federal Official Gazette: i) the Hydrocarbons Law, ii) the Electric Industry Law, iii) the Geothermic Energy Law, iv) the Law of the Coordinate Controlling Agencies in the Energy Sector, v) the Petroleos Mexicanos Law, vi) the Federal Electricity Commission Law, vii) the Hydrocarbon Income Law, viii) the Law for the National Agency of Industrial Safety and Environmental Protection of the Hydrocarbon Sector and ix) other amendments to various laws, e.g. the Foreign Investment Law.

    1. Hydrocarbons Law

    The main provisions of the Hydrocarbons Law may be summarized as follows:

    The purpose of the law is to regulate the activities of exploration, extraction, refining and commercialization of hydrocarbons, among others.

    The Executive Branch will be entitled to grant, modify and revoke Assignations, which are temporal authorizations for the exploration and extraction of hydrocarbons in a specific area, whether to Petroleos Mexicanos (“Pemex”) or to any other productive State company.

    Assignations may be transferred in case that the assignee is another productive State company and with prior authorization.

    Pemex and any other productive State company, may enter into service agreements with private individuals or entities, only for the activities related to the Assignations, observing productive and profitable outlines, provided the consideration is paid in currency.

    The Executive Branch, through the National Hydrocarbons Commission, will be able to enter into exploration and extraction agreements.

    Prior authorization of the Ministry of Energy (“ME”), the Assignations may be converted into exploration and extraction Agreements, in this case, Pemex and other productive State companies may enter into alliances or associations with Legal Entities.

    Only through the National Hydrocarbon Commission the Mexican State may grant exploration and extraction agreements. The selection of the contractor must be through a public tender process.

    Areas of interest for the exploration and extraction of hydrocarbons may be proposed to the ME.

    The ME shall issue the five-year public tender plan, regarding Contractual Areas, which must be public.

    Mandatory participation of Pemex or any other productive State company in contractual areas where finding cross border reservoirs is possible.

    Permits must be obtained to commercialize hydrocarbons, oil-bearings and petrochemicals within the Mexican territory.

    It will be possible for any interested party, complying with the requirements of the law, to obtain permits to import gasoline and diesel starting on January 2017.

    The law is effect since August 12, 2014.

    The Regulations of the law shall be issued in February 8, 2015 at the latest (180 days after its effective date).

    Prior to the energy Reform, Pemex had the exclusive exploration in Mexico. As a consequence of the reform the Federal Government will assign the areas to explore and exploit through different “Rounds” (Rondas), as will be commented below.

    We must distinguish to types of resources: probable reserves (2P) are hydrocarbons with at least 50% of possibility of extraction from the subsoil and ii) prospective resources are hydrocarbons not yet discovered, but estimated and pondered as potentially recoverable. It is estimated that prospective resources represent 72% of the total resources in Mexico.

    Round Cero. The majority of the 2P reservoirs were assigned to Pemex and a small portion of the prospective resources.

    Round One. Pemex and the private companies, including foreign companies, may compete in tenders corresponding to this round, which has already initiated.

    The ME estimates to assign to the private sector 169 areas which include profound waters, non-conventional resources, shallow waters, heavy oils, Chicontepec and land reservoirs for hydrocarbon production and exploration in Mexico. The aforementioned areas represent an estimate of 3,782 million crude oil barrels.

    It is expected that in November 2014 the draft of the terms for the public tenders will be published It is expected that the final terms for the tenders will be released in February-April 2015.

    Round 0.5. Pemex will announce the sectors in which it will associate with third parties to increase its production. These projects include mature fields (land and marine), extra heavy crude reservoirs, gas development and profound waters.

    2. Electric Industry Law

    In general terms, it is set forth that:

    Its purpose is to promote sustainable development of the electric industry and ensuring its operation for the benefit of its users.

    The Ministry of Economy, with the opinion of the ME, will define strategies to promote direct investment in the electric industry, with particular interest in small and medium businesses.

    The Energy Controlling Commission has the authority to grant permits regarding electric centrals, issuing and applying the tariff regulation regarding the operation of the providers of basic services and to authorize the final tariffs of the basic supply in terms of the law, among others.

    The ME will promote credit for the financing of Clean Distribute Electric Generation Plants.

    The law is effect since August 12, 2014.

    3. Law for the Coordinate Controlling Agencies in the Energy Sector

    In general terms, it is set forth that:

    It is the law’s purpose to regulate the organization, operation and attributions of the coordinate controlling agencies (“CCA”).

    The CCA are: i) the National Hydrocarbon Commission, and ii) the Energy Controlling Commission, which have technical, operative, and management autonomy.

    The Coordination Council of the Energetic Sector will be to promote the coordination between the referred agencies, the ME and other governmental agencies.

    Generally speaking, the main purpose of such agencies is to promote competition in the energy sector, the competitiveness of the productive State companies, to further economic development and increasing the State income.

    The law is effect since August 12, 2014.

    4. Amendments to various law

    Additionally, to the entioned laws, some other were amended such as the Foreign Investment Law, the Mining Law, the Public-Private Associations Law, the National Waters Law, the Federal Governmental Fees Law, among others. The above in order to allow Mexican and foreign entities in certain activities regarding energy and associations with Pemex.

    Please contact us if you have any questions or comments regarding the foregoing information.

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