Fragile Legal Certainty


News from Panama / Tuesday, October 9th, 2018

Adverse court decisions against companies, social and political conflicts and fiscal issues are some of the factors that are impeding the development of productive projects in Central American countries.

One of the latest court decisions affecting companies with investments in the region was that of Minera Petaquilla, in Panama. The contract that this company had signed with the Panamanian State was declared unconstitutional last week.

The decision of Panama’s Supreme Court occurred nine years after the legal dispute began, following the Centro de Incidencia Ambiental (CIAM) filed an appeal of unconstitutionality against the contract granting a 20-year concession to exploit and commercialize gold, copper and other mineral resources from the Cerro Petaquilla.

See “Court decision against mining company

In this regard, the Cámara de Comercio, Industrias y Agricultura de Panamá (CCIAP), considers that beyond the reasons that support it, the declaration of unconstitutionality of a mining concession contract, almost 10 years after requesting the measure, is worrying due to what it projects on legal certainty in the country.

Another case is in Guatemala, where 16 hydroelectric projects are suspended mostly due to issues of social conflict, which together represent an investment of approximately $1.5 billion. In addition, Minera San Rafael has not operated for more than a year as a result of multiple delays in local court decisions, and is now waiting for a community consultation to restart its operations.

See “Energy: Investments in Limbo” and “Less legal uncertainty, by now

In Nicaragua, after a social and political crisis that persists to date started last April, entrepreneurs have reported that several farms in different regions of the country have been taken over by criminal groups.

Also see “Nicaragua: Productive Land Invaded

From the statement of CCIAP of Panama:

(Panama, September 28th, 2018). Regardless of the reasons on which it is based, the declaration of unconstitutionality of a mining concession contract, almost 10 years after requesting the measure, is concerned for the Cámara de Comercio, Industrias y Agricultura de Panamá (CCIAP) because of what it projects on legal certainty in the country.

Our ability to attract employment-generating investments depends on legal certainty, which is why we must strengthen and consolidate it, rather than subject it to dangerous risks, and the Supreme Court must be the guarantor of this.

“In particular, the decision created unnecessary uncertainty for the largest foreign direct investor in the country’s history,” said Jorge Juan de la Guardia, head of CCIAP.

To take just a few important numbers into account, Minera Panamá, and its Cobre Panamá project, employs more than 12,600 people, contributing US$120 million annually in worker-employer dues to the Social Security Funds; and has invested about US$1.1 billion in acquisitions from local suppliers.

He also said, “It is worrying that the decision on the process in question has lasted almost a decade, which confirms our intention to continue encouraging the changes we promote in the administration of justice, through constitutional reforms with two consecutive national assemblies. Such reforms are becoming more and more necessary.”

 

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