Breaking developments in Mexico amid COVID-19

As the world continues to deal with the implications and consequences of the evolving COVID-19 (coronavirus) outbreak, during the past few days the Mexican government has adopted key actions that will undoubtedly impact Mexican companies and the performance of contractual and regulatory obligations under Mexican law.

What you need to know

At this time, no sanitary emergency (nationwide or otherwise) has been formally declared in Mexico. Norton Rose Fulbright lawyers are closely monitoring this potential development, to the extent if and when a sanitary emergency is declared, a number of legal obligations and limitations may be triggered (such as a mandatory suspension of employment relationships, and a corresponding obligation for  Mexican employers to pay up to a month of minimum wage per employee).

Earlier this week, the Ministry of Health issued a decree outlining certain actions aimed at mitigating and containing sanitary risks associated with COVID-19 (the Decree). The Decree has been formally sanctioned by the Mexican President.

Although the scope and legal implications of the Decree are not abundantly clear, the Ministry of Health urges private and public parties to immediately adopt social distancing actions (including the suspension of massive events and concentrations of more than 100 persons).

Notably, the Decree also urges those individuals in groups that have been identified as higher-risk to avoid attending public places (including their respective workplaces). These high-risk groups include (i) pregnant women, (ii) individuals older than 65 years, (iii) individuals with disabilities or preexisting chronic medical conditions, and (iv) individuals who for any reason are subject to immune suppression or suffer from a weakened immune system.

The Decree further provides that (i) all high-risk group individuals shall receive a full-paid leave (although in principle, the authorities for the Ministry of Health to issue such a mandate are questionable); (ii) the entities of the Public Administration shall determine essential activities which continuance shall be ensured; and (iii) private business that is “necessary to face the contingency” shall continue operating (the Decree does list pharmacies, hospitals and financial institutions as non-exhaustive examples of such.

Irrespective of the foregoing, the Decree is not a declaration of essential services (much less a prohibition for non-essential services to continue its activities). 

Because there has been no formal declaration of a sanitary emergency and the Decree arguably lacks detail on many matters, it would be reasonable to expect to see supplementary decrees or administrative resolutions to be issued in the next few days.

In the absence of a general sanitary emergency declaration, many governmental offices, agencies and institutions have chosen to issue resolutions suspending or limiting activities, and most importantly, suspending or extending legal terms for obligations, administrative proceedings and resolutions.

Among others, the National Hydrocarbons Commission, the Energy Regulatory Commission, the Federal Economic Competition Commission, the Environmental Agency for the Hydrocarbons Sector and the Intellectual Property Institute, have all issued such resolutions. Many more governmental offices, agencies and institutions are expected to follow in the next few days.

Mexican contract law does recognize principles of force majeure and rebus sic stantibus that may potentially allow a party to suspend or be released from the fulfillment of certain obligations. Obviously, this will need to be reviewed and analyzed on a case-by-case basis.

This update is not intended to provide (nor shall it be construed as) legal advice. Feel free to reach out to Hernán González, Dante Trevedan or your Norton Rose Fulbright contact for additional updates and specific advice on how the COVID-19 outbreak may impact your deal and/or the performance of contractual or regulatory obligations under Mexican law.