Enrique Rodríguez del Bosque
RB Abogados

Preventative Approach to Land Ownership Disputes

Mon, 10/21/2013 - 12:04

Land ownership has historically been a big topic in Mexico. The lasting memory of Spanish rule is one of the dispossession and exploitation of indigenous groups, which continued under the rule of Porfirio Díaz (1876-1911). At the end of the Porfiriato, as his rule is known, it is estimated that only 2% of the population held titles to land, despite the fact that a great majority depended on the land for their survival. In 1915, in the midst of the Mexican Revolution, President Venustiano Carranza created the Agrarian Law, which aimed to redress imbalance in land ownership in Mexico. This process took a number of years, and between 1915 and 1965 52.2 million hectares of land were redistributed to around two and a half million campesinos. The Agrarian Law was complemented by the creation of the new Constitution in 1917, which reestablished communal rights to land, and created three categories of land type that are still in use today: private, social, and national.

The categorization of the land covered by any one concession will affect the speed at which a mining project can move to begin operations, because the mining concession provided by the government only gives the holder permission to access and exploit the content below the surface of the ground, whereas the surface itself remains the property of the landowner. Whether the land is privately owned, nationally owned or social, the mining company must negotiate with the landowners in order to gain permission to access and operate on it. There is much at stake during this process – landowners may refuse access until they feel that they have reached acceptable terms. As landowners do not receive royalties from mining companies, the negotiation process represents their single opportunity to take advantage of the works that will take place on their property. According to legal mining experts, negotiating with private landowners is usually preferable, because the process can be more direct and usually does not require the involvement of third parties, such as state or federal government. Mining on land that is classified as national or social will almost always be more complicated, because by its very definition it requires the involvement of many more stakeholders in the negotiation process.

As more than half of the land in Mexico is social or nationally owned, mining companies hoping to begin operations in Mexico should be aware of the significant - though surmountable - challenge of navigating access to the land they wish to use. Current Mexican legislation is designed to create an environment that is favorable to the exploitation of mineral resources found within the national territory. For example, in 1992 the law was changed in order to give ejido owners permission to sell

or lease their land for the first time in Mexico’s history, opening up a significant proportion of Mexican land for potential exploration and exploitation. Another example of the country’s mining-friendly legislation is a clause in the Constitution that states that private property rights may be overridden in cases where the extraction of natural resources would ‘benefit society’. Where this is the case, landowners may be obligated to vacate the land, in the form of an expropriation, a temporary occupation or easement. It should, however, be noted that despite being endorsed by law, the Mexican government in many cases has proved reluctant to resort to forced expropriation of land. This reluctance can be attributed to damaging high- profile legal cases with indigenous groups in the past, and fear of uprisings or reprisals from social organizations in response to a case of forced expropriation. Through effective negotiation, the final product of which is a social license, most mining companies are able to avoid having to resort to legal action in order to access property. “Social licenses are fundamental in order to start a project,” says Gabino Fraga Peña, Director General of Grupo GAP. “They establish the approval of those people living close to where the project will take place, and even help companies protect themselves against third parties looking to create problems. It is important to maintain a good relationship with the community, but obviously, such a relationship should be based on clear legal agreements.”

Whether the land in question is privately owned, nationally owned or social, mining companies are better advised to rely on a process of effective negotiation with the landowners. Legal experts agree that resorting to expropriation should rarely be necessary if the process of negotiation with land owners and local communities is correctly managed, and there exist many specialist law firms with expertise in this area. Securing access to land through negotiations that benefit all of the involved parties will also likely result in a more positive overall reception and a better reputation for the mining company than resorting to legal channels, which can often take years.