THE ROLE AND RESPONSIBILITIES OF INSIDE AND OUTSIDE COUNSEL IN THE MINING INDUSTRY - MEXICO (ENGLISH AND SPANISH)

• Jurisdiction: Derecho Internacional

Mining and Oil and Gas Law, Development, and Investment - Book 1
(Apr 2007)
CHAPTER 7A
THE ROLE AND RESPONSIBILITIES OF INSIDE AND OUTSIDE COUNSEL IN THE MINING INDUSTRY - MEXICO (ENGLISH AND SPANISH)
Juan Pizarro-Suárez
Attorney
Pizarro-Suárez & Vázquez S.C.
Mexico City, Mexico

JUAN PIZARRO-SUÀREZ V.L.

Juan Pizarro-Suárez V.L., is an attorney and counselor in Mexico City, Mexico. He is the senior partner of the Law Firm Pizarro-Suárez & Vázquez. His practice is mainly focused on the areas of corporate law, mining law, international agreements, foreign investment, international commercial arbitration, mergers & acquisitions and, in general, representation of foreign companies - mostly American, Canadian, Australian, European and South American -- doing business in México and Central America.

He has authored various works related to corporate law, international commercial arbitration and mining law. He participated as external advisor to the Mexican Mining Chamber in the discussions of the Regulations to the Mining Law passed in 1999. Between 2002 and 2005, he also participated in a Special Working Committee formed by the Mexican Federal Government to prepare the most recent amendments to the Mexican Mining Law passed in 2005, where he was personally requested to prepare the Statement of Purpose for said Amendment. By virtue of the aforesaid amendments to the Mining Law, Mr. Pizarro-Suárez also participated in the discussions to amend the Federal Law of Duties consistently, and is currently collaborating with the Mexican Mining Chamber in the discussions of the new Regulations to the Mining Law to be passed in the near future. He is currently advising many national and international mining companies in various legal matters.

Mr. Pizarro-Suárez received his legal education from the Law School of Universidad La Salle, in México City, where he obtained his Law Degree with honors and his professional admission. Furthermore, he has post graduate studies and Diplomas on International Commercial Arbitration (joint program between Escuela Libre de Derecho and the International Chamber of Commerce), Letters of Credit and Mining Law.

He is member of the Barra Mexicana, Colegio de Abogados (Mexican Bar Association); the Rocky Mountain Mineral Law Foundation, since 1994; Abogados Mineros Latinoamericanos (AMLA); the Arbitration Commission of the International Chamber of Commerce (ICC); and, the Legislative Committee of the Mexican Mining Chamber.

He has been Professor of International Commercial Arbitration in Escuela Libre de Derecho, Assistant Professor of Commercial Law in Universidad La Salle and Visiting Professor in Universidad Anáhuac del Sur and Universidad Nacional Autónoma de México, and has also participated in a number of seminars on mercantile, mining, and tax law, commercial arbitration and other subjects of Mexican, U.S. and Latin-American Law.

I. Certain responsibilities of Attorneys under Mexican Law.

A.Introduction

Financial problems which have arisen in recent years in the international environment, in which large corporations have been involved, as well as public scandals surrounding such events, have generated special attention and concern not only for investors and the media, but also for authorities in charge of regulating such activities and those entrusted with providing more stringent laws, norms and rules which will allow a stricter surveillance of activities carried out by each company, its corporate organs and main officers in charge of the proper performance of the company, the veracity and sufficiency of the financial reports presented to the public and some other aspects of interest; from the foregoing, as never before, concepts such as corporate governance, best corporate practices, risk management and compliance, corruption practices and others, have now become essential and are under closer scrutiny.

With these new and stricter norms and rules -and Mexico has not been the exception, particularly for public companies, that is, those whose shares are traded in the stock exchange- the traditional role of the attorney and the responsibilities inherent to his professional activity, whether as outside counsel or as inside counsel, have changed and it could even be said that they have been affected given that the degree of responsibility -to which they have now become liable as a consequence of such legal provisions- is greater and even has other implications.

The main purpose of this paper is to analyze briefly some aspects of the traditional role of attorneys in our society, under the scope of certain basic principles which must rule his actions and his own personal liability as concerns himself and his client, vis a vis the courts and other authorities and, finally, vis a vis society, as a whole, given that several questions have arisen with regards to all the new norms, such as: How valid is it -from an ethical and legal standpoint- for a law or group of rules to modify the traditional role of the attorney as a defender of his client with strict appliance of moral norms, when such laws and rules disregard professional secrecy (attorney/client privileged information) due to a client and try to make the attorney the "policeman" of his client, more than his counselor? To what extent may an attorney be made responsible for the violations to a law incurred by his clients? and several other questions which are not easy to answer. The scope of

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this matter is very broad and therefore, a paper such as this cannot cover all but only some of the issues which need to be reflected upon, for each attorney to make his own analysis and reach his own conclusions.

B.Some Basic Principles of the Conduct of Attorneys

To approach this matter, I would like to start with a short simple review of certain basic principles of the conduct of the attorney, which have been traditionally acknowledged. Although there are several fundamental principles ruling the activities of attorneys, for purposes of this paper we will center our attention on two which bear special interest for this analysis, independence of attorneys and the professional secret (attorney/client privileged information), analyzed from the standpoint of the mission of attorneys in our society.

B.1 Mission of the Attorney

In accordance with the Professional Code of Ethics of the Mexican Bar, College of Attorneys, "the attorney must bear in mind that he is a server of the law and a helper for the application of justice; and that the essence of his professional duty is to diligently defend the rights of his client with strict application to moral norms"¹

On the other hand, the definition of the Code of Ethics of the Illustrious and National College of Attorneys of Mexico, inspired by the criteria of the Counsel of Colleges of Attorneys of the European Union, expresses: "in a society founded on the respect of justice, the attorney has a fundamental paper. His mission vis a vis such society is not limited to faithfully executing a mandate within the scope of the Law. In a State of Law, the attorney is indispensable in the obtainment of respect and compliance with justice and for those to whom justice must apply, since he has the obligation to defend their rights and liberties; and is therefore, the counselor and defender of his client, and at all times must search for justice to prevail".

His mission imposes multiple duties and obligations, some times apparently contradictory with respect to: (i) his own self; (ii) the client; (iii) the tribunals and other authorities before which the attorney must act or represent the client; (iv) his profession in general and each colleague in particular; and, (v) the society, for which a liberal and independent profession, ruled by the respect of the laws which such society has imposed upon itself, all are an essential means to safeguard the rights of man vis a vis the State and other authorities."²

B.2 Independence of Attorneys

The various activities performed by attorneys impose the need for an absolute independence exempt from any pressure, mainly that which may result from his personal interests or external influences. This independence is necessary to

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maintain trust in justice and in the impartiality of the judge and of the authorities participating in the various proceedings; therefore, the attorney must avoid any issue which may affect his independence and be aware in order not to disregard professional ethics to satisfy a third party.

"Independence of the attorney is a demand of a State of Law and of the effective right of citizens to defense, which for the attorney constitutes a right and a duty."³ From the foregoing, it is clear that an attorney must maintain his independence when faced with pressures, demands or requests which limit such independence, whether it be with respect to public, economic or factic powers, courts and even the client itself, in which latter case, the attorney may as a last resort reject the instructions that the client may try to impose, against the attorney's own personal professional judgment.

This principle of professional independence for attorneys "constitutes a distinctive element of the exercise of the attorney's profession"⁴ and must therefore be acknowledged by all legal systems, such concept is reaffirmed in the General Principles for the Legal Professional of the International Bar Association, adopted on September 20, 2006, when indicating that "a lawyer shall maintain and be afforded protection of independence, to allow him or her to give his or her client unbiased advise or representation. A lawyer shall exercise his or her independent, unbiased professional judgment, upon advising his or her client as to the likelihood of success of the client's case and upon the client's representation".⁵

B.3 Professional Secret (Attorney/Client Privileged Information)

It is first necessary to establish...