OPIS-Mexican collegiate courts have paused several private companies’ injunctions against President Andres Manuel Lopez Obrador’s hydrocarbon reform. Injunction processes will resume once their rights are seen to be harmed once the law is executed. On Thursday, collegiate courts paused five injunctions against the reform, which the industry denounced, that could give the government broad discretion to grant or revoke permits to private companies. Arguments used by courts to pause companies’ injunctions include that the implementation of the reform does not represent any damage on its own, said Bernardo Cortés, founding partner of Mexico City-based legal firm Cortes Quezada Abogados. Once the reform is implemented, the collegiate courts will evaluate if it harms any company operation, added Cortes. A similar case happened in the power sector since collegiate courts lifted suspensions granted by district courts against Lopez Obrador’s Electric Industry Law (LIE) reform. The hydrocarbon reform will be applicable once all the companies’ suspensions previously granted by district courts get resolved, said the lawyer, adding that this process could take over six months. A major concern is that once the government implements the modifications to the law, there will be a wave of injunction requests to be introduced, added Marcial Diaz, director of Mexico-City-based legal firm Lexoil. This legal pause will leave the fuel industry under much uncertainty as it will be vulnerable to government actions that violate the rights and interests of market participants, said Diaz. About 50% of the 128 court injunction requests submitted by Lexoil haven’t been heard yet by district courts, 40% received an injunction, and the collegiate court paused the remaining 10%, he added. The collegiate courts “paused the clock” on the legal processes until the companies’ rights are proved to be harmed by the execution of the law, the sources agreed. “The collegiate courts won’t hear any injunctions requests until the governments violate the due process,” Diaz said. The increasing lack of communication and collaboration from the Mexican government regarding the energy policy results in more companies defending themselves, sources said. A probable reason for pausing companies’ injunctions could be explained by the excess of complaints already introduced in courts, added Cortes. There have been over 14,000 demands introduced in 2021 against the government amendments, including injunctions on all sorts of issues in the telecommunication, electricity and hydrocarbon industries, said Cortes, adding that specialized courts typically handled before the COVID-19 pandemic over 300 cases. Currently, there are over 600 companies that have submitted injunction requests against the hydrocarbon reform alone, according to a Lexoil tally. Other hydrocarbon issues companies seek court protection against are the elimination of Pemex’s asymmetric regulation, changes to the international trade rules and inaction from regulators to approve new permits, said Cortes. It is unlikely that the collegiate court will decide the law until the district court rules all injunctions, said Diaz. An eye in the power market There is a perception that the president is not in a hurry to implement the hydrocarbon reform since his government has already made several amendments to the fuel sector by suspending import permits and storage facilities, added Cortes. The Mexican government has been using administrative tools to block private participation without implementing the reform, he said. “That is why the electric reform was more ambitious than the hydrocarbon,” Cortes said. Lopez Obrador has paid more attention to constitutional modification to the power market since district courts suspended the bill. It is expected that the next week, Lopez Obrador will present the final reform to the power market to the Mexican congress. Unlike the LIE reform, the Supreme Court has not yet accepted a constitutional controversy introduced by the president’s opposition parties to analyze its viability, added Cortes. –Reporting by Karla Omana, komana@opisnet.com; and Daniel Rodriguez, drodriguez@opisnet.com; Editing by Barbara Chuck, bchuck@opisnet.com Copyright, Oil Price Information Service
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