Judicial Ruling Against Mining Company

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.

Tuesday, September 25, 2018

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.

Nine years later, Law 9 of February 25, 1997 has been declared unconstitutional by the Supreme Court of Justice and, according to the court ruling, the concession did not represent the best interests of the State. When the decision is published in the Official Gazette, the contract will cease to exist.

See also "Metalliferous minerals market in Central America"

In relation to the repercussions that the ruling could have for the Panamanian government, Juan Carlos Araúz, former president of the Bar Association, told Laestrella.com.pa that " ...This decision could result in economic claims being made against the State. 'It would not be surprising if this ruling triggers a conflict in international arbitration tribunals over the damages suffered by the company.'"

Regarding the issue, Jorge Obón, spokesperson for the company, explained that " ... the mining companies have invested more than $10 billion in the development of this activity in the province of Coclé. 'They can not leave thousands of workers out of work or leave the legal security of foreign investors in the country in limbo.'"

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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.

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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.

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Mining companies and spanish citizens are suing the Panamanian State arguing arbitrary and discriminatory measures imposed by the Martinelli Administration are detrimental to their investments.

The companies Petaquilla Gold, Petaquilla Minerals LTD, and Corporación de Recursos Iberia, S.A.

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