Having worked on several projects across Mexico, I have encountered numerous unforeseen situations arising from a wide range of sources. Some are common globally, while others are unique to the Mexican social and political landscape.
These experiences create significant and fascinating legal scenarios, lessons I personally enjoy embracing, as no two cases are ever the same. The learning continues most recently, with a successful Force Majeure claim just two weeks ago.
In Mexico, force majeure claims have become increasingly vital for clients navigating turbulent financial and political environments. However, these clauses are only truly effective when properly drafted, or modified, to address new, [not always of course] foreseeable economic, political, social, or legal developments. This point is crucial.
These provisions, embedded in contracts to excuse non-performance due to extraordinary events, serve as a legal shield when external shocks disrupt business operations. For example, beginning in 2022, the Mexican National Oil Company (PEMEX) effectively suspended all payments to providers and contractors without prior notice or legal justification, amounting to over $21 billion USD. The impact? Widespread disruption, bankruptcies, and unemployment across the oil and gas supply chain. The impact on each or affected contracts should be reduced with a solid force majeure clause covering such kind of ideological political decisions.
And this is not an isolated event. Several legal reforms have been enacted that might cause further disruption and financial stress for thousands of contracts. Regulatory bodies have been dismantled in Mexico leaving serious doubts about the impact on complex transactions and operations specially on highly regulated activities. Under a common force majeure clause, such impacts might not be covered, unless they are treated as unforeseen governmental shifts.
This is a perfect example of how, during periods of economic volatility, political unrest, or regulatory upheaval, businesses face not only conventional force majeure risks like natural disasters but also emerging challenges that traditional clauses often fail to cover. A timely review and amendment of these clauses is essential. Many do not account for the new generation of force majeure scenarios, e.g. pandemics, government inaction, economic concentration through political measures, organised crime (distinct from terrorism or common thefts), and politically driven decisions made without legal basis.
Under Mexican law, force majeure (fuerza mayor) and fortuitous events (caso fortuito) are treated similarly. However, Civil Law theory distinguishes between acts of God and those stemming from any kind of human activity, both are recognized under the Federal Civil Code and the Commercial Code. These laws allow parties to be excused from liability if an event is unforeseeable and unavoidable, external to the party’s control, and not caused by that party’s negligence.
It may seem obvious, but one crucial point to emphasize is that recognition of a force majeure event is granted by the private parties to the contract—not by a judge. This means the triggering mechanism lies within the private interests of the contracting businesses. The shared goal of the parties is to preserve the contract and maintain a balanced commercial relationship. Under such aim, parties might amend the contract to preserve this spirit.
At this stage, judicial intervention is not necessary to initiate protection of the core purpose of the contract under a force majeure claim. Legal escalation only becomes relevant when one party rejects the force majeure invocation without solid legal justification, thereby activating dispute resolution mechanisms. Even then, alternative dispute resolution (ADR) methods may be employed to resolve the issue efficiently. This is particularly relevant under the Mexican Civil Code, which permits dépeçage, the application of different laws to different clauses within a contract. This flexibility can be especially advantageous in the current legal landscape, given the recent and contentious judicial reform enacted in Mexico.
So, the challenge lies in drafting new clauses that honour this legal framework while addressing the social and political realities specific to Mexico. For instance, financial hardship is generally excluded from force majeure protection, so in the case of PEMEX’s payment suspensions how can a client’s assets and interests be safeguarded? Well, again, with a creative new generation of clauses.
For clients, particularly multinationals and investors, force majeure clauses are critical tools for risk management. I regard them as a first line of defence, but rarely are treated as such. With recent judicial reforms in Mexico, where it is unclear whether court decisions will be grounded in legal principles or political ideology (this is no exaggeration), contractual analysis should begin with a careful review of provisions addressing the theory of unforeseen circumstances—namely, the force majeure clause.
In short, force majeure in Mexico is not merely a legal formality; it is a strategic safeguard. In uncertain times, it empowers clients to protect assets, remain compliant, and adapt swiftly. If you are reviewing contracts or entering a new market, ask yourself: Is your force majeure clause ready for the next storm in Mexico?
