Orlando Cabrera
Mexico as one of the heirs of the civil law tradition, instituted by the Spanish Kingdom, and thereafter procured by the scholars of the free nation, sits down at the table of the Latin American brotherhood of “state contracts” (contratos administrativos) that are subject to a public law regime (administrative law) utterly distinct from contracts executed between private individuals (private law either civil or commercial law).
This subject has been traditionally studied by Administrative Law. Academics have identified certain characteristics of this type of contracts. Firstly, they constitute the agreement of a state entity and a private or public person. Secondly, there is certain inequality among the parties. This inequality is twofold. On the one hand, the will of the private person is restrained by a body of law that shall be observed at all times. When the government prepares the bidding guidelines and the contract, the bidders cannot negotiate the terms of the guidelines or the contract.[1] On the other hand, different purposes call parties to contract. The private contractor is enticed by economic aspects; the government instead, seeks the public order and the satisfaction of a collective public necessity. Thirdly, administrative contracts lack the stiffness of the private regime. A third party may finish the execution of the contract in the event that the contractor did not fulfil its obligations on time. Fourthly, ‘cláusulas exorbitantes’(exorbitant clauses) that may be considered as abusive under the private regime can be found in these contracts, i.e., administrative rescission[2] or early termination of a contract on the basis of public policy. Lastly, the authority can only act and agree to contract in accordance with the express provisions of the concerning law.[3] The will of the parties is restrained. Courts[4] have coincided with academics. The distinctive features of an administrative contract are as follows: 1) the social interest and the public service; 2) the inequality of the parties, where the State must necessarily be present; 3) the existence of exorbitant clauses; and 4) the special jurisdiction, i.e. administrative jurisdiction.[5]
The governing law of state contracts is scattered across the wide sea of public procurement provisions. This spectrum goes from the constitution, international treaties[6] and the statutory laws to regulations, guidelines and many other bodies of law.[7] Given that Mexico is a Federation composed of 31 States and a Federal District, there are municipal, state and federal rules governing public procurement. This complex system nevertheless, is duly harmonized with the principles enshrined in the constitution and the treaties. In this regard, some important provisions of the Federal Regime, governing the majority of the most important projects, will be commented to illustrate the principles girding the realm of administrative contracts.
The Federal Constitution is laid as the cornerstone setting up the principles under which the Mexican state carries out public procurement. As such, in its article 134 it is stated that the economic resources of the Federation, states, municipalities and the Federal District and other entities shall be managed with efficiency, effectiveness, economy, transparency and honesty. Moreover, public procurement shall be carried out through public biddings in order to secure the best conditions in regards to price, quality, financing, timing and other relevant circumstances. Additionally, the Federal Constitution regulates the exploitation of certain industries. In this sense, a concession is required for the exploitation of mines, water resources, broadcasting and telecommunications. Nonetheless, regarding oil and hydrocarbons no concession shall be granted, but services agreements, license agreements, production sharing agreements may be executed. The terms and forms of consideration are also regulated.[8]
[1]Ley de Adquisiciones Arrendamientos y Servicios del Sector Público (Acquisitions Law), art 26
[2] Rescission of a contract under Mexican law represents the right of one party to terminate the contract due to the non-fulfilment of obligations by the other party. A judicial resolution is needed except that parties have agreed lex commisoria expresa in the contract. A governmental agency or entity of the Public Administration may rescind administratively the contract by means of an administrative procedure that initiates with a notification to the contractor stating the non-fulfilment of obligations. During a 15 working day period, the contractor may present arguments and evidence supporting his case. Thereafter, the agency or entity shall render its decision within 15 working days. This decision shall state the legal grounds and provide a justification. If it is not issued within that time frame, the procedure is barred or lapsed by the state of limitations (‘caduca’) and if the legal grounds or justification are not provided or defective, the decision could be set aside by the competent court. Federal Law on Administrative Procedure, arts 60, 3.V, 5-6.
[3] Acquisitions Law, art 15; Ley de Obras Púbicas y Servicios Relacionados con las Mismas (Works Law) art 15; Laura Ruiz García, Contratos Administrativos (Flores Editor y Distribuidor, México D.F. 2010) 266-272; Francisco González de Cossío ‘Arbitraje y Contratación Gubernamental’ [2012] 15/2012 SAR España 121.
[4] Administrativo y Contrato Civil o Mercantil. Diferencias. [2001] TCC, Amparo en revisión 196/2001, SJFG XIV (188644).
[5] See (n 34)
[6] Mexico has entered into several free trade agreements that include a chapter on government procurement with the USA and Canada (NAFTA), Chile, Costa Rica, Guatemala, Honduras, Colombia, the European Union, Israel, Japan, Nicaragua, Iceland, Lichtenstein, Norway and Switzerland (EFTA).
[7] These bodies of law include the following: National Development Plan, Sector Development Plans, Policies, Basis and Guidelines (POBALINES, by its acronym in Spanish), Application Handbooks (Manuales de Aplicación), Acquisitions or Works Annual Programmes (Programa Annual de Adquisiciones y Servicios o de Obras).
[8] Federal Constitution, art 28