Penner & Associates - Mexico Law Firm and Business Consulting for Mexico

For professional assistance & information on legal & business matters regarding Mexico and Latin America, please contact:

ATTORNEYS AT LAW FOR MEXICO
Please contact us at our Mexico offices located at:
Apartado Postal No. 9
San Miguel de Allende, Guanajuato, Mexico
TEL. US.: (800) 856-5709

e-mail E-MAIL

 

BUSINESS CONSULTANTS FOR MEXICO
REAL ESTATE BROKERAGE ASSISTANCE FOR MEXICO
At our Phoenix or Mexico Offices
P.O. Box 42773
Phoenix, Arizona 85080
Tel: (623) 242-7442

e-mail E-MAIL

OUR MEXICO CITY OFFICES
Montecito no. 38 Piso 37 Oficina 37
Edificio World Trade Center
Colonia Napolis C.P. 03810
Mexico, Distrito Federal
Tel: (55) 5351-0438

e-mail
E-MAIL

 

ARTICLES CONTRIBUTED

Articles in English , Articles In Spanish

Do you wish to Contribute ?


Articles in English :

The Role of the Attorney, Notary Public, Real Estate Agent and Bank in Mexico Real Estate

Are You Thinking About Doing Business in Mexico? , Title is That Tile is ! , Show me the Money - In Mexico ! ,

Arbitration From the US Point of View Mexico Arbitration and More , Seller Beware-Arizona Court of Appeal Judgment 

on Sellers Liability of Disclosure , Getting into Position for Mexico Real Estate and Business. , Economic and Business

Update for Mexico (January 2002) ,

New Car Import to Mexico 2003

U.S. case may change business in Mexico

Contribuciones en Español (Articles in Spanish)

Arbitraje desde el punto de Vista de los Estados Unidos

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English Language Articles

 

(August - September 2003 for the Arizona International Lawyers Group Presentations in Phoenix and Tucson, Arizona)

THE ROLE OF ATTORNEY, NOTARY PUBLIC, REAL ESTATE AGENT & BANK IN MEXICO REAL ESTATE

(WITH OTHER CONSIDERATIONS & SOURCES OF INFORMATION)
(By Vernon Penner, attorney in Mexico and Real Estate Broker in Arizona & Mexico)
More resources as well as information on Mr. Penner at the end of this paper

GENERAL INTRODUCTORY STATEMENT

In principal and theory, the public should expect the same service and attention from all attorneys, notary publics, real estate agents and banks in Mexico like in the U.S. However, knowledge, experience, local customs, disposition and several other factors play a role in their activities in the performance of their roles in assisting the public in their real estate needs. In other words, they may not all give you the same service or result. Knowing which attorney, notary public, real estate agent and bank to choose is important.

Due to the nature of the legal system (title, liens, registries, governmental authorizations, foreigner restrictions and other matters) and the general absence of escrow, an Attorney in Mexico is very commonly used in real estate transactions. Since title to real estate is almost always transferred from one party to another via a notary public “public instrument” registered at the local Public Registry of Property where the property is located, a notary public is also almost always used as well. In order to find the best property at the best price, we have come to reply upon our real estate agents as our source. Where title is to be taken by means of the bank trust (most common case is the residential property in the costal area of Mexico), a Mexican bank must act as the trustee (fiduciary).

THE ATTORNEY AT LAW in Mexico is licensed by the Federal Mexican governmental authorities and therefore may practice his or her profession in all and any part of Mexico. The attorney at law in Mexico is an essential part of the system.

The activity of the attorney at law in Mexico is of a private nature, their activities being generally stated in both federal and state law as an agent of the principal, in legal matters.

1.Attorneys are, from a legal point of view, to advise their customers as to the most adequate legal means to accomplish their goals form a legal point of view, explaining the corresponding legal documents necessary for the same as well as the consequences thereof, upon the customer’s request (ADVISE & EXPLAIN).

2.The attorney is to prepare the content of the resulting documents and explain their content value under the law as well as the consequences thereof (PREPARE & EXPLAIN).

3.When there is a need for the performance of court action or other representation of the client before public or private parties, the attorney is to represent his (her) client to the best of their ability, under the guidance and wishes of the client (REPRESENT).

4.When there is a need for assistance from other professionals, such as when they need the “public faith” element and/or “public instrument”, then the attorney is to seek the assistance of a notary public to obtain the same, or when they need a Mexican bank to hold trust title for the client or when the client wishes the assistance of a real estate agent in locating real estate or locating a buyer for their real estate (SEEK ASSISTANCE).

The attorney is thought of as a knowledgeable legal expert in all areas of law in Mexico and know-how to respond to all areas of law, representation and prepare all documents necessary or convenient for the accomplishment of all legal acts and events that clients want or need. This is not what the real world is. Although he (she) is generally a knowledgeable legal expert in certain areas of law in Mexico and know-how, they do not normally have the knowledge or expertise to accomplish all legal acts and events that clients want or need. It is not the real world to expect everything. To claim to be an expert in all areas of law is not real. Where possible, attorneys will want to limit their liability just like everyone else. So we begin to understand that attorneys in Mexico, like attorney everywhere, after mastering the basic types of events and documents most common to their specialization, will attempt to learn more about their areas of endeavor through further study and experience, and thus provide more complete services with the passage of time.

Attorneys can and do prepare documents that contain certain incorporations, certain shareholder meetings, wills, certain powers of attorney, transfer of title of real estate, creating of trusts, mortgages and many other diverse documents that customers either want or need. However, since many of these and other documents require the “public faith” and “public instrument”, they will also need the services of a notary public.

ATTORNEY AT LAW CONCLUSION. Think of attorneys as specializing in areas of law. In our case, the area of real estate law. To make the best use of an attorney at law in Mexico is to use his(her) services as a legal (and possibly business) advisor in that area of law and business in which they specialize, having them coordinate with the other parties necessary to complete the job. Think of them as your center piece for all technical and legal issues.

THE NOTARY PUBLIC in Mexico is first a licensed attorney at law and then appointed by the governor of the state where he(she) resides, to act as a notary public in a certain demarcation of that sate, normally within a certain municipality (which is larger than what we understand as a city or town). The notary public in Mexico is an essential part of the Mexican system.

The activity of the notary public in Mexico is of a quasi public nature, their activities being delegated by the executive branch of state government to attorneys at law in Mexico as determined by the governor of the corresponding state and dictated by the states’ population.

1.Notaries are, from a legal point of view, to advise their customers as to the most adequate legal means to accomplish their goals form a legal point of view, explaining the corresponding legal documents necessary for the same as well as the consequences thereof, upon the customer’s request (ADVISE & EXPLAIN).

2.The notary is to prepare the content of the resulting document and explain their content value under the law and the consequences thereof (PREPARE & EXPLAIN).

3.Under their public faith, the notary is to formalize legal acts that are granted before them in the form of a public instrument (FORMALIZE LEGAL ACTS, TAKE SIGNATURES, ATTEST THERETO & EXPLAIN) or give evidence to events that occur under their authority (like a declaration) or events that occur before them (that they see, hear or perceive through their senses) (EXECUTE STATEMENT OF AFFIRMATION OF EVENT, TAKE SIGNATURES, ATTEST THERETO & EXPLAIN).

4.The attestation or affirmation performed by the notary is a formalization and witnessing (FORMALIZATION & WITNESS) of the act or event occurring under the public faith authority given the notary by the governor.

The normal Mexican notary public process will culminate in either a public instrument (escritura publica) or a document of certification of signatures (certificacion). In the first, the notary will keep the original public instrument, which is in his protocol book of acts and deliver to the parties a testimony thereof, conserving the original in their possession (DELIVER). In the case of certification of signatures, the notary will return the original document on which the parties certified their signatures before the notary and make a copy thereof to keep for his files. Notary publics provide the legal equivalent of “self evidence” in the public instruments they issue, as well as the ratification of signatures in documents they don’t prepare.

As a notary public and attorney, he (she) is generally thought of as a knowledgeable legal expert in all areas of law in Mexico and know how to prepare all documents necessary or convenient for the accomplishment of all legal acts and events that clients want or need and then witness and deliver them. This is not what the real world is. To claim to be an expert in all areas of law is not real. Where possible, notary publics will want to limit their liability just like everyone else. So we begin to understand that even notaries in Mexico, after mastering the basic types of events and documents most common to their trade, will attempt to learn more about other areas of endeavor, thereby hoping to learn more form their further study and experience, and thus provide more complete services with the passage of time.

Notaries can and do execute and deliver formalized public instruments that contain certain incorporations, certain shareholder meetings, wills, certain powers of attorney, transfer of title of real estate, creating of trusts, mortgages and many other diverse documents that customers either want or need to have certain formality for protection. However, it is not their job to understand the clients’ business or personal needs or wants and therefore the documents prepared may be more generic than the customer might want or receive from assistance by his attorney.

Notaries can only act as notaries when requested to do so. They do not perform their duties own their own initiative.

Normally, they can not take any political or governmental jobs or posts, employment from privates parties, participate as a notary in those matters where they are a party to a controversy or litigation, act as an attorney at law where there is controversy, act as a principal in commerce, or as a commissionist or agent in commerce, act as a ministry of a cult or religion, perform active military duty and take certain other jobs, charges or duties, that are described in the notary public law of their state. Notaries may also not act against the law or good customs, perform their notary activities outside their jurisdiction (usually a municipality) or join other persons or groups in order to require others to use their notary services. Still, the notary can act as an agent of his spouse., take charges of public benefit, teaching jobs, perform legal consultations and act as an arbitrator in arbitration.

NOTARY PUBLIC CONCLUSION. Think of notary publics as specializing in the area of law known as notary public. To make the best use of a notary public in Mexico is to use his(her) services as a public faith officer of government in order to formalize documents that will be self evident and registerable as needed.

THE REAL ESTATE AGENT activity in Mexico is of a private nature, their activities being generally that of an agent, acting on behalf of the principal, in real estate related matters. The real estate agent in Mexico is an essential part of the Mexican system. Although there are both federal and state rules and regulations that generally govern agency and/or real estate matters, there is generally no licensing, registry, formal education or disciplinary action in place specifically for “real estate” agents. Anyone that wants to declare himself as a real estate agent in Mexico may do so (with one exception).

1. Real Estate Agents are, from a legal point of view, to act as agent of their principal (in the best interest of their principal), normally seeking out a buyer or seller of real estate. Since there is normally no law specifically governing over this activity, the relationship is general agency. However, this should normally include, but not be limited to, advising their customers as to the circumstances and content of the real estate matter in which they are assisting, the most adequate means to accomplish their goals and the consequences thereof, all upon the customer’s request for full assistance (ASSIST, ADVISE & EXPLAIN).

2. The Real Estate Agent is to assist in the preparation of the resulting offer or counter offer document and other documents that may be necessary or convenient to complete his(her) job as agent and the real estate transaction sought by the principal, and explain their content value and consequences, all upon the customer’s request for full assistance (ASSIST, PREPARE & EXPLAIN).

3. When there is a need for assistance from other professionals, such as: (a) when they need legal advise, review of title, review of registries, acquisition of permits, preparation of agreements, etc, then the agent is to seek assistance form an Attorney in Mexico specialized in real estate, and (b) when there is a need for the “public faith” element and/or “public instrument”, then the agent is to seek the assistance of a notary public to obtain the same (SEEK ASSISTANCE).

The exception to the preceding statement of “no requirement” of registry and other requirements to act as a real estate agent in Mexico is the State of Sonora, just south of Arizona. This is the very first such law in all of Mexico. In May of last year (2002) it passed a law requiring the registry of real estate agents and in August of the same year, it passed a regulatory law of the first mentioned, making additional initial and on-going requirements. So now there a requirement for registry with the state government (and other continuing requirements) for those who wish to act as real estate agents in Sonora. As part of the registry process, the state requires the applicant to present personal identification and pertinent information relating to their business and its location(s); to accredit their professional training, specialized knowledge and experience in real estate agency; to agree to enroll in training programs on a regular basis and provide proof of completion thereof; and prove they have not been convicted of any crime of fiscal malfeasance or of any other serious crime. Subsequent to the registry, the state requires continuing education, registry renewal and governmental inspections and it reserves the right of potential disciplinary administrative action against the registry, if needed. If the agent is not registered, he(she) can not act as a real estate agent in Sonora.

REAL ESTATE AGENT CONCLUSION. Think of real estate agents as specializing in the area of assisting buyers or sellers in their real estate needs. To make the best use of a real estate agent in Mexico is to use his(her) services as to find the property you seek or the buyer you seek, helping you in getting through the process of the transaction.

THE BANK: For our purposes (real estate title maters), the activity of the BANK in Mexico is of a private nature, their activities being generally that of a titleholder via a long term irrevocable title trust., acting on behalf of the buyer (or seller if the property is already in a trust). The title trust bank in Mexico is an essential part of the Mexican system. There are both federal and state rules and regulations that generally govern banks, title trusts and real estate matters. Mexican banks that want to act as fiduciary/trustee agents are federally licensed to do so.

1. The Mexican trustee bank will take title and hold it for the benefit of the buyer, upon request form the buyer and there being an agreement between them on how this trust will function (CONTRACTUAL AGREEMENT & TITLE HOLDER FOR BENEFICIARY).

2. The Mexican bank will perform those duties set forth in the trust agreement that is negotiated between the buyer and the trust bank (RECEIVE INSTRUCTIONS AND PERFORM DUTIES).

3. At the end of the title trust or whenever the beneficiary so determines, the trust bank will deliver the title (or permit the assignment of the trust) to that party the beneficiary determines, provided the new party can hold the title (or assigned trust rights). As well, the trust bank will deliver the net proceeds to the beneficiary once the title transfer has been completed. (TRANSFER TITLE OR ASSIGN TRUST AND DELIVER PROCEEDS).

BANK CONCLUSION. Think of Mexican banks authorized to act as real estate trustees as specializing in the business of acting as the buyer’s titleholder for that property where the buyer does not qualify to take direct or otherwise wishes the bank to act as trustee. To make the best use of a Mexican fiduciary bank, is to use its services as a holder of title.

OTHER CONSIDERATIONS AND SOURCES OF INFORMATION

CONSIDERATIONS: We should also consider acquiring title insurance and using the resource of escrow provided by the title insurance company. These title insurance companies can be found on the website of: http://www.realtyinmexico.com (under the section on Title Insurance)

SOURCES OF INFORMATION

The Arizona International Lawyers Group. Is a group of professionals located in Arizona that can provide knowledge and experience on real estate matters in Mexico.

The Governor’s Real Estate Task Force. Is a group of professionals that have assisted the governors office of Arizona in preparing general information documents for the buyers, sellers and developers of Mexico real estate. A direct link is http://www.azmc.org/realestate.asp?from=welcome

Professionals. Those persons located in Arizona that have experience and knowledge in the are of real estate in Mexico. This can include real estate brokers, appraisers, attorneys and others.

Websites on Real Estate and Law of Mexico. These are websites that can provide specific or general information on real estate in Mexico. Example http://www.mexicolaw.com

This article was written by LIC. VERNON PENNER. A founding member of the The Arizona International Lawyers Group, The Governor’s Real Estate Task Force and the International Real Estate Council of the Arizona Association of Realtors; and he is an Attorney at Law in Mexico, Real Estate Broker in Arizona and Mexico, and teaches a class on real estate and business in Mexico at the Arizona School of Real Estate & Business in Scottsdale. He can be reached at Tel: (623) 242-7442, Fax: (623) 242-7443. His E-mails are: info@mexicolaw.com and his websites are:  http://www.mexicolaw.com

Are You Thinking About Doing Business in Mexico?

Written by Vernon Penner

The opportunities are there! The money is waiting to be made! Are you ready?

We all enjoy the warm climate, great hospitality, good times and good disposition of the people in Mexico. We all keep wanting to go back and spend more time. However we should not let these things cloud our judgment.

You may feel ready but do you know what to do? Foreigners wishing to do business in Mexico can either hire a distributor, send the product and let the distributor take care of business or you can set up your own shop.

If you chose option one, a distributorship, there are several matters to address. Do you get paid in advance or after sale ?, Is it an exclusive or non-exclusive distributorship ?, Does he use his name or your name ?, Is he acting on your behalf or his behalf ?, Is there intellectual property transfer? I am sure you can come up with other questions. If you can't, there are professionals that can.

If you chose option two, you can set up a Mexican commercial corporation, with limited liability and capital represented by stock certificates. Depending on the specific business you go into you might just own up to 100% of the stock. It's the Federal Foreign Investment Law of Mexico that lists the limits of foreign investment in the different areas of endeavor in Mexico.

By the way, don't forget that you should consult a qualified person to assist you with all of this, since things have a way of changing and getting complicated at the drop of a sombrero. So lets' have a great time and be careful out there.

Title is That Tile is !

Written by Vernon Penner

There is no substitute for title to real estate in Mexico!

We all enjoy the warm climate, great hospitality, good times and good disposition of the people in Mexico. We all keep wanting to go back and spend more time. However we should not let these things cloud our judgment.

Its easy to accept a promise from someone that has a good disposition and means well. Still that is not title. We need to do our home work and get title to the real estate we want before we rest in our big arm chair with our feet up.

Those of nationality other than Mexico, can think in two basic roads of thought in the beach and border areas of Mexico.

a) If the property is of residential nature and purpose, we need the long term, irrevocable, title transfer, bank trust as our means to take title. We choose a Mexican bank to act as our fiduciary title holder and we find a good notary public to assist in the title transfer process. The bank gets the trust permit, agrees with the notary on the terms of the trust/purchase document, and the bank and seller (and the buyer with the cash) show up at the notary's office, sign the document, he buyer gives the seller the purchase price, the closing costs are paid to the notary (by the buyer or seller), and the bank gets its acceptance and holding fees (normally from the buyer) and the buyer makes sure the executed title is registered at the Public Registry of Property and the National Registry of Foreign Investment. Then, the buyer can sip his/her pink lemonade by the pool with his/her feet up.

b) If the property is commercial, the buyer can go the route of the mentioned trust or the buyer can set up a Mexican business corporation, which the buyer will own and the company can take the title directly by title transfer with the notary public, after the buyer (on behalf of his company) and the seller agree on the term of the title document, and registered the title at the two registries.

By the way, don't forget that you should consult a qualified person to assist you with all of this, since things have a way of changing and getting complicated at the drop of a sombrero. So lets' have a great time and be care out there.

Show me the Money - In Mexico !

Written by Vernon Penner

Are you thinking about doing business in Mexico ? The opportunities are there! The money is waiting to be made! Are you ready?

We all want to make money. We know that Mexico is there and the are markets asking for product, but maybe we haven't thought about it or we just put it off for another day.

In addition to the warm climate, great hospitality, good times and good disposition of the people in Mexico, there is a growing market for most all of the consumer products that we enjoy in the U.S.

If you feel ready but do you know what to do or just want more information, perhaps the time is now, to ask questions. Foreigners wishing to do business in Mexico can either hire a distributor, send the product and let the distributor take care of business or you can set up your own shop.

If you chose option one, a distributorship, there are several matters to address. Do you get paid in advance or after sale ?, Is it an exclusive or non-exclusive distributorship ?, Does he use his name or your name ?, Is he acting on your behalf or his behalf ?, Is there intellectual property transfer? I am sure you can come up with other questions. If you can't, there are professionals that can.

If you chose option two, you can set up a Mexican commercial limited liability stock corporation. Depending on the specific business you go into you might just own up to 100% of the stock. It's the Federal Foreign Investment Law of Mexico that lists the limits of foreign investment in the different areas of endeavor in Mexico.

By the way, don't forget that you should consult a qualified person to assist you with all of this, since things have a way of changing and getting complicated at the drop of a sombrero. So lets' have a great time and be careful out there.

Arbitration From the US Point of View

written by Phil Robbins
SURVEY OF DEVELOPMENT AND
USE OF ARBITRATION TO RESOLVE
PRIVATE DISPUTES IN THE UNITED STATES
PHILIP A. ROBBINS
Chile
September 1999

I. DEVELOPMENT OF ARBITRATION IN THE UNITED STATES

A. In earlier years, courts opposed arbitration and refused to enforce arbitration agreements and awards. Many lawyers also preferred court and opposed arbitration.

B. Demand for increased use of arbitration arose from many factors:

1. Overcrowded courts which caused long delays.

2. Litigation in court, especially with juries, became increasingly expensive.

3. Parties wanted more control over the process, including selection of the arbitrator, the time and place of the hearing, and what law would apply.

4. Parties desired to resolve disputes in confidence.

C. Federal and state statutes and court decisions began to reflect a more positive view and now strongly support the use of arbitration.

II. CURRENT U.S. LAW GOVERNING ARBITRATION

A. In the U.S. common law system, arbitration is governed by a combination of federal and state law as determined by Congress, state legislatures and decisions of federal and state courts.

B. Federal law strongly supports the use of arbitration in domestic and international disputes.

1. The Federal Arbitration Act (FAA) governs all contracts involving interstate and foreign commerce.

a. The FAA requires enforcement of agreements to arbitrate and enforcement of arbitrator=s awards with limited defenses

.b. The FAA implements the New York and Panama Conventions.

2. Federal courts, including the U.S. Supreme Court, have strongly backed the use of arbitration.

 

B. Most states also have statutes and court decisions supporting arbitration.

1. The Uniform Arbitration Act or similar laws have been adopted by many states and require enforcement of arbitration agreements and awards.

2. Arbitration is mandatory in certain types of cases (especially where the amount in controversy is small) with restricted right to appeal to the court for a trial by judge or jury.

3. Use of arbitration or other ADR may be required before proceeding to trial.

C. Most types of cases can be the subject of enforceable arbitration agreements unless:

1. Contrary to public policy, or where criminal offenses, domestic relations (especially disputes affecting children) or matters affecting the public interest are involved.

2. There was clear inequality in bargaining power between the parties to the original contract.

III. PROCEDURES IN ARBITRATION

A. Arbitration Agreements

1. The original Contract between the parties includes the agreement to arbitrate and covers all important procedural matters, such as how to initiate the arbitration, selection of the arbitrator, applicable law, language, time, place and rules of procedure for the hearing, and the form and finality of the award.

2. Parties may adopt existing rules of procedure drafted by various institutions. Procedure may be governed by law where no agreement exists.

>B. Selection of arbitrator.

2. Arbitrators must be neutral and disclose any conflicts of interest, in which case a party may challenge the selection.

3. Arbitrators are often lawyers but are not required to be lawyers. Retired judges often serve as arbitrators. Arbitrators may be chosen for special expertise in the subject matter.

4. There may be a single arbitrator, or a panel of three.

>C.procedures.Pre-hearing

1. Some discovery is allowed but less than in litigation in court.

a. Some depositions may be taken.

b. Production of documents may be required.

2. The arbitrator may require written briefs and hold preliminary meetings to define and narrow the issues.

>D. Hearings.

1. The arbitrators will schedule a hearing as soon as possible.

2. Witnesses may be compelled to attend and testify by deposition or at the hearing.

3. Cross examination by lawyers and questions by the arbitrator are permitted.

4. Written briefs and oral argument may be submitted.

>E. Award.

1. The Award will be in writing, and may contain the arbitrator=s reasons.

2. Awards may be binding (with very limited appeal rights) or non-binding, depending on the agreement or controlling law.

IV. INTERNATIONAL ARBITRATION

A. The United States has adopted the New York and Panama Conventions, (but not the 1985 UNCITRAL Model Law).

1. Agreements to arbitrate in the U.S. or in other countries will be enforced by U.S. courts.

2. Arbitration awards rendered in the U.S. or in other countries will be enforced by U.S. courts.

3. Defenses to enforcement are limited to those set forth in the New York and Panama Conventions.

B. The North American Free Trade Agreement (NAFTA) requires the governments of Canada, Mexico and the U.S. to promote the use of ADR, including arbitration, to resolve private commercial disputes, and created an Advisory Committee to pursue this task. Your speaker has served on this Committee for several years and has participated in numerous arbitrations. The use of arbitration to resolve cross-border commercial disputes has become increasingly common.

C. The Free Trade Agreement of the Americas (FTAA) also envisions the use of ADR.

V. REASONS FOR USING ARBITRATION

A. Control by parties, including choice of arbitrator, the applicable law, the language to be used, the time and place of the hearing, and other important aspects.

B. Speed, efficiency and lower cost.

C. Confidentiality.

D. Informality and flexibility.

E. Enforcement with limited rights of appeal.

F. May be less disruptive to future relations.

VI. SKILLS, EDUCATION AND EXPERIENCE NEEDED IN ARBITRATION

A. Lawyers.

1. Education in substantive and procedural law.

2. Experience in obtaining and presenting evidence and questioning witnesses.

3. Skill in written and oral advocacy.

B. Arbitrators.

1. Experience and training in resolving disputes.

2. Fair and impartial attitude, ability to listen and instill confidence.

3. Ability to identify and analyze issues.

4. General knowledge of law and procedure.

5. Expertise in the particular subject area may be helpful, but not essential.

C. Training for arbitrators is provided in law schools and in post-graduate seminars and conferences for lawyers and judges.


Arizona Civil Remedies Seminar (October 1999)
By: Vernon Penner

DEVELOPMENT OF ARBITRATION

In earlier years, courts opposed arbitration and refused to enforce arbitration agreements and awards, until such time that arbitration was recognized under civil legislation in Mexico. Many lawyers still prefer to use the courts because it gives them more maneuverability than arbitration.

Those seeking fast results in commercial disputes can begin to see the usefulness of arbitration because:

Courts cause long delays.

Litigation in court can be expensive.

Parties want more control over the process, including selection of the arbitrator, the time and place of the hearing, and which law will apply.

Parties desired to resolve disputes in confidence.

Arbitration is becoming more widely known.

CURRENT MEXICAN LAW GOVERNING ARBITRATION

Arbitration is governed by the State Civil codes, the Federal District Civil Code and the Federal Commercial Code, in additional to any treaties or conventions

Most types of civil/commercial cases can be the subject of enforceable arbitration agreements unless: they are contrary to public policy, or where criminal offenses, domestic relations (especially disputes affecting children) or matters affecting the public interest are involved, or where inequality in bargaining power between the parties is evident.

NATIONAL AND INTERNATIONAL

Mexico's arbitration statutes apply to all national (parties that reside in the same country) and international (parties that reside in different countries) arbitration when the place of arbitration is in Mexico, unless there are treaties or laws that state that certain disputes are not susceptible to arbitration. The Federal Commercial Code of Mexico and the Civil Procedure Codes of the several state of Mexico set forth basic recognition and use of arbitration. The Federal Commercial Code recognizes the enforcement of foreign abritral awards.

GENERAL RULES

The agreement to arbitrate in the case of dispute should be given in writing between the parties (in the principle contract or a separate agreement) and in the case of invalidness of the contract, the arbitration clause will still exist, unless expressly agreed otherwise or the invalidity extends directly to this agreement to arbitrate.

It is possible to choose specific sets of arbitration rules to solve dispute issues in Mexico, to the extent not contrary to the laws applicable where enforcement is sought. The most common set of rules will be those promoted by the chambers of commerce. It is possible to authorize the arbitrators to decide according to the rules of law ("derecho", approved by congress / written codified law) or ex aequo et bono ("de conciencia").

The number of arbitrators is normally one, however three can be chosen (the total must be an uneven number ("número non"). The arbitrators have authority for ordering provisional remedy of protection if requested by the parties, and to require the parties to provide the corresponding security when the arbitrator so determines.

INTERNATIONAL CONVENTIONS

Both the U.S. and Mexico are signatories to the treaties, which generally mandate enforceability, as follows:

  1.  
    1. New York Convention (U.N. Convention on the Recognition and Enforcement of Foreign Arbitral Awards)
    2. Panama Convention ( Inter-American Convention on International Commercial Arbitration, Panama 1975)
    3. Montevideo Convention ( Inter-American Convention Concerning the Extraterritorial Effect of Judgements and Arbitral Awards).
    4. Mexico's Law on Arbitration Mexico passed an updated (by Decree) Commercial Arbitration Statute as of July 22, 1993, by modifying and adding to the content of Title 4 "Commercial Arbitration" of the Federal Mexican Commercial Code (see articles 1415 through 1463 of the Commercial Code). This statute is structured after the 1958 United Nations Convention of the Recognition and Enforcement of Foreign Arbitral Awards, and it is as follows:

PROCEDURAL RULES

Arbitrational contracts may establish by reference all published procedural rules of:

  1.  
    1. The International Chamber of Commerce (ICC)
    2. The Inter-American Commercial Arbitration Commission (IACC)
    3. The American Arbitration Association (AAA)

4. United Nations Commission on International trade Laws (UNCITRAL)

5 Or if the rules are not set in the arbitration contract, then per the rules of Mexican legislation.

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SELLER BEWARE

(ARIZONA COURT OF APPEAL JUDGMENT ON REAL ESTATE)

by E.J. Peskind

We enjoy advising our clients and friends 6f new developments in the law. Here is a "blockbuster" new decision which will significantly impact the purchase and sale of real estate.

A recent decision altered what was believed to be a long settled understanding that the seller of real property may disclaim liability for the condition of the property by selling the property "As Is". It is commonly believed that such a disclaimer would protect the seller from liability regarding the condition of the property by shifting the burden of finding defects in condition to the Buyer.

"Not so," said the Arizona Court of Appeals in a recent case, involving apartments, where the contract contained a very broad disclaimer of warranties and an "As Is" clause.

The buyer had two engineering firms inspect the building which did not reveal any plumbing problems. Two years after the closing, the buyer learned that polybutylene pipe had been used in the plumbing. This flexible tubing may fail and leak when it is used to transport warm water under normal water pressures.

The trial court judge rejected the seller's argument that it had no liability because of the disclaimer of warranties and "As Is" language in the contract, and a jury awarded approximately $3,700,000!

The Court of Appeals held that the disclaimer and "As Is" language did disclaim implied warranties, but the seller nevertheless had a duty to disclose latent defects which were known to the seller prior to the closing.

Why? Because a latent defect is "a hidden or concealed defect. One which could not be discovered by reasonable and customary observation and inspection . . .". Of course, that definition will cause problems. Does it mean the same to a buyer without experience in the construction industry as it does to a buyer who is a licensed general contractor?

By the way, The Court imputed "knowledge" of the defective pipe to the seller because an agent of the seller (though not the seller), knew about it, but that is another story for another day.

The decision did not specify if this principle applies to the sale of residential property, but there is nothing in the opinion which suggests that it would not.

Given the dollar value of the judgment against the seller and the importance of the issue to the real estate community, it appears highly likely that the seller will attempt to appeal to the Arizona Supreme Court.

Care and specificity in drafting contract and legal documents is so much of what a lawyer does. If "as is" does not really mean "as is", what is going on here? What can be done? Well, we have a great idea to try to get around the problem. At Peskind Hymson and Goldstein, with over 200 years of combined legal experience, we are creative.

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GETTING INTO POSITION FOR MEXICO REAL ESTATE AND BUSINESS (DECEMBER 2001)

By Vernon Penner, Esq. (attorney in Mexico)

With the focus and continual efforts of the Mexicans nationals to improve their economy and the interest of the U.S. economy on Mexico for both business and leisure, the interest in Mexican real estate continues to grow. As well, we should not forget that the U.S. baby boomer generation is but a short few years form seeking retirement and what better place to do so than in the sun and relaxing atmosphere of just south of the border.

If we watch the road signs, we can see the announcements of what is coming. Politics is changing; Labor continues to be inexpensive; Foreign investment in the Mexican banking industry has come of age; Foreign investment in the telecommunications industry has taken hold; Ejidos (communal farms which hold beach front property) are des-incor-porating and thereby freeing up beach front land; U.S. citizens can own beach front property either through their Mexican corporations if for business use and if for residential use then through bank title trusts, while holding fee simple title on land in the interior if they qualify; and as well, Title insurance on real is taking hold in Mexico.

The PAN party (opposition party) won the most recent presidential election in Mexico and renewed faith in the balance of power and the political system is at hand. With a President of Mexico who’s background is business rather than political, many feel relieved and with new desire and hope to prosper.

Labor has traditionally been very inexpensive as compared to the U.S. and now the U.S business community is not only finding ready access to the labor pool in the northern part of Mexico, it is also finding good sources in the southern part of Mexico.

Both Bancomer and Banca Serfin, large banks in Mexico, have new investor owners, both of which investor owners are from Spain, while Banamex another large bank has its new investor owner from the U.S. (Citibank).

Although Telmex is still the leading party in the basic telecommunications industry in Mexico, there are now other companies there that are competing to provide long distance and cell phone service to the public.

One of the most misunderstood problems in foreigners holding land in Mexico has been the theme of the “Ejido” communal farms. These farms are created for Mexican low-income farmers (something like share-croppers) that are given the right to hold and farm land in the “Ejido” (not the ownership) which is owned by the Federal Mexican government. The government sets it into this farming program but does not give up its’ ownership. Along comes someone that wants to buy it and promises big money to the farmer (since its on the beach!). The farmer says OK and takes the money, but no one asks the government, who later on takes it back. Now, under the present day rules, the members of the “Ejidos” may formally des-incorporate their “Ejidos” with prior government approval, the end goal of which process is the farmer ending up with the ownership he can sell (under special conditions).

What the author sees as the greatest need for the near future of the real estate market in Mexico is a better understanding of the system and educated decisions. The better understanding can come from educating oneself or using professionals that understand the system. What better way to provide for this than to educate and license real estate sales persons and brokers in Mexico, which education and licensing has not existed to-date. There is a subsurface push to license these persons in Mexico, which the author is involved in. Still it is slow to catch on. I see the need to disseminate the word for the need to license these agents. Until licensing comes around, reputation is a very good thing to consider when seeking an agent in Mexico. As well, Realty Executives, Century 21 and possibly other U.S. based real estate sales companies have or are setting up franchises in Mexico. Also, there is a national fraternal organization that does a reasonably good job at attempting to bring the agents together as a body, which is AMPI (the Mexican Association of Professionals in Real Property).

It has become common knowledge that foreigners can take title to real estate in the restricted zone (in the beach and international border areas) of Mexico. This can be accomplished either in the bank title trust whether for business or residential use or they can take title in the name of a Mexican company (of which they may possibly own 100%) if the specific use of the property is for business. They mat use the title trust or the corporation in the interior or possibly even take fee simple direct title if they qualify.

I understand that title insurance is also coming of age in the Mexican touristic real estate market. Stewart Title Insurance, through its international section out of Houston, Texas has advised the author that it has just opened a Mexican title insurance company and is setting up its an agents system in Mexico. That is well received.

Until it has all comes together, do your homework, ask questions, educate yourself, consult the professionals (attorney specializing in real estate in Mexico), consider title insurance, close with a Mexican notary public. We should not forget that a well-informed decision is always a good idea.

In the coming months, there will be additional articles on real estate related issued in Mexico, so keep your eyes open. The Arizona School of Real Estate and the author of this article are also offering classes every month on real estate and business issues in Mexico, at their facilities in Scottsdale and Mesa. To get the schedule, please call the school.

This article was written by LIC. VERNON PENNER. He is in private practice as an attorney at law licensed exclusively in Mexico; he teaches classes at the Arizona School of Real Estate on real estate and business matters in Mexico and was the Director of the Administrative Actions Division of the Arizona Department of Real Estate for almost 2 years. You can reach him at Tel: (623) 242-7442, E-mail info@mexicolaw.com or check out his firms’ web page at http://www.mexicolaw.com

============

December 2001

By Vernon Penner

The author of this article did a summary search on the Internet, both at U.S. based sites as well as Mexico based sites. There is a wealth of information to be viewed. Some of the highlights found are mentioned in the following paragraphs.

Per the Finance secretariat of Mexico, in the last four quarters in Mexico there has been a decline in it’s Gross Domestic Product (GDP), even though they saw a positive 1.9% GDP in the first quarter of this year (their third quarter was reportedly the worst third quarter since 1995).In comparison to the U .S., Mexico appears to be performing as if linked to the U.S., which would seem generally expected by this author, since they are strong trading partners with a large land border between them. However, the manner in which the U.S. and Mexico view and handle their calculations is different. The U.S. performs its calculations on adjusted annual quarter over quarter system, looking at its growth at the margin, while Mexico normally shows non-adjusted year-to-year rates and looks at its growth on a one-year frame.By doing this, Mexico shows a smother transition process. This process in Mexico, although it has its justification, is viewed by some economists as not the best way to factor in seasonality.

Mexico in general is concerned that if the recession prolongs in the U.S., this will cause the Mexican recession to also prolong and eventually curtail vital Foreign Direct Investment (FDI) levels in Mexico. If this occurs, Mexico is concerned that this will adversely affect Mexico’s trade deficit, since FDI roughly pays for 2/3rds of Mexico’s trade deficit.

The bright side shows that even with the decline in the GDP in Mexico, there were positive results in the agriculture (+5.8%) and financial (+4.1%) sectors of Mexico in the third quarter. Mexico’s Finance Secretariat has stated that the exchange rate of the Mexican Peso to the U.S. dollar has remained stable, inflation remains low, interest rates remain low and therefore the financial structure underlying the macroeconomics elements stays solid. The President of the World Bank also recently congratulated Mexico and President Vicente Fox for the financial policies that are maintained in Mexico. However, the services sector, although it only dropped 0.4% in the third quarter, accounts for over half of Mexico total GDP, which has had a heavy impact on the Mexican economy. Heavy falls in the services sector have been seen in the hotel and restaurant sector.

Mexico started its recession process six months before the U.S. and is expected to last at least as long as the U.S. (projected for mid 2002) and maybe even one quarter further. The good news is that there has been instability in Mexico’ markets in past recessions but in this one there seems to be some control and it shows more decline in inflation than instability. Mexico is placing part of its’ hope in the rapid recovery by the U.S. economy.

Mexico’s “maquiladora” industry is the means by which the U.S. industry imports to Mexico, duty free, packaging, raw materials and equipment for assembly or manufacture and shipment of the resulting products back to the U.S. or other parts of the world, to take advantage of Mexico’s labor force. This sector of the industry has, as a result of the recession in Mexico, cut more than 150,000 jobs in 2001 showing an 11.3% unemployment rate (with another 20,000 jobs projected to be lost in 2002); exports have fallen to 7.2% and 132 maquiladoras have closed their operations this year, all according to Rolando González, President of the National Maquila Industry Council of Mexico.

In regards to the oil sector, Mexico, a non-aligned member of OPEC (the Organization of Petroleum Exporting Countries) is following the organization’s recommendation of cutting back exports of petroleum, by cutting back its daily oil exports by 100,000 barrels. The result of this, per Mexico’s Finance Secretary Francisco Gil Diaz, is that Mexico will need to revise it’s annual budget downward since about 1/3 of its’ budget relies on the oil exports.

On the political scene, according to Mexico’s Employer Confederation (Copamex), Mexico’s Federal Chamber of Deputies (comparable to the U.S. House of Representatives) is earning a grade of “F” (for failing). Copamex’s members gave the congressmen a grade of 5.6 (of a possible 10) on average. Per Copamex, there appears to be a feeling by the survey respondents that the congressmen have blocked or slowed the reforms the country purportedly needs (in fiscal, energy, labor and educational sectors). Copamex President Jorge Espina told reporters that the respondents based their opinions on the congressmen’s’ voting records on pending principal reforms, the way they interact with their constituents and their attendance records. A spokesperson for the congressmen criticized the survey, while a spokesperson for the opposition PRI (Revolutionary Independent Party) Political Party stated that President Fox was behind the survey.

Regarding immigration matters, Mexico’s National Migration Institute has reported that more than 350,000 Mexican citizens have returned to Mexico in the two months following the September 11 terrorist attacks. Another official source in Mexico believes that that number will continue to grow. The Wall Street Journal has reported that arrests of illegal immigrants crossing the U.S.-Mexico border attempting to come to the U.S. in the year ending September 12th have declined, reaching their lowest figures since 1995, which a major additional decline of 54% from October 1st. to November 5th (we should keep in mind that the immigrants traditionally go back to Mexico for the holidays, so we will wait and see what happens in the new year).

In a move that surprised many, President Fox’s administration expropriated 27 of the country’s 59 sugar mills in order to reconstruct and renovate them. Although per Finance Secretary Francisco Gil, the government will re-privatize the entities in 18 months (after 3 billions Pesos injection in the companies), the fact that they were expropriated has caused mixed reaction in the private sector. Some see this as a good step (including Raul Picard, President of the National Manufacturing Industry Chamber in Mexico) on the part of the government in order to finally root out the corrupt practices in the mills.

Microsoft Chief Executive Steve Ballmer has been reported as having pledged $60 billion U.S. dollars over the next 5 years to Mexico President Vicente Fox’s E-Mexico project, using this money to train 20,000 software developers and E-Mexico teachers. The project will aim at connecting 10,000 Mexican communities to the internet.

In the previous article, I reported on foreign financial institutions taking (confirming their intention to take) a position in the top 3 banking concerns in Mexico (Bancomer, Banamex, Banca Serfin). The fourth largest in Mexico, Bancreser, is running low on suitors, since Canada’s Scotiabank-Inverlat pulled out of the auction recently, leaving only the Monterrey (Nuevo Leon, Mexico) based bank Banorte as an interested suitor. The Bank Deposits Protection Fund (IPAB) of Mexico will evaluate Banorte’s bid.

In other news, Maytag appears to have announced its intention to invest $32 million U.S. dollars in a new assembly plant in Mexico (undisclosed location for the plant) (see the section on maquiladores above). Also, a recent edition of Forbes appears to have reported where some of the wealth in Mexico is located, by listing the 5 most wealthiest individuals in Mexico as: Carlos Slim (Telmex-Carso) for $10.8 billion U.S.; Emilio Azcárraga Jean (Televisa) for $3 billion U.S.; Ricardo Salinas Pliego (TV Azteca-Elektra) for $3 billion U.S.; Lorenzo Zambrano (Cemex) $2.9 billion U.S.; and Eugenio Garza Lagüera for 2.5 billion U.S.

In the coming months, there will be additional articles on Mexico and real estate related issued in Mexico, so keep your eyes open. The Arizona School of Real Estate and the author of this article are also offering classes every month on real estate and business issues in Mexico, at their facilities in Scottsdale and Mesa. To get the schedule, please call the school.

Although the information provided in this article is believed to be correct, the reader is to perform his/her full independent investigation before relying upon it.

This article was written by LIC. VERNON PENNER. He is in private practice as an attorney at law licensed exclusively in Mexico; he teaches classes at the Arizona School of Real Estate on real estate and business matters in Mexico and was the Director of the Administrative Actions Division of the Arizona Department of Real Estate for almost 2 years (2000 & 2001). You can reach him at Tel: (623) 242-7442, Fax: (623) 242-7443

His E-mail is info@mexicolaw.com or check out his firms’ web page at http://www.mexicolaw.com

===========

January 2002

MEXICO - ON THE ROAD TO SUCCESS

By Vernon Penner

Politics

In the present day transition of Mexico, its’ federal Congress has taken on a new role. From a congress that follows to one that seeks to lead or at least seeks to think on it’s own. There is a new view forming on the checks and balances of the executive branch as relates to the legislature. It appears that there might not be just a single political party or coalition in total control. This creates new hope in many persons, but at the same time these changes require people to think outside the traditional box.

With President Fox’s election as President of Mexico, the Institutional Revolutionary Party (PRI) lost its hold on the executive position. Although the PRI still has simple majority in the federal Congress, it does not have the required two-thirds majority, so laws can only be passed when two or more parties join together.

Due to term limits in the legislative branch, many of its' members are not as experienced as otherwise would be; and the closeness of legislators to the general population has not previously as much as many have hoped. In that scenario, the 128 senators and 500 members of the lower chamber of deputies have a real task before them. They are becoming a real force with which to contend. Hope is eternal.

This now brings us to the reality of the difficulty that has existed for President Fox, in the hopes of getting his initiatives passed. The legislature has not viewed Mexico’s future in the same manner as Fox, as relates to Fox’s Mexico's agenda, both domestic and international.

In December, Mr. Fox had offered to negotiate a settlement with the United States over trade barriers which stop 600 tons of sugar from entering United States markets each year, but the Mexican Congress blocked this effort. As well, in the final stage of debate in congress on its federal tax plan, it imposed a tax on soft drink producers that use fructose, a substance that is mostly imported from the United States. In place of taxing food and medicine, it put new taxes on some luxury items, which include liquor, tobacco and the cellular telephone service (a ten percent tax was placed on many telecommunications services, including pagers, national long distance phone calls, local phone calls, and cable and satellite television).

New Directions in Business.

Grupo Financiero Banamex, which is Citigroup Inc.'s wholly-owned banking subsidiary in Mexico, is purchasing the remaining portions of joint ventures, which will fully place the life insurance company “Seguros Banamex Aegon” and the pension fund management company “Afore Banamex Aegon” in its portfolio.

Pemex, Mexico’s petroleum industry group and the world's sixth largest company, is offering "multiple service contracts" to do public works projects, whereby it will permit foreigners to help the natural gas industry production meet the country’s demand and hopefully avoid expensive imports into Mexico. Raul Munoz Leos, it’s director, hopes to complete the necessary contracts to develop a dozen production blocks in the northern part of Mexico, all within this year.

Wells Fargo & Co. has introduced a discount service for wiring up to $1,000.00 US to Mexico. This is this bank’s newest move toward seeking the ever-growing Hispanic population in the United States. It is estimated that Mexicans living in the United States wire an up to $8 billion annually to friends and relatives in Mexico.

Mexico's long-term foreign currency rating was recently upgraded to BBB-minus from BB-plus. The cited reason for doing this was Mexico’s fiscal discipline, as shown in the passing of the country’s 2002 budget and the tax increases that took place at the first of the year.

President Vicente Fox wants entrepreneurs on both sides of the border to invest in poor communities with high migration rates to the United States.

Toyota Manufacturing has chosen Tijuana, B.C. as the location it will place an automotive assembly plant.

Sempra Energy and InterGen are erecting electrical power plants near Mexicali (on the Mexican side of the border) and the Bush administration, through the Department of Energy, has issued presidential permits to allow the plants' transmission lines to be built across the border into the U.S.

Hotel owners and government officials across Mexico are saying that tourism has returned in a good part to its norm, after dipping 12 percent after the Sept. 11 attacks. It has been said that the resort of Acapulco now has more international flights than before the terror attacks, including new arrivals from Chicago and Dallas. It appears that Mexico is one of the few countries to have seen such a recovery.

Labor Salary Increases

Mexico has increased its $3.80 Dollars per day general minimum wage by 4.5 to 7 percent for the year 2002. This increase is different for each general geographical location, as identified by the labor authorities.

About 20 percent of the 40-million plus workforce does receive one of the three minimum salaries that start at 35.80 Pesos (approximately $3.80 Dollars U.S.) and which can vary by a few cents a day based on the higher or lower costs of living in their part of the country. Workers who make the lowest minimum daily general wage in Mexico (or almost of all of the workers who receive this minimum wage) are getting the highest wage increase, bringing their daily salary to 38.30 Pesos (approximately $4.20 Dollars U.S.). Still, there is another group receiving minimum wage, which due to its' residence in geographical locations such as Mexico City, will receive the lowest increase in the general minimum daily wage. Their’s will increase by just 4.5% to 42.15 Pesos (approximately 4.60 Dollars U.S.) daily. The remainder of the workers receiving a general minimum daily wage will receive a raise of 5.7 percent, which will bring their salaries to 40.10 Pesos (approximately $4.40 Dollars U.S.) daily.

When the employer in Mexico is figuring the cost per labor hour, he should not forget to include the other direct and indirect costs he will have to pay (examples: social security, housing-INFONAVIT, educational programs, and others).

Economic Projections for 2002

Mexico is hoping it’s recovery will be spurred on by its giant northern neighbor in 2002, but is aware that a return to growth in the United States is not be enough in itself and is watching it’s own consumer spending. It has been said that Mexico’s consumer spending, if it remains relatively strong may be the overriding internal factor in Mexico's resurgence.

Many economists agree Mexico will put up better growth numbers in 2002 than it did in 2001, when it came to an apparent halt. A recent poll forecasted Mexico's economy expanding by 1.42 percent in 2002, compared with forecasts of the economy shrinking 0.26 percent last year. This is still far short of the 6.9 percent gross domestic product growth Mexico enjoyed in 2000, following suit of the U.S. when it enjoyed such good days of expansion.

This and other indicators have shown just how close Mexico’s economy is liked to the United States and considering the trade relationship, how close and strong the relationship is between the two of them. It has been said that as much as 85 percent of Mexico’s exports are to the United States and Canada, all three of which are partners in the North American Free Trade Agreement (NAFTA).

This relationship between Mexico and the United States has it good points and bad points for Mexico. Mexico is increasingly vulnerable to swings in the U.S. business cycle. Still, it can mean that there are occasions when Mexico can escape from some of the turmoil that exists among its Latin American brethren. An example to be cited is the recent Argentina economic unraveling.

Mexico's recession was strongly felt by its' manufacturing sector. Industrial output through the first nine months of 2001 reportedly fell 3.2 percent. Among the hardest hit was its' “maquiladora” industry. This is the industry that imports raw materials, component parts and machinery into Mexico and exports finished products to the United States and other parts of the world. The industry reportedly had to give-up some 150,000 jobs in 2001, or about 12 percent of its total work force. This by any calculation is hard to deal with, especially in a growing country like Mexico. Still, since the Maquiladora and the other sectors directly linked to the U.S. economy – such as foreign investment – make up about a third of Mexico's economic output, they are expected to rebound when the United States gathers it’s focus and starts to rebound.

Trouble

On a darker note, we should not forget that according to the Inter-American Development Bank, Mexico ranks No. 2 behind Colombia among Latin American nations in terms of traditional kidnappings, with 600 last year. The big cities of Mexico have not yet found a way to stop the so-called "kidnap express", which can be most seen predominately in Mexico City. Some say that it has gone up as much as 300 percent during the past five years. This is a kidnapping with can include violent robbery by forcibly taking the victims hostage for a short time period to secure the source of their money. This can be for as little as a few hours. There are even occasions when the victim is not aware that he or she is captive, unless they try to leave. Some experts like Pedro Ibarra Trujillo, director of planning for the National Public Security Ministry, say that law enforcement personnel are ineffective and there have been times when authorities have complicity with the criminals.

On the Local Scene

Police in the border city of San Luis Rio Colorado (west of Puerto Peñasco, Sonora and on the border with the U.S.) stated that they arrested one man and were searching for another suspect in the Jan. 3 stabbing death of a Phoenix man at a trailer camp in the coastal town of Puerto Peñasco. The two suspects are purportedly said to have broken into the El Capitan trailer camp in Puerto Peñasco and entered a trail in which four U.S. tourists were staying.

Hope for the Near Future

It has been reported that according to JP Morgan, the second-largest financial institution in the United States, Mexico could become the first Latin American country to come out of the recession.

In the coming months, there will be additional articles on Mexico’s business and real estate related issues, so keep your eyes open. The Arizona School of Real Estate and the author of this article are also offering classes every month on real estate and business issues in Mexico, at their facilities in Scottsdale and Mesa. To get the schedule, please call the school.

Although the information provided in this article is believed to be correct, the reader is to perform his/her full independent investigation before relying upon it.

This article was written by LIC. VERNON PENNER. He is in private practice as an attorney at law licensed exclusively in Mexico; he teaches classes at the Arizona School of Real Estate on real estate and business matters in Mexico and was the Director of the Administrative Actions Division of the Arizona Department of Real Estate for almost 2 years (2000 & 2001). You can reach him at Tel: (623) 242-7442, Fax: (623) 242-7443

His E-mail is info@mexicolaw.com  or check out his firms’ web page at http://www.mexicolaw.com.

==========

Economic and Business Update for Mexico (January 2002)

by Vernon Penner

. The author of this article did a summary search on the Internet, both at U.S. based sites as well as Mexico based sites. There is a wealth of information to be viewed. Some of the highlights found are mentioned in the following paragraphs.

Per the Finance secretariat of Mexico, in the last four quarters in Mexico there has been a decline in it’s Gross Domestic Product (GDP), even though they saw a positive 1.9% GDP in the first quarter of this year (their third quarter was reportedly the worst third quarter since 1995). In comparison to the U .S., Mexico appears to be performing as if linked to the U.S., which would seem generally expected by this author, since they are strong trading partners with a large land border between them. However, the manner in which the U.S. and Mexico view and handle their calculations is different. The U.S. performs its calculations on adjusted annual quarter over quarter system, looking at its growth at the margin, while Mexico normally shows non-adjusted year-to-year rates and looks at its growth on a one-year frame. By doing this, Mexico shows a smother transition process. This process in Mexico, although it has its justification, is viewed by some economists as not the best way to factor in seasonality.

Mexico in general is concerned that if the recession prolongs in the U.S., this will cause the Mexican recession to also prolong and eventually curtail vital Foreign Direct Investment (FDI) levels in Mexico. If this occurs, Mexico is concerned that this will adversely affect Mexico’s trade deficit, since FDI roughly pays for 2/3rds of Mexico’s trade deficit.

The bright side shows that even with the decline in the GDP in Mexico, there were positive results in the agriculture (+5.8%) and financial (+4.1%) sectors of Mexico in the third quarter. Mexico’s Finance Secretariat has stated that the exchange rate of the Mexican Peso to the U.S. dollar has remained stable, inflation remains low, interest rates remain low and therefore the financial structure underlying the macroeconomics elements stays solid. The President of the World Bank also recently congratulated Mexico and President Vicente Fox for the financial policies that are maintained in Mexico. However, the services sector, although it only dropped 0.4% in the third quarter, accounts for over half of Mexico total GDP, which has had a heavy impact on the Mexican economy. Heavy falls in the services sector have been seen in the hotel and restaurant sector.

Mexico started its recession process six months before the U.S. and is expected to last at least as long as the U.S. (projected for mid 2002) and maybe even one quarter further. The good news is that there has been instability in Mexico’ markets in past recessions but in this one there seems to be some control and it shows more decline in inflation than instability. Mexico is placing part of its’ hope in the rapid recovery by the U.S. economy.

Mexico’s “maquiladora” industry is the means by which the U.S. industry imports to Mexico, duty free, packaging, raw materials and equipment for assembly or manufacture and shipment of the resulting products back to the U.S. or other parts of the world, to take advantage of Mexico’s labor force. This sector of the industry has, as a result of the recession in Mexico, cut more than 150,000 jobs in 2001 showing an 11.3% unemployment rate (with another 20,000 jobs projected to be lost in 2002); exports have fallen to 7.2% and 132 maquiladoras have closed their operations this year, all according to Rolando González, President of the National Maquila Industry Council of Mexico.

In regards to the oil sector, Mexico, a non-aligned member of OPEC (the Organization of Petroleum Exporting Countries) is following the organization’s recommendation of cutting back exports of petroleum, by cutting back its daily oil exports by 100,000 barrels. The result of this, per Mexico’s Finance Secretary Francisco Gil Diaz, is that Mexico will need to revise it’s annual budget downward since about 1/3 of its’ budget relies on the oil exports.

On the political scene, according to Mexico’s Employer Confederation (Copamex), Mexico’s Federal Chamber of Deputies (comparable to the U.S. House of Representatives) is earning a grade of “F” (for failing). Copamex’s members gave the congressmen a grade of 5.6 (of a possible 10) on average. Per Copamex, there appears to be a feeling by the survey respondents that the congressmen have blocked or slowed the reforms the country purportedly needs (in fiscal, energy, labor and educational sectors). Copamex President Jorge Espina told reporters that the respondents based their opinions on the congressmen’s’ voting records on pending principal reforms, the way they interact with their constituents and their attendance records. A spokesperson for the congressmen criticized the survey, while a spokesperson for the opposition PRI (Revolutionary Independent Party) Political Party stated that President Fox was behind the survey.

Regarding immigration matters, Mexico’s National Migration Institute has reported that more than 350,000 Mexican citizens have returned to Mexico in the two months following the September 11 terrorist attacks. Another official source in Mexico believes that that number will continue to grow. The Wall Street Journal has reported that arrests of illegal immigrants crossing the U.S.-Mexico border attempting to come to the U.S. in the year ending September 12th have declined, reaching their lowest figures since 1995, which a major additional decline of 54% from October 1st. to November 5th (we should keep in mind that the immigrants traditionally go back to Mexico for the holidays, so we will wait and see what happens in the new year).

In a move that surprised many, President Fox’s administration expropriated 27 of the country’s 59 sugar mills in order to reconstruct and renovate them. Although per Finance Secretary Francisco Gil, the government will re-privatize the entities in 18 months (after 3 billions Pesos injection in the companies), the fact that they were expropriated has caused mixed reaction in the private sector. Some see this as a good step (including Raul Picard, President of the National Manufacturing Industry Chamber in Mexico) on the part of the government in order to finally root out the corrupt practices in the mills.

Microsoft Chief Executive Steve Ballmer has been reported as having pledged $60 billion U.S. dollars over the next 5 years to Mexico President Vicente Fox’s E-Mexico project, using this money to train 20,000 software developers and E-Mexico teachers. The project will aim at connecting 10,000 Mexican communities to the internet.

In the previous article, I reported on foreign financial institutions taking (confirming their intention to take) a position in the top 3 banking concerns in Mexico (Bancomer, Banamex, Banca Serfin). The fourth largest in Mexico, Bancreser, is running low on suitors, since Canada’s Scotiabank-Inverlat pulled out of the auction recently, leaving only the Monterrey (Nuevo Leon, Mexico) based bank Banorte as an interested suitor. The Bank Deposits Protection Fund (IPAB) of Mexico will evaluate Banorte’s bid.

In other news, Maytag appears to have announced its intention to invest $32 million U.S. dollars in a new assembly plant in Mexico (undisclosed location for the plant) (see the section on maquiladores above). Also, a recent edition of Forbes appears to have reported where some of the wealth in Mexico is located, by listing the 5 most wealthiest individuals in Mexico as: Carlos Slim (Telmex-Carso) for $10.8 billion U.S.; Emilio Azcárraga Jean (Televisa) for $3 billion U.S.; Ricardo Salinas Pliego (TV Azteca-Elektra) for $3 billion U.S.; Lorenzo Zambrano (Cemex) $2.9 billion U.S.; and Eugenio Garza Lagüera for 2.5 billion U.S.

In the coming months, there will be additional articles on Mexico and real estate related issued in Mexico, so keep your eyes open. The Arizona School of Real Estate and the author of this article are also offering classes every month on real estate and business issues in Mexico, at their facilities in Scottsdale and Mesa. To get the schedule, please call the school.

Although the information provided in this article is believed to be correct, the reader is to perform his/her full independent investigation before relying upon it.

This article was written by LIC. VERNON PENNER. He is in private practice as an attorney at law licensed exclusively in Mexico; he teaches classes at the Arizona School of Real Estate on real estate and business matters in Mexico and was the Director of the Administrative Actions Division of the Arizona Department of Real Estate for almost 2 years (2000 & 2001). You can reach him at Tel: (623) 242-7442, Fax: (623) 242-7443

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December 2003

New Car Import into Mexico

The office of the Secretary of Tax Administration and Public Loans (Hacienda) published the rules governing the importation of new cars from the US and Canada, which has been approved for January 1st, 2004. One of the guidelines of the rules is that only one new car per year will be allowed per person if one wishes to avoid importation standards and importers registries. As long as the person involved is importing one car and no other merchandise and he/she can proved residence with an official document; he/she can import the car. The rules warn that any car will be considered new if the owner is the first and if it has a manufacturer’s receipt. Source: Diario Ciudad Juarez 

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Reprint 

Jan. 5, 2005, 8:48PM

U.S. case may change business in Mexico

Reuters News Service

MEXICO CITY - "Business as usual" in Mexico can result in dire consequences in the United States, as media tycoon Ricardo Salinas found out the hard way when U.S. regulators filed fraud charges against him this week

The Securities and Exchange Commission accuses Salinas of pocketing $109 million in a debt deal and then engaging in an "elaborate scheme" to cover it up. The charges shocked a country accustomed to a more lax regulatory environment.

Salinas denies the charges. But some analysts say the case could change the way business is done in Mexico, leading to greater transparency and respect for minority shareholders.

"Owners of Mexican companies that are listed in the U.S. have to be looking at this and saying: 'Wow.' It will have an influence," said Jim Harper, a director of research at BCP Securities in Greenwich, Conn.

The SEC has jurisdiction over the case because shares in Salinas-controlled broadcaster TV Azteca are listed on the New York Stock Exchange — meaning they must adhere to the same securities regulations as U.S. companies.

Laws in Mexico are theoretically just as tight. But the Mexican equivalent of the SEC is not even allowed to make its punishments public. Analysts claim that publicly traded companies are rarely sanctioned. Minority shareholders often say their rights are ignored by many Mexican companies, which are controlled by insular dynasties.

"That's the environment that Salinas comes from, a Mexico where businessmen are above the law. What's happening now must be a real shock to him," said a U.S. fund manager who has done business in Mexico for decades

 

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Contribuciones en Español (Articles In Spanish)

 

by Phil Robbins
Arbitraje desde lel Punto de Vista de Los Estados Unidos

ENCUESTA DE DESARROLLO Y USO

DE ARBITRAJE PARA RESOLVER DISPUTAS

PERSONALES EN LOS ESTADOS UNIDOS DE AMERICA

PHILIP A. ROBBINS

Chile

Septiembre 1999

I. DESARROLLO DE ARBITRAJE EN LOS ESTADOS UNIDOS DE AMERICA

A. En los años anteriores, los juzgados se oponian y rehusaban hacer valer los convenios de arbitraje y sus sentencias. Muchos abogados tambien preferían el juzgado y se oponían al arbitraje.

  1.  
    1. La demanda por el aumento en el uso de arbitraje creció debido a muchos factores.
    2. 1. Los juzgados sobresaturados que causaban largas esperas.

      2. El litigio en los juzgados, especialmente con jurado, se convirtió en altamente costoso.

      3. Las partes interesadas querían más control sobre el proceso, incluyendo la selección del árbitro, la fecha y lugar de la audencia, y cual ley sería la aplicable.

      4. Los participantes en el proceso deseaban resolver las disputas confidencialmente.

    3. Las leyes federales y estatales y las decisiones de los juzgados empezaron a reflejar una

Visión más positiva. Y ahora apoyan fuertemente el uso del arbitraje.

II. LEY ACTUAL DE LOS ESTADOS UNIDOS QUE RIGE SOBRE EL ARBITRAJE

  1.  
    1. En el sistema de derecho consuetudinario (common law) de los Estados Unidos, el arbitraje está regido por una combinación de leyes federales y estatales, determinadas por el congreso, por las legislaturas estatales y decisiones de los juzgados federales y estatales.

B. La ley federal fuertemente sostiene el uso de arbitraje en disputas locales e internacionales.

1. El Acta Federal de Arbitraje (Federal Arbitration Act - FAA) tiene control sobre todos los contratos que involucran el comercio interestatal e internacional.

a. El FAA requiere el cumplimiento de los acuerdos para arbitrar y el cumplimiento de las resoluciones, con defensas limitadas.

b. El FAA implementa las Convenciones de Nueva York y Panamá.

    1. Los juzgados federales, incluyendo la Suprema Corte de los Estados Unidos, han apoyado fuertemente el uso de arbitraje.

B. La mayoría de los estados también tienen leyes y decisiones de los juzgados que apoyan el arbitraje.

    1. El Acta Uniforme de Arbitraje o leyes similares han sido adoptadas por muchos estados y requieren el cumplimiento de convenios y resoluciones arbitrales.
    2. El arbitraje es obligatorio en ciertos tipos de casos (especialmente cuando la cantidad en controversia es pequeña), con derecho restringido para apelación a juzgado para resolverse en juicio por un juez o jurado.
    3. El uso de arbitraje u otro "ADR" podrá ser requerido antes de proceder a juicio.

C. La mayoría de los casos pueden ser materia de convenios de arbitraje imponible (exigible), a menos que:

    1. Sean contrarios a la regla u orden público o donde hay ofensas criminales, relaciones domésticas (especialmente disputas que afectan a los menores) o asuntos donde los intereses públicos están involucrados.
    2. Haya una desigualdad clara en el poder de negociar entre las partes del contrato original.
  1. PROCEDIMIENTOS EN EL ARBITRAJE

A. Convenios de Abitraje

    1. El convenio original entre las partes, incluye el acuerdo de arbitraje y cubre todos los asuntos procesales importantes, tales como: la manera de iniciar el arbitraje, selección del árbitro, la ley aplicable, idioma, tiempo, lugar y las reglas de procedimiento para la audencia, y la forma y finalidad de la sentencia.
    2. 2. Las partes podrán adoptar reglas existentes de procedimientos diseñados por varias instituciones. El procedimiento podrá ser regido por la ley cuando no exista un acuerdo.

      B. Seleccion del Arbitro.

      1. Las partes pueden acordar el método de selección, o dejar el mismo a un juzgado o a una institución.

      2. Los árbitros deben ser neutrales y declarar cualquier conflicto de interés que pueda haber, en cuyo caso cualesquiera de las partes pueden oponerse a la selección.

      3. Los árbitros frecuentemente son abogados pero esto no es requisito. Con frecuencia jueces retirados actúan como árbitros. Los árbitros pueden ser escogidos debido a sus conocimientos en la materia del asunto.

      4. Puede haber un solo árbitro o un panel de tres.

      C. Procedimientos Previos a Audiencia.

      1. Se permite algo de descubrimiento (discovery) , pero menos que lo permitido en un litigio en juzgado.

      a. Se tomarán algunos testimonios en forma de preguntas y respuestas.

      b. Se puede requerir la presentacion de documentos.

      2. El árbitro puede requerir informes por escrito y tener juntas preliminares para definir y enfocar los desacuerdos.

      D. Audencias.

      1. Los árbitros fijarán una fecha para audiencia tan pronto como sea posible.

      2. Los testigos pueden ser obligados a asistir y testificar por medio de responder a preguntas (en descubrimiento - discovery) o en una audencia.

      3. Está permitida la contra examinación por los abogados y preguntas hechas por el árbitro.

      4. Pueden ser presentadas declaraciones de argumentos por escrito y argumentos orales.

      E. Sentencia.

      1. La sentencia se dará por escrito, y puede contener las razones del árbitro.

      2. Las sentencias podrán ser obligatorias (con derecho a apelación muy limitado) o no-obligatoria, dependiendo del acuerdo o la ley aplicable.

      IV. ARBITRAJE INTERNACIONAL

      A. Los Estados Unidos de América han adoptado las Convenciones de Nueva York y Panamá (pero no La Ley Modelo UNCITRAL 1985).

      1. Los convenios para arbitrar en los Estados Unidos o en otros paises, serán impuestos y exigidos por los juzgados de los Estados Unidos.

      2.Las sentencias de arbitraje dictadas en los Estados Unidos u otros paises, serán impuestas o exigidas por los juzgados de los Estados Unidos.

      3. Las defensas contra la exigibilidad están limitadas a lo establecido en las Convenciones de Nueva York y Panamá.

      B. El Tratado de Libre Comercio (TLC- NAFTA) requiere que los gobiernos de Canada, México y los Estados Unidos promuevan el uso de "ADR", includyendo arbitraje, para resolver disputas comerciales privadas, y crear un Comité de Consejería para proseguir esta tarea. Su Servidor ha participado en este Comité por varios años y ha participado en numerosos arbitrajes. El uso del arbitraje para resolver disputas comerciales que trascienden las fronteras se ha convertido en muy común.

      C. El Convenio de Libre Comercio de las Américas (CLCA - FTAA) tambien prevee el uso de "ADR".

  1. RAZONES PARA EL USO DE ARBITRAJE

A. Control por las partes, incluyendo el de elegir árbitro, la ley aplicable, el idioma que será usado, el lugar y fecha de la audiencia , y otros aspectos importantes.

B. Rapidez, eficiencia y bajo costo.

C. Confidencialidad.

D. Informalidad y flexibilidad.

E. Imposición forzosa, con los derechos de apelación limitados.

F. Puede resultar menos dañina a futuras relaciones.

VI. HABILIDADES, EDUCACION Y EXPERIENCIA NECESARIAS EN EL ARBITRAJE.

A. Abogados.

1. Educación en la ley substantiva y procesal.

2. Experiencia en obtener y presentar evidencia e interrograr a testigos..

3. Habilidad en la abogacía escrita y oral.

B. Arbitros.

1. Experiencia y entrenamiento en resolver disputas.

2. Actitud justa e imparcial, habilidad para escuchar e inspirar confianza.

3. Habilidad para identificar y analizar puntos de discordia.

4. Conocimiento general de la ley y su procedimiento.

5. Ser experto en la materia específica del área puede ser de mucha ayuda, pero no es esencial.

                                 El entrenamiento para árbitros se provee en las escuelas de derecho y en seminarios de post-graduados y conferencias para abogados y jueces.