1E9Ct5D

While one of the problems with the prior State liability regime was the lack of budgetaryprovisions that specifically assigned funds for the payment of indemnifications forcausing harm to a private party, this law does contain such provisions.In accordance with Article 6 of the law, each of the federal public entities must includein their respective draft budget the funds necessary to cover obligations arising fromtheir liability; however, this same article establishes a limit; the funds approved underthis item in the budget cannot exceed the equivalent of 0.3 percent of the programmableexpenditure of the Federal Outlay Budget.As a result of this limitation on the funds allocated to the payment of indemnifications,the priority of payment takes on greater relevance if we consider that the amount ofthese funds could be exhausted during the fiscal year in question.With this in mind, the law provides that if the funds budgeted for the payment ofindemnifications for state liability are insufficient to completely pay the debt, the affectedprivate party will be entitled to have the balance covered in the subsequent fiscalyears with the corresponding adjustment of the unpaid balance in accordance with theprovisions of the Federal Tax Code.In consideration of the above, in order to have control of the priority of payment ofthe debts of public entities, the law provides for the creation of a public registry in whichthe definitive decisions ordering payment of indemnifications are recorded. It also establishesthat they shall be paid taking into account the chronological order of the dates onwhich the decisions ordering such payment were issued.As can be observed, the above regulation clearly indicates an effort of the legislativebody to make the reform of Article 113 of the Constitution effective and above all viablefor the economic conditions of our country.333State Liability5. Form and Time Periods for Claimingthe Right to IndemnificationThe affected private party must file its indemnity claim before the Federal Tax andAdministrative Court, and the procedure will be governed by the Federal Law of AdministrativeCourt Procedure (Ley Federal de Procedimiento Contencioso Administrativo).With regard to the statute of limitations for filing an indemnity claim, the action formaterial damages expires one year from the date on which the damage occured, or ceasedproducing effects if the damage was continuous. An action for personal injury or “moral”damages expires in two years.While it is necessary to obtain a decision against the State in order for the State toindemnify a private party for damages and losses caused by its irregular administrativeactivity, Article 26 of the law recognizes the possibility of the parties agreeing to terminatethe dispute by determining the amount of indemnification to pay.