Mexico’s Judicial Reform: Why Arbitration is Now Essential for Protecting Your Business

On June 1, 2025, Mexico implemented a sweeping Judicial Reform that changes the very foundation of how justice is administered in the country. Judges, magistrates, and justices are now chosen through popular elections—a major departure from the traditional career-based judiciary. This shift introduces a new level of uncertainty into the legal system that could directly impact any company doing business in Mexico, whether domestic or foreign.

In light of these changes, arbitration—both domestic and international—is becoming a critical tool for businesses seeking reliable and impartial ways to resolve disputes in Mexico.

What Changed—and Why It Matters

The Judicial Reform introduces several fundamental changes:

• Judges and justices are now elected by popular vote, rather than selected based on judicial career experience.
• The eligibility criteria for candidates have been significantly reduced, raising concerns about the qualifications of those who will preside over complex legal matters.
• The Supreme Court of Justice has been restructured, including a reduction in members and the elimination of subject-specific chambers.
• A Disciplinary Tribunal has been created, but its effectiveness in safeguarding judicial independence remains uncertain.

These changes have sparked concerns among legal experts, business associations, and international observers. The primary risks are:

• Loss of judicial expertise: Unqualified individuals may now be elected to critical judicial positions.
• Political influence: Judges may face pressure to rule in ways that favor popular opinion or political agendas. For example, all Supreme Court judges are tied to the political party currently in power. 
• Unpredictability in legal outcomes, especially for commercial disputes that require technical knowledge and impartial decision-making.

What This Means for Your Business

Whether your company is headquartered in Mexico or abroad, if you operate in Mexico, you may be exposed to a legal system that is less predictable and less equipped to handle complex business disputes.

For example:

• Contract enforcement may depend on newly elected judges with little commercial experience.
• Local litigation could involve delays, politicization, or inconsistent rulings.
• The risk of adverse outcomes may increase, not due to the merits of your case, but because of the new structure of the courts.

Arbitration: A Reliable Alternative

Arbitration is a private and legally recognized method of resolving disputes outside the court system for contracts of all sizes. It offers an effective and enforceable, and at times a more cost-effective alternative to litigation, that is already widely used by businesses around the world—and is now more relevant than ever in Mexico. 

Key Benefits of Arbitration:

• Neutrality: The parties choose arbitrators and can agree on a neutral place and set of rules for resolving disputes.
• Expertise: Arbitrators are typically experienced legal professionals with specific knowledge of commercial or industry matters.
• Flexibility: Procedures can be customized based on the needs of the parties and the nature of the dispute.
• Confidentiality: Unlike court proceedings, arbitration is private—protecting sensitive business information.
• Enforceability: Arbitral awards can be enforced through the courts in Mexico and over 170 other countries that are party to the New York Convention. And because the seat of the arbitration can be moved to outside Mexico, even appellate challenges can be moved outside Mexican judicial review. 

Importantly, arbitration is fully recognized under Mexican law and is regularly used in both domestic and cross-border business transactions. 

What Companies Should Do Now

To protect your operations and investments in Mexico:

• Review all commercial contracts—especially those with high-value transactions or long-term commitments.
• Include a properly drafted arbitration clause, which clearly identifies the forum (such as ICC, ICDR, CAM and CANACO in Mexico, or others) and governing law. 
• Choose the type of arbitration that best fits your business: domestic arbitration for local matters, or international arbitration for cross-border or foreign investment disputes.
• Consult with legal counsel familiar with both Mexican law and arbitration practice to ensure your dispute resolution strategy is enforceable and aligned with your risk profile.

Conclusion: Arbitration is Now a Strategic Business Necessity

Mexico’s Judicial Reform has introduced new and serious questions about the long-term reliability of the national court system—especially for commercial disputes. Businesses of all sizes, whether Mexican or foreign, should not assume the legal landscape will operate as it once did.

Arbitration offers a stable, predictable, and fair path forward. It allows you to resolve disputes with confidence—even in times of institutional transition.

Now is the time to act. By adopting arbitration as a key part of your legal strategy, you can safeguard your contracts, protect your assets, and reduce your exposure to the uncertainties of judicial reform.