Karime

Statute of limitations for corporate actions

In Mexico, legal actions against partners or shareholders may be filed for different situations, such as breach of obligations, conflicts of interest, abuse of power, among others. The legal basis for such actions is based on the provisions of the Civil Code, the Commercial Code and the General Law of Commercial Companies.

First of all, it is important to note that legal actions may be brought by both the corporation and the other affected partners or shareholders, i.e., the corporation may bring liability actions against partners or shareholders who have incurred in acts contrary to the law or the corporate bylaws, and the other partners or shareholders may bring liability actions against those who have caused damage to the corporation or to the other partners.

Regarding the statute of limitations for these actions, Article 1045 of the Code of Commerce states that the actions derived from rights and obligations of the partners among themselves by reason of the corporation will be barred in five years. However, it is important to take into account that there are shorter terms for the exercise of certain actions, such as, for example, the term of one year to exercise liability actions against the administrators of the company.

In this sense, we can mention that the aforementioned term is interrupted by the filing of a lawsuit or by any other act that implies the acknowledgment of the debt or liability.

Likewise, it should be noted that those interested in exercising a legal action should consider that the statute of limitations is fatal, and there will be no room for the restitution of the same, for which reason, it is essential to consult a specialized attorney to obtain specific legal advice on each case.

by Karime

Can moral damages be quantified?

SCJN. Thesis number 1a./J. 109/2023 (11a.). NON-MATERIAL DAMAGE. GENERAL GUIDELINES FOR ITS QUANTIFICATION.

The First Chamber of the Supreme Court of Justice of the Nation (SCJN) in resolving the direct amparo in review 2558/2021, analyzed the issue of moral damages, and established the guidelines to be followed to quantify it.

The origin of this matter arose from a strict liability lawsuit filed by a person after the death of his son as a result of an electric shock. In the first instance, the defendant and the insurer were acquitted; subsequently, on appeal, the Unitary Circuit Court declared that the indemnity for pecuniary damages was inadmissible; however, it sentenced the defendants for pain and suffering damages, establishing their quantification in correlation with the amount that would have corresponded to the material damage.

Finally, the plaintiff filed an amparo proceeding, which was denied, since the Collegiate Circuit Court considered that the way in which the moral damages were quantified was correct. In disagreement with this decision, an appeal for review was filed.

It should be noted that there is a complexity when quantifying moral damages due to the fact that it is considered "an injury to a non-patrimonial (or spiritual) right or interest that is a presupposition of a subjective right".

In this sense and according to the provisions of article 1916 of the Federal Civil Code (CCF), the SCJN detailed several aspects that serve as a guide when quantifying the moral damage.

1. Full reparation of moral damages must be sought at all times. Limits or legal ceilings previously established or base parameters without the possibility of modification or casuistic assessment by the judge are not accepted.

2. Compensation must be comprehensive, equitable, fair and expeditious.

3. Do not condition or limit the moral damage to the compensation for material damage, since each one responds to its own particularities. Overlapping or duplication of compensation for each of them should be avoided.

4. Do not confuse the assessment of the existence of moral damages with the quantification of the corresponding compensation; they are conceptually different operations.

5. The elements of quantification provided by law are merely indicative factors, they are a guide for the actions of the judges, based on the function and purpose of the right to compensation for pain and suffering.

. The applicability of the elements of quantification of an indemnity must be distinguished in a case of subjective civil liability from one of strict civil liability.

7. The judge must respect and protect the right to legal equality.

8. The principle of not overcompensating the victim or unjustified enrichment should be safeguarded.

9. In specific and necessary cases to reduce the compensation of moral damages, this situation will be exceptional and will occur when in the trial it is demonstrated that the compensation that proceeds will generate an oppressive burden for the responsible party in light of the economic situation of the parties; in particular, in order to protect the right to the minimum vital.

For the application of the provision in these cases, it is necessary to differentiate with the legal entities, specifically if it is an insurance company, since they cannot demand this reduction as far as their scope is concerned since, contractually, they must respond for the total of the insured amount.

by Karime

President of the SCJN: The implementation of the new labor justice system urgently needs to be finalized

Norma Lucía Piña, President of the Federal Judiciary Council (CJF) and of the Supreme Court of Justice of the Nation (SCJN), stated that the constitutional reform in labor matters moved towards a new way of analyzing the relationship between workers, employers and unions, which has implied radical transformations in the administration of justice by the Federal Judicial Branch (PJF) and local judicial bodies.

In this sense, the Minister assured that in order to achieve the proper functioning of the labor justice system, the professionalization and constant training of those who work in the PJF is essential.

Likewise, she asserted that it is necessary to concretize the stages for the implementation of the reform, betting on more jurisdictional bodies, judges, operative personnel, experts and legal advisors that allow the proper functioning of the labor justice system.

He emphasized that the reform established conciliation as a mandatory pre-judicial administrative instance and that the Mexican State, being part of the Treaty between Mexico, the United States and Canada (T-MEC), is obliged to guarantee access to all persons, for the application of labor laws and to provide the necessary resources to continue advancing in the international commitments acquired in this matter.

It is important to highlight that, in the new justice system, it was proposed to work in two stages -one of conciliation, the other of trial- with the objective of reducing the time to resolve conflicts to a maximum of eight months. The first stage of conciliation is a pre-judicial requirement and has a limit of 45 days. The second stage will take place when the conciliation fails and the "No Conciliation" act is issued; subsequently, the worker may go before the competent Federal or Local Court, which is supposed to resolve the dispute within a term not exceeding six months.

Likewise, it is pertinent to point out that, according to figures of the current administration, the new Labor Justice model has allowed four out of every five labor conflicts to be resolved through Conciliation, and that of these 78% are concluded within 25 days after the request is made before the Federal Center of Conciliation and Labor Registry. In practice, we can see that the conciliations are inclined to favor the workers, forgetting the workers' interests.

For his part, Héctor Arturo Mercado López, Magistrate of the First Collegiate Tribunal in Labor Matters of Mexico City, considered that the current reform "was made by forced marches", and affirmed that the country's labor justice system must be evaluated.

In the face of the polarized opinions generated by the reform to the new labor justice system, the challenges are still present, since there are many companies and unions that are still not clear about the new labor regulations, since it implies not only changing rules and processes, but also a true transformation of the labor culture where respect for the human rights of the parties and a healthy balance between the factors of production prevail.

For any questions regarding this topic, please contact our experts in the labor area:

Esther Uribe Soria

euribe@muclaw.mx

by Karime

Mexico: Global investment focus

Mergers and acquisitions increase due to the rise of nearshoring

With the increase of the so-called nearshoring in Mexico, the country has become one of the main investment focuses worldwide, thanks to the production costs and the logistic facility due to its proximity to the United States; an example of this is the manufacturing sector, which grew 1.7% in January 2023, compared to the same period in 2022, according to the National Institute of Statistics and Geography (Inegi).

This has led to an economic growth of 3% for the whole year, which has been reflected in the increase of Mergers and Acquisitions (M&A) throughout the country. This increase reached a value of 7.8 billion dollars in the first four months of 2023, an increase of 189% over the 2.7 billion dollars of the same period last year.

Thus, and according to the firm that tracks mergers and acquisitions, Private Equity & Venture Capital, as well as comprehensive corporate information in Latin America and Ibero-America, Mexico ranked second in the M&A business in the region, only surpassed by Brazil.

The report, which also presented a quarterly analysis of the Mexican panorama in which the market dynamics can be evaluated, gathered a complete and correlational study of the most active economic sectors, as well as the most outstanding transactions, which allowed concluding that, since January 2022, U.S. companies were the ones that carried out the largest number of acquisitions with Mexican companies.

It is important to highlight that during the first four months of the year, the sectors that have presented an increase in M&A activities of Mexican companies abroad are: industrial, with 43.8%; information technology (IT), with 12.5%; financial, with 12.5%; consumer, with 12.5%; and telecommunications, with 6.3%.

In the current situation, transactions and partnerships must be strategic and meticulously chosen to represent a clear benefit for both parties, since all procedures related to nearshoring also present legal, cultural and operational challenges and considerations that must be carefully evaluated in the M&A process. Furthermore, decision evaluated in the M&A process. Furthermore, decision making in this area must be based on a thorough analysis of market conditions, strategic objectives and the financial viability of the proposed operations.

For this reason, it is essential to have a comprehensive and specialized legal team.

For more information, please contact us:

Bernardo Llaca Martínez

bllaca@muclaw.mx

Luis Cuesta Salces

lcuesta@muclaw.mx

dcanals@muclaw.mx

Diego Canals López Velarde

by Karime