Not all Strange Laws are Unconstitutional: The Case of Fixed Price of Books in Mexico, as Ordered by Law

1 09 2011

Less "FACE" and more "BOOK." Gandhi Bookstore, Mexico.

Librerías Gandhi is a bookstore chain in Mexico, famous for their good service and smart advertising campaigns (as illustrated by the image below). I loved going to their original location in Coyoacán while in law school in Mexico City. Since 2008, Gandhi cannot, by law, offer discounts in the price of most books, or charge more than the price fixed by editors or importers.

Articles 22 and 24 of the Ley de Fomento para la Lectura y el Libro (Law that Promotes Reading and Books) orders editors and importers to set a unique price for each not only acceptable, but mandatory. And sellers cannot charge more for the book, ever. And cannot sell for less either, within the first 18 months of publication. (The law provides for an exception: it is OK to give a discount if the buyer is the government, a public library or an educational institution.)

The rationally behind the law is that if let open to the market forces, supply and demand would only benefit big bookstores—normally found at big cities—in detriment of small towns and small book stores. The ultimate result should be, according to the law, to ease access to book ownership to everybody. None of that has happened so far, as the invisible hand of the market is known for its stubbornness.

COSTCO Mexico also sells books (although it is not its primary business). COSTCO, we all know, bases its sales model in offering discounted prices to their members, and resented the legal restrain on moving down the prices of books sold at their stores. COSTCO MX challenged the law was initiated via an Amparo trial, that was ultimately decided by the Suprema Corte de Justicia de la Nación (SCJN), Mexico’s highest court.

The SCJN ruled today in a divided 6-5 majority decision that a law requiring book editors and importers fixing a unique price for books neither promotes monopolies (which are prohibited by the Constitution) nor violates fundamental rights of commerce and equality, according to a SCJN’s press release. Or read the court transcript.

Weird law. But the issue before the SCJN was whether it promoted a monopoly, and the answer was in the negative. So be known: at least in Mexico, strange ≠ unconstitutional.





Mexico’s Supreme Court: Members of the Military Can Be Tried in Civilian Courts for Crimes that Violate Human Rights of Civilians (Not in Military Court)

12 07 2011

SCJN: OK for Civilian Ct. to Try Members of the Military for Crimes vs. Civilians

The Suprema Corte de Justicia de la Nación (SCJN), Mexico’s highest court, decided today that cases involving violations of human rights of civilians by members of the military can be tried in civilian courts—and not in military courts, as has been the practice until now. Well done, SCJN!

The SCJN specifically stated that the change in judiciary posture was made in execution and in deference to the Inter–American Court of Human Rights (IACHR)’ 2009 recommendation on the case of Mr. Rosendo Radilla. (Mr. Radilla was a local activist in Guerrero on the 1970s. He was arrested at a military checkpoint in 1974 and was never seen again.)

Article 57of the Code of Military Justice indicates on its previous to last paragraph that crimes involving both civilians and members of the military–like the Radilla case, and like the killing of civilians in military checkpoints in 2011, military members should be tried in military court.

On November 29, 2009, the Inter-American Court ordered Mexico to implement Constitutional and legislative reforms in matters of military jurisdiction, including the amendment of the above–mentioned article 57; President Felipe Calderon introduced a bill on the Mexican Senate in October of 2010, to comply with international treaties and the recommendation of the Inter-American Court, but Congress has failed to pass the amendments. The SCJN stood up to the plate to conform with the international tribunal’s decision.

Ministro Jose Ramón Cossío Díaz defined that the heart of the Inter–American Court’s sentence asks that cases of violations of human rights of civilians by members of the military should be tried in civilian–and not military–courts.

The SCJN’s decision is correct at least by 3 reasons:

  1. It reiterates Mexico’s respect for int’l law, int’l human rights, and the weight of sentences by int’l tribunals. This is congruent and consistent with Mexico´s own position with other countries in similar issues, like its stance with the United States’s violation of the Vienna Convention on Consular Relations and of the International Court of Justice judgment regarding 52 Mexican nationals on death row in the US, as exemplified last week before and after the execution of Humberto Leal in Huntsville, TX (violations by geopolitical divisions of a country are imputed to the country itself) (The Washington Post published an editorial urging the US Congress to act on the issue).
  2. It gives transparency to criminal proceedings involving members of the military and civilian victims by taking the cases out of the barracks, and into the judiciary branch.
  3. The resolution hopefully will narrow discretion of the military in its day-to-day operations in civilian life, in the context of the war against organized crime declared by President Calderon.




Service of Process in Mexico: NOT by Certified Mail.

31 05 2011
No Mail

Service of process: NOT by mail in MX

Or as Associate Professor Charles B. Campbell (Faulkner University) says—writes—: doing it No Sirve (literally, “doesn’t work”).

One common daunting legal task for the U.S. practitioner is to have to serve process of a lawsuit in Mexico. The natural temptation for the American lawyer is to try to accomplish it by using certified mail or courier. But that is NOT a valid method for Mexican law purposes.

Mexico and the United States are signatories to the Convention of 15 November 1965 on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters (commonly referred as the Hague Service Convention). This international treaty “allows service of judicial documents from one signatory state to another without use of consular and diplomatic channels,” in words of Wikipedia, but rather through the Central Authority designated by each signatory for that purpose.

The Hague Service Convention does provide for alternative methods for service of legal documents, but Mexico objected to them. Professor Campbell pointed out a mistranslation of the English courtesy copy of Mexico’s objection as the source of confusion for U.S. litigators in his January of 2010 paper “No Sirve: The Invalidity of Service of Process Abroad by Mail or Private Process Server on Parties in Mexico Under the Hague Service Convention.”

This year, Mexico changed  the language of his declaration to make its opposition to the alternative methods clearer. Professor Campbell reported it in a new article entitled “No Sirve Continued: Mexico Modifies Its Declarations to the Hague Service Convention.”

I personally always understood Mexico’s original objection as unequivocally rejecting the usage of alternate methods, but I of course read the Convention text in Spanish-my first language, so the fact actually strengths Professor Campbell’s point.

How to accomplish service of process then, if not by certified mail? Via Mexico’sSecretaría de Relaciones Exteriores (Ministry of Foreign Affairs). The Secretary of State has a link with information on the issue.

And practitioners: if your client was served with process in Mexico not via the central authority, oppose it.

Great articles by professor Campbell. Gracias, Maestro.





Amendments to Increase Competition in Mexico Become Law

11 05 2011
President Calderon signs the amendments to the Competition Law, Federal Penal Code and Tax Code

President Calderon signs the amendments to the Competition Law, Federal Penal Code and Tax Code

Mexico published an amendment to its competition law (Ley de Competencia Económica), the Federal Penal Code (Código Penal Federal) and the Fiscal Code (Código Fiscal de la Federación) that should that will give more tooth to the main regulatory agency, the Comisión Federal de Comptenecia (CFC) and increase penalties for corporations and individuals engaging in monopolistic or anticompetitive practices.

Among other changes, the amendments provide for Federal District and Appeals Courts  specialized in competence and anti-trust issues (article 39). These specialized tribunals are yet to be created, but is a positive step towards perfecting the system.

In recent years, the CFC has struggled to control a giant financial actor of the Mexican economy: Forbe’s purportedly richest man in the world, Carlos Slim and his realm of telecommunication companies: TELMEX, TELCEL and América Móvil SAB.

The Wall Street Journal reported this week what they saw as an unheard of triple challenge to Mr. Slim from the Mexican government:

  1. The Mexican Supreme Court (Suprema Corte de Justicia de la Nación) ruled last week that rulings of the CFC should be obeyed even in an appeal was pending or sub judice.
  2. The CFC fined Slim’s cell carrier in Mexico, TELCEL, with a $1 billion dollars fine.
  3. The final punch came via yesterday’s amendments.

Earlier this year, TELCEL/TELMEX started a press war with TV Azteca and Televisa, Mexico’s biggest television networks.

The modifications on the law seem positive. We will have to wait to see for their implementation and the delicate dance needed to execute with gargantuan actors as those involved in the current challenges to competence in Mexico.





My latest article: NAFTA and You (well, not ALL of you)

29 04 2011


GP Solo, ABA’s Solo and Small Firm Division‘s flagship magazine, published an article I wrote (NAFTA and You) on the opportunities created by the North American Free Trade Agreement (NAFTA) for solo and small firm practitioners. Before NAFTA, midsize and big law firms were almost the only players on the legal service providers arena. Now, solos and small firms have a niche too.

Here is the text of the article:

The North American Free Trade Agreement (NAFTA) is a regional agreement among the governments of Canada, Mexico, and the United States that provides the legal framework to implement a free trade area—one of the biggest in the world by the size of its members’ combined population and gross domestic product—within the territory of the three countries.

NAFTA creates new business opportunities for business people and—directly and indirectly—for the lawyers serving them, including solo and small firm attorneys. Before NAFTA, such legal services were traditionally reserved to big and midsize law firms, but now law firms of all sizes are getting business derived from the Canada–Mexico–United States trade and investment. Because NAFTA has provided new and increased business opportunities to big, medium, and small goods and service traders and investors, it is relevant not only to big and midsize firms, but to small firms and sole practitioners as well that may serve these traders and investors.

Overview of NAFTA

NAFTA entered into force on January 1, 1994, and gradually eliminated most of the tariff and non-tariff barriers to trade among its members, more than tripling cross-border movement of goods and services. Of the three NAFTA countries, Mexico changed the most after signing: Whereas NAFTA merely superseded and expanded the then-in-force United States–Canada Free Trade Agreement (CFTA), it gave Mexico a new partnership with two financial giants. Mexico was coming from a planned economy with a market restricted to imports and foreign investment, and it had begun to transition gradually into an open market economy starting the mid-1980s.

NAFTA is not an economical and political union as the European Union. Each North American country keeps its own currency; the Agreement does not provide for free flow of persons; and there are not trinational representative bodies such as the European Parliament.

The free trade area among Canada, Mexico, and the United States is an example of enhanced competitiveness and openness owing to globalization. Globalization is neither good nor bad, but it is surely inescapable.

Structure of NAFTA

NAFTA covers a variety of areas relevant to international trade and investment in a comprehensive fashion:

  • National treatment and market access for goods/tariff reduction
  • Rules of origin
  • Customs procedures/certification of origin
  • Energy and basic petrochemicals (with heavy reservations by Mexico in exploration, production, and investment on those key areas, in accordance with its constitutionally mandated state monopoly in place after 1938)
  • Agriculture and sanitary and phytosanitary measures
  • Investment (including a dispute-resolution mechanism for claims by investors against member states)
  • Financial services
  • Intellectual property
  • Review and dispute settlement in antidumping and countervailing duty matters
  • NAFTA also includes two side agreements on environmental and labor standards.

What Has NAFTA Done in 17 years?

NAFTA has been a commercial success. According to data from the Office of the U.S. Trade Representative, NAFTA links 444 million people producing $17 trillion worth of goods and services. U.S. goods and services trade with NAFTA totaled $1.1 trillion in 2008 (for more, see www.ustr.gov/trade-agreements/free-trade-agreements/north-american-free-trade-agreement-nafta). Exports totaled $482 billion; imports totaled $596 billion. The U.S. goods and services trade deficit with NAFTA was $114 billion in 2008. U.S. foreign direct investment (FDI) in NAFTA countries was $322.9 billion in 2008; NAFTA countries’ FDI in the United States was $229.8 billion.

NAFTA Downsides?

Some observers love NAFTA, some hate it, but the vast majority are indifferent. NAFTA has been criticized in all three countries of the free trade area; invariably, a particular group in one country will allege that the other two nations are obtaining the benefits of NAFTA while the first country bears the negative effects.

For example, Canadian and U.S. workers protested the migration of manufacturing jobs to Mexico; farmers in Mexico regularly complain about the elimination of agriculture tariffs and diminution of subsidies from the Mexican government; Canadian ecologist groups have denounced threats to the Canadian water supply and ecosystem; U.S. groups have succeeded in blocking access by Mexican trucks to U.S. highways, arguing safety and pollution concerns, openly defying NAFTA provisions.

Some of these complaints reflect the effects of a global economy, not necessarily of NAFTA’s implementation: Agricultural problems in Mexico can very well be linked to imports of agricultural products from other areas of the world (for example, corn and wheat from Africa and Asia); in the case of Canadian and U.S. workers’ complain described above, lost manufactured jobs probably migrated to China—not Mexico.

Critics frequently attack Mexico’s heavy reservations on exploration for, production of, and investment in energy and basic petrochemicals. But Mexico’s constitution explicitly mandates a state monopoly in those areas. The Mexican public is hyper-sensitive to the issue, mixing a complex combination of nationalism, sovereignty, and history; privatizing the sector—or even allowing much-needed private partnerships with state-owned Petróleos Mexicanos (Pemex, Mexico’s oil and gas company) and Comisión Federal de Electricidad (CFE, Mexico’s electric company)—would likely result in controversy and come with a high electoral cost to any Mexican politician proposing such measures.

Beyond its critics and shortcomings, NAFTA’s success should be considered in light of its purposes as stated in Article 102: NAFTA has succeeded in increasing commercial trade among its members. It is not a deeper union or the remedy for all inequities.

Current State of NAFTA

The level of trade and investment among Canada, Mexico, and the United States follows the economic mood of the countries—NAFTA is by no means immune to crisis and recession. Nowadays the tide is low, as are the economies of North America, but no doubt it will bounce back in sync with the financial indicators of its members, as it has done in the past.

One topic deliberately left out from NAFTA is the free flow of people among the free trade area. Mexico is very different in composition than the other two NAFTA countries; in my opinion, Canada and the United States are unwilling—at least at this point—to draft a modification to the Agreement to provide for open borders within the free trade area.

Likewise, the issue of Mexico’s position on energy and basic petrochemicals is probably going to remain as it is, until the Mexican Constitution is amended to allow private production and investment.

NAFTA Opportunities for Solos and Small Firms

Before NAFTA, trade and investment among Canada, Mexico, and the United States was conducted mostly by big corporations. Generally, big law firms cater to such corporations, and consequently smaller firms and sole practitioners were not getting much of the legal work derived from international business among North Americans.

After NAFTA, more mid- and small-size Canadian, Mexican, and American players began to trade and invest in the region. Solos and small law firms frequently represent such players, either for inbound or outbound transactions or for dispute resolution; their participation as counsel has grown accordingly.

Some NAFTA areas have a direct impact on the practice of law in North America, whereas some others have an indirect impact.

Direct Impact

Intellectual property. NAFTA expanded the protection of copyright, trademarks, patents, and trade secrets afforded by Mexico before 1994. NAFTA members agreed to comply with the Geneva Convention, Berne Convention, Paris Convention, and UPOV Convention. This was an important development for Mexico, which previously had not been on par with the United States or Canada in its protection of intellectual property.

Immigration law. NAFTA provides for temporary entry to business persons of one of its member states seeking to engage in a business activity in one of the two other member states in a profession set out in one of the NAFTA Appendixes. The Unites States created visa designation TN specifically to allow certain Canadian and Mexican professionals to enter temporarily to work in the United States for a U.S. enterprise or entity; similarly, Canada issues NAFTA work permits to Mexicans and U.S. citizens seeking to work temporarily in Canada.

Foreign investment. Chapter 11 provides for a series of principles to investors: most-favored-nation treatment, national treatment, and minimum standard of treatment according to international law. But Chapter 11 also sets up a settlement mechanism via arbitration for disputes among private investors from different NAFTA countries.

Indirect Impact

Franchises. U.S. and Canadian franchises in Mexico have multiplied since NAFTA. Likewise—although in smaller number—Mexican franchises have also ventured into U.S. and Canadian territory, mainly to cater to the Latino population there. Franchise law will likely continue being an area positively impacted by the free trade agreement.

Maquiladoras. Many American and Canadian companies decide to assemble and manufacture goods in Mexico under a maquiladora program. A maquiladora is an operation for the production of goods in Mexico where raw materials and equipment is temporary imported to Mexico for subsequent export to foreign markets—mainly the United States. The origin of the word comes from the Spanish word maquila, which was the small portion of wheat, grain, or oil kept by millers for processing grain.

U.S. exports. In 2010 the federal government of the United States launched the National Export Initiative with the goal of doubling exports within the next two years. It is likely that a significant part of the added export will land in Canada or Mexico. If that happens, legal work opportunities for U.S. lawyers should increase as well.

A Special Note on Chapter 11: Investment

Before NAFTA, investment among the three North American nations was dealt with via bilateral investment treaties (BITs). NAFTA addressed this issue directly in Chapter 11.

The dispute resolution mechanism for investment claims, noted above, is probably the most innovative feature of NAFTA; it gives investors from Canada, Mexico, or the United States an opportunity to arbitrate their claims under NAFTA directly, without the intervention of the national government of the investor. This direct access to arbitration tribunals have allowed creativeness on the part of plaintiffs, many of whom have claimed breach of fair and equitable treatment under international law by the host country against the foreign investor. For example, in Loewen Group v. United States (June 26, 2003), a Canadian funeral conglomerate operating in the United States claimed such a breach by a Mississippi state court, imputed to the U.S. federal government. The strategy has produced diverse results.

This settlement mechanism has its share of critics: some take issue with the alleged lack of transparency in the dispute-resolution process for investors’ claims—even though the NAFTA countries have agreed since July 31, 2001, to make available to the public all documents submitted to, or issued by, a Chapter 11 tribunal. The critique would be more accurately aimed at arbitration proceedings outside NAFTA, where secrecy is the norm.

Critics also emphasize the absence of an institution within the NAFTA framework to administer Chapter 11 arbitrations and to solve the problems arising from those proceedings—but ad hoc arbitration proceedings (those administered outside the traditional arbitration institutions) also offer their own advantages, and all three NAFTA members would honor an arbitral award emanated from a Chapter 11 arbitration tribunal.

Finally, some others complain that, by consenting to arbitral tribunals, Canada, Mexico, and the United States have diminished their sovereignty—yet consent in advance to the submission of a claim to arbitration (NAFTA Article 1122.1) was done exercising that sovereignty, and it benefits investors from each NAFTA member by granting a clear path for access to justice in a speedy and relatively inexpensively fashion; further, sovereignty cannot be understood as an absolute value but in a global context, where states must interact and cooperate.

Conclusion

NAFTA created and continues to create professional opportunities to solos and small law firms representing mid- and small-size Canadian, Mexican, and American traders and investors in North America, both for inbound or outbound transactions and for dispute resolution. These opportunities will continue growing in the same measure that the economies of the NAFTA countries recoup from the recent economic downturn.

Intellectual property, immigration, foreign investment, international trade, franchising, maquiladoras, and dispute resolution are areas impacted by NAFTA.

The burden is on us, solos and small firm practitioners, to be aware of these opportunities to better serve our clients and to expand our practices.

Resources

  • NAFTAClaims (www.naftaclaims.com): A website with information on all reported investor-state NAFTA disputes, including legal documents.
  • NAFTA Research Guide by Duke Law (www.law.duke.edu/lib/researchguides/nafta): A good website with links to the text of the agreement, background information, dispute resolution, legislation and legislative history, and internet sources.
  • NAFTA Resources at the University of Texas at Austin (lanic.utexas.edu/la/mexico/nafta/index.html): This site includes documents and publications as well as academic and trade resources.
  • NAFTA Secretariat (www.nafta-sec-alena.org). The official web page of the Secretariat of NAFTA, an organism that administers the mechanisms specified under NAFTA to resolve trade disputes among national industries and/or governments of the free trade area.
  • Understanding NAFTA (www.naftaworks.org). A website in plain English explaining NAFTA, its benefits and downsides, and pending issues.

Read the article at http://jurismex.com/NAFTAandYOU.pdf





SCJN Says No to Amparo Trial as Avenue to Challenge Constitutional Amendments

30 03 2011

The Suprema Corte de Justicia de la Nacion, Mexico's Highest Court, in Plenary Session

Amendments to the Constitución Política de los Estados Unidos Mexicanos (Political Constitution of the Mexican United States, MXConst) cannot be challenged through Amparo trials, the Suprema Corte de Justicia de la Nación (SCJN), Mexico’s highest court, ruled last March 28th.

Last Monday’s SCJN session was a continuation of their 01.31.11 meeting that ended in a 5-5 vote draw. Ministro Jorge Mario Pardo Rebolledo, the Court’s newest justice, had the uneasy task of starting his rookie year tipping the scale (although at the end there were 7 votes for the proposed denial, as the transcript of the session indicates).

The case at hand was a revision by the SCJN of an Amparo trial that had been dismissed by a lower federal court where private citizens lead by Federico Reyes Heroles, Head of Transparencia Mexicana, Mexico´s Chapter of Transparency International, argued that a 1997 constitutional reform prohibiting access to private individuals to buy electoral publicity, which has now to be bought by political parties only through Mexico’s Instituto Federal Electoral (Federal Electoral Institute, IFE) violated the fundamental right to free [political] speech .

Jorge Castañeda (fmr. Minister of Foreign Affairs); attorney Alonso Aguilar Zinser and Federico Reyes Heroles (president of Transparencia Mexicana) at the Supreme Court

An Amparo trial (as Wikipedia explains it) is a Mexican federal trial where a complainant alleges violation of her constitutional rights by an authority. Almost any Mexican authority can be sued via Amparo. Even Congress. (For more on Amparo trial, see my brief PowerPoint Presentation.)

The issue was whether Amparo trial was the proper venue to challenge the constitutionality of a constitutional amendment. In other words: could Federal courts entertain a trial where a modification to the MXConst itself was questioned.

The SCJN sided with the lower court, saying that the Amparo trial is not the proper venue, mainly because Amparo sentences have no universal, erga omnes effects, but only benefit the plaintiffs that brought it (this characteristic is known as the relativity principle or Otero Formula, first proposed by 19-Century jurist Mariano Otero, the Father of the Amparo trial (read a good article about it by Mexican professor Juan Real Ledesma).

Jorge Castañeda, former Minister of Foreign Affairs of Mexico and one of the plaintiffs in the original case, was understandably disappointed. Mexicans have no right to hire electoral publicity, and since the new rule is part of the Constitution, have no means of challenging it either. On a broader level, individuals have no right either to challenge any amendment to the Constitution, even if they contradict or nullify fundamental rights within it (as the Court suggested in a non–binding jurisprudence precedent of 2002 on the issue of the crime of illicit enrichment). The SCJN did not ruled on the substance of the Amparo complaint.

Ministro José Ramón Cossío Díaz voted for allowing the review of the case via Amparo, and announced a dissenting opinion (or as is said in Mexico, a voto particular); I look forward to reading the opinion of the SCJN most advanced scholar (before joining the Court, he was the dean of the school of law of ITAM).





A Paper on Mex.Imm.Law by 2 NY Professors

21 03 2011
Mexico Institute

From the Mexico Institute at the Wilson Center's webpage

This month, two professors at the University at Albany-SUNY published a paper analyzing Mexico’s immigration laws, with the title “Understanding Mexico’s Changing Immigration Laws.” The research was sponsored by the Mexico Institute of the Wilson Center,

The piece is highly critical of Mexico’s approach to immigration in its own territory, vis-à-vis its posture and demands towards the United States regarding how Mexican nationals generally, and those without legal status particularly, are treated in the U.S. It also details the effect that such approach had on the U.S. comprehensive immigration reform effort.

The authors highlight what they perceive as shortcomings of the  Ley General de Población (General Law of Population) of 1974 and the Instituto Nacional de Migración (Nat’l Immigration Institute, INM).

The Mexican government and Congress are currently working on a comprehensive immigration reform in Mexico. The Cámara de Senadores (Mexican Senate) should eventually vote on a bill proposal introduced by 10 Senators from all 3 main political parties to bring Mexican immigration law to day.

Beyond that effort, President Calderón enacted a Law for Refugees last January, and the INM has a new Manual since last year that better approaches immigration to Mexico. Both efforts are described in the Wilson Center paper. Also, the INM’s webpage is more transparent, relevant information is easily available, and pending cases can be checked online.

Understanding Mexico’s Changing Immigration Laws” provides facts and opinions, but neither are too sophisticated in legal analysis. I would have liked to see a more in-depth study of the elements and ingredients of the legal framework itself, but maybe it is just me. As an Assistant Chief Counsel of the U.S. Immigration and Custom Enforcement agency told me in a conference for a bond redetermination hearing in immigration proceedings with the immigration court told me after hearing my “wishes” in the particular case: and I wish I had another house and could retire. All in due course, I replied.

Hat tip: jjr, again.