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MEXICO: An Introduction


Contributed by Michell Nader S., Partner, Nader, Hayaux & Goebel © (Mexico City-London)


The global economic volatility resulting from COVID-19, the war in Ukraine, high inflation rates and recessions in many developed countries have led the Central Bank of Mexico to increase interest rates, which are expected to exceed 9% by the end of 2022. Growth projections for the Mexican economy have been revised to around 1.9% this year and a little more than 2% for 2023.

Growth in Mexico has been sustained by internal consumption, a thriving tourism industry, exports and remittances which have helped the Mexican Peso to remain relatively stable in the last year. Capital investments remain below pre-pandemic levels and its recovery will be slow given the world economics and the beginning of presidential campaigns in Mexico for 2024.

The recent dispute settlement energy related consultations initiated by the US and joined by Canada under the US-Mexico-Canada trade agreement (USMCA) could also impact investment and could result in tariffs on Mexican exports to the US and Canada which could have a material impact on the Mexican economy.

Although very relevant cases have been resolved by the Mexican Supreme Court of Justice, it still has a long list of other constitutional issues in its dockets. These include challenges against the extinction of public trusts, the militarisation of the National Guard, the new list of serious felonies and crimes at a federal level, the nationalisation of lithium and interpretation of criteria regarding electoral propaganda.

Energy Reform 

In October 2021, the Mexican President introduced a constitutional reform to Congress to vacate important aspects of the 2013 energy reform. Among others, the proposed reform (i) grants the state-owned Federal Electricity Commission (CFE) increased powers, (ii) privileges dispatch of energy generated by CFE, (iii) revokes generation permits, and (iv) terminates certain contracts entered into with private energy producers. In April 2022, the Chamber of Deputies discussed and rejected the constitutional energy reform.

Although the President’s constitutional energy reform will no longer move forward, in April 2022 the Mexican Supreme Court, in a controversial decision, dismissed an action of unconstitutionality promoted against the amendments to the Electricity Industry Law (LIE) that were signed into law by Congress in March of 2021. The Supreme Court considered certain aspects of the LIE as constitutional; however, since a qualified majority vote was not reached with respect to all of such aspects, the resolution is not fully binding on lower federal courts. Accordingly, on 25th of July, a specialised federal district court in competition matters granted the first amparo (constitutional injunction) against the LIE reform, invoking the human right to a healthy environment.

Although the 2021 reforms to the LIE continue suspended by injunctions granted by federal courts, some energy projects have been affected by the inaction or denials of energy regulatory bodies in granting key authorisations, or by the imposition of fines.

The Ministry of Energy, through the natural gas pipeline operator CENAGAS has required users of the natural gas transportation system to favour contracting of natural gas imports from CFE and Petróleos Mexicanos (PEMEX) over those of private parties; the requirement is also being challenged in court. Despite the energy policies, there has been an increase in the development of distributed generation and, to a lesser extent, isolated supply projects.

USMCA Consultations 

On 20th July 2022, the US and Canada initiated USMCA dispute settlement consultations of the energy policies mentioned above, alleging that the policies favour CFE and PEMEX over US and Canadian companies. This could result in punitive tariffs for Mexico if attempts to resolve the disputes are unsuccessful. The Mexican government has expressed its willingness to reach a mutually satisfactory solution during the consultation stage, which will possibly extend to next year. In addition to the energy related claims, there are complaints filed by the US regarding violations to labour provisions of the USMCA in the automotive industry.

Restructurings / Non-bank Banks 

As expected, during 2021 and 2022 we have seen a number of financial restructurings in many sectors, including cross-border Chapter 11 proceedings and other completed or underway out-of-court restructurings involving banks, bondholders and other creditors of Mexican airlines, real estate developers, cinema and restaurant chains, media, radio companies and non-bank banks. Although the collapse of major non-bank banks does not seem to create a systemic risk, the cases are very relevant and may bring heightened scrutiny and oversight from regulators.

Other Relevant Developments 

Pursuant to the 2022 amendment to the Mining Law, lithium has been declared national patrimony. According to the reform, the nationalisation aims to address the imminent energy transition, considering lithium as strategic given its multiple uses in various sectors, including technology, transportation and health.

Among other relevant initiatives are an amendment to the General Law of Commercial Companies to allow the virtual or remote presence in shareholders' or partners' meetings, granting to such remote presence an equivalence to physical attendance. Likewise, there is an initiative to amend the General Law of Negotiable Instruments to regulate the issuance of electronic notes and negotiable instruments. We will likely see amendments promoted in the near future aimed to give certainty to the use of technologies in the legal sector.

Environmental, Social, and Corporate Governance (ESG)

Green and sustainable finance and ESG principles continue as a very important trend. Regulatory changes applicable to investments made by Mexican pension fund managers (AFORES) and other initiatives to adopt ESG by the Mexican Pension Fund Association (AMAFORE) is in the works and expected to be implemented in 2022. Mexico’s Central Bank is also working to issue regulation for financial institutions taking ESG principles into account. Furthermore, green and sustainable-linked bonds and loans is an increasing market in Mexico.


There has been an increase in the number of tax audits during 2022, many of which have been settled by means of conclusive agreements with the support of the Taxpayers’ Defence Office (PRODECON) which acts as a mediating instance between tax authorities and taxpayers.

One of the most relevant aspects of the 2022 tax reform is an obligation for all taxpayers to identify their ultimate controlling individual beneficiaries for different purposes; failure to comply with this obligation can result in substantial sanctions. This measure is part of the domestic and global trend aimed to prevent money laundering and other illicit activities.


The Mexican Antitrust Commission (COFECE) has been active with investigations, recommendations and even challenging the energy reform. Among others, COFECE has launched investigations in different sectors, ranging over household insecticides, Mexican airports, federal land passenger transport, maritime transport services, and possible cartels in the market of public procurement procedures for the acquisition of electoral material and documentation.