JULY 2010 EDITION: Business & Politics Outlook
Mexico’s Supreme Court Denies the Mexican Electrician Union’s Amparo Constitutional Lawsuit and Upholds the Dissolution of Compañía de Luz y Fuerza del Centro
President Felipe Calderon’s administration ordered, in a Decree dated October 10, 2009, the dissolution of the state-owned Compañía de Luz y Fuerza del Centro (LFC), which provided electric power to Mexico City and various states in central Mexico. The Mexican Electrician Union (SME) adamantly opposed the dissolution and filed an amparo constitutional lawsuit before a Mexican federal court, which was finally decided by Mexico’s Supreme Court. The SME exhausted all of its available legal remedies to challenge the Presidential Decree, dissolving LFC, as well as the lay-off of all of its employees. The key issue in such amparo lawsuit was whether Mexico’s President has the authority to order the dissolution of a company such as LFC. The SME argued that the exclusive authority to issue such an order lies in Mexico’s Federal Congress. Nevertheless, the Justices of Mexico’s Supreme Court voted unanimously to uphold the president’s authority to make such decisions. The Justice drafting the opinion, Juan Silva Meza, stated that Mexico’s Congress delegated to the president the authority to dissolve such company. The Mexico Supreme Court’s decision focused on the Federal Law of State Owned Entities, which allows the dissolution of such state owned entities when they cease to meet the purposes for which they were formed or when such purposes are no longer financially feasible. Mexico’s Supreme Court held that the order did not violate the SME’s freedom nor affect its right to a prior hearing, as alleged by SME employees, who claimed that the President’s decision aimed at eliminating their union and proceeded without giving SME employees an opportunity to be heard. This decision by Mexico’s Supreme Court paves the way to conclusively end the conflict that arose several months ago as a result of SME’s political activism. The LCF employees that have not colleted their severance payments from the company will have to do so in accordance with the applicable law.