Energy Investors Face Mexico Risks in the Electricity and Lithium Sectors

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30 min read

Investors in the Mexican energy sector are facing evolving challenges, as the Mexican government is making good on threats to increase state interference in the sector through the implementation of changes in electricity sector law and announcing the nationalization of the lithium mining industry. 

It was less than a decade ago when Mexico made global headlines when it put an end to State control over the energy sector through the 2013 Energy Reforms during the administration of President Enrique Peña Nieto. The liberalization of the sector was a long-anticipated step toward the opening of the Mexican energy sector to foreign investment. The reforms upended the historical control of the state-owned oil company Petroleos Mexicanos ("PEMEX") and the national power authority, Comisión Federal de Electricidad ("CFE"). 

Due to the reforms, a wave of new investment began to flow into the Mexican energy sector from abroad. Among other examples, Mexico made headlines in 2017 as it completed three rounds of auctions for new renewable-energy investments that were so successful they doubled the country's renewable energy capacity and set world records for low-priced renewable energy, making Mexican wind and solar energy among the cheapest sources of energy in the world.1

Those halcyon days are now over. Since assuming power at the end of 2018, the government of President López Obrador has taken a series of steps that have impacted or undermined investment in key sectors of the Mexican economy. The government is now making good on its threats to the energy sector by dismantling the historic reforms that led to increased investment in the sector—and restoring the dominance of state entities in the energy sector through nationalization and resource nationalism.

The Mexican energy sector is roiled by an environment of uncertainty and regulatory brakes to execute new and ongoing investments. Potential damage to existing foreign investments in the electricity and mining sectors could result from the amendments to the Electricity Law, the Lithium Mining Reform, and secondary regulations. These regulatory changes largely maintain the uncertainty as to the consequences for the companies that have invested in the electricity sector and could possibly open the door to litigation, including international investment claims against the Mexican government. Individuals or entities whose rights would be affected by these developments should consider their legal options in this respect.  

This note reviews the recent reforms in the electricity and mining (particularly lithium) sectors. It is organized in three sections. The first section provides a brief overview of the key changes derived from the liberalization of the Mexican energy sector. The second section sets out the recent amendments to the legal framework for the energy (hydrocarbon and electricity) sector and the resulting legal uncertainty in the Mexican electricity and mining sectors. The third section highlights potential legal considerations that foreign investors in these sectors in Mexico may want to consider to protect their investments. 

 

The previous Mexican energy sector reforms

Following the nationalization of the Mexican power sector in 1960, the generation, transmission, distribution and supply of electricity were established as a "strategic activity" that only the State could perform through its state-owned enterprise ("CFE").2 In December 1992, however, Mexico progressively initiated a transformation process of its electricity sector that sought to revitalize an ailing sector and boost the economy, with the stated objective of attracting foreign investment. In particular, the Mexican Congress amended the Public Service Electricity Law ("LSPEE") in order to allow private investment in the generation of electricity through the schemes of independent power producing (Productor Independiente de Energía), self-supply (autoabastecimiento), co-generation (cogeneración) and low-scale production (pequeña producción), which were not considered public services.

It took more than two more decades, and multiple administrations, finally to achieve a wholesale revamping of the constitutional and legislative framework to implement a wider liberalization of the energy market.

This process was accelerated when, in June 2012, the Mexican Congress passed the General Law on Climate Change (Climate Change Law), which sought, among other things, to reduce greenhouse gas emissions by 30 percent in 2020 and by 50 percent by 2050.3 To this end, the new statute established aggressive targets concerning the promotion of clean energy generation, including that clean energy should account for 35 percent of the energy mix by 2024.4

In 2013, in line with these objectives, the Executive Branch submitted to the Mexican Congress a novel and bold energy reform proposal, seeking to amend Articles 25, 27, and 28 of the Constitution, which provided that the electricity industry—among other sectors—would be a public service reserved exclusively to the Mexican State. Following approval by both chambers of the Mexican Congress, the constitutional reform became effective on 21 December 2013 ("2013 Energy Reform"). The cornerstone of the 2013 Energy Reform was the liberalization of the electricity generation and commercialization sectors, with the establishment of a free market regime. Although electricity transmission and distribution activities still constituted public services in charge of the State, the reform made it possible for the State to enter into agreements with private parties in relation to these activities.5 Moreover, the national power company, CFE, would be subject to competition like any other market participant.6

In August 2014, the Mexican Congress approved a new Electric Industry Law ("2014 LIE"), which was part of a set of new laws to implement the 2013 Energy Reform. In line with this reform, the 2014 LIE liberalized the electricity industry, opening the electric industry to private sector participation in generation and commercialization activities. The 2014 LIE notably provided that the generation and wholesale power markets would exist "under a regime of free competition," with the CFE becoming a competitor in the new generation market.7 In addition, the LIE reduced the State's control of the industry and promoted transparency in the market, in order to incentivize private investment, with particular emphasis on renewable energy projects.8

Against this background, international companies decided to participate in the three long-term electricity auctions organized by Mexican authorities between 2016 and 2017, which promoted the growth of renewable energies, especially wind and solar power. These auctions resulted in the renewables segment contributing almost US$9 billion in investments and allowing a sharp reduction in the prices of electricity generated by renewable sources.9

The new energy legal framework attracted numerous local and foreign investments. According to data published by the Mexican Ministry of Economy, between 2012 and 2021, more than US$15 billion in foreign investments flowed into Mexico's electricity market, and 64 percent of these investment flows came between 2015 and 2018, i.e., after the approval of the 2013 Energy Reform and its implementation laws in 2014.10 In 2018 alone, foreign direct investments in the electricity market reached more than US$5 billion, representing 13.5 percent of Mexico's overall foreign direct investment that year.11

Among other results of these policies, the influx of private investments pushed Mexico's green energy transition forward, significantly contributing to the nation's wind and solar capacity. 

 

Altering the Electricity Sector Reforms 

Starting in January 2019, then recently inaugurated President López Obrador canceled the long-term and mid-term auctions for the awarding of electricity-hedging agreements with CFE—these auctions being the principal mechanism for promoting private investment in renewable projects. Then, in October 2019, the policies deployed by President López Obrador's administration explicitly sought to dismantle the energy sector legal framework adopted in the 2013 Energy Reform, and return a dominant role to the state-owned power company, CFE at the expense of private competitors. The administration's dismantling of the 2013-2014 regime occurred progressively, through a series of decisions and regulatory amendments, culminating in critical amendments to the 2014 LIE in early 2021 and the modification of Mexico's mining law to nationalize lithium mining one year later. We provide below an overview of these two major events and their potential impact on private investment. 

In February 2021, President López Obrador's administration submitted to the Mexican Congress a bill introducing several amendments to the 2014 LIE. The proposed amendments substantially modified the regulatory framework for the electricity sector introduced by the 2013 Energy Reform and notably sought to prioritize CFE at the expense of private power contracts and permits, including by increasing CFE's market share and prioritizing the energy produced by CFE. Following approval by the Mexican Congress, the Decree Amending and Adding Various Provisions to the Electricity Industry Law was published in the Federal Official Gazette on 9 March 2021,12 entering into force the following day (the "2021 LIE Amendments").13

We provide below a summary of the key changes in the Mexican power industry resulting from the LIE amendments: 

  • Modification of the "merit order" dispatch rules. Energy dispatch rules essentially regulate the order in which each power plant injects its energy into the national grid over a given period. The 2014 LIE introduced an "economic dispatch methodology" for the dispatch of electricity whereby the National Energy Control Centre—Centro Nacional de Control de Energía ("CENACE")—would rank generation plants from lowest to highest variable costs, in what is known as the "Merit Order."14 The 2021 LIE Amendments modify the economic dispatch method by prioritizing the energy produced in generation assets owned by CFE, which would be included in newly-created electricity hedging agreements with physical delivery commitment (Contratos de Cobertura Eléctrica con Compromiso de Entrega Física). Effectively, this means that CFE's power plants are to be dispatched first, regardless of cost-efficiency and sustainability implications, and at the expense of private power companies. A study published by the National Renewable Energy Laboratory ("NREL") of the US Department of Energy anticipates that prioritizing state-owned generation will increase annual electricity production costs by 32 percent to 54 percent,15 and boost the possibility of power outages by 8 percent to 35 percent.16 The same study assesses that prioritizing state-owned generation will increase Mexico's annual CO2 emissions by 26 percent to 65 percent.17 The modification of the dispatch rules under which power generation projects were developed and financed will also possibly impair the operation and profitability of these projects. Financings in place for these projects may face obstacles resulting from the resulting reduced or limited potential revenue;
  • Clean Energy Certificates. Derived from the 2013 Energy Reform, Clean Energy Certificates—Certificados de Energía Limpia ("CELs")—were implemented to give electricity generators an incentive to use clean energy sources to produce electricity and promote the penetration of clean technologies through investments in new clean power plants in the Mexican electricity market. Each year, the Mexican Ministry of Energy—Secretaría de Energía ("SENER")—requires that a certain percentage of the electricity supplied to final consumers come from clean energy sources.18 CELs are certificates titles issued by the State's Energy Regulatory Commission— Comisión Reguladora de Energía ("CRE")—that certify the production of a certain amount of energy generated from renewable sources. As such, they serve to meet the annual clean energy requirements established by SENER. CELs are issued in favor of power generation plants that evidence the production of a determined amount of clean energy. However, CELs do not apply to all renewable energy produced in Mexico. Under the 2014 LIE and its associated regulations, only renewable energy plants established after August 2014 (or repowering projects of existing power plants) qualified to obtain CELs. Most of the CFE renewable power plants—i.e., the so-called "legacy power plants" (Centrales Eléctricas Legadas) owned by the State and built before August 2014—were not eligible to acquire CELs under these criteria. Hence, power plants that were not eligible to obtain CELs had to purchase them from qualifying clean energy generators to comply with the annual requirements. To this effect, the 2014 LIE created a CEL market that enabled market participants to trade CELs through long-term auctions and/or bilateral contracts. Accordingly, the price of the CELs is not fixed, and rather fluctuates according to the demand and supply, and other market mechanisms;
  • As part of the 2021 LIE Amendments, all clean power generation facilities will be eligible to obtain CELs regardless of their ownership and the time when the power facilities began operating.19 This change will notably result in CFE's clean energy facilities receiving CELs, and will eliminate the need to acquire new CELs through the CEL market. The resulting oversupply of CELs will likely cause a drop in the value of the CELs, thereby discouraging investments in new clean energy projects and negatively affecting the return on investment of the existing clean energy investments installed after 2014. Indeed, the CELs value played an important role in assessing the profitability and bankability of the new investments that the 2014 LIE expressly sought to attract. Here again, financings in place for these projects will possibly face obstacles resulting from a reduced or limited revenue generation and the legal uncertainty under the new regime;
  • Review and potential termination of existing self-supply and independent power producer projects. The 2014 LIE established a "legacy" or grandfathering framework for self-supply, cogeneration and independent power producer permits and contracts granted, or applied for, prior to the entry into force of the law.20 It notably provided that—unless their owners chose to transition those projects into the 2014 LIE framework—these permits and contracts would continue to be governed by the prior laws—including in particular the 1992 LSPEE and associated regulations. The LIE framework would apply only in supplementary fashion and to the extent not in conflict with prior applicable regulations.21 In contrast, the 2021 LIE Amendments provide that that the State's CRE shall review existing permits granted under the self-supply scheme and revoke those that the authority should consider were granted in "fraud of the law."22 In addition, contracts under the independent power producer modality must also be reviewed in order to confirm that they are still "profitable" for the State and, as the case may be, renegotiated or terminated. Effectively, the revocation of these permits and agreements will put the self-supply and independent power producer regime in a state of uncertainty, possibly preventing permit holders from operating and complying with their energy commitments, and creating a risk of default on existing contractual obligations, as well as the risk of abandonment or fire sale of generation assets. Here again, financings in place for these projects will possibly face obstacles resulting from a reduced or limited revenue generation and the legal uncertainty under the new regime; and
  • Conditions for power generation permits. The 2014 LIE established a permit-based regime whereby all participants meeting certain specified requirements were entitled to obtain a power generation permit.23 Under the 2021 LIE, the granting of new power generation permits is subject to the planning criteria of the National Electric System—Sistema Electrico National ("SEN")—issued by the Mexican Ministry of Energy– Secretaría de Energía ("SENER"). In addition, on 30 March 2022, the CRE issued new requirements to obtain power generation permits.24 The new regulation sets out further requirements and establishes new obligations in connection with generation permits, including legal, technical, and financial aspects. These new provisions and regulations will possibly reduce new private generation projects in Mexico. Transparency in the SEN planning criteria and reducing regulatory burden will be crucial to attract new investments. 

Following the publication of the 2021 LIE Amendments, members of the Mexican Senate, COFECE (the Mexican antitrust authority), and the State of Colima filed a constitutionality action before Mexico's Supreme Court to challenge the constitutionality of several articles of the amended statute. Under Mexican law, a constitutionality action is a special procedure that entitles certain state government entities to petition the Supreme Court for an abstract judicial review of laws.25 A declaration of unconstitutionality requires a qualified majority vote of the Supreme Court plenary session (i.e., 8 out of 11 Justices). The actions in this case alleged that several provisions of the amended LIE violated the 2013 Constitutional Energy Reform that sought to expand private investments in the energy sector and the use of clean energy sources. The challenges relied, among other things, on the constitutional principles of free trade and competition, and the right to a healthy environment. 

In parallel to these constitutionality actions, numerous industry participants individually challenged the 2021 LIE Amendments before lower courts, through a different constitutional control mechanism known as amparo actions. These amparo actions resulted in an industry-wide injunction of the LIE amendments during the pendency of these lawsuits. Public sources indicate that to date, more than 250 amparo actions have been registered involving the 2021 LIE Amendments.26

On 5 and 7 April 2022, a plenary session of Mexican Supreme Court debated and voted on the constitutionality action against the 2021 LIE Amendments.27 In short, the Supreme Court did not gather enough votes to declare any article of the amended LIE unconstitutional. Interestingly, however, the Justices' votes were split differently on the various legal provisions under review. With respect to some provisions, the Court reached a simple majority vote (but not a qualified one) holding that they were constitutional.28 With respect to other provisions, the court likewise found by simple majority (but not a qualified one) that they were unconstitutional as they violated fundamental rights to competition, free market, and environmental protection.29

In any event, the amparo proceedings brought by private parties will continue their course. In the meantime, the 2021 LIE Amendments will not go into effect unless and until the industry-wide injunctions are lifted. Following the decision by the Supreme Court on the constitutionality actions, it is now unclear whether the amparo actions will be resolved individually by lower courts, or whether the Supreme Court will attract one or more of the amparo actions in order to set a binding precedent for the remaining actions. In addition, it is also unknown at this time whether the Court will resolve these cases en banc (i.e., in plenary session among all 11 justices), or whether the cases will be resolved to one of the two five-member chambers of the Court. 

Nevertheless, the varying majorities, and the varying concurrent and dissenting opinions as to the different provisions of the 2021 LIE Amendments likely will guide the reasoning of the lower courts in the amparo trials, particularly given that many of the arguments raised in the amparo actions are similar to those underlying the constitutionality actions. In other words, it is reasonable to anticipate that the provisions of the 2021 LIE Amendments declared unconstitutional will be found to be unconstitutional in amparo proceedings. Conversely, those provisions of the 2021 LIE Amendments declared constitutional are likely to be upheld in the context of amparo proceedings.

 

The Lithium Mining Reform

As the world increasingly shifts toward clean-energy solutions, the global market for energy storage continues to grow rapidly, facilitating the move towards the decarbonization of the energy markets and bolstering global demand for lithium, particularly due to its use in batteries for powering electric vehicles, mobile phones and computers. 

Mexico has lithium deposits in the exploitation stage licensed to foreign investors from Canada, the United States, England and China. According to the US Geological Survey ("USGS"), Mexico is ninth in the world in lithium reserves, with 1.7 million tons of lithium reserves.30 Against this background, President López Obrador moved to nationalize the lithium industry. 

In October 2021, President López Obrador submitted to the Mexican Chamber of Deputies—the lower chamber of Congress—an "Initiative to Amend Articles 25, 27 and 28 of the Mexican Constitution Regarding the Energy Sector."31 Similarly to the amendments to the Electricity Law, this proposed constitutional reform sought to modify the legal framework for the energy sector derived from the 2013 Energy Reform, and grant a dominant role to the CFE, both at the market and regulatory levels. At the market level, the reform notably sought to limit the participation of private companies in the Mexican electricity sector, among others, by (i) guaranteeing CFE at least 54 percent of the electricity generation market; and (ii) granting the State the ability to cancel (a) existing and pending permits for the generation of electricity; (b) existing power purchase agreements ("PPAs") executed by private companies with CFE; and (c) existing Clean Energy Certificates ("CELs"). It also contemplated that lithium and other strategic minerals would be reserved to the State. At the regulatory level, the Energy Reform sought to dismantle the energy regulatory framework, by removing the current energy regulators and concentrating their regulatory power in the CFE and SENER.

On 17 April 2022, following the Mexican Supreme Court's dismissal of the constitutional actions against the 2021 LIE Amendments; the Mexican Chamber of Deputies dismissed the proposed constitutional amendments. With 275 votes in favor from President López Obrador's Morena party and its allies, and 223 votes against, the reform did not achieve the two-thirds majority required for a constitutional amendment (i.e., 332 votes). As noted above, however, several of the changes, that the Administration sought to incorporate into the Constitution are already included in the 2021 LIE Amendments.

Following the Mexican Congress's rejection of the constitutional reform proposal, President Obrador introduced a standalone proposal to amend Mexico's mining law as regards the exploitation of lithium ("Lithium Mining Reform").32 This reform was given fast-track treatment, approved by both chambers of the Mexican Congress, and signed into law by President López Obrador on 20 April 2022.33 In short, the Lithium Mining Reform declared lithium resources "of public utility,"34 and reserved lithium exploration and exploitation to the Mexican State.35

The two key changes introduced into the Mining Law relate to the following aspects:

  • Public utility of lithium. The exploration and exploitation of lithium is declared to be of "public utility." Accordingly, no new concessions, licenses, contracts, permits, assignments, or authorizations will be granted. Further, lithium deposits are considered mining reserve areas and lithium is declared a part of the national heritage. Lithium value chains will be publicly controlled through a state-owned entity with the state guaranteeing rights related to lithium exploration, including living in a healthy environment and indigenous rights; and
  • New decentralized public body. The exploration and exploitation of lithium are exclusively the responsibility of the State, and will be carried out by a new decentralized public body, to be established by Executive Branch.36 The Mexican Geologic Authority—Servicio Geológico Mexicano ("SGM")—will assist the new decentralized public body with exploration activities.37 The Executive Branch has 90 days following the entering into force of the law to create this new entity. As of the date of this publication, it is unclear whether any effective steps have been taken in this regard.38

Although the Lithium Mining Reform expressly provides that no concessions or exploration permits will be granted with respect to lithium, the effects that this reform will have on existing concessions and exploration projects remain largely uncertain. While the amendments to the Mining Law do not textually contemplate the revocation or termination of existing lithium concessions, the continued operation under existing permits and concessions seems hardly reconcilable with the State's newly declared exclusive authority in the lithium exploration and mining activities. Potential damages to existing concessions and exploration projects could range from the termination of existing contracts, withdrawal of licenses, permits or other authorizations previously granted and impairment of title and economic value of investors' investments.

On 29 May 2022, members of the Mexican Senate introduced a constitutionality action before Mexico's Supreme Court to challenge the constitutionality of the New Mining Law. It is unclear whether the Mexican court will hear the constitutional challenge. A decision on the challenge's admissibility is expected in the following days. However, former State officials have raised the possible unconstitutionality of this reform, anticipating that it will result in a sequence of events similar to those relating to the 2021 LIE Amendments.39

 

Navigating the impact on energy sector investment

In light of these developments, foreign investors engaged in the electricity and lithium sectors would be well advised to consider available options. Companies can take a variety of steps, including risk-mitigating measures, taking timely steps to increase the likelihood of a negotiated solution, and/or ensure the international protection of their investment, including through possible claims against Mexico under international investment treaties. 

Indeed, Mexico's changes to the Electricity Law and Lithium Mining Reform could potentially impair rights protected under the more than 40 investment treaties to which Mexico is a party, including those entered into with the United States, Canada, the United Kingdom, China, Germany, France, Spain and Italy.40

These investment protection treaties grant foreign investors a series of rights aimed at protecting their investments in Mexico including among others:

  • Fair and equitable treatment: This standard is usually found to prohibit States from frustrating legitimate expectations that they created to induce an investor to invest, as well as arbitrary and unjust conduct. While a violation of this standard is fact-specific, tribunals have found that this standard is violated, when a State fails to afford due process and observe fundamental principles of its regulatory framework; conducts itself in a way that is arbitrary, grossly unfair, unjust or involves a lack of due process; and fails to respect the foreign investor's legitimate expectations;
  • Non-discrimination: This standard is usually found to prohibit States from discriminating among investors/investments and seeks to ensure that investors in similar circumstances are treated equally, regardless of nationality; and 
  • Legal expropriation: Expropriation entails a State's interference with private property for a public use. Both physical items (such as infrastructure, land, natural resources) and intangible rights associated with ownership (such as debts, shares in companies, and intellectual property) may be expropriated. While States have the right to expropriate private property—including through nationalizations—that right is subject to certain conditions and must at a minimum be (i) non-discriminatory; (ii) for a public purpose; and (iii) accompanied by the payment of prompt, adequate, and effective compensation.41

Ultimately, the specific actions that a particular investor should take depend on the particular facts and available rights for each situation. Investors faced with recent changes in the Mexican electricity and lithium sector should take active steps to protect both their legal and commercial interests. These should notably include actions to minimize disruption to their investment, preserve critical data and information, as well as consultation with experienced practitioners. 

 

1 The Wall Street Journal, Mexico Takes Aim at Private Companies, Threatening Decades of Economic Growth, June 12, 2022.
2 Political Constitution of the United Mexican States ("Mexican Constitution"), Article 27. 
3 Climate Change Law, Second Transitional Provision.
4 Climate Change Law, Third Transitional Provision (II)(e).
5 Mexican Constitution, Article 25 and 27.
6 Mexican Constitution, Article 25 and 27.
7 2014 LIE, Article 4.
8 2014 LIE, Article 4.
9 See, BNamericas, What Now for Renewables in Mexico?, 24 May 2022, available at: BNamericas - What Now for Renewables in Mexico?
10 See National Foreign Investment Commission, Statistic Report on the behavior of foreign direct investment in Mexico (January-December 2021), Table No. 2, p. 12, available at: https://www.gob.mx/cms/uploads/attachment/file/718302/Informe_Congreso-2021-4T.pdf.
11 See National Foreign Investment Commission, Statistic Report on the behavior of foreign direct investment in Mexico (January-December 2021), Table No. 3a, p. 14, available at: https://www.gob.mx/cms/uploads/attachment/file/718302/Informe_Congreso-2021-4T.pdf.
12 See Decree Amending and Adding Various Provisions of the Electricity Industry Law (9 March 2021) available at: https://www.diputados.gob.mx/LeyesBiblio/pdf/LIElec_090321.pdf.
13 See, 2021 LIE, available at: Ley de la Industria Eléctrica (diputados.gob.mx).
14 2014 LEI, Article 101 and Article 108.V.
15 See Impacts Analysis of Amendments to Mexico´s Unit Commitments and Dispatch Rules, published by National Renewable Energy Laboratory ("NREL") of the US Department of Energy (NREL’s Impact Analysis), available at: https://www.nrel.gov/docs/fy22osti/81350.pdf.
16 See NREL’s Impact Analysis, p. 21, Table 6, available at: https://www.nrel.gov/docs/fy22osti/81350.pdf.
17 See NREL’s Impact Analysis, p. 23, Table 9, available at: https://www.nrel.gov/docs/fy22osti/81350.pdf.
18 In 2018, the clean energy annual requirement amounted to 5% of the total energy consumed during the year. This percentage increased to 5.8% in 2019, 7.4% in 2020, 10.9% in 2021 and 13.9% in 2022.
19 2021 LEI, Article 126(II).
20 2014 LEI, Articles Second Transitional Provision.
21 2014 LIE, Second Transitional Provision and Tenth Transitional Provision.
22 2021 LEI, Fourth Transitional Provision. 
23 2014 LEI, Article 12, 17 and 129.
24 See https://www.whitecase.com/publications/alert/new-requirements-obtaining-power-generation-permit
25 Constitution, Article 105 (II) (e.g., 33% of the Chamber of Deputies or Senators members; the Federal Executive through the Government Legal Advisor; the National Commission for Human Rights, the Attorney General of the Republic)
26 Expansión, los amparos se vuelven el último recurso para definir la política eléctrica, 21 April 2022; El Economista Litigios e incertidumbre generan alta tensión en el sector eléctrico, 24 April 2022.
27 Mexican Supreme Court, Press Release, 7 de abril de 2022, available at: Listado de Comunicados (scjn.gob.mx).  The full judgment of the Supreme Court Decision is available at: https://www2.scjn.gob.mx/ConsultaTematica/PaginasPub/DetallePub.aspx?AsuntoID=281693
28 The Mexican Supreme Court declared constitutional by simple majority the following provisions of the 2021 LIE: Article 3 (XII) (definition of Electricity Derivative Contract), Article 3 (XII-Bis) (definition of Electricity Derivative Contract with Physical Delivery Commitments) and Article 3 (XIV) (definition of Legacy Contract for Basic Supply); Article 4 (I) (authority to grant open access to the national transmission grid and general distribution lines when technically feasible); Article 12(I) (authority to grant permits considering the National Electric System planning criteria); Article 35 (possibility that power plants and load centers are aggregated to perform interconnection works); Article 108(V) (authority to assign and dispatch following the National Electric System's criteria for security, reliability, quality and continuity); Article Fourth Transitory (authority to revoke self-supply permits that are deemed to have been obtained in violation of the law); and Article Fifth Transitory Article (authority to review the legality and profitability of the Contracts to Commit Generation Capacity and Electricity Supply executed with independent energy producers). See, White & Case's alert, Mexico Supreme Court of National Justice Decision Related to Unconstitutionality Action 64/2021 on the Electricity Industry Law, 13 April 2021 available at: Mexico Supreme Court of National Justice Decision Related to Unconstitutionality Action 64/2021 on the Electricity Industry Law | White & Case LLP (whitecase.com).
29 The Mexican Supreme Court declared unconstitutional by simple majority the following provisions of the 2021 LIE:  Article 3(V) (new definition of Legacy Electric Power Plant); Article 4, (VI) (priority of Electric Derivative Contracts with Physical Delivery Commitments over renewable power plants); Article 26 (priority order that Electricity Carriers and Distributors must grant to Legacy Electric Power Plants and External Legacy Power Plants); Article 53 (elimination of the competitive means to acquire electricity (i.e., tenders)); Article 101 (change to the dispatch order and prioritization of electric derivative contracts); Article 108, section VI (generation and consumption programs associated to Electric Derivative Contracts with Physical Delivery Commitments); and Article 126(II) (new criteria to grant Clean Energy Certificates or CELs).  See, White & Case's alert, Mexico Supreme Court of National Justice Decision Related to Unconstitutionality Action 64/2021 on the Electricity Industry Law, 13 April 2021 available at: Mexico Supreme Court of National Justice Decision Related to Unconstitutionality Action 64/2021 on the Electricity Industry Law | White & Case LLP (whitecase.com).
30 In terms of reserves, Bolivia ranks first with 21 million tons, followed by Argentina (19 million tons) and Chile (9.8 million). Mexico holds 1.7 million tons of lithium reserves. See information available at: Mineral Commodity Summaries 2022 - Lithium (usgs.gov)
31 See Initiative to Amend Articles 25, 27 and 28 of the Mexican Constitution Regarding the Energy Sector (14 April 2021), available at: asun_4243951_20211026_1634248679.pdf (gobernacion.gob.mx).
32 See Decree Amending Decree amending and adding various provisions of the Mining Law (20 April 2022), available at: http://dof.gob.mx/nota_detalle.php?codigo=5649533&fecha=20/04/2022.
33 The Decree Amending and Adding Several Provisions to the Mining Law was published in the Federal Official Gazette on 20 April 2022.  See, Decree Amending and Adding Various Provisions of the Electricity Industry Law (9 March 2021) available at: DOF - Diario Oficial de la Federación.  The amended version of the Mining Law entered into force the day following the Decree's publication.  See, New Mining Law  available at: Móvil - Ley Minera (diputados.gob.mx).
34 New Mining Law, Article 5 Bis.
35 New Mining Law, Article 1.
36 New Mining Law, Article 1.
37 New Mining Law, Article 9.
38 New Mining Law, Third Transitory provision.
39 See, declaration from Jose Ramón Cossío, Former Minister of the Supreme Court of Justice, available at: El litio y la Constitución (eluniversal.com.mx)
40 Specifically, Mexico has signed Investment Promotion and Protection Agreements ("IPPAs") with the following countries: Germany, Argentina, Australia, Austria, Bahrain, Belarus, China, South Korea, Cuba, Denmark, United Arab Emirates, Slovakia, Spain, Finland, France, Greece, Holland, India, Iceland, Italy, Kuwait, Panama, Portugal, United Kingdom, Czech Republic, Singapore, Sweden, Switzerland, Trinidad and Tobago Turkey and Uruguay.  México has also signed free trade agreements ("FTA") that contain certain dispositions for investment protection, such as, Pacific Alliance, Treaty between the United States, Mexico and Canada ("USMCA" late NAFTA) Comprehensive and Progressive Agreement for Trans-Pacific Partnership, FTA with Chile, FTA with Colombia, FTA with Costa Rica, FTA with Japan, FTA with Panama, FTA with Peru y FTA with Uruguay. There are also several investments agreements whose ratification is still pending (e.g., the Free Trade Agreement between Mexico and the European Union).
41 It should be noted that the public interest of a regulatory measure does not necessarily exonerate the State of its international responsibility in cases of expropriation.

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