Mexico: Fintech & BaaS / Seaworthiness & Bunkers

October 2022 / Diego Latorre

I. Fintech Mexico, BaaS.

In the last few years, the banking landscape worldwide has changed dramatically. Now there are many different types of banks, including, the new breed of “challenger banks”, which are mainly digital based. As the financial services industry continues to change, the emphasis is on meeting the needs of today’s banking customers and being able to offer the latest in financial services and products. Without a strong core banking solution, banks struggle to be competitive with younger, more agile industry entrants. Partnering with fintechs, adders, and acquirers is now a tested option to leverage the most innovative tech solutions and a way to stay relevant within the industry. The fintech ecosystem in Mexico has evolved to become one of the most developed in the region. Mexico is the largest fintech hub in Latin America with more than 441 startups, slightly ahead of Brazil, the second largest ecosystem in the region. The sector is comprised of companies and startups from all segments, being the most developed the payments and remittances segment with 90 startups, consumer lending with 52 startups, enterprise financial management with 52 startups, and enterprise technologies for financial institutions with 51 startups. Many banks are now trying to shift to software as a service and cloud-native models, which can facilitate innovation while at the same time removing obstacles to integration. The software-as-a-Service core banking model (“BaaS”) was developed so that banks could move away from the requirement to use the hardware infrastructure of a traditional banking software suite. Unlike the legacy model mentioned above, BaaS platforms are operated by a third-party company, rather than the bank’s data center.

The BaaS model is a cost-effective solution to modern banking, as it allows banks to leverage cloud-based solutions and minimize the use of cumbersome legacy platforms. By leveraging the expertise of experienced partners, banks can more easily integrate with other players in the financial services industry, offering the latest banking products and services, while also being able to outsource their own banking infrastructure. Around the world, the access and benefits of BaaS fueled the open banking. Born from regulation pushing banks to open access of client data to 3rd parties, open banking has spawned the popular independent banking brands that we see today. In Mexico recent positive changes are in Congress nowadays, requiring banks to create open APIs (application programming interface). We are looking forward for the implementation of the fintech’s secondary law provisions crafted with the aim of fueling BaaS’s options and contribute to generating a positive economic and social impact by strengthening financial inclusion in Mexico. The largest chain of convenience stores in Mexico, Oxxo®, who owns a major adder and acquirer player in the market, is leading the momentum and will surely become, with its more of 19,000 branches, the largest BaaS in Latin America as a consequence of its partnering with Santander.

II. Seaworthiness & bunkers.

In a recent decision, a Tribunal in London held that both the time charterers and bareboat charterers of a vessel were jointly and severally liable to pay for bunkers stemmed by time charterers. The decision departs from the traditional view under the law in practically all jurisdictions, that in general, only a party who has contracted to purchase bunkers is liable to pay for those bunkers. As a consequence of this new decision, owners of vessels can be held contractually liable for unpaid bunkers stemmed by their time charterers, thus the implications are worth considering by bunker suppliers and vessel owners. The Tribunal held that the bareboat charterers and time charterers were jointly and severally liable for the invoice value of the bunkers because time charterers and bareboat charterers came within the definition of “Buyer” under the bunkers’ supplier general terms and conditions, and, therefore, had apparent or ostensible authority to bind the bareboat charterers. The bunker supplier was entitled to the benefit of a maritime lien, which bound the bareboat charterers when they became the owners of the vessel. While the bareboat charter and time charter contained “no lien” provisions, the Tribunal held that notice of those clauses was not given to the bunker supplier before the issuance of its confirmation letter, and therefore, the “no lien” clauses were ineffective against the bunker supplier.

This decision is a notable departure from the judgment of Clarke J in the Yuta Bondarovskaya who held that it was not “within the usual authority of a time charterer to buy bunkers on behalf of owners or demise charterers” and stated there was “no warrant for holding a shipowner or demise charterer personally liable without his consent”.

Based upon the foregoing, a court motion was filed before a Federal Judge in Mexico by the Firm, considering exactly the same arguments, but upholding that the existence of the relevant maritime lien lies, as well, on a seaworthiness utmost duty. The ruling judge acknowledged the existence of the lien, and therefore ordered the arrest of the vessel. The vessel was released after the shipowner placed a bond in guaranty of payment of the relevant lien. The case is now in the appeal circuit. Will see what is finally resolved.

1 Dear reader, please be advised that this piece is not, and shall not be construed as a legal advice, and it is not a comprehensive analysis of the subject matter referred to above.

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