Although it has been overshadowed by the discussion of the initiative that seeks to modify the powers of the Electoral Tribunal and events such as the death of 40 foreigners in an immigration station in Ciudad Juárez, the initiative on administrative matters sent to the Congress of the Union at the end of March by President Andrés Manuel López Obrador set off alarm bells among businessmen and law firms, due to the delicate situation of defenselessness that would place private individuals who do business with the government.
These are the most relevant points of the initiative and the consequences they could have on public life, according to different experts consulted by El Economista.
1. Use of damage judgments as a rule and not exceptionally
In accordance with what is stated in the initiative, it is intended to avoid acts of corruption through the use of two figures: the lesividad trial and the annulment procedure.
Specifically, the initiative proposes to reform both the Law of Administrative Litigation Procedure, as well as the Organic Law of the Federal Court of Administrative Justice to establish the definition of the lesividad trial.
This type of trial aims, says the initiative, to correct an illegal action that has been configured by means of an act or administrative resolution favorable to an individual.
In this regard, Adolfo Athié Cervantes, a partner at Basham, Ringe y Correa, points out that the intention is to remove the extraordinary character of the damages lawsuit and give it greater strength.
For her part, lawyer Diana Rangel León, from the Basham, Ringe y Correa law firm, stresses that this trial already exists in our legislation. It is promoted by the authorities to annul an act or authorization issued by the State, when they consider that it was issued contrary to the laws; but it is very infrequent because its provenance is limited to cases where it is proven that the act is clearly contrary to the law, and it can be promoted up to five years after it was issued or it became known.
With the proposed modifications, it is indicated that the judgment of harm would now be appropriate just by indicating that the act causes damage to the State, or that the public interest is harmed with it, he highlights.
Adolfo Athié Cervantes stresses that what they are doing with the initiative in question is treating everything as cases of harm, that is, they want to make the exception the rule and the rule to make the exception.
It is trying to put aside the rule of law and act as a government according to the needs of the moment or with the opinion of the current president, he explains.
2. Charges and risks, for the individual; the benefits for the government
In order to prevent acts that could cause damage to the treasury, the initiative intends to make it possible to resort to the revocation of administrative acts due to supervening events that affect the public, general or social interest, by “reinforcing the contracting of goods and services at a national and international level through the mandatory inclusion of the so-called exorbitant clause”, which “grants prerogatives to the public administration over individuals, so that the State can terminate the legal relationship in advance and unilaterally when it is in the public, general or social interest” .
Adolfo Athié Cervantes explains that a supervening fact is one that the contracting parties were unaware of, or did not exist and occurs after the signing of the contract and when it occurs it modifies the terms of the contract because if it had been known at the time of the negotiation it would have been different.
Even in the federal civil code there is an article that establishes that neither party can unilaterally determine the nullity of the contract.
For the renowned lawyer, in some way, what is proposed in the initiative of President López Obrador is that all the burdens will be on the individual and all the benefits on the State. This situation, from the civil point of view, is not allowed. Null clauses are considered because there is an imbalance in the contractual relationship.
The good news, the lawyer points out, is that, if these reforms are approved, this particular situation can be challenged via an amparo trial and in the end the Supreme Court of Justice of the Nation will have to determine if it is constitutional or not and if they attempt or not against the principle of equality and legal certainty in contracts.
In his opinion, it seems that the intention is to limit the compensation that the government would have to pay in case of breach of contract.
However, it drew attention that currently the legal framework establishes that the penalties cannot be greater than the value of the business that was intended to be carried out at the time of signing a contract.
He says that if that part of the initiative is approved as it is proposed, it would generate legal uncertainty. “Who is going to invest in such a relationship?” he wondered.
In turn, the lawyer Mario Mejía Kargl emphasizes that the change is the obligation to quote the clause in the contract, “what would be applicable whether or not it was cited in the contract.” He believes that this early termination could be applied in conjunction with the reforms that provide limitations on the payment of damages.
It stresses that the possibility is provided for the administrative authorities to declare an administrative act invalid, after guaranteeing a hearing, which is contemplated in the current legal framework, but the main difference is that, with the initiative, it is intended that the possibility of declaration of nullity of an act by the authority does not depend on its regulation in other laws unrelated to the Federal Law of Administrative Procedure, but is applicable in any matter in which this law is mandatory.
In addition, unlike current regulations, the legal act declared null and void will not be rectifiable.
3. Limits to compensation
In terms of compensation, it is proposed to modify the General Law of National Assets and the Federal Law of Patrimonial Responsibility of the State; the Expropriation Law and the federal Law of Administrative Procedure in order to establish limits to the amounts of compensation.
In this regard, the lawyer Mario Mejía Kargl points out that it is foreseen as an addition in the Federal Administrative Procedure Law (except for the cases provided for in other laws) that compensation for damages or losses will not proceed when certain situations are met, but in reality the initiative of The reform translates into protection for the State so as not to make compensation in certain cases that are generic and subjective. In addition, it should not be forgotten that, although it is indicated that in the case of claims for payments derived from the irregular administrative activity of the State, the procedure will be followed in terms of the Federal Law on State Patrimonial Responsibility, the same initiative foresees as a reform to the latter law, the elimination of the definition of irregular activity of the State, which leaves it in the hands of the Executive Power (and finally in the jurisdictional bodies), to determine what irregular activity is.
In this sense, the lawyer Diana Rangel León draws attention to the fact that there are two points in the initiative in which it is intended to bypass international treaties. One is in the expropriation law, it is intended to put into law that international treaties do not apply for the purposes of expropriating a property.
The same occurs with the intention of changes to the National Assets Law, either through the figure of expropriation or through the figure of recovery of a national asset.
The serious thing about the initiative in question is that it is intended not to follow legal procedures or not comply with international criteria.
This would mean that the State would have the possibility of recovering an asset without carrying out the legal procedure. In addition, it would be the government who would define what is of public interest, in an emergency, since these are terms that are very subjective.
4. International market without exhausting options in the national market
On the other hand, it is proposed to reform the Law on Acquisitions, Leases and Services of the Public Sector, with the purpose that goods can be acquired in international public bidding, “without exhausting the national public bidding when market research shows that they can be obtained better conditions of price, quantity and quality”.
The lawyer Mario Mejía Kargl points out that in terms of expropriation, the initiative proposes to eliminate the second paragraph of article 21 of the current Law that establishes that “the application of this Law will be understood without prejudice to the provisions of international treaties that Mexico is party and, where appropriate, in the arbitration agreements that are concluded”. That means, he points out, that it eliminates the application of the treaties, regardless of their possible unconstitutionality, being interpretable if this elimination actually affects or not the provisions of the treaties.
