What is AMLO’s Judicial Reform? What is it and what implications does it have? When will the Chamber of Deputies approve it? These are some of the terms that have seen a notable increase in Google searches, according to an analysis of Google Trends data.

As the Presidente of Mexico, Andrés Manuel López Obrador (AMLO), nears the end of his term and Claudia Sheinbaum Pardo’s eventual arrival, the 2024 Judicial Reform has emerged as the most relevant topic on the national agenda.

The potential approval of the reform has sparked a wave of criticism and calls from different sectors: thousands of law students marched on September 1, workers from the Federal Judiciary (PJF) and the Supreme Court are on strike, and analysts and experts have expressed concerns about the proposed changes.

Here’s what you need to know about the 2024 Judicial Reform of Mexico (reforma judicial in spanish):

How the idea of a “Reforma Judicial 2024” was born

The 2024 Judicial Reform was introduced by President López Obrador as part of an ambitious reform package during the commemoration of the Constitution on February 5, 2024.

AMLO has been highly critical of the judiciary, accusing it of corruption, especially when court rulings have gone against his government. One such case was when the Supreme Court declared it unconstitutional for the National Guard to be under the Secretary of National Defense.

In this context, Justice Norma Piña Hernández revealed that this decision was what broke her relationship with López Obrador.

“I never imagined everything that has happened since I became president. (…) It’s a concerning situation because it directly affects the judiciary,” she said.

Initially, the configuration of Congress wasn’t favorable for passing such major constitutional reforms, but after the June 2, 2024, elections, the ruling coalition secured the necessary supermajority to push these changes forward.

Popular election of judges and magistrates

The most controversial proposal is that judges, magistrates, and justices will be elected by popular vote in elections scheduled for 2025 and 2027.

Legal experts warn that this change could undermine the judiciary’s independence, a crucial pillar for confidence in the legal and economic system. For businesses, the politicization of the judicial process could pose additional risks in litigation and conflict resolution.

Reduction in the number of Supreme Court justices

The reform also proposes reducing the number of justices in the Supreme Court of Justice of the Nation (SCJN) from 11 to 9. This adjustment aims to make the court more efficient but has been criticized for potentially concentrating power in fewer hands.

Currently, the SCJN is led by Justice Norma Lucía Piña Hernández, the first woman to preside over the Court, who has faced criticism and insults from President López Obrador and some of his followers.

Introduction of “faceless judges”

Another proposal is the creation of “faceless judges” who would handle high-risk cases, such as those related to organized crime. While the intention is to protect judges’ safety, this concept has raised concerns about transparency and accountability in the judicial system.

Impact on judicial independence

Organizations such as México Evalúa and the Centro de Estudios Económicos del Sector Privado (CEESP) have warned that the reform could compromise judicial independence, which in turn could affect investor confidence and the country’s economic stability. Judicial independence is key to ensuring the predictability of laws, something businesses rely on when making long-term investment decisions.

A clear example of this concern: just days after Claudia Sheinbaum’s victory, when AMLO announced that the new Congress allied with Morena would push forward Plan C and changes to the judiciary, the Mexican Peso began to lose ground against the dollar.

Analysts caution that this is a sign of the legal uncertainty caused by the reform.

Working conditions and salaries for judges and magistrates

The reform proposes that judges and magistrates who are not re-elected will not receive a lifelong pension, and no member of the judiciary may earn more than the president of the republic.

Implications for the USMCA and foreign investment

The 2024 Judicial Reform has raised concerns among Mexico’s trading partners, including the United States and Canada, who have pointed out that it could affect the implementation of the USMCA and create uncertainty in the investment climate.

In the last week of August, Ken Salazar, the U.S. Ambassador to Mexico, issued an unusual statement that unsettled President Obrador.

“Based on my lifetime of experience supporting the rule of law, I believe that the direct election of judges poses a greater risk to the functioning of Mexico’s democracy. Any judicial reform must include safeguards to ensure that the judiciary is strengthened and not subject to political corruption.

“I also believe that the debate over the direct election of judges at this time, along with the intense politics if judicial elections in 2025 and 2027 were to be approved, threatens the historic commercial relationship we’ve built, which depends on investor confidence in Mexico’s legal framework. Direct elections could also make it easier for cartels and other bad actors to exploit inexperienced judges with political motivations,” said the U.S. Ambassador to Mexico, whose statement was backed by his government.

In response, López Obrador “paused” Mexico’s relationship with its main trading partner, adding more uncertainty.

Reactions from civil society and the business sector

Various business chambers and civil society organizations have expressed concern about the reform. For example, Coparmex and the American Chamber of Commerce (AMCHAM) have noted that the popular election of judges could compromise the professionalization and independence of the judicial system.

México Cómo Vamos compiled several critical opinions on the Judicial Reform:

• México, ¿cómo vamos?: The reform is seen as contrary to USMCA commitments and allows interest groups to interfere in the administration of justice, compromising the protection of human rights.
• México Evalúa: Warns of an unassessed economic impact, increasing the risk for investment.
• Mexico Institute, Wilson Center: Argues that the reform could weaken Mexico’s regulatory environment, negatively affecting the investment climate and regional competitiveness.
• Centro de Estudios Económicos del Sector Privado (CEESP): Expresses concern about increased economic uncertainty and the negative consequences for the economy.
• Fitch Ratings, S&P Global, BBVA, Banco Base, Morgan Stanley, Bank of America, Citibanamex, UBS: Have voiced concerns about the economic and political uncertainty the reform could generate, pointing to potential adverse effects on investment, economic growth, and international commitments.
• Law Student Societies: View the reform as a threat to the democratic system and separation of powers, suggesting reforms should protect citizens’ rights without compromising judicial independence. On September 1, parallel to López Obrador’s Sixth Government Report, thousands of law students marched against the Judicial Reform on Paseo de la Reforma in Mexico City and other cities across the country.

Members of the judiciary and Supreme Court workers are on strike in protest of the reform, which Congress seeks to approve on September 3.

A latent risk, warns Banxico analysts

According to the August 2024 Private Sector Economic Expectations Survey conducted by the Bank of Mexico, governance has become the main obstacle to the country’s economic development.

The report shows that 57% of analysts consider governance-related issues, including internal political uncertainty, public insecurity, corruption, and lack of rule of law, to be the biggest risks facing the Mexican economy. This raises alarms among experts, who warn that political instability could deter both domestic and foreign investment.

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Here are the key highlights from Banxico’s survey:

• 57% of analysts identify governance as the main obstacle to economic growth in Mexico.
• 21% mention internal political uncertainty as the main factor within governance.
• 14% point to public insecurity.
• 11% highlight other issues related to the lack of rule of law.
• 7% mention corruption as a relevant factor.
• 15% of analysts believe internal economic conditions represent a risk to growth.
• 6% of analysts are concerned about uncertainty regarding the domestic economy.
• 7% see external conditions as a risk, with currency uncertainty standing out.

Business climate in the next six months:

• 71% of analysts believe it will worsen.
• 24% believe it will stay the same.
• 5% expect it to improve.

Perception of the current economic situation:

• 84% believe the economy is not better than a year ago.
• 16% think the economy has improved over the last year.

Current environment for investments:

• 63% of analysts believe it is a bad time to invest.
• 26% are unsure whether it’s a good time for investments.
• 11% believe it is a good time to invest.

Key business obstacles in Mexico:

• 27% mention crime as the main obstacle.
• 25% point to a lack of rule of law.
• 18% highlight corruption.
• 11% indicate inadequate infrastructure as an issue.

How is the Mexican Federal Judiciary structured?

It consists of:

• The Supreme Court of Justice of the Nation
• The Federal Judiciary Council
• Over 900 courts and tribunals across the country
• The Electoral Tribunal of the Federal Judiciary

What is its function?

It is responsible for preserving the institutional order established in the Constitution and has the authority to interpret laws and intervene when a law, act, or omission by any authority infringes on individuals’ rights. It also resolves disputes between private parties, especially those that impact the nation’s economy, property, and security.