Proposed Constitutional Reforms: the Judiciary overhaul and the elimination of the Independent Agencies

Galicia Abogados - In its previous communication on the 19 initiatives of reforms to the Political Constitution of the United Mexican States that the Federal Executive presented to the Congress of the Union on February 5, 2024, including a proposal to reform the Judicial Branch and the disappearance of several autonomous agencies, Galicia pointed out that Morena, the party in power, and its allies in Congress, the Green Ecologist Party and the Labor Party, lacked the necessary majority to approve such reforms.

After a landslide victory in last June’s elections, Morena and its allies now have the constitutionally required majority to amend the Constitution, so they have resumed their legislative efforts, prioritizing the militarization of the National Guard (currently under civilian command under the current Constitution), the disappearance of autonomous constitutional bodies, and a major judicial reform autonomous constitutional bodies and a far-reaching judicial reform.

In this document Galicia will only address the proposals regarding administrative simplification and the Judiciary.

Current status and next steps

On August 23, 2024, the Constitutional Points Commission of the Chamber of Deputies issued an opinion subscribing the presidential initiative to eliminate certain autonomous constitutional agencies, without making any changes to it. On the 26th of the same month, said Committee issued a positive opinion, subscribing the presidential initiative to reform the Judicial Branch, to which it made different changes, none of which altered the substance of the document sent by the Executive (both initiatives are summarized below).

Pursuant to the regulations applicable to Congress, the next immediate step is for the positive opinions of the Commission regarding the Executive’s initiatives to be scheduled for discussion in the plenary of the Chamber of Deputies with this new legislature in its first legislative period. In fact, the amendments regarding the Judicial Branch are already being discussed by the Lower House right now and are expected to be voted on in the following days. As previously stated, the Executive and its allies in Congress have a qualified majority in the new legislature, so it is expected that both initiatives will obtain the necessary votes to be approved.

Once approved by the Lower House, the Bills will be sent to the Senate, where the Constitutional Points Committee will have to approve or modify such Bills (as referred to it by the Chamber of Deputies). With the proposed modifications, the Bills will be referred to the Senate Plenary for a vote. If approved in the same terms as those proposed by the Lower House (which is to be expected, since Morena and its allies will surely reach the constitutionally required majority in the Senate as well (they are only one vote short), such Bills will be referred to the state legislatures (32) for approval (first in the corresponding commissions and then in their respective plenary sessions).

If approved by the majority of the State Legislatures (which is also expected, since Morena and its allies have a majority in a significant number of the local congresses), the drafts will enter into force and their modifications will become part of the Federal Constitution.

Should the Senate make changes to any of the rulings approved by the Lower House, the corresponding bill with such changes must be returned to the Lower House for debate and approval.

In the past, this process has taken several months but it is possible that this time it will be completed in much less time and that the Judicial Reform will become part of the Constitution in the next few months, since the different steps of the legislative process are moving extremely fast and, as stated, Morena and its allies have the necessary majorities in both chambers of Congress and in the local congresses.

The following is a summary of the Initiatives and the mandate to be given to Congress to make legislative changes to bring federal legislation in line with the constitutional amendments described above.

Judicial Branch

Integration and organization of the Supreme Court of Justice of Mexico

It is proposed that the Supreme Court’s composition be reduced from 11 to 9 persons, who would serve a term of 12 years instead of 15. With respect to its operation, the chambers of the Court would be eliminated, the qualified vote would be reduced to 6 members for the establishment of binding precedents (currently 8).

Likewise, it is proposed to eliminate the power of the Supreme Court to grant the suspension of constitutional controversies or actions of unconstitutionality against general rules, as well as the possibility of granting amparo against regulatory provisions with general effects. The Court, however, would retain the power to make a general declaration of unconstitutionality of general norms, but would require the concurrence of 8 of the 9 available votes.

Appointment of judges

It is proposed that the appointments of ministers of the Court, circuit magistrates and district judges be made by popular vote in a direct election, after the integration of shortlists with the participation of the Executive, Legislative and Judicial branches.
It is proposed that the appointments of Court ministers, circuit magistrates and district judges be made by popular vote in direct elections, after the integration of shortlists with the participation of the Executive, Legislative and Judicial branches. It is not foreseen that political parties or citizens may run for office, nor the possibility of public or private financing (although electoral campaigns may be carried out, leaving the regulation of these elections to secondary legislation). Likewise, it is proposed that those who impart justice last 9 years in office (12 years in the case of the Supreme Court and 6 years in the case of the Electoral Tribunal).

Powers of constitutional control

As in the case of the Supreme Court, the presidential proposal establishes a prohibition for district courts and circuit courts to declare the unconstitutionality of rules with erga omnes effects in the resolution of amparo proceedings, as well as to grant suspensions against such rules.

Salaries and benefits

A provision is established in the sense that the remuneration of no judicial officer may be higher than that of the President and the possibility of creating trusts and funds within the Judicial Branch, other than those authorized by Congress, is eliminated.

Replacement of judges

It is proposed that all judges of the Federal Judicial Branch cease to hold office on the date on which new judges are elected according to the direct popular election method, which election should occur within the calendar year following the approval of the reforms. The transitory provisions of the proposed constitutional reform establish that the Congress must legislate to make adjustments to the federal law within 90 days following the entry into force of the reform, while the state legislatures will have 180 days to do so. Regarding the election of the judges, it is proposed that in 2025 the entire Supreme Court of Justice of the Nation and half of the district courts and circuit magistrates will be elected, and that the remaining half will be replaced by persons elected in 2027, according to the method described above.

The reform proposal establishes that the first election must be held on June 1, 2025.

Judicial Administration/Creation of the Judicial Disciplinary Tribunal

It is proposed to eliminate the Federal Judiciary Council and divide its functions between an administrative body and a new Judicial Disciplinary Tribunal in charge of disciplinary matters within the Federal Judiciary, whose members will be appointed by popular election.

Tax disputes and criminal proceedings

In the case of major controversies (the law will fix the corresponding amounts) related to taxes, both the administrative justice bodies and those of the Federal Judiciary must resolve within a maximum of 6 months from the date they become aware of the matter. If this term is not observed, the Judicial Disciplinary Tribunal (or the corresponding disciplinary body in the case of administrative tribunals) will be notified. It is also established that in the event that in criminal proceedings the courts do not observe the constitutional time limits, the Judicial Disciplinary Tribunal must be notified.

Implementation

The proposed constitutional reform to the Judicial Branch must be implemented in secondary legislation reflecting these amendments, as well as any changes or policies that the new administration or the Legislature may wish to incorporate, as long as they are consistent with the amended constitutional text.

Autonomous Constitutional Bodies

Arbitrators in competition and telecommunications matters

It is proposed to eliminate the Federal Competition Commission ("COFECE") and the Federal Telecommunications Institute ("IFT"). Thereafter, the responsibility for enforcing competition laws in all industries and markets would correspond to the Federal Executive, through one or more agencies that would be in charge of general industry, foreign and domestic trade, supply and pricing policies, on the one hand (presumably the Ministry of Economy), and of telecommunications and broadcasting policies, on the other hand (presumably, the Ministry of Infrastructure, Communications and Transportation, which would also absorb the powers of the IFT as regulator in the telecommunications and broadcasting sectors).

Amparo against new regulators

It is proposed that to the extent that they exercise the powers that currently correspond to the IFT and COFECE, the acts of the Executive agencies may only be challenged by means of amparo proceedings against final resolutions, in which the suspension will not proceed.

Regulators in the energy sector

It is proposed the disappearance of the National Hydrocarbons Commission ("CNH") and the Energy Regulatory Commission ("CRE"), which regulate the different activities in the hydrocarbons and electricity sectors. Their powers would henceforth be transferred to the Federal Executive, which would develop them through the Energy Secretariat, which would subsequently be responsible for the technical and economic regulation of energy and hydrocarbons, as well as the power to impose sanctions in the industry and its markets. 

Transparency and personal data

It is proposed that the National Institute of Transparency, Access to Information and Protection of Personal Data ("INAI") be abolished, so that henceforth the agencies that exercise comptroller functions in the Executive, Judicial and Legislative Branches and autonomous constitutional bodies, as well as the electoral authority in the case of political parties and the labor authority in the case of unions, will protect the exercise of the right of access to public governmental information.

In the case of the protection of personal data in the possession of private parties, compliance with the corresponding laws and the protection of the rights they provide for would be transferred to the Federal Executive.

Evaluation of social and educational policy

It is proposed the disappearance of the National System for the Continuous Improvement of Education, which evaluates the achievement of the constitutional objectives in the field of education, so that its attributions will be carried out by the Ministry of Public Education (which in turn is responsible for achieving the aforementioned achievements).

Likewise, it is proposed the disappearance of the National Council for the Evaluation of Social Development Policy, which measures poverty, evaluates programs, objectives, goals and actions of the social development policy; and issues recommendations in this regard, so that the National Institute of Statistics and Geography will henceforth perform these functions.

Ongoing proceedings and new authorities

All current agencies will continue to exist and operate until their successors are appointed and take office. The reform proposal mandates the harmonization of secondary legislation to the new institutional design it mandates, which may also include changes proposed by the new administration in the areas of telecommunications, competition, energy, data protection and transparency. At present, these agencies operate as independent bodies with their own governing boards or plenary sessions and support staff. While it is true that the proposal approved by Congress establishes the transfer of their powers to government agencies, it is not clear whether the new authorities will be created as such, there is no clarity as to whether the new authorities will be organized as collegiate bodies (commissions or agencies) or mere departments.

The transitory provisions included in the opinion establish that within 90 days from the entry into force of the reform, the corresponding legislative changes must be made, but it is not clear whether this will be possible.

As far as ongoing proceedings are concerned, the transitory provisions of the reform proposal only state that the legal acts issued by the autonomous constitutional agencies prior to their disappearance will take full legal effect, but do not specify how ongoing proceedings should be handled. This will have to be addressed in the final decree (assuming Congress wishes to do so at this time) or when the secondary legislation is enacted. By way of context, in 2013, when COFECE replaced COFECO and IFT replaced the Federal Telecommunications Commission, both the constitutional reform and the decree enacting the secondary legislation included specific provisions stating that ongoing proceedings should be substantiated under the rules in force at the time they were initiated. This is something that is not currently in the opinion under discussion, but can (and should) be addressed in the transitional provisions of the secondary legislation.

How can we help?

It is crucial to keep in mind that the Judicial Reform as well as the new institutional design in competition, telecommunications, energy and transparency (among others), will significantly affect the way in which individuals manage the legal affairs of their businesses. These changes are likely to require adaptation not only in litigation and regulation, but also in related areas such as legal compliance, jurisdiction and arbitration clauses in contracts, and treaty protection when establishing investment structures. Addressing these challenges requires a holistic approach.

While the implementation of these changes is expected to face significant challenges, such as the appointment or replacement of members of the Supreme Court and other judges (circuit and district judges), commissioners of specialized bodies and other federal officials, it is also expected that these reforms will surely materialize and have long-term consequences that will take years to fully assess. This process may generate even more distraction and potentially disruptive discourse in the business ecosystem.

Notwithstanding the above, we believe, as a Firm, that it is of utmost importance to be prepared to face the new challenges and understand that the Judiciary will not disappear, but will be different; and that regulation will undergo changes and regulatory processes will evolve.

It is also likely that the technocratic approach that was already fading in this administration will become even less effective in the next one.

We understand that some procedures and remedies may become more complicated or less accessible, but others, such as alternative dispute resolution mechanisms may offer viable options in the face of litigation. On those same grounds, we believe that taking a proactive and effective approach with law enforcement and enhancing efforts around legal compliance will be more important than ever, as the primary goal of these reform proposals is to strengthen the power of the Executive and its agencies.

We believe we are uniquely positioned to assist our clients in this transition and team with them to meet the challenges that these proposals and the new political landscape will bring. In recent years, we have been on the front lines, side by side with our clients, helping them successfully navigate complex disputes and proceedings before the authorities; we know what lies ahead, because we have seen it firsthand. In Galicia, our 35 practice areas provide our clients with a global approach that combines extensive and sophisticated knowledge of the public sector, an unparalleled understanding of their business and our commitment to achieving better deals.

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