Is arbitration the big winner of Mexico’s 'democratisation' of its judiciary?

Sometimes, legal reforms have unintended beneficiaries. Is this the case of arbitration, after the recent reform in Mexico that mandates that all judges be elected by popular vote?

Last September, Mexico’s Congress approved a constitutional reform that will retire all its current 7,000 judges and elect their replacement in two public ballots, in June 2005 and in 2007. Judges from all levels, including the Supreme Court, will need to run a campaign, appear on TV and radio, and try to get as many votes as possible. According to the party in power, this reform will boost “principles of humanism, justice and democracy”. However, let’s see in more detail what this reform really implies and who may benefit from it.

Before the reform, judges were appointed through a contest and skill-based system. Instead, now, all aspiring judges will need to be included in a list of candidates, run public campaigns and then be elected by the people. This may seem quite neat and transparent. However, the devil is in the details.

Who will decide who can be listed as candidate? The law implementing the reform states that anyone who is a lawyer with 5 years of experience can apply to be in the list of candidates. This could be acceptable. However, the new system allows the political party in power to influence the integration of that list as the congress and president will be able to submit their candidates. What is more, the final selection of candidates will be decided by “evaluation commissions” established by Congress, the Executive Power and the Supreme Court. In other words, the ruling party will have ample opportunity to produce its preferred list of potential judges. The independence of these judges will be at risk. Will the judges’ demonstrated loyalty to the party improve their chances of being selected?

Once the candidate list is assembled, the campaigns start. Mexicans will have to get used to seeing judges campaigning as politicians on radio and TV. However, how will the candidates run their campaigns? The details are still unknown. However, the reform establishes that candidates will be given equal time on radio and TV to promote their ticket. However, who will decide which candidates can appear on primetime? Is it realistic to think that a candidate with weak political support and no connections will be allocated the pick timeframe?

Furthermore, in a rather naïve attempt, the reform prevents candidates from receiving funding from third parties to run their campaigns. Is the reform favouring candidates with personal wealth, who will naturally be able to run better campaigns? Will the government be able, and willing to, control how thousands of candidates finance their campaigns? What is more unsettling, will criminal groups attempt to finance friendly candidates?

The above-mentioned uncertainties of the judicial reform are not negligible. However, we have not yet discussed how will voters be able to assess and identify the best candidates. This is a daunting task imposed on the population. For example, people in Mexico City will need to elect candidates to fill more than 150 judicial positions, which means that they will need to examine the experience, skills and ethics of around 1000 candidates, whose names they have never heard before. It is simply not credible that normal citizens will be able to identify the best and most qualified candidates. The effectiveness of the judiciary is at risk.

The reform also establishes that judges will be elected for a 9-year term with the possibility of being re-elected. Thus, judges seeking re-election will need to campaign at the same time they are administering justice. Will judges decide their cases based on what is right and just, or will they be trying to please their electorate? The incentive to produce demagogic judicial decisions is too high, and, as we all know, good judicial decisions are not always popular.

The judicial reform is exponentially increasing the uncertainty on the independence and effectiveness of the Mexican judiciary. Concurrently, the International Bar Association (IBA) recently issued a public statement alerting that the “proposed changes raise serious concerns as they will likely affect the independence of Mexico’s judicial branch”.

The increased level of distrust in Mexico’s judiciary will encourage parties to avoid local courts and incentivise their use of arbitration as a means to settle disputes effectively. Arbitration offers the possibility of cases being decided by independent, qualified and experienced experts. Arbitrators are appointed by the parties in the dispute and, therefore, free of political bias or demagogic considerations.

In the current context in Mexico, parties dealing with the state or public entities will try to resort to arbitration instead of courts. These parties will have reasons to doubt if judges will be free of political considerations in disputes against the Mexican State.

Arbitration will be particularly beneficial for international investors and foreign parties doing business in Mexico as, naturally, they are not invited to vote for local judges and, therefore, there is little incentive for a campaigning judge to decide in favour of a foreign party and against a local elector.

For the moment, and much is yet to be seen, the judicial reform is not boosting confidence in Mexico’s judiciary but, instead, incentivising the use of arbitration, the big winner of the reform so far.