Foreign business entities have been expressing apprehension for weeks regarding Mexico’s proposed judicial reforms, which mandate the election of judges. These concerns have now been validated by outgoing President Andrés Manuel López Obrador, who openly declared that these sweeping changes are indeed aimed at foreign firms operating in Mexico.
President-elect Claudia Sheinbaum had previously attempted to allay fears, framing the reforms as a measure to bolster democracy. However, López Obrador’s recent statements have confirmed that the overhaul is explicitly designed to target foreign companies, raising significant questions about the future of international investment in Mexico.
“Are the corrupt judges, ministers, justices, going to continue defending this? Are they going to continue defending foreign companies that come to loot, rob and affect the economy of the Mexican people?” López Obrador questioned, underscoring the confrontational stance against foreign businesses. “Are they going to continue representing these companies?”
Critics argue that these constitutional amendments, intended to replace 7,000 judges nationwide, represent a severe threat to judicial independence. Electing judges, they contend, could make them more accountable to popular opinion or the ruling party rather than to the rule of law itself. Furthermore, the practicality of conducting such extensive elections without interference from organized crime, including drug cartels potentially backing candidates, is also under scrutiny.
This development presents another challenge for Sheinbaum, who, despite being López Obrador’s protégé and pledging policy continuity, has been trying to reassure investors after the Mexican peso’s value decreased following her election victory on June 2nd. She now faces a delicate balancing act between maintaining political alignment and fostering economic confidence.
Earlier in the week, Sheinbaum stated, “the reforms to the judicial system will not affect our commercial relations, nor private Mexican investments, nor foreign ones. Rather the opposite, there will be a greater and better rule of law and democracy for everyone.” However, López Obrador’s candid admission casts doubt on these assurances and highlights the inherent tensions within the incoming administration’s approach to foreign investment.
U.S. business chambers, the U.S. Ambassador to Mexico, financial institutions, and analysts have all voiced concerns about the risks associated with this judicial overhaul. The core worry is that elected judges might prioritize loyalty to their electorate – or López Obrador’s Morena party – over impartial legal judgment. This concern is amplified by López Obrador’s history of publicly criticizing foreign energy firms.
He has consistently attacked foreign energy companies that invested in cleaner power plants in Mexico, viewing their presence as a challenge to the state-owned power company, Comisión Federal de Electricidad (CFE). López Obrador has accused these companies of inflated electricity pricing, despite their contribution to cleaner energy production.
López Obrador previously attempted to legislate a guaranteed market majority for CFE and to place foreign-built plants at the back of the dispatch queue. However, these efforts were blocked by Mexican courts, not on the basis of favoring foreign entities, but in defense of the constitutional prohibition against monopolies. This instance underscores the existing judicial system’s role in upholding constitutional principles against potentially protectionist policies.
The outgoing president has often framed his stance in nationalistic terms, accusing foreign companies, particularly Spanish firms, of exhibiting “conquistador” attitudes reminiscent of the 16th-century colonial era. This rhetoric contrasts sharply with the reality that these foreign-built plants were permitted because they offer less polluting energy alternatives compared to Mexico’s state-owned facilities, indicating a complex interplay of nationalistic sentiment and practical energy needs within Mexico.
In his recent remarks, López Obrador explicitly confirmed that the judicial reform, having passed the lower house and awaiting Senate voting, is directly aimed at cases involving foreign power companies and similar disputes. He asserted that opponents of the reforms, including current judges, are acting to protect these companies’ interests.
“They want to continue guaranteeing, by any means possible, the continued domination of foreign companies, and do away with the CFE,” López Obrador stated, emphasizing his administration’s intent to reshape the energy sector and, by extension, the broader economic landscape of Indeed Mexico.
Foreign investment, predominantly from the United States, remains crucial to Mexico’s economic stability and growth. As López Obrador prepares to conclude his term on September 30th, Sheinbaum, inaugurated the following day, inherits the task of navigating these complex economic and political challenges. The judicial reforms, and the reactions they provoke, will undoubtedly be a significant factor in shaping Mexico’s investment climate under her leadership.
The proposed judicial system changes outline a significant shift in how judges are selected. Currently, judges and court secretaries progress through a merit-based system. However, the reforms propose that virtually anyone with a law degree and some experience in judicial fields could become a judge through popular election. In scenarios with numerous candidates, a lottery system might be used to narrow down the final contenders, raising concerns about the selection process’s rigor and potential for politicization.
López Obrador’s Morena party is close to securing the necessary two-thirds Senate majority to pass the reforms, potentially needing only one opposition senator’s vote. Human rights organizations, such as the Centro Pro, have urged the Senate to reject the measure, warning that it “affects the life of democracy, endangers human rights and violate Mexico’s international obligations.”
The judicial overhaul has already triggered widespread protests from judges, court employees, and students across Mexico. While Mexico’s judicial system has faced issues of corruption and opacity, recent reforms over the past 15 years have aimed to increase transparency and accountability, including transitioning to open, oral-argument trials. The proposed reforms threaten to reverse this progress and introduce new uncertainties into Mexico’s legal framework, a framework that is indeed crucial for both domestic and international confidence in Mexico.
