MEXICO Trends and Developments Contributed by: Marco Tulio Venegas, LITREDI, S.C.
ance where corporate decision-making, public budg - eting, sector regulation and administrative oversight converge. It is that convergence which gives dispute resolution clauses their analytical interest and invites closer attention to their functions and legal limits. Arbitration and the architecture of consent Where public direction and private capital converge in this way, the contract becomes the instrument through which their relationship is governed – —and the dispute resolution clause becomes the point at which tensions are anticipated. Arbitration clauses may offer a neutral and technically specialised forum for disputes arising from mixed electricity projects, particularly where financing is international, perfor - mance obligations are intricate, or the parties seek procedural confidentiality and an enforceable award. The 2025 Law of the State Public Enterprise Federal Electricity Commission recognises a special contract - ing regime for CFE, and Mexico’s Commercial Code and the National Code of Civil and Family Procedures supply the general legal framework for arbitration: party autonomy, competence-competence, interim measures, judicial referral to arbitration, and the rec - ognition and enforcement of awards. Subject to the applicable statutory and contractual requirements, project contracts may accordingly refer controversies to domestic or international arbitration. The interest of arbitration, however, extends beyond the availability of a private adjudicatory forum. In mixed generation projects, the design of dispute reso - lution shapes how regulatory, contractual and financ - ing risk is distributed among CFE, private investors, lenders, contractors and operators. Its institutional function can be assessed through three questions: • which controversies fall within arbitral consent; • how arbitral proceedings interact with public law remedies; and • whether the resulting allocation of jurisdiction sustains the predictability that long-term electricity investment requires. All three questions are shaped at the drafting stage, where consent takes its concrete form. The design of arbitration clauses in mixed generation projects ordi - narily turns on a familiar set of elements:
• the disputes covered; • the arbitral institution or procedural rules; • the seat, language and governing law; • the number of arbitrators and the method of their appointment; • confidentiality obligations; • interim relief mechanisms; and • the relationship between arbitration and any prior technical or negotiation stage. Electricity projects add two further concerns: • the line between technical determinations and legal disputes; and • the co-ordination of proceedings where financing, construction, operation, fuel supply, interconnec - tion and power purchase contracts are interde - pendent. These choices define the reach of the parties’ agree - ment; what they cannot do is extend that reach beyond the limits imposed by the legal order itself. The limits of arbitral jurisdiction Those limits begin with arbitrability. An arbitration clause does not turn every disagreement involving a public enterprise into an arbitrable dispute. Mexican law distinguishes acts performed by a state entity in a commercial capacity from exercises of public author - ity. Administrative rescission, permit decisions, sanc - tions, system-planning determinations and other reg - ulatory measures may fall under special jurisdictional rules or judicial review outside the contractual arbitral forum. The applicable statute, the legal character of the contract and the nature of the challenged conduct together mark the boundary of arbitral jurisdiction. That boundary is easier to state than to draft. A clause covering disputes “arising out of or relating to” the contract may leave uncertainty where the agreement identifies no exclusions for acts of authority; an exclu - sion drawn too broadly may hollow out the arbitra- tion it accompanies. The analytical line runs between ordinary contractual controversies – payment, delay, performance standards, price adjustment, termination for breach – and challenges to permits, sanctions, compulsory planning decisions or other measures governed by public law.
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