By Guillermo Madrigal
On January 31st, the Second Chamber of the Supreme Court of Justice of the Nation (SCJN) granted protection against the reforms to the Electric Industry Law (LIE), published on March 9, 2021, in the Official Gazette of the Federation. The Court’s resolution in deciding amparo164/2023 benefits Mexico and avoids commercial consequences at the international level.
The Second Chamber considered that the legal provisions ordering energy supply to be based on unit costs foreseen in the reform, implied by electricity coverage contracts with a commitment to physical delivery, represent a competition barrier as the Federal Electricity Commission would have priority access to energy dispatch.
Thus, the reforms to the contested LIE, as a whole, diminished competition in electricity generation and favored a specific group of companies, to the detriment of other participants in the electricity generation market.
Likewise, the SCJN specified that the restriction of auctions implied a differentiated or privileged treatment that went against the principles of competition and free competition in the national electricity market, in addition to the fact that the new way of acquiring clean energy certificates is contrary to sustainable development.
The resolution of this amparo proceeding determines the impossibility for the reform to the LIE to continue its course, helping to improve, to some extent, Mexico’s position in the international trade context by reducing the possibility of the United States taking the country to a panel over its energy policy and eventually leading to commercial consequences such as suspending benefits in the sector or other sectors covered under the Treaty between Mexico, the United States, and Canada (USMCA).
The amparo reflects a more favorable position internally for Mexico, by promoting competition in the electricity generation market, energy security, and sustainable development.
At Vega, Guerrero & Asociados, the dispute resolution team is available to provide advice and offer our services in procedures involving this matter.
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