watching each other / keeping an eye on each other / closely observing each other
there is a system where they have to keep an eye on each other
there is a system where they have to keep watching each other
「お互いを監視する」= watching each other / keeping an eye on each other / closely observing each other
「お互いを監視し合わなければならない制度がある」= there is a system where they have to keep an eye on each other / there is a system where they have to keep watching each other