Mexico City, March 30th, 2021.
As it is publicly known in Mexican legal community, the amendments and additions to several provisions of the Electric Industry Law (EIL) are considered to be contrary to the purposes of the amendments to articles 25, 27 and 28 of the Political Constitution of the Mexican United States, published on December 20th, 2021, as well as to articles, among others reason for:
- Affecting free competition
- Having a negative impact on the environment, by giving preference to electricity generation plants powered with non-renewable resources, to the detriment of those using clean and renewable power sources.
- Conditioning the issuance, modification, cancellation, and termination of permits to generate, distribute and market to the criteria for developing of the National Electric System set forth by the Ministry of Energy.
Consequently, among other private individuals or companies, the holders of permits for generation of electric energy and interconnection agreements are entitled to file a constitutional proceeding (“juicio de amparo”) against the Decree to amend and supplement the EIL, and request an order to stay the effects of said Decree, with the District Courts in Administrative Matters Specialized in Economic Competition, Radiobroadcast and Telecommunications, or Administrative District Courts or any other District Court if in the specific Circuits, the two types of District Courts previously mentioned do not exist.
The term to file the juicio de amparo against the Decree is: i) thirty business days counted from the day which the Decree came into effect, since the amendments became immediately effective; or ii) fifteen business days from the first act of application of the provisions of the Decree to a specific individual or corporation subject to those provisions.
One of the benefits of the juicio de amparo is that, the petitioner may request an order to stay the effects of the challenged acts. To obtain the order to stay, the legal requirements set forth in the Amparo Law must be met. In summary those requirements are: the petitioner to request said order; identify the effects subject matter of the suspension; and that by granting the order, public policy and social interest provisions are not affected.
It is worth mentioning that several District Courts have granted, first the provisional suspension, and in due course the definitive suspension against the Decree, based on the consideration that granting the suspension does not contravene public policy and social interest provision; and furthermore, that granting the order to stay is justified, since it is aimed at protecting: i) environment; ii) free competition in electricity market; iii) final consumers, who benefit from lower prices, etc.
As it is known, the suspension in the juicio de amparo is divided in two stages namely: the first in which the provisional suspension is requested in the juicio de amparo[1], at the time of accepting the action for processing; the order to stay may be challenged by a recourse of grievance that shall be processed and decided by a Collegiate Court in Administrative Maters Specialized in Economic Competition, Radiobroadcasting and Telecommunications, before the ancillary hearing is held[2]; and the second one when the definitive order to stay is issued, once the ancillary hearing is held. In theory, the definitive order to stay shall be in effect until the juicio de amparo is finally decided, unless the order is modified or cancelled through a motion for review before a competent Collegiate Circuit Court. This has not yet occurred.
This means that so far, the courts in which juicios de amparo have been lodged are inclined to uphold that by granting the order to stay, a greatest protection to the public policy and social interest is given, than by rejecting it, if compared to another public interest, for instance, the State guidance in electricity matters.
The merits of the juicio de amparo would be decided by means of a judgement to be issued after the instruction is concluded and final arguments are filed in the constitutional hearing. The parties in disagreement with the judgement would have a ten business days term to challenge it. Certainly, in Mexico most of the motions for review against judgements rendered in juicios de amparo are decided by Circuit Collegiate Courts; however, in the case of the Decree, we are of the opinion that due to its relevancy it would be decided by the Supreme Court of Justice.
In addition to the juicio de amparo, the Decree may be challenged by means of an Action of Unconstitutionality. The government bodies who may file this action are those listed in the Federal Mexican Constitution and the regulations of paragraph I and II of article 105 of the Mexican Constitution. In case the of the Decree, by a 33% of the House of Representatives, or of the Senate, as well as by the National Commission of Human Rights, and the Federal Commission of Economic Competition.
This constitutional action is aimed at challenging a law which the petitioner considers to contain provisions contrary to those of the Constitution.
The term for filing the Action of Unconstitutionality is thirty days after the law becomes effective and in the case of the Decree, the Supreme Court of Justice acting en banc shall render the decision, since the Decree is formally and materially, a law.
Regarding actions for unconstitutionality, similarly to juicio de amparo, an order to stay could be ordered and be effective until finally decided on its merits. This order is granted by the Instructing Justice upon request, generally made with the complaint, and the decision could be confirmed, modified, or cancelled by the Supreme Court acting en banc.
The objective of the action for unconstitutionality is to invalidate the challenged provisions (in the instant case those contained in the Decree), and the judgement accepting such action is to be approved by at least eight Justices of the Supreme Court.
Considering the present situation of the juicios de amparo already filed, and the orders to stay that have been granted, the permits to generate, distribute and market electricity have not been affected; therefore, until said juicios de amparo are finally decided, it will be known if the Decree will be declared unconstitutional (something which we believe should occur), or to be valid (something which we believe should not occur). In this latter case, it will be necessary to review contracts executed by private parties, in order to adapt them to the new scenario.
The Partners of our Energy, Administrative and, Civil & Commercial Litigation Practices, together with the counselors and associates of these remain at your orders to specify the necessary.
S I N C E R E L Y,
Juan Carlos Serra
Rodolfo Barreda
Hector Calatayud
José Massas
Jorge Eduardo Escobedo
[1] It could also be requested after the claim is filed.
[2] To-date, a Collegiate Court has rejected several of these recourses.
