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GC Alert | Definitive suspensions granted to the Hydrocarbons Act

05/19/2021

Legal News / Updates

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On May 4th, 2021, the Decree that amends and adds various provisions to the Hydrocarbons Act (the “Bill”), derived from an initiative filed by the Mexican President on March 26th, 2021, was published in the Official Gazette (“Diario Oficial de la Federación”), as we previously reported in GC news. The Bill entered into force May 5th, 2021.

Several permit holders as defined by the Hydrocarbons Act filed indirect amparos claims as they consider the Bill to be unconstitutional.

On May 17th, 2020, certain resolutions of the First and Second District Judges in Administrative matters specialized in Economic Competition, Broadcasting and Telecommunications were published. In these, Judges granted definitive injunctions to suspend the Bill effects. These suspensions were granted with general effects against some of the articles of the Bill which is an exception to the general amparo rule.

In this regard, the First Judge granted the definitive suspension with broader general effects, since it included articles 51 (requirement related to minimum inventory), 57 (suspension of permits), 59 BIS (suspension procedure), Fourth Transitory (revoking for failing to comply with  minimum storage requirements) and Sixth Transitory (revoking in case of underperformance of any provisions related to the Hydrocarbons Act). The Second Judge only granted a general effect  suspension insofar article 57 and the Fourth and Sixth Transitory articles.

The above means the only provisions that continue to apply are those related to (i) product smuggling , including recidivism regarding the modification of facilities without prior notice, and non-compliance with the measurement of quantity and quality and (ii) in relation to permit assignment , substitution of negative ficta (in absence of a response, the request shall be understood to be denied) instead of affirmative ficta (in  absence of a response, the request shall be understood as granted).

Although the provisional and definitive injunctions to suspend the enactment of the Bill have been granted with general effects, it is imminent that the Ministry of Energy will file resources to challenge them. There are judicial precedents in which Specialized Collegiate Courts have considered this type of precautionary measures should not have general effects. Therefore, to guarantee that a permit holder will not be affected by the Bill, such company must file its own amparo.

Those affected can challenge the Bill via indirect amparo. The statute of limitation to file such claim expires on June 16th and/or 15 business days upon the first act that materializes the application of the Bill. In addition, it is advisable to analyze investment protection mechanisms in terms of existing bilateral and multilateral treaties.

At Gonzalez Calvillo we are prepared to provide the advice required in relation to this Bill. We remain available for any questions or clarifications regarding the scope of this.

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