As widely known, several Participants in the Mexican electricity market have filed Amparo lawsuits against the Electricity Industry Law amendments.
The District Judges Specialized on Economic Competition matters granted stays of execution with general effects to all Market Participants and, therefore, the implementation of such amendments was stopped. It is important to mention that the Authorities appealed such stays before the Collegiate Circuit Courts Specialized on Economic Competition and these have decided to revoke them considering that, as of today, there is no grievance to the Participants in the Mexican electricity market since they have to be enforced by the Authorities, in order to file an Amparo lawsuit.
Likewise, the Senate, the Federal Economic Competition Commission and the Government of the State of Colima challenged the amendments considering it interferes with their powers and functions. As a result of such proceedings, the Mexican Supreme Court of Justice ordered, by means of General Agreement 3/2022, the delay of the Amparo lawsuits resolution by the Collegiate Circuit Courts Specialized on Economic Competition that have been filed against rulings issued by the District Judges regarding the amendments.
In this regard, on session held on April 7, 2022 the Supreme Court of Justice resolved said procedures. A qualified majority was gained with respect to certain amended provisions and, therefore, they were validated. Said provisions deal with issues related to technical feasibility as a condition for open access to the electrical grid; the grouping of applicants for interconnection of Power Plants or Load Centers for the execution of expansions or modifications; the criteria to maintain the security of dispatch, reliability, quality and continuity of the National Electric System and grid and regarding the regime of the Self-Supply and the Independent Energy Producers, as well as the fact that the amendments do not infringe environmental human rights (although in the case of possible commercial grievances, actions could be brought within the framework of international law in this matter).
On the other hand, since a qualified majority was not reached with respect to the amendments on the order of dispatch and granting of Clean Energy Certificates, the Supreme Court of Justice did not issue a ruling on their constitutionality (they were dismissed); therefore, the Amparo lawsuits filed by the Participants of the Electricity Market with respect to such amendments, remain in effect.
Consequently, the District Judges and Collegiate Circuit Courts are not obliged to take into account the reasoning of the Justices of the Supreme Court of Justice at the time of resolving the Amparos filed, although they could use them as guiding criteria to resolve them.
Notwithstanding the foregoing, we consider that it is likely that the Collegiate Circuit Courts would apply, when resolving the Amparos, the criteria they have used when revoking the stays of execution granted by the District Judges in those terms (as explained above), i.e., to resolve that the amendments, as of today, do not affect the Participants of the Electric Market since they have to be enforced by the Authorities, in order to file an Amparo lawsuit.
It is important to mention that it is likely that the Authorities in the electric sector would carry out Acts and procedures to apply the provisions validated by the Supreme Court of Justice of the Nation.
Finally, and in relation to the initiative of constitutional reform in electricity matters filed by on September 2021 by the Federal Executive Power which seeks to incorporate to constitutional rank, among other issues, the referred amendments; we are of the opinion that it is likely that it would not be approved by the Mexican Federal Congress because the legislative coalition in the Federal Government does not have, as of today, the constitutional qualified majority necessary for such purposes.
Hogan Lovells is ready to advise any interested party on the legal implications of the decision of the Supreme Court of Justice regarding the Electricity Industry Law amendments, as well as on any other issue related to it.
Authored by Arturo Tiburcio, Miguel Ángel Mateo, and Oscar Tamayo.