Petroleum Nationalization in Mexico
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The Petroleum Expropriation, or Petroleum Nationalization, is the result of the implementation of the Expropriation Law of 1937 and Article 27 of the Mexican Constitution applied to petroleum companies on March 18, 1938, by the President of Mexico, Lázaro Cárdenas.
[edit] Background
The political support of labor unions and the founding of Petromex (before Pemex) immediately after taking power by President Lazaro Cardenas, were the proximate events closest to the Petroleum Expropriation.
In 1924, after several failed strike efforts and break-ups by the Mexican Army, a strike began in Tampico against the refinery “El Aguila”, in which workers emerged triumphant and achieved recognition from the management for the labor union and reached a collective bargaining agreement.
On August 16, 1935, the Petroleum Workers Union of Mexico (Sindicato de Trabajadores Petroleros de la República Mexicana) was formed and one of the first actions was the writing of a draft contract transmitted to the petroleum companies requesting a 40 hour working week and a complete paid salary in the event of sickness, and claimed to replace the distinct collective contracts governing labor relations. On November 3, 1937, the union demanded that the companies sign the collective agreement and on May 17, the union summoned a strike in case their demands were not met. In the early days of June, the union sued the companies before the General Arbitration and Conciliation Board (Junta General de Conciliacion y Arbitraje). The aforementioned strike started on a limited basis on May 31 and fully burst open on June 9.
The petroleum workers struggle was well regarded by the President and the population despite problems caused by the petroleum shortage. In July, as instructed by the arbitration board, a commission of financial experts was formed that investigated the petroleum companies finances, concluding that their profits easily permitted them to cover the demands of the workers.
But, on December 8, the companies hired other unemployed workers and had not responded to the arbitration board. On December 18, 1937, the board gave a verdict in favor of the union by means of a “laudo” (binding judgment in arbitration) which demanded that the companies fulfill the requirements of the petitions and pay 26 million pesos in lost salaries. The petroleum companies initiated a lawsuit on January 2, 1938 before the Mexican Supreme Court to protect their property from the labor union and arbitration board, which denied the request.
Consequently, the foreign companies rebelled against the imposed contract, and the maximum Judicial Authority responded by rendering a decision on March 1, giving the companies until March 7 to pay the 26 million pesos penalty.
