- Indefinite strike in federal courts and proposed reforms introduce significant uncertainty into Mexico’s judicial landscape
- Changes in federal judicial selection and compensation could impact domestic and international legal proceedings
- Investors and stakeholders should prepare for potential disruptions in legal proceedings and consider operational implications
On August 21, 2024, judges of Mexico’s federal judicial branch initiated an indefinite strike in response to President López Obrador’s proposed judicial reform. This reform aims to change the structure and selection process of the judiciary, including a controversial proposal to elect federal judges by popular vote.
The reform has sparked widespread protests within the federal judiciary and has the potential to continue to impact business and financial markets. This alert outlines the current situation, proposed changes, and potential impacts for businesses and international stakeholders operating in Mexico.
The proposed judicial reform
On February 5, 2024, the “Initiative to reform the judicial power” was introduced for consideration by Mexico’s legislative body (Cámara de Diputados). Both President López Obrador and President-elect Claudia Sheinbaum have indicated that they anticipate the Initiative will be voted on during the start of the next legislative session, which commences September 1, 2024.
Key elements of the proposed judicial reform include:
- The Supreme Court of Justice magistrates, circuit magistrates, and district judges would be elected directly by popular vote.
- Capping judicial officials’ salaries at a level not exceeding the President’s salary.
- Reducing the Supreme Court from eleven to nine justices and only meeting in plenary public sessions.
- Creation of a Tribunal for Judicial Discipline, also elected by popular vote, with broad powers to investigate, sanction, or impeach judges and Supreme Court justices.
- Shortening Supreme Court justices’ terms from 15 to 12 years and eliminating the right to a retirement pension.
On August 26, 2024, the reform cleared its first obstacle as the Constitutional Points Commission of the Cámara de Diputados approved the proposed reform with 22 votes in favor and 17 against. Note that the proposed reform requires approval by a two-thirds majority in Congress for final passage.
Strike and criticisms
The work strike by federal judges and magistrates began on August 21, 2024, as a pressure tactic against the proposed judicial reform. The Federal Judiciary Council (Consejo de la Judicatura Federal) acknowledged these events and mandated the admission and processing of only urgent matters in accordance with applicable regulations. The official communication provided a non-exhaustive list of “urgent matters,” including cases handled in federal criminal justice centers, situations where lives are at risk, issues affecting health rights, provision of basic services, amparos deemed urgent, and precautionary measures in cases of domestic violence. To determine a case’s urgency, two key factors must be considered: (i) The human rights at stake and potential consequences of suspending the decision, and (ii) Possible impacts on economic and social rights for particularly vulnerable individuals.
The ongoing judicial strike has had a significant impact on the administration of justice in federal courts. More concerning still, the timeline for normalization of federal court proceedings remains unknown. This uncertainty has led to broader economic repercussions, as evidenced by Morgan Stanley’s decision to downgrade Mexico to UW (underweight) status, negatively impacting Mexican markets.
Mexico’s proposed judicial reform presents significant challenges to the country’s legal landscape. In the short term, the ongoing judicial strike has disrupted federal court operations, creating uncertainty with regard to current legal proceedings. With only urgent matters being processed, non-urgent cases face potential delays.
Looking ahead, if enacted, the reform would fundamentally reshape Mexico’s judiciary. Changes in judicial selection and term limits could affect the timing and consistency of legal decisions, while international concerns may impact investor confidence and trade relations. These shifts may require businesses to adapt their legal strategies and risk management approaches.
We are closely monitoring these developments and their potential implications for our clients. Our team is ready to provide tailored guidance to help you navigate this evolving situation, address your specific challenges, and help you strategically plan for various scenarios.
Source: Reed Smith LLP
