Amendments to Mexico’s Power Industry Law Remain Suspended Despite Court Decisions

As of July 15, 2021, both Federal Collegiate Courts in Administrative Matters Specialized in Economic Competition (Tribunal Colegiado en Materia Administrativa Especializado en Competencia Económica, Radiodifusión y Telecomunicaciones) have issued decisions lifting two permanent suspensions of the Amendments to Mexico’s Power Industry Law (the Amendments). However, the Amendments remain unenforceable due to injunctions with general effect granted in other amparo constitutional proceedings presented before Mexican district courts.

In a decision dated 15 July 2021, the First Collegiate Court in Administrative Matters followed the decision previously taken by the Second Collegiate Court in Administrative Matters on 1 July 2021 and lifted a suspension against the Amendments. For details on the decision of 1 July 2021, see our previous LawFlash. Both Collegiate Courts in Administrative Matters held that absent any administrative act enforcing the Amendments, there would be no harmful effects caused by the Amendments to investors, in part because the transitory articles to the Amendments gave the authorities a 180-day period to adjust the industries’ secondary regulations and guidelines.

The First and Second Collegiate Courts in Administrative Matters are the higher courts of the district courts and, therefore, the Collegiate Courts will most likely dismiss the pending amparo procedures and lift the corresponding injunctions on the appeal. As of now, there are still more than 100 injunctions in place related to amparo proceedings presented before district courts. Most of the injunctions issued by district courts apply to all relevant aspects of the Amendments. Since additionally all of these injunctions have general effects, and thus not only apply towards the individual parties involved but to everybody affected by the Amendments, the Amendments will remain unenforceable until all such injunctions are lifted.

Despite the decisions by the Collegiate Courts in Administrative Matters, President Lopez Obrador and his administration still face considerable obstacles until the Amendments will be fully implemented, including the following:

• First, the process of lifting all of the injunctions that have been granted before district courts will be difficult. While it can be expected that some district courts will lift the injunctions within the next two months, other procedures may take longer. This will depend on the specific status of each case and in particular whether the parties require the issue to be attracted for resolution by the Mexican Supreme Court.

• Second, it must be noted that some environmental organizations such as Greenpeace have also initiated amparo claims where injunctions with general effect were granted. As these specific cases additionally concern possible negative impacts on the environment, the rulings of the Collegiate Courts could differ.

• Third, even if all suspensions will be lifted, per the July 15 ruling by the First Collegiate Court, investors would be able to once more apply for constitutional protection (amparo) and injunctive relief either (i) once the secondary regulations and guidelines affected by the Amendments are adjusted, or (ii) when the energy regulatory authorities will start reviewing, renegotiating, or revoking the permits of investors on the basis of the Amendments.

However, the obstacles referred to above should be taken with cautious optimism since President Lopez Obrador and his administration remain determined to implement measures favoring the Comision Federal de Electricidad, Mexico’s state-owned utility company as discussed in more detail in our previous LawFlash.

Should the Amendments ultimately enter into force, the potential detriments to foreign investors in the Mexican energy sector and in particular the renewable energy sector are substantial, as outlined in detail in our previous LawFlash. Given the latest developments, foreign investors should carefully consider their investment protection options in case the Amendments become enforceable in the near future. This should include the consideration of protecting the investments outside of Mexican courts before investment arbitration tribunals.

Contacts

If you have any questions or would like more information on the issues discussed in this LawFlash, please contact any of the following Morgan Lewis lawyers:

Houston
Humberto Padilla Gonzalez
John Crespo
Felipe Alice