Mexico’s 2024 judicial reform has redrawn the country’s legal landscape in ways that business people with operations in Mexico cannot ignore. At its center is a radical innovation: the direct election of all judges by popular vote.
For foreign executives, Mexico’s 2024 judicial reform is less a constitutional experiment than a new layer of systemic risk. The overhaul replaces merit-based appointments with popular elections for thousands of federal judges and magistrates, trims the Supreme Court from 11 to 9 justices with 12-year terms, and narrows the reach of amparo injunctions that could once freeze potentially unconstitutional policies. Approved by the Senate on Sept. 11, 2024 and enacted days later, the reform led to Mexico’s first judicial elections on June 1, 2025. A second round is scheduled for 2027, but its effects are already visible in contract enforcement, regulatory disputes, and investment planning across Latin America’s second-largest economy.
What changes—and why it matters
Judicial elections replace merit-based selection. Federal judges and magistrates are now chosen through campaigns administered by the National Electoral Institute (INE), ending the professional career path that once elevated judges through exams and service. Supporters argue that direct elections enhance accountability to voters. Critics, however, warn that campaign finance, party dynamics, and organized crime influence may weaken judicial independence.
A disciplinary tribunal with sweeping removal powers. The newly created Tribunal of Judicial Discipline can sanction or remove judges outright, with no avenue for appeal. International observers warn it risks becoming a tool of political intimidation.
The Supreme Court reduced and curtailed. The Supreme Court now has nine justices instead of eleven, each serving a shortened 12-year term. More critically, its ability to issue “general suspensions” in amparo cases—nationwide injunctions that once blocked the enforcement of unconstitutional laws—has been severely restricted. The change accelerates regulatory implementation and shifts leverage toward the state.
Business implications of reduced judicial independence. Electoral pressures, disciplinary oversight with no appeal, and a diminished Supreme Court converge to produce a judiciary less insulated from politics. For companies, the reform alters the risk calculus of operating in Mexico.
How systemic risk enters through local adjudication
Mexico’s commercial law is federal in scope, yet in practice most commercial disputes are decided by local civil judges. Federal courts, despite greater resources and expertise, often decline such cases. This leaves supply-chain and shareholder disputes before local benches now exposed to electoral politics and disciplinary oversight.
With the amparo narrowed, state measures now take effect faster, leaving businesses less time for interim relief.
Early cases illustrate the risks. In Sonora, a district court granted a preliminary injunction in March 2024 against a liquefied natural gas project, halting operations under an environmental permit (energy.gov). In January 2024, Mexico’s Supreme Court struck down key provisions of the 2021 Electricity Industry reform, ruling that they unconstitutionally favored state-owned utilities over private generators (haynesboone.com). And in September 2025, Iberdrola won an injunction overturning a US$500 million government fine for alleged improper electricity sales (mexicobusiness.news).
These outcomes show courts can still restrain government action, but relief is less consistent and windows to adapt are shorter.
Cross-border exposure: supply chains, energy, and data-driven services
Manufacturers relocating to Mexico under USMCA rules of origin now face heightened legal uncertainty as domestic courts adjust to the new judicial system. Disputes over plant siting, engineering contracts, or joint ventures often begin in state courts. With judges now elected and subject to oversight by a powerful disciplinary tribunal, executives must anticipate unpredictable timelines and outcomes—risks that are increasingly priced into operational planning.
In this environment, companies are turning to private arbitration as their preferred risk-management tool. International arbitration offers predictability through neutral tribunals and tested procedures, but it demands careful contract drafting and thoughtful enforcement strategies.
The need for reliable dispute resolution is particularly acute in the auto sector. USMCA’s regional value content thresholds—75% for core auto parts—depend on predictable supplier relationships across integrated North American supply chains. Robust arbitration clauses are therefore essential in cross-border manufacturing contracts.
Energy projects face similar challenges. Restrictions on nationwide suspensions in amparo cases mean regulatory shifts take effect faster, narrowing the window for challenges to policies favoring CFE and PEMEX. As recent jurisprudence demonstrates, state-owned utilities continue to receive preferential treatment, a reality investors must now treat as a structural feature of the market.
Technology and services are also impacted. Agreements covering confidentiality, intellectual property, and data hosting are especially vulnerable when adjudicated before local judges with limited expertise. This makes comprehensive ADR frameworks with cross-border enforceability critical. Uncertainty also shadows cross-border data flows—protected under USMCA’s digital trade chapter but increasingly tested by elected judges navigating complex licensing disputes or potential data localization requirements.
The economic costs are already being felt. Mexico’s Secretariat of Economy reported an estimated $35 billion in delayed foreign investment projects through late 2024, reflecting concern that judicial uncertainty has become a deterrent to capital deployment.
Why arbitration and mediation rise in value
Broadly speaking, Mexico’s Commercial Code provides a fairly pro-arbitration framework. Article 1421 establishes minimal court interference during arbitral proceedings, underscoring legislative intent to keep disputes outside the judiciary. Yet the system draws a hard line at enforcement. Under Article 1461, arbitral awards must still be recognized by domestic judges before they can be executed in Mexico. And Article 1462 empowers courts to refuse enforcement if they find party incapacity, improper notice, an award beyond the arbitrators’ mandate, a defect in tribunal composition, procedural irregularities, or evidence that the award has already been annulled elsewhere.
That dependence on Mexican courts is the system’s critical vulnerability. Arbitration allows parties to bypass the uncertainties of the reformed judiciary, but enforcement of an award—whether to seize assets, freeze bank accounts, or compel contractual performance—ultimately requires the approval of the very judges now subject to electoral politics and disciplinary oversight. Even an arbitration seated in New York, London, or Paris cannot avoid this last mile of exposure.
For that reason, companies can no longer treat arbitration clauses as boilerplate. They must be drafted with precision, narrowly tailored to comply with the Commercial Code, and seated in jurisdictions covered by strong enforcement treaties such as the New York Convention. Contracts should also provide for interim relief—emergency measures that preserve assets or status quo pending recognition of the final award.
Cross-border supply chains physically anchored in Mexico will continue to face residual risk that no contract can fully eliminate. Arbitration and mediation provide more certainty than state courts, but they cannot substitute for a predictable judiciary when enforcement is contested. That is why boards and general counsel are increasingly treating enforceability not as a legal detail, but as a core element of board-level investment decisions.
Contract Strategy: Four Essential Steps
With Mexico’s courts no longer a reliable backstop, arbitration clauses are now the first line of defense in cross-border contracts. To ensure enforceability and predictability, companies should focus on four essentials:
Choose proven institutions and neutral seats. The International Chamber of Commerce (ICC) and International Centre for Dispute Resolution (ICDR) remain the most widely used fora in Mexican-related disputes, offering tested procedures and cost structures. But the real shield lies in the seat of arbitration. Selecting New York, Houston, or London ensures that supervisory authority rests with courts outside Mexico’s reformed judiciary—thereby reducing exposure. The seat determines which courts may intervene, making it the most consequential decision for risk management.
Draft comprehensive arbitration clauses. Clarity in drafting is critical. Contracts should define seat, venue, governing law, language, number and qualifications of arbitrators, confidentiality rules, and mechanisms for consolidation or joinder. Including provisions for emergency arbitrators allows parties to secure interim measures before a tribunal is fully constituted. While Article 1421 of Mexico’s Commercial Code supports arbitration with minimal judicial interference, interim relief ordered by arbitrators still requires enforcement by Mexican courts.
Adopt a staged dispute-resolution pathway. A “mediation-first, then arbitration” structure provides a safety valve for supply chains and joint ventures. Mexico’s National Law on Alternative Dispute Resolution Mechanisms expressly recognizes mediation and arbitration, with the latter especially prevalent in construction and infrastructure projects. Mediation preserves relationships, while arbitration remains available for intractable disputes.
Plan enforcement across jurisdictions. Enforcement remains the Achilles’ heel. Awards often require recognition in Mexico, the U.S., or Canada—all signatories to the New York Convention. To minimize resistance, companies should align notice provisions and evidentiary standards with Mexico’s Commercial Code (Articles 1461–1462). Document-retention systems should withstand scrutiny in all three jurisdictions to avoid enforcement challenges.
Building Compliance Defenses Against Electoral Pressures
When judges face electoral pressure, the neutrality of rulings–at least in politically sensitive cases–comes into question. For this reason, it’s important that executives start to update compliance protocols. Legal strategies can no longer be divorced from political calendars: judges approaching re-election campaigns are unlikely to issue rulings that might jeopardize their prospects.
This environment also magnifies the need for third-party due diligence. Local counsel, lobbyists, and consultants may have undisclosed ties to judicial candidates or their financial backers. Vendor vetting must therefore extend beyond standard risk indicators to include political contributions, campaign roles, and family or business connections to candidates. Boards should reinforce clear prohibitions against payments that could be construed as indirect electoral support—principles consistent with the U.S. Foreign Corrupt Practices Act (FCPA).
Close monitoring of Mexico’s National Electoral Institute (INE) will also be essential. As the body charged with administering judicial elections, INE’s vetting practices will reveal whether professional qualifications or political loyalties dominate. Companies should track candidate approval rates, background-check protocols, and transparency in campaign finance reporting.
The June 2025 judicial elections offered an early test. Voter education was minimal, ballots listed hundreds of names with scant biographical data, and the electorate responded with indifference: turnout reached just 18%. According to a study by México Evalúa, 60% of those elected had fewer than five years of judicial experience, and several had never presided over a courtroom.
Companies that fail to adapt governance frameworks to this reality risk entanglement in a compromised system—an acute reputational and legal hazard that boards can no longer afford to ignore.
Three Critical Indicators for Mexico’s Judicial Future
Whether Mexico’s judicial overhaul strengthens accountability or entrenches political influence will hinge on three developments: the administration of elections, the conduct of the new disciplinary tribunal, and the handling of limits on amparo injunctions.
INE’s electoral infrastructure is the first test. Mexico’s National Electoral Institute now bears the task of administering nearly 7,000 judicial races—a scale with no precedent. Success depends on transparent candidate vetting, campaign finance oversight, and meaningful voter education. Unless INE can correct these weaknesses before the 2027 cycle, judicial elections risk being reduced to contests of name recognition and political machinery rather than professional merit.
The Tribunal of Judicial Discipline will define the balance of accountability and control. This elected body holds sweeping, unappealable authority to sanction or remove judges. Its membership, drawn from the same June 2025 electoral process that produced many inexperienced jurists, raises doubts about its independence. If its early caseload focuses on genuine misconduct, the tribunal could raise standards. But if it begins penalizing judges for decisions that displease the government, it will confirm fears that the tribunal functions less as a guardian of ethics than as a lever of political discipline.
Lower courts’ application of the new amparo limits presents the most immediate business risk. The reform restricts judges from issuing “general suspensions,” injunctions that once froze nationwide policies pending constitutional review. How local courts adapt will directly affect foreign investors. The first test cases are likely to come in antitrust enforcement, environmental regulation under SEMARNAT, and disputes in the energy sector involving CFE and PEMEX. If lower courts treat these cases as rubber stamps for regulators, companies will lose a critical tool for restraining government measures before they take full effect.
Together, these indicators will reveal whether the reform delivers the accountability promised by its authors or accelerates the erosion of judicial independence long feared by critics. For foreign companies, the answer will shape whether alternative dispute resolution remains a complementary safeguard—or becomes the only viable path to predictable outcomes.
Managing Residual Litigation Risk When Litigation Can’t be Avoided
For companies unable to steer disputes into arbitration, litigation in Mexico now carries heightened unpredictability. Several dynamics converge to make outcomes less about legal merit and more about timing, politics, and judicial experience.
The first challenge is electoral pressure. Judges who must face voters may hesitate to issue rulings that could be framed as politically costly—especially in cases involving foreign companies or disputes with the state. This dynamic is most acute in politically sensitive sectors such as energy, labor, and infrastructure, where rulings can be weaponized during election cycles.
Second, the elimination of general amparo suspensions has sharply reduced interim relief. Contested energy, environmental, or antitrust policies now take effect even as litigation proceeds.
Third, the June 2025 judicial elections underscored the system’s loss of institutional expertise. This inexperience raises the likelihood of procedural mistakes, inconsistent rulings, and misinterpretation of binding precedent (jurisprudencia), increasing the variance in litigation outcomes.
Additional risks compound the problem. Campaign finance sources for judicial candidates remain opaque, heightening concerns about undisclosed influence from parties, business interests, or organized crime. The new Tribunal of Judicial Discipline, itself elected, holds unchecked authority to remove judges—a tool that may enforce political conformity rather than professional standards. Mass turnover has triggered historic case backlogs, with thousands of proceedings stalled.
Taken together, these factors transform litigation in Mexico into a far riskier undertaking than before the reform. High-stakes disputes now unfold in a system where politics, inexperience, and backlogs can weigh as heavily as the law.
The Strategic Imperative: Prevention Over Cure
For boards and general counsel, the risk calculus is no longer about how to litigate in Mexico, but how to avoid doing so. Once disputes reach the domestic courts, outcomes are clouded by political pressures, uneven expertise, and reduced interim relief—conditions that translate into heightened uncertainty.
The most effective defense is front-end planning: embedding arbitration, mediation, and cross-border enforcement pathways into contracts so that disputes never enter the courthouse at all.