Background on the Situation
Trade experts have expressed concern over a recent reform to Campeche’s expropriation law, fearing it strays from Mexico’s commitments under the Tratado entre México, Estados Unidos y Canadá (T-MEC).
Who is Involved?
The Campeche State Congress approved the reform on September 4, 2021, following an initiative by Governor Layda Elena Sansores San Román. This law modifies the Expropriation and Property Rights Limitations Act for Campeche, outlining procedures, modalities, and execution of expropriations, temporary occupations, administrative servitudes, and property limitations within the state’s territory.
Concerns from Businesses
Business leaders are worried that the reform allows the state government to seize private property immediately without a firm resolution or pre-payment of compensation. Moreover, the compensation, determined by decree, can be paid within ten years in annual installments with market interest.
Ambiguities and Lack of Due Process
Experts highlight ambiguities in determining expropriation causes, such as “equitable distribution of accumulated or monopolized wealth advantageously held by one or several individuals, to the detriment of the general public or a particular class.”
The reformed law states that once an interest public declaration is made, the affected party has five business days to defend themselves, with no right to administrative appeals except for amparo lawsuit.
Deviation from Federal Parameters and SCJN Criterions
Critics argue that these expropriation criteria diverge from federal parameters and the criteria set by the Supreme Court of Justice of the Nation (SCJN). SCJN mandates fair, prior, and proportional compensation, effective notification, and robust audience rights. The T-MEC Anexo 14-B offers a detailed interpretation and shared understanding of what constitutes expropriation, whether direct or indirect, outlining its scope and investor protections.
Investor Protections
Among investor protections against potential expropriations are requirements for a public purpose, fair and equitable treatment, non-discrimination circumstances, and payment of compensation or indemnity at the market value. The Campeche expropriation law, however, fails to meet these international standards, according to the experts.
Key Questions and Answers
- What is the concern regarding Campeche’s expropriation law reform? Trade experts worry that the reform deviates from Mexico’s T-MEC commitments and may set a precedent for other states to conduct expropriations without adhering to national judicial standards or respecting international trade commitments.
- Who is Governor Layda Elena Sansores San Román? She is the current Governor of Campeche, a Mexican state in the southeast. Her administration proposed and passed the controversial expropriation law reform.
- What are the investor protections outlined in T-MEC Anexo 14-B? These protections include fair treatment, non-discrimination, and timely compensation at market value for any expropriation, ensuring investors’ rights are upheld.
- Why do experts believe the Campeche law fails to meet international standards? The reformed law lacks clear due process, fair compensation requirements, and adherence to SCJN criterions, which are essential for protecting investors’ rights.
