About a year ago [1], on January 27, 2016, the UMA (Unidad de Medida y Actualización - Unit of updated measure) was introduced through a Constitutional amendment to Article 1915 of the Mexican Federal Civil Code published in the Official Federal Gazette (Diario Oficial de la Federación) (the “Amendment”).

The Amendment replaced the minimum wage as the basis for calculating the payment of certain obligations (fines, penalties, etc) and to enable the Government to raise the minimum wage without generating other side effects. The value of the UMA started at $73.04 MXP, equivalent to the minimum wage.

On 18 January 2018, article 1915 of the Federal Civil Code was subject to the announced change (Amendment-2). In addition to replacing the expression “minimum wage” with UMA, it modified the basis for calculating compensation payable to victims for death or injury, by removing the wording “four times the maximum minimum wage…” [2], and thus reducing the basis for calculating compensation by 75%.

Amendment-2 goes against the trend of the continuous rise in non-material damages (moral damages) awards seen before the Mexican Courts. This could be “good news” for insurers writing risks where claims are prosecuted under the provisions of the Federal Civil Code; namely, public entities or liability policies for public roads, and proceedings before the administrative authorities/courts. However, for proceedings before the civil courts, jurisdiction may also be established according to the victim’s permanent residence.