MEXICO Law and Practice Contributed by: Federico Ruanova Guinea and Isabella Guzman, Baker McKenzie
case of officers, legal representatives, managers or employees. Under the Liability Law, directors and other officers may be ordered to pay fines of up to 50,000 times the Mexican Measurement and Actualisation Unit (UMA) for each violation (equivalent to around USD271,000). The UMA is a measurement used to calculate fines, penalties and other obligations owed to the govern- ment and is updated annually. In addition to fines, they may face criminal liability if they wilfully caused contamination or were grossly negligent. Criminal law also contemplates the possibility of directly penalising directors, officers or any person that ordered an action that caused environmental damage. As mentioned in 5.1 Key Types of Liability , there is also the possibility that a criminal court may order the dissolution of a company if it has been proven that its directors, employees or legal representatives commit- ted serious crimes against the environment. Individuals or companies may purchase environmen- tal liability insurance or in some cases may acquire surety bonds to cover against environmental damage that may be caused due to breaching a legal obliga- tion or an environmental permit. In the case of large projects, such as petrochemical installations, infrastructure projects, power plants or industrial facilities that may be deemed “high-risk”, regulators will order the project owners or develop- ers to purchase insurance to cover any type of envi- ronmental damage that may be caused. If an entity has caused contamination, penalties against it may be reduced if it is able to show that it has acquired adequate insurance. 8. Insurance 8.1 Environmental Insurance
or for breaching environmental law if they have been instructed to carry out actions that are detrimental to the environment or public health. Financial institutions or lenders could be ordered to carry out site remedia- tion activities if they own or occupy a contaminated site as a result of a financial arrangement, lien or other type of agreement. Also, if a financial institution holds title over a contami- nated site as a result of a mortgage guarantee or any other type of guarantee, it may be liable for carrying out remediation activities because of the strict liability provisions established by the Waste Law. 9.2 Lender Protection Lenders may legally protect themselves by incorporat- ing adequate indemnity and release language in credit or loan agreements, making the debtor or actual occu- pier of a site liable for carrying out site remediation or compensation activities and securing a release from any and all liability associated with contamination or environmental damage. In Mexico, financial institutions are not legally required to adopt the “Equator Principles” or ESG policies. However, many of these institutions consider such regulations as a good practice when authorising dif- ferent transactions. Among other things, the Equator Principles require financial institutions to comply with local environmental regulations within their activities. Any action or omission that causes environmental damage may generate civil liability. The Liability Law allows any person the right to file a civil action against an individual or entity that causes environmental dam- age. This action may be brought by an individual or by a group of 15 or more individuals through a collec- tive action. A judge must “qualify” the complaint to make sure that the group has proper standing or, if it is being represented by a non-governmental organisa- tion (NGO), that it has been formed and registered to address environmental protection matters. 10. Civil Liability 10.1 Civil Claims
9. Lender Liability 9.1 Financial Institutions/Lenders
Employees, directors or representatives of financial institutions may be liable for environmental damage
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