This article was featured in Jus Mundi‘s 2025 Arbitration Year in Review, an annual publication analyzing arbitration developments across 40+ jurisdictions on 6 continents. This edition brings together young practitioners and senior experts to capture the year’s most significant legislative reforms, enforcement trends, and institutional innovations.
THE AUTHORS:
Antonio Grayeb Cervantes, Head of International Arbitration Unit at Mexico’s Federal Electricity Commission.
Pamela Payró Katthain, Associate of the Dispute Resolution Practice at Creel, García-Cuéllar, Aiza y Enríquez.
This article briefly recaps Mexico’s 2025 arbitration landscape, covering the controversial judicial reform, the recent ADR law, the upcoming USMCA review, as well as some noteworthy judicial and arbitral precedents.
Constitutional Reform of the Judiciary
In February 2024, former President Andrés Manuel López Obrador submitted a priority bill to Congress amending the functioning and structure of the Mexican judiciary branch.
This bill, commonly referred to as the “judicial reform”, proposed a series of constitutional amendments that, most notably: restructured Mexico’s Supreme Court of Justice, replaced the appointment-based system of all judicial positions—including that of Supreme Court justices—to one where they are elected by popular vote, permitted the use of “faceless judges” in certain cases, created new oversight entities, and limited the effects of constitutional claims (amparos) to only the participating parties, among others.
Despite significant pushback from national and international stakeholders and watchdogs—including members of the former judiciary itself—that mainly argued that the reform could erode judicial independence, the bill was approved by the Mexican Congress in early September 2024 and published into law on September 15, 2024.
The first round of judicial elections under the reform—covering all nine of the Supreme Court justices, several federal judges, and local judges of 19 states—took place in June 2025, with the remaining judges scheduled to be elected in 2027. The elected judges from this first round of elections assumed office on September 1, 2025.
With the newly minted judges only having been in power for a few months now, it remains to be seen how exactly this new reform will shape Mexico’s judicial branch and, particularly, whether the judiciary under this new system will continue to uphold the arbitration-friendly precedents that had previously prevailed in Mexican courts, and whether the reform will in fact lead to an increase of arbitration proceedings arising from Mexican agreements in lieu of local proceedings, as has been broadly speculated.
Entry Into Force of the General Law on Alternative Dispute Resolution Mechanisms
On January 26, 2024, the General Law on Alternative Dispute Resolution Mechanisms (Ley General de Mecanismos Alternativos de Solución de Controversias; the “ADR Law”) was published into law. This statute stems from a constitutional amendment enacted in February 2017, which added section XXIX-A into Article 73 of the Mexican Constitution and empowered Congress to issue general laws containing the principles and foundations for alternative dispute resolution mechanisms, except for criminal matters.
In general terms, the ADR Law establishes the basis, general principles, and distribution of powers governing alternative dispute resolution in Mexico, as well as the enforceability of outcomes reached through these processes. It expressly recognizes negotiation, collaborative negotiation, mediation, conciliation, and arbitration as mechanisms, while allowing for others by agreement of the parties. The law’s objective is to facilitate agreements that resolve some or all disputes between the parties. When such agreements meet the law’s formal requirements, they are accorded res judicata effect. To support these processes, the law provides for the creation of various roles and institutions responsible for facilitating the proceedings.
The law applies to private individuals, public agencies, bodies, and organizations across all three levels of government, public authorities, state‑owned enterprises, and autonomous constitutional bodies. It also extends to certain administrative proceedings and to hydrocarbon exploration and extraction contracts.
Most notably, the ADR Law regulates technology‑enabled dispute resolution. It permits online dispute resolution and the conduct of proceedings through information and communication technologies, including systems that use automation and decentralized justice protocols supported by smart contracts and blockchain, when expressly agreed by the parties. In such cases, parties are entitled to transparency regarding how the applicable system operates, and proceedings remain subject to data protection, confidentiality, and the substantive and procedural requirements of the ADR Law.
Although there are currently no publicly available figures on the number of cases resolved under the ADR Law thus far, it can be expected that this law will ultimately encourage the use of consensual and digital dispute resolution in Mexico, reducing litigation.
Upcoming Review of the USMCA
As of July 1, 2020, the North American Free Trade Agreement (1994) (“NAFTA”) was replaced by the United States-Mexico-Canada Agreement (2018) (the “USMCA”). Pursuant to Article 34.7 (Review and Term Extension) thereof, the USMCA has an initial 16-year term and, on the sixth anniversary of the agreement’s entry into force, the Free Trade Commission—composed of representatives of the government of each Party—shall convene to conduct a review of the USMCA’s operation and decide on any appropriate actions. Accordingly, the first review of the USMCA is scheduled to take place in 2026.
In the context of the upcoming joint review, on September 17, 2025, a notice was published in the Official Federal Gazette whereby the Mexican Ministry of Economy invited stakeholders to submit comments and recommendations regarding the USMCA’s performance and its impact across the productive sectors covered by the agreement. This comment period closed on November 18, 2025.
As expected, the upcoming review has become quite politicized and there has been much speculation as to what it may entail. However, it can be expected that the general framework under Chapter 14 (Investment), which regulates protections for foreign investments and investor-State arbitration between Mexico and the U.S., will likely remain in force for the duration of its term.
Investor-State Arbitrations Held Against Mexico
Mexico is currently involved in 24 publicly known investment arbitration proceedings initiated under various International Investment Agreements, with its representation led by the General Directorate of Legal Counsel for International Trade of the Mexican Ministry of Economy. Among the Investor-State arbitration proceedings concluded since 2024 are the following:
Alicia Grace et al. v. The United Mexican States (UNCT/18/4)
Alicia Grace et al. v. The United Mexican States, Case No. UNCT/18/4, was brought against Mexico by a consortium led by Alicia Grace under NAFTA, in accordance with the UNCITRAL Arbitration Rules 1976. The dispute concerned the adverse effects suffered by 27 investors following the renegotiation of lease rates for drilling platforms used by Petróleos Mexicanos (“Pemex”), Mexico’s state-owned oil company, which ultimately resulted in the termination of the contracts by the state entity. In particular, the investors alleged that, upon refusing to pay bribes to various Pemex officials, those officials allegedly implemented a series of strategies, together with competitors, aimed to drive the consortium into insolvency, which ultimately led to an indirect expropriation of the claimants’ investments and a corresponding breach of Mexico’s Fair and Equitable Treatment obligations under NAFTA.
After the proceedings, the Arbitral Tribunal determined that it lacked jurisdiction to resolve the disputes on the grounds that some of the claimants possessed dominant Mexican nationality, rendering them ineligible to bring claims under the treaty. As to the remaining claimants, the Tribunal held that it lacked jurisdiction because the procedural route chosen by the claimants under NAFTA Article 1116 is intended solely for claims arising from direct harm to investors. However, the claimants who invoked that provision did so essentially on behalf of enterprises or entities under their control, making the harm indirect and requiring recourse under NAFTA Article 1117, thereby depriving the Tribunal of jurisdiction over the claims submitted.
Odyssey Marine Exploration, Inc. v. The United Mexican States (UNCT/20/1)
This second proceeding concerned the development of a project aimed at exploiting minerals contained in marine deposits located off the coast of the Gulf of Ulloa in northern Mexico, using a novel seabed dredging technique that, at the time of the proceedings, had not been tested anywhere else in the world.
Due to the attention the project attracted, various institutions and civil organizations requested that Mexican authorities to submit the project’s approval to public consultation, particularly given the inability to determine the true environmental impact of the techniques Odyssey Marine intended to implement to extract the sought minerals, nor to remediate damage to the ecosystem caused by the aforementioned techniques.
Following a series of interactions between investors, administrative and judicial authorities, the Mexican environmental authority (SEMARNAT) ultimately denied authorization to the project, citing methodological deficiencies in the studies submitted by Odyssey, as well as the potential harm to the marine environment posed by the project, particularly to certain species at risk of extinction in the region. In response, the investors initiated ISDS proceedings under NAFTA, arguing that Mexican authorities had denied environmental permits based on political rather than scientific considerations.
The Arbitral Tribunal issued its Final Award by majority, finding that Mexico breached its obligations under NAFTA Article 1105 regarding the Fair and Equitable Treatment standard by failing to establish that its denial of environmental permits was based strictly on environmental grounds. Relevantly, the Tribunal ultimately awarded the claimant compensation equivalent to US $37.1 million plus costs of the proceedings, by rejecting Claimant’s request to rely on an income-based approach for the calculation of damages and instead awarding only sunk cost for the project.
It is important to note that there was a dissenting opinion by Professor Philippe Sands KC, who pointed out certain deficiencies in the majority’s reasoning in the Final Award. In particular, he considered it crucial that the project sought to implement—in an area of high environmental fragility—mineral extraction techniques never used before, whose consequences were unpredictable forcing Mexican authorities to prevent and avoid any risk that could turn into irreparable harm to the environment. This, without disregarding the fact that the investor acknowledged having no prior experience in the mining industry.
Relevant Commercial Awards
On January 16, 2025, the final award in the Credit Suisse Mexico and Casa de Bolsa v. Respondent (ICC Case No. 27990/PDP) was issued and subsequently made public.
In this case, after conciliation failed, the respondent filed a claim in a Mexican federal labor court seeking payment of alleged outstanding compensation from the claimants, its former employers. The claimants then commenced arbitration under the ICC Rules, with seat in New York, on the basis of a separation agreement signed by the parties. Although labor disputes are generally understood to fall within the exclusive jurisdiction of Mexican federal labor courts, the tribunal upheld its jurisdiction, among other reasons, because the amounts at issue did not constitute “salary” or labor compensation under Mexican law, and because the respondent did not establish that Mexican law holds such disputes non‑arbitrable. The tribunal further found that the respondent did not prove that Mexican public policy would render the award unenforceable in Mexico and noted that enforcement could also be sought in other jurisdictions.
This case establishes an interesting, though divisive, precedent that highlights the importance of seat selection to arbitral awards’ reasoning and, ultimately, their validity and enforcement.
Relevant Jurisprudence Developments
While Mexican courts did not issue any groundbreaking jurisprudential decisions last year, a few interesting developments are worth highlighting.
First, it was reaffirmed that the court of the seat of arbitration has jurisdiction to hear actions to set aside the arbitral award, further clarifying that this applies even when an annulment argument is raised as a counterclaim within proceedings for the recognition or enforcement of a foreign award. Courts also confirmed their authority to grant provisional precautionary measures during recognition/enforcement proceedings to safeguard the award’s effectiveness, upholding the constitutionality of Articles 1425 and 1478 of the Commercial Code which confer this power. In addition, it was held that, while an award issued by an arbitral tribunal is affected by res judicata, this document lacks public faith and thus is not opposable to third parties. To make any property transfer ordered in an award enforceable against third parties, the transfer must be duly notarized and registered before the applicable public registry.
In procedural-related issues, it was held that the calculation of time limits within recognition/enforcement proceedings is in business days (as opposed to calendar days), and the lapse of a proceeding for inactivity (caducidad) can terminate stalled recognition/enforcement actions.
Thus, taken together, these decisions are generally in line with Mexico’s arbitration friendly disposition.
Discover more insights into the latest developments in arbitration in 2025 from around the world now
ABOUT THE AUTHORS
Antonio Grayeb Cervantes serves as Head of the International Arbitration Unit at the Federal Electricity Commission (Comisión Federal de Electricidad), Mexico’s state-owned utility for the public electricity supply. Throughout his career, he has participated in and led the defense of multiple complex and high-value proceedings in the energy sector. Antonio earned his law degree from the National Autonomous University of Mexico (“UNAM”).
Pamela Payró Katthain is an Associate of the Dispute Resolution practice at Creel, García-Cuéllar, Aiza y Enríquez, S.C. in Mexico City. With almost 10 years of professional experience, she has served as counsel and tribunal assistant in complex, cross-border proceedings. Her background in public international law and commercial law informs strategies in treaty-based and contractual disputes across various sectors. She is dually qualified in Mexico and New York. She earned her law degree from Universidad Iberoamericana (Mexico City) and an LL.M. from New York University School of Law.
*The views and opinions expressed by authors are theirs and do not necessarily reflect those of their organizations, employers, or Daily Jus, Jus Mundi, or Jus Connect.
