The High Price of Legal Insecurity

Two months after the hydroelectric projects Oxec I and II were suspended in Guatemala, investors have threatened to resort to the international justice system.

Wednesday, May 3, 2017

An international arbitration with a high price for the country's image as an investment destination could be the result of a process which started with the suspension of the license to the concessionaires of the hydroelectric stations Oxec I and II. In mid-February the Constitutional Court decided to keep the suspension in force because of alleged non consultation with the indigenous peoples in the area before starting the projects.

See: "Guatemala: Hydroelectrics and Legal Uncertainty" reports that "...According to José Quezada Fernández, the constitutional guarantees of employers have been violated, because of the protection of the State over the process of consulting Convention 169 of the International Labor Organization (ILO) and violating other rights to freedom, industry, trade and labor, as well as property rights and acquired rights."

"... In any case, he explained that carrying out the consultation corresponds to the State and not the employer, complying or not complying with a requirement - consultation - that does not correspond to it and is not attributed to it in a legal manner." There are contradictions on the part of the State, between institutions, such as the Ministry of Energy and Mines, which states that it has carried out the consultation, with the CC and the Supreme Court of Justice." The lawyer explained that a claim will be made for the economic damages caused by the work stoppage."

Guatemalan businessmen insist that the CC should not postpone the final ruling.  According to Antonio Malouf, president of Cacif, "The lack of regulation of consultations with indigenous peoples has brought serious consequences such as violation of rights, such as labor and industry."

More on this topic

Mining Companies Demand Legal Certainty

June 2017

Guatemala's industrialists are demanding speed in the resolution of the case against the La Puya mine, property of Exmingua, whose operating permit was annulled a year ago by the Supreme Court of Justice.

At the end of June last year, the Supreme Court of Justice "definitively" revoked the operating permit for the mine La Puya, awarded to the company Progreso VII Derivatives. Now the mining union is asking the Constitutional Court to resolve the problem more quickly, consistent with and as a consequence of the ruling issued to OXEC and as a sign of equal rights and respect for the legal certainty of Guatemala.

Guatemala: Oxec Hydroelectric Station to Resume Operations

May 2017

The Constitutional Court has authorized the continuation of operations of the Oxec I and II Stations for a period of 12 months, while consulting indigenous peoples in the area.

The Constitutional Court unanimously dismissed the appeals filed by the Ministry of Energy and Mines and representatives of Oxec I and II and resolved to authorize resumption of operations for only 12 months.  The decision comes more than two months after the Court ratified the suspension of operations, for allegedly not consulting indigenous peoples in the area before starting the projects.

Guatemala: Hydroelectrics and Legal Uncertainty

February 2017

The Constitutional Court has upheld suspension of the license for the Oxec I and II hydroelectric stations, for allegedly failing to consult indigenous peoples in the area before starting the projects.

The decision taken by the Constitutional Court (CC) is seen by the private sector as a threat to legal certainty in the country, because of the projects that are at stake and the effect it will have on other investments that may no longer be made in Guatemala if orders continue to be given to suspend mining and energy projects.

Guatemala: Businessmen demand Legal Certainty for Investments

January 2017

The business sector is against making retroactive consultations on mining and energy projects as they are already under development and is demanding regulation of the implementation of the ILO Convention 169 in order to protect investments.

From a statement issued by the CACIF:

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