Mexico Adopts Standardized Hotel Star Ranking System

Mexico has enacted a new hotel classification guidelines under which the authorities can measure, in a standardized and objective manner, eight variables under which a hotel can be classified.  The variables are: accessibility, communication, rooms, food and beverage, front desk, A/C, guest services, and public areas. Each variable is worth a certain number of points.  The hotel will be awarded a certain number of stars, from 1 to 5, depending on the number of points obtained, as follows:

Points		Category
1	260	1 star
261	520	2 stars
521	780	3 stars
781	1040	4 stars
1041	1300	5 stars

Hotels with 1 star are deemed to offer only the indispensable; hotels with 2 stars are deemed offer basic services and infrastructure; hotels with 3 stars are deemed offer adequate facilities and services; hotels with 4 stars are deemed offer superior facilities and services; and hotels with 5 stars are deemed offer exceptional facilities and services. The guidelines also define the following terms: boutique, bed and breakfast, city center, city, conventions, business, express, luxury, vacation, full service, and all inclusive.

While some hotel operators have criticized the guidelines and referred to them as unfair, the authorities believe that the benefits to the tourists outweigh any potential harm or inconvenience to the hotel operators.  The guidelines can be accessed in the Federal Gazette dated September 12, 2016.

Please contact us if you would like to learn more about the guidelines or you need information on how to register your hotel.

Mauricio Leon de la Barra has more than 15 years of experience advising and representing individuals, family offices, private equity firms, and domestic and international corporations, in a wide range of domestic and cross-border matters. He also advises and represents law firms, receivers and trustees in cross-border matters involving Mexico assets or Mexico law. Mauricio is licensed to practice law in Mexico and California.

Mexico continues to make improvements to the legal and regulatory framework in favor of private equity

Mexico continues to open up new sectors of the economy to competition and investment. Reforms around pensions systems and securities regulations, together with government support for incubators, are helping unlock local pools of capital to invest in private equity. 

 

As noted by the Emerging Markets Private Equity Association (EMPEA) in its 2016 report:

-        Mexico’s stability, notwithstanding the drop in oil prices, is contributing to Mexico’s appeal to private equity investors.

-        Mexico’s growth is considered slow but steady, which investors find enticing.

-        New regulation allowing Retirement Funds’ investment in private equity through the public placement of capital development certificates (CKDs); the creation of new instruments, such as the FIBRA E, and the investment projects certificates (CERPIs) which attract global investment managers by providing more flexibility in the investment decisions of the fund; and other reforms in taxation, education, energy sector ownership and free competition sent; have been fundamental to the development of the private equity market in Mexico.

Despite these signs of grown and stability, investors looking to protect and maximize the value of their investments should keep in mind the importance of (a) understanding Mexico laws and business practices, (b) having adequate corporate compliance policies and systems that ensure compliance with Mexico and US laws and regulations, and (c) including flexible exit strategies.

Rebeca Sanchez has extensive experience practicing corporate and finance law. She advises Mexico and international clients on a variety of matters, including foreign investment, corporate restructuring, minority rights, mergers, acquisitions and joint ventures, data protection, and public and private financing, such as the incorporation of private equity funds. Rebeca is licensed to pracice law in Mexico.

Mauricio Leon de la Barra has more than 15 years of experience advising and representing individuals, family offices, private equity firms, and domestic and international corporations, in a wide range of domestic and cross-border matters. He also advises and represents law firms, receivers and trustees in cross-border matters involving Mexico assets or Mexico law. Mauricio is licensed to practice law in Mexico and California.

 

New rules applicable to the investment of retirement funds in CKDS and CERPIS (Mexico Securities Update)

Recently, the General Financial Rules for the Retirement Savings Systems (Disposiciones de carácter general en materia financiera de los Sistemas de Ahorro para el Retiro, “Financial Rules for Retirement Funds”) were amended in order to include special requirements for the investment of Retirement Funds in certificates of capital development (Certificados de Capital de Desarrollo, “CKDs”) and investment projects certificates (Certificados Bursátiles Fiduciarios de Proyectos de Inversión, “CERPIs”).

 

CKDs and CERPIs are financial instruments regulated by the Securities Market Law (Ley del Mercado de Valores) and the General Provisions Applicable to Issuers of Securities and other Market Participants (Disposiciones de Carácter General aplicables a las Emisoras de Valores y a otros Participantes del Mercado de Valores).

The basic structure of a trust issuing CKDs or CERPIs is as follows:

 

Mexico amends rules applicable to issuers of hydrocarbon-related securities

Last Friday, May 6, Mexico's Banking and Securities Commission published a resolution amending the "General Provisions Applicable to Issuers of Securities and other Market Participants".  The resolution was published in the Federal Official Gazette (Diario Oficial de la Federación), the main publication of Mexico’s federal government.   

 

The amendment (a) is intended to clarify certain aspects relating to the information that is to be disclosed by issuers of securities participating in one or more contracts for the exploration and extraction of hydrocarbons, (b) provides guidelines for the preparation and filing of annual reports, and (c) extends the term during issuers can submit their initial filings.

 

Because the resolution is already in full force and effect, issuers should contact legal counsel at their earliest convenience to understand its implications and be ready to submit the required reports in proper time and form.      
 

 

 

 

Mauricio Leon de la Barra is a business and real estate counselor and attorney at law. He is one of the few attorneys licensed to practice law in both Mexico and California, and has more than 15 years of experience handling all type of business, corporate and real estate transactions.

 

Rebeca Sanchez Perez has extensive experience practicing corporate and finance law. She advises Mexico and international clients on a variety of matters, including foreign investment, corporate restructuring, minority rights, mergers, acquisitions and joint ventures, data protection, and public and private financing, such as the incorporation of private equity funds.

Single Member Entities in Mexico?

Yes! Mexico finally amended its Business Entities Code (Ley General de Sociedades Mercantiles) to create the Simplified Stock Corporation. The decree was published in the Federal Official Gazette. 

 

In a nutshell, the Simplified Stock Corporation:

- Can have one or more shareholders, whose liability is limited to the amount of their capital contributions;

- Reduces formation costs from at least 6 days to 24 hours;

- Eliminates formation costs, which currently exceed $20K pesos;

- Eliminates the use of notaries by allowing individuals to incorporate by submitting an online application;

- Eliminates the need of personalized bylaws; and

- Will only require, for formation purposes, (a) the agreement of the shareholder or shareholders to form a simplified stock corporation and adopt the bylaws provided by the Ministry of the Economy, (b) the Ministry of the Economy’s use of name authorization, and (c) the shareholder or shareholders electronic signature.

Never before had there been a simpler, cheaper and faster way to form a legal entity in Mexico.  This type of entity, however, is not for everyone.  For instance, (a) no shareholder can be a controlling member of any other corporation or business entity, (b) the Simplified Stock Corporation cannot have annual revenues in excess of $5MM pesos; (c) the shareholders can only adopt the bylaws provided by the Ministry of the Economy, and (d) the Simplified Stock Corporation will need to be converted into a different type of entity if certain conditions are met.  Accordingly, individuals interested in forming a Simplified Stock Corporation should consult with a business and corporate attorney to determine if this is the right business structure for them.

 

Mauricio Leon de la Barra is a business and real estate counselor and attorney at law. He is one of the few attorneys licensed to practice law in both Mexico and California, and has more than 15 years of experience handling all type of business, corporate and real estate transactions. 

 

 

Time to get your FBARs ready!

The deadline to file the 2012 year FBAR (Report of Foreign Bank and Financial Accounts) is fast approaching. The FBAR for 2012 must be received on or before June 30, 2013. This reporting requirement is not to be confused with the foreign financial assets reporting requirement under FATCA - IRS Form 8938.

 

U.S. persons with interests in or control with respect to foreign financial accounts (e.g., securities, brokerage, savings, demand, checking, deposit, time deposit, etc.) with values that exceed a certain threshold balance are required to file a report commonly referred to as an “FBAR,” i.e., the Report of Foreign Bank and Financial Accounts (Form TD F 90.22). Specifically, any U.S. person who has a financial interest in, or signatory or other authority over, one or more financial accounts in foreign countries with an aggregate value greater than $10,000 at any point in the calendar year is required to report that interest to the Internal Revenue Service. This requirement is met through the filing of an FBAR. A taxpayer is also required to report any interests in overseas financial accounts on his or her federal income tax return where indicated on the applicable schedule. The FBAR is not filed with the federal income tax return.

 

The consequences of failing to file a required FBAR can be significant. Willful and nonwillful penalties are civil penalties that can apply to individuals. A nonwillful violation can result in imposition of a penalty of up to $10,000. A willful violation can result in imposition of a penalty of the greater of $100,000 or 50 percent of the balance in the subject account. In some instances, violations can result in criminal sanctions.

 

To read more or to get more information on how to file, contact LaVonne Lawson or visit LawsonTax.

 

Mauricio Leon de la Barra is an international law attorney licensed to practice law in Mexico and California, and has more than 15 years of experience representing clients in cross-border business and real estate transactions and litigation involving international, U.S. and Mexican laws.

 

Mexico’s Tax Amnesty Program is Now in Effect!

Mexico’s tax amnesty program “ponte al corriente” has been finally approved by Congress.  Under this program, taxpayers will be able to save up to 100% of penalties and interests and up to 80% of pre-2006 taxes.  The press release, issued today by the Mexican tax authorities, is available here.  The link to the official filing tutorial, FAQs, and electronic filing sites is available here.  The program expires on May 31, 2013.

Mauricio Leon de la Barra is an international law attorney licensed to practice law in Mexico and California, and has more than 15 years of experience representing clients in cross-border business and real estate transactions and litigation involving international, U.S. and Mexican laws.

Official Mexican Standards (a.k.a. NOMS)

Companies doing business in Mexico must be familiar with Mexican business laws and regulations.  These include the Commercial Code (Código de Comercio), the General Business Entities Act (Ley General de Sociedades Mercantiles) and the Foreign Investment Act (Ley de Inversión Extranjera).  In addition, such companies must be familiar with the Official Mexican Standards or Normas Oficiales Mexicanas.  Failure to do so may result in monetary fines, business closures or restriction from exporting goods or services to Mexico.    

Official Mexican Standards (as known by their Mexican acronym, “NOMS”) are mandatory technical regulations that establish rules, specifications, or requirements for goods and services.  NOMS serve as tools that allow Mexican governmental agencies establish measurable parameters to prevent injuries or damages to the general population, to animals or to the environment.  For instance, NOMS may require the use of green energy products, the implementation of accurate phone billing practices, compliance with accurate product measurements procedures, the inclusion of certain timeshare contract provisions, or compliance with health and safety standards. 

When the Mexican forum selection clause is mandatory, the traditional forum non conveniens analysis does not apply

Last week, the Court of Appeal of California affirmed an order staying a forum non conveniens action arising from a purchase agreement for a $20 million beach lot in Cancun, Mexico. The purchase agreement entered into by and between two Mexican corporations, contained a forum selection clause waiving the right to any jurisdiction except Mexican courts.

Plaintiff sued on various theories of fraud, contract and fiduciary duty breach, common counts and for other equitable forms of relief.  In the complaint, plaintiff alleged conducting significant business in Los Angeles County; that the property was owned by a subsidiary of co-defendant, a California corporation; that plaintiff was induced to deposit $2 million in escrow in Los Angeles, California; that Chicago Title Company was supposed to act as both escrow agent and title insurer, even though Chicago Title Company is not licensed to provide the type of title insurance required under Mexican law; that, because no title insurance was provided, plaintiff was prevented from closing escrow despite having secured a funding commitment; and that Defendant subsequently sold the Mexican property to a third party for $17 million. Defendants moved to dismiss or alternatively to stay the action on forum non conveniens grounds, arguing the lawsuit should be heard in a Mexican court based on the forum selection clause.

Mexico's Trademarks and Patents Office - 2012 and 2013 Holidays

Please take note that Mexico’s Intellectual Property Institute, which is Mexico's trademarks and patents office, will be closed from December 20, 2012 through January 6, 2013, and on February 4, March 18, May 1, May 6 and November 18, 2013.

Such dates may affect the scheduling of trademark and patent related filings and proceedings.

The two notices were published today in Mexico’s Official Federal Gazette and are available here and here.

Mauricio Leon de la Barra is an international law attorney licensed to practice law in Mexico and California, and has more than 15 years of experience representing clients in cross-border business and real estate transactions and litigation involving international, U.S. and Mexican laws.

Mexico to help improve international tax compliance with respect to FATCA

You better watch out, you better not cry, better not pout, I'm telling you why:

 

After two years of negotiations between the governments of Mexico and the United States, an agreement between the Department of the Treasury and Mexico’s Ministry of Finance and Public Credit to improve international tax compliance including with respect to FATCA has been reached. In doing so, Mexico became the third country to sign such an agreement with the United States.

 

This means that, whether you are in the US or in Mexico, FATCA is coming to town.

 

California courts may have an interest in a Mexico breach of contract dispute …

Last week, California’s Court of Appeal affirmed a trial court’s finding of forum non conveniens, but reversed the order to dismiss and remand with directions to vacate the dismissal and enter an order staying the matter.*

I.R.S. concludes Mexican landholding trust is not a trust ...

1.         Understanding the Mexican Landholding Trust

 Under Article 27, Section I, of the Mexican Constitution, all land is the property of the Nation, and legal capacity to acquire ownership of lands and waters from the Nation is limited to Mexicans by birth or naturalization and Mexican companies. The federal government, through the Ministry of Foreign Relations, may grant the same right to foreigners provided they agree to consider themselves as Mexican nationals with respect to such property and bind themselves not to invoke the protection of their governments in matters relating thereto.  Noncompliance with such agreement would result in forfeiture of the property to the Nation.  This “agreement,” commonly known as the Calvo Clause or Calvo Doctrine, is named after the Argentine diplomat and historian Carlos Calvo, who propounded it in his 1868 book “Derecho Internacional Teórico y Práctico de Europa y América,” justifying it as necessary to protect the jurisdiction of weaker nations from those more powerful.  Further, the Constitution of Mexico provides that “under no circumstances may foreigners acquire direct ownership of lands or waters within the ‘Restricted Zone’”, which is the area located one hundred kilometers along the international borders and fifty kilometers along the shores. 

The US Continues to Build International Support for Combating Tax Evasion

Yesterday, the U.S. Department of the Treasury today announced that it is engaged with more than 50 countries and jurisdictions around the world to improve international tax compliance and implement the information reporting and withholding tax provisions commonly known as the Foreign Account Tax Compliance Act (“FATCA”).

FATCA was enacted in 2010 as an effort to combat tax evasion by U.S. persons holding investments in offshore accounts. Under FATCA, certain U.S. taxpayers holding financial assets outside the United States must report those assets to the IRS. In particular, FATCA requires certain U.S. taxpayers holding foreign financial assets with an aggregate value exceeding $50,000 to report certain information about those assets on a new form (Form 8938) that must be attached to the taxpayer’s annual tax return. Underpayments of tax attributable to non-disclosed foreign financial assets will be subject to an additional substantial understatement penalty of 40 percent.

FATCA will also require foreign financial institutions to report directly to the IRS certain information about financial accounts held by U.S. taxpayers or by foreign entities in which U.S. taxpayers hold a substantial ownership interest. To properly comply with these new reporting requirements, foreign financial institutions (“FFI”) will have to enter into a special agreement with the IRS by June 30, 2013, pursuant to which the FFI will be obligated to: undertake certain identification and due diligence procedures with respect to its accountholders; report annually to the IRS on its accountholders who are U.S. persons or foreign entities with substantial U.S. ownership; and withhold and pay over to the IRS 30% of any payments of U.S. source income

The Treasury Department has already concluded a bilateral agreement with the United Kingdom. Additional jurisdictions with which Treasury is in the process of finalizing an intergovernmental agreement and with which Treasury hopes to conclude negotiations by year end include: France, Germany, Italy, Spain, Japan, Switzerland, Canada, Denmark, Finland, Guernsey, Ireland, Isle of Man, Jersey, Mexico, the Netherlands, and Norway.

Jurisdictions with which Treasury is actively engaged in a dialogue towards concluding an intergovernmental agreement include: Argentina, Australia, Belgium, the Cayman Islands, Cyprus, Estonia, Hungary, Israel, Korea, Liechtenstein, Malaysia, Malta, New Zealand, the Slovak Republic, Singapore, and Sweden. Treasury expects to be able to conclude negotiations with several of these jurisdictions by year end.

 Mauricio Leon de la Barra is an international law attorney licensed to practice law in Mexico and California, and has more than 15 years of experience representing clients in cross-border business and real estate transactions and litigation involving international, U.S. and Mexican laws.

Mexican President Nominates Supreme Court Justices

Mexico’s Supreme Court Justices Salvador Aguirre Anguiano and Guillermo Ortiz Mayagoitia will conclude their terms by then end of this month.  President Felipe Calderon has nominated, as replacements, the following candidates:

·         Vicente Monroy Gómez;

·         Alberto Pérez Dayán;

·         Andrea Zambrana Castañeda;

·         Manuel Baraibar Constantino;

·         Emma Meza Fonseca; and

·         María Temblador Vidrio.

The nominations are interesting, as there is no consistency in the nominees’ ideology. Also interesting is the fact that the justices will be elected just before the incoming President, Enrique Peña Nieto, takes office.

Justices of the Mexican Supreme Court serve for fifteen years and are not eligible to serve a second term. The justices elect one of them to serve as President of the Court.  Presidents serve a four-year period.

Pursuant to article 76 of Mexico's Constitution, new justices shall be appointed by the Senate. The Constitution requires the nominees to: (a) be Mexican by birth; (b) be at least 35 years old; (c) be licensed to practice law for at least 10 years; (d) be of good moral character and have no criminal record; (e) reside in Mexico for at least two years prior to the election; (f) not to serve as governor, senator, representative or state attorney the year before the election.

Cross-Border Estate Planning and the Perils of the Two-Will Strategy

Estate planning is the process of anticipating and arranging for the disposal of an estate. Estate planning typically attempts to eliminate uncertainties over the administration of a probate and maximize the value of the estate by reducing taxes and other expenses.

A knowledgeable international estate planning attorney will generally provide in-depth analysis and guidance on U.S. income and wealth transfer taxes affecting cross-border planning, foreign death taxes, including:

Mexico approves Anti-Money Laundering Law - Can it affect you?

Mexico's Congress approved Thursday a long-awaited anti-money laundering law. While this law aims to attack the finances of Mexico's powerful drug cartels, both Mexicans and foreigners doing business or investing in Mexico should familiarize themselves with it, as new restrictions on certain cash purchases of real estate, jewelry, armored cars and other assets occurring within Mexico are imposed. 

Mexico Enacts New Immigration Regulations

Mexico has enacted new immigration regulations.  These new regulations represent Mexico’s new immigration policy and are intended to regulate the migration of individuals in and out of the country; the policy for the issuance of visas; the status of non-residents within Mexican territory; and other immigration related matters. New compliance requirements are also established.
 

In California, the equitable doctrine of successor liability may be applied to a corporation ...

Equitable doctrine of successor liability may be applied to a corporation that succeeds to the assets of an unincorporated but clearly separate line of business of another corporation. Imposition of successor liability was proper--under traditional rule that a corporation that purchases the assets of another assumes the first corporation’s liabilities when "the transfer of assets to the purchaser is for the fraudulent purpose of escaping liability for the seller’s debts"--where evidence supported conclusion that defendants transferred assets from one corporation to another and hid the formation of the second corporation from plaintiff for the purpose of avoiding liability under defendants’ contract with plaintiff. Defendants owed a fiduciary duty to plaintiff as a pre-incorporation investor in the business that defendants transferred from one corporation to another. Plaintiff’s investment, which gave him rights to a specified percentage of the enterprise’s gross profits ad infinitum, was akin to the ownership interest of a shareholder, not to a "debtor/creditor relationship."

Cleveland v. Johnson - filed October 11, 2012, Second District, Div. Eight

Mexico's Foreign Investment Framework (Intro and Recent Activity)

Mexico’s foreign investment framework is governed primarily by Mexico’s Foreign Investment Law. As a general rule, this Law allows foreign investors to own and control Mexican companies. There are, however, certain industries in which foreign investment is prohibited or restricted for national security or strategic reasons.

The most common types of corporate entities used by foreign and national investors in Mexico are the Sociedad Anónima or “S.A.”, which is similar to the U.S. Corporation, and the Sociedad de Responsabilidad Limitada or “S. de R.L.”, which is similar to a U.S. limited liability company.

Other, perhaps more specialized, types of legal entities include: (a) the Sociedad Anónima Promotora de Inversión or “SAPI”, which is similar to an S.A. but with more flexible corporate and economic rights; (b) the Sociedad Anónima Búrsatil or “SAB”,which are entities that issue shares listed in the Mexican stock Exchange; and (c) the Sociedad Anónima Promotora de Inversion Búrsatil or “SAPIB”,which is a SAPI capable of issuing shares to be listed on the Mexican Stock Exchange.

This legal framework is attracting new foreign investors or larger investments from existing ones. For instance, the following foreign investors made the following announcements last September:

Vitro Asks U.S. Court to Compel Mexican Bankruptcy Plan

Founded in 1909, Vitro, S.A.B. de C.V., is the leading glass manufacturer in Mexico, and one of the largest in the world, backed by more than 100 years of experience in the industry. It is headquartered in Monterrey, Mexico, and has subsidiaries in Europe and the Americas.

In 2008, Vitro became unable to service the interest payments on several series of notes it had issued and, on November 1, 2010, commenced a voluntary judicial reorganization proceeding in a Mexican federal court pursuant to Mexico’s business reorganization act, the Ley de Concursos Mercantiles. Notwithstanding the pending Mexican insolvency proceeding, certain holders of Vitro’s notes instituted actions against Vitro and its non-debtor subsidiaries in New York state court, seeking to accelerate the notes and enforce the guarantees. In response to these noteholder actions, Vitro filed a complaint in the United States Bankruptcy Court for the Southern District of New York and requested a temporary injunction enjoining the noteholders from attempting to enforce the non-debtor subsidiary guarantees. The case was later transferred to the United States Bankruptcy Court for the Northern District of Texas, which denied Vitro’s motion for a temporary injunction. Subsequently, the Texas bankruptcy court recognized Vitro’s Mexican insolvency proceeding as a foreign main proceeding pursuant to chapter 15 of the Bankruptcy Code.

CEMEX announces pricing of U.S.$1.5 billion in senior secured notes; Expects third quarter 2012 operating EBITDA to grow by about 9%

CEMEX, S.A.B. de C.V. (“CEMEX”) (NYSE: CX) announced yesterday the pricing of U.S.$1.5 billion aggregate principal amount of senior secured notes (the “Notes”) denominated in U.S. dollars.

The Notes to be issued by CEMEX Finance LLC will bear interest at an annual rate of 9.375% and mature in 2022. The Notes will be issued at par and will be callable commencing on their 5th anniversary. The closing of the offering is expected to occur on October 12, 2012, subject to satisfaction of customary closing conditions.

CEMEX intends to use the net proceeds from the offering to prepay principal outstanding under CEMEX’s Facilities Agreement, dated September 17, 2012, thereby allowing CEMEX to satisfy the March 31, 2013 U.S.$1.0 billion prepayment milestone and the February 14, 2014 U.S.$500 million amortization payment thereunder. These payments will reduce the interest rate on the Facilities Agreement debt by 25 basis points.

Should you file an FBAR or a Form 8938 to report your Mexican Financial Assets?

	Form 8938, Statement of Specified Foreign Financial Assets	Form TD F 90-22.1, Report of Foreign Bank and Financial Accounts (FBAR)
Who Must File?	Specified individuals, which include U.S citizens, resident aliens, and certain non-resident aliens that have an interest in specified foreign financial assets and meet the reporting threshold	U.S. persons, which include U.S. citizens, resident aliens, trusts, estates, and domestic entities that have an interest in foreign financial accounts and meet the reporting threshold
Does the United States include U.S. territories?	No	Yes, resident aliens of U.S territories and U.S. territory entities are subject to FBAR reporting
Reporting Threshold (Total Value of Assets)	$50,000 on the last day of the tax year or $75,000 at any time during the tax year (higher threshold amounts apply to married individuals filing jointly and individuals living abroad)

Do you have a financial interest in, or signature authority over, a Mexican financial account?

If you are a United States citizen or resident and have a financial interest in or signature authority over a Mexican financial account, including a bank account, brokerage account, mutual fund, trust, or other type of foreign financial account, the Bank Secrecy Act may require you to report the account yearly to the Internal Revenue Service by filing a Foreign Bank Account Report (FBAR). Generally, an FBAR needs to be filed if the US citizen or person (a) has a financial interest in or signature authority over a Mexican financial account and (b) the aggregate value of such account exceeds $10,000 at any time during the calendar year.

When a Mexican court may be a more appropriate and convenient forum ...

Deciding whether to litigate in Mexico or in US courts deserves thorough analysis. There is no "clear cut" rule. One of the key factors to consider is which court constitutes adequate forum, as the action may be otherwise dismissed. To understand what constitutes adequate forum, the parties must familiarize themselves with the doctrine of forum non conveniens.

The doctrine of forum non conveniens is a judicial doctrine permitting a US federal district court to dismiss an action where ...

Mexico is getting hungrier for overseas assets!

During the first semester of 2012, Mexicans’ direct investments abroad reached $11.5 billion.  This is a record amount!  In addition, it is the first time in the past 10 years that such amount exceeds the total amount of inbound direct investment. Here are the numbers:

Apostilles - What are they and what are they for?

1.         An apostille is an international certification that authenticates the origins of a public document. (See The Hague Convention Abolishing the Requirement for Legalization for Foreign Public Documents, Oct. 5, 1961, 33 U.S.T. 883, 527 U.N.T.S. 189 (the “Hague Convention”)).

2.         The purpose of the Hague Convention is ...

Are "quick" Mexico divorces enforceable in California?

As discussed in our previous posting, many Americans are still obtaining, or trying to obtain, quick divorces in foreign jurisdictions, with Mexico being a “preferred” jurisdiction.  The validity of such divorces was discussed in that posting.  The following arguments explain why such divorces are generally unenforceable in California:

Are "quick" Mexico divorces valid?

Various online companies claim that valid Mexico divorces can be obtained by Americans in one business day even if one party is unable or unwilling to sign or otherwise participate in the process, and even if the petitioner does not know where the spouse is living.  All that is needed, they argue, is the completion of several simple forms.  

Not surprisingly, hundreds if not thousands of these "mail order" divorces are obtained every year.  They are generally, however, void under Mexico law and unenforceable under California law.

Mexico Eases Up on Foreign Investors

As a general rule, Mexico’s Commerce Code and Foreign Investment Law allow foreign businesses to operate in Mexico, but require such foreign businesses to first obtain an authorization from the Ministry of Economy (Secretaría de Economía). As a result of a new resolution (the “Resolution”), this general rule is now, to some extent, inapplicable.

Specifically, ...

Mexico and the Risks of Using International Corporate Structures

Mexico has some of the world’s largest reserves of key minerals. According to estimates by Mexico’s Ministry of Economy, in 2011 investment in the mining sector may have reached $4.73 billion, making Mexico the world’s ninth largest mining producer.

A significant percentage of the mining companies operating in Mexico have foreign capital and are headquartered in Canada or in the US. The use of international corporate structures is not an uncommon practice in the mining induustry, as well as in many others. Unfortunately, few of these companies are aware of the implications of doing so.

Last week, for instance, ...

Legal Update: Mexico and the Madrid Protocol

The International Trademark Association recently commended the Government of Mexico for moving to the final stage to join the Madrid Protocol, a treaty that simplifies trademark registration throughout the world.

Under the treaty, Mexican companies will be able to file an application for international registration with the Mexican Trademark office (IMPI) and designate any of the countries that belong to the Madrid System in order to start the registration process in those selected jurisdictions. Likewise, companies in Madrid Protocol countries can designate Mexico using their own trademark offices with the application for international registration passing through WIPO to IMPI.

Accession will greatly benefit Mexican companies as well as overseas trademark owners in developing their international marketing and protection strategies.

The next step will be for Mexico to deposit its instrument of accession with the World Intellectual Property Organization (WIPO), which administers the treaty.  There is no specific date set, as regulatory, administrative and technical adjustments need to be made and an “opposition system” needs to be developed.  However, with this development, Mexico is clearly on its way to becoming one of the first Latin American countries to join other major trading partners in this global trademark filing and registration system.

As attorneys representing clients on both sides of the border in varied trademark issues, we welcome and applaud this step!

Mauricio Leon de la Barra is an international law attorney licensed to practice law in Mexico and California, and has more than 15 years of experience representing clients in business and real estate transactions and litigation.

Mexico's Maquila Program is still Thriving

The Promotion of the Manufacturing, Maquila and Export Service Industry (IMMEX) program allows the temporary importation of goods that are used in an industrial process or service to produce, transform or repair foreign goods imported temporarily for subsequent export or provision of export services, without covering the payment of general import tax, value added tax and, where appropriate, countervailing duties.

The categories available under the IMMEX program are:

Contracts: Courts should not be called upon to function as a backstop for sloppy drafting!

Under California law, contracts are interpreted by an objective standard: the words of the contract control over the party's subjective intentions. This is relevant in all cases, including forum and jurisdiction provisions.  While in a great many situations forum and jurisdiction are undifferentiated, California courts recently observed that:

(a) there is a difference;

(b) a court should not be called upon to function as a backstop for sloppy contract drafting; and

(c) a judge should not have to spend court time sorting out the meanings and applications of common legal terms. 

The lesson, needless to say, is that proper contract drafting is an art that should never be underestimated and competent counsel shall always be involved.

Mauricio Leon de la Barra is an international law attorney licensed to practice law in Mexico and California, and has more than 15 years of experience representing clients in business and real estate transactions and litigation involving international, U.S. and Mexican laws.