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Mexico Supreme Court of National Justice Decision Related to Unconstitutionality Action 64/2021 on the Electricity Industry Law

Rules Applicable to Unconstitutionality Actions

Unconstitutionality actions are abstract constitutional control mechanisms available to certain Governmental entities.1  The legal standard to accept and initiate these types of actions does not require that the plaintiff prove that the challenged law has harmed it or that the law has been applied. 

Unconstitutionality actions may lead to the challenged law’s invalidation. Because of its characteristics, unconstitutional actions are deemed to be extraordinary means of constitutional control that require a qualified vote by the Justices of the Supreme Court of Justice (eight out of 11 justices) to achieve such invalidation. Unconstitutionality actions that do not obtain the qualified vote are dismissed; Justices may nonetheless draft concurring or dissenting opinions.2

Moreover, the law that governs unconstitutionality actions provides that the reasoning of a Supreme Court’s decision approved by at least eight justices will become binding precedent for federal and local judicial authorities.3 Accordingly, for decisions to become binding precedent, they must obtain a qualified vote and the justices’ reasoning must be aligned.

 

Details of the Decision

The Mexican Senate filed the Unconstitutionality Action 64/2021 ("Unconstitutionality Action") to challenge the constitutionality of several articles of the "Decree that modifies and adds several provisions to the Electricity Industry Law" published in the Federal Gazette on March 9, 2021 (“Amended LIE”).

On April 5 and 7, 2022, a plenary session of the National Supreme Court of Justice ("Supreme Court") held hearings to discuss and decide on the draft Unconstitutionality Action decision prepared by Justice Ortiz Ahlf. The draft concluded that all the contested provisions of the Amended LIE were constitutional.
The Supreme Court of Justice decided as follows:

A. To declare the unconstitutionality of the following articles of the Amended LIE by six or more votes (without obtaining a qualified vote):

  • 3, section V (new definition of Legacy Electric Power Plant);
  • 4, section VI (priority of Electric Derivative Contracts with Physical Delivery Commitments over renewable power plants);
  • 26 (priority order that Electricity Carriers and Distributors must grant to Legacy Electric Power Plants and External Legacy Power Plants);
  • 53 (elimination of the competitive means to acquire electricity (i.e., tenders));
  • 101 (change to the dispatch order and prioritization of Electric Derivative Contracts);
  • 108, section VI (generation and consumption programs associated to Electric Derivative Contracts with Physical Delivery Commitments); and
  • 126, section II (new criteria to grant Clean Energy Certificates or CELs).

The Unconstitutionality Action as it relates to the provisions above is thus dismissed because a qualified vote was not obtained. The majority of Justices who voted to declare these provisions unconstitutional deemed they are unconstitutional because they violate fundamental rights to competition, free market, and environmental protection.  Each Justice’s specific reasoning will be known once their concurring and dissenting opinions are released.

B . To declare the constitutionality of the following articles of the Amended LIE by six or more votes:

  • 3, section XII (definition of Electricity Derivative Contract), section XII-Bis (definition of Electricity Derivative Contract with Physical Delivery Commitments) and section XIV (definition of Legacy Contract for Basic Supply);
  • 4, section I (authority to grant open access to the national transmission grid and general distribution lines when technically feasible);
  • 12, section I (authority to grant permits considering the National Electric System planning criteria);
  • 35 (possibility that power plants and load centers are aggregated to perform interconnection works);
  • 108, section V (authority to assign and dispatch following the National Electric System’s criteria for security, reliability, quality and continuity);
  • Fourth Transitory (authority to revoke self-supply permits that are deemed to have been obtained in violation of the law); and
  • 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).

The constitutionality or presumption of constitutionality of a law is granted by the legislative proceeding that gives it origin.  Therefore, by deciding on the unconstitutionality action, the Supreme Court of Justice only validates its constitutionality.

The Justices’ dissenting and concurring opinions are required to assess whether the Supreme Court’s decision constitutes a binding precedent on the federal and state courts related to the articles declared constitutional. Although certain articles obtained a qualified vote (e.g., article 35 and Fifth Transitory Article of the Amended LIE), the reasoning behind the decision must be on the same grounds for it to be deemed binding precedent

 

The Supreme Court's Decision effect on ongoing Amparos challenging the Amended LIE

The Supreme Court’s decision did not reach a qualified vote to declare the unconstitutionality of the Amended LIE.  Therefore, the Amended LIE will continue to be deemed valid until its constitutionality is reviewed by another mechanism of constitutional control (e.g., amparo trials).

The majority vote on certain provisions (whether to declare its unconstitutionality or validity) serves as a guide to anticipate the reasoning that Courts, Magistrates or Justices will follow in the amparo trials.  This is because arguments presented in the amparo trials are similar to the arguments that the Senate made in the Unconstitutionality Action.

Since only a simple majority is required in an amparo decision to declare that a law is unconstitutional, it is reasonable to expect that the Amended LIE’s provisions deemed unconstitutional by majority in the Unconstitutionality Action will also be deemed unconstitutional in the context of amparos.  On the other hand, the Amended LIE’s provisions deemed constitutional by majority in the Unconstitutionality Action may be deemed valid in the context of amparo actions.  To assess the consequence fully, however, the Supreme Court or Collegiate Tribunal’s assessment on legal standing and relativity principles (i.e., particular or general effects of the amparo decision) will be relevant.

The Unconstitutionality Action’s decision does not affect the injunctions that the Specialized Courts have granted.  Because those injunctions are still in force, the Executive Branch cannot apply the Amended LIE. Lastly, with the issuance of the written decision on the Unconstitutionality Action, the Supreme Court may order the lifting of the amparo trial suspension so that they may be resolved in a definitive manner.

 

Click here to download 'Supreme Court of Justice decision on the Unconstitutionality Action 64/2021 about the Electric Industry Law' PDF in Spanish.

 

1 Article 105, Section II of the Political Constitution of the United Mexican States (“Constitution”) (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). 
2 Constitution, Article 42, Regulatory Law, Article 105, Sections I and II, second paragraph.  
3 Constitution, Article 43, Regulatory Law, Article 105, Sections I and II.

 

María Inés García Noriega (White & Case, Trainee Lawyer, Mexico City) contributed to the development of this publication.

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