Fragile Legal Certainty

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.

Monday, October 1, 2018

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."



More on this topic

Mine in Guatemala: Clear and Objective Consultation

June 2020

After the Constitutional Court decided to keep the "Extracción Minera Fénix" project suspended, the private sector is asking the authorities to start the community consultation process as soon as possible, in an objective and clear way.

The operations of the mine located in the department of Izabal were suspended since July 2019 as a result of a legal appeal filed by a group of neighbors, who argued that the community consultation process for the operation of the mining project had not been exhausted.

Legal Certainty in Doubt

June 2019

The decision of the Legislative Assembly to not endorse the bill that seeks to approve the contract between the government and Minera Panamá, shows the fragility of the contracts between the Panamanian state and companies.

The obstacles to the mining project date back several years, since the legal dispute began in 2009, when the Environmental Impact Center (CIAM) filed an appeal of unconstitutionality against the contract granting a 20-year concession to exploit and commercialize the gold, copper and other mineral resources of Cerro Petaquilla.

Judicial Ruling Against Mining Company

September 2018

Arguing that the basic principles of public procurement were not complied with, in Panama the contract between the State and the company Petaquilla Minera has been declared unconstitutional.

The legal dispute began in 2009, when the Environmental Advocacy Center (CIAM) filed an unconstitutionality appeal against the contract that grants a twenty year concession to Cerro Petaquilla to exploit and sell gold, copper and other mineral resources.

Another Mining Company Suspended in Guatemala

July 2017

Minera San Rafael will have to cease operations after its two operating licenses were suspended as a result of a writ of protection granted by the Supreme Court of Justice to an environmental group.

Prensalibre.com reports that "... The licenses for El Escobal, approved in 2013, and Juan Bosco, in 2012, are suspended and as a consequence, the San Rafael mine must stop its operations. The extraction plants whose licenses are now invalid are located in Mataquescuintla, Jalapa, and Nueva Santa Rosa, Casillas, and San Rafael Las Flores, Santa Rosa."

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