Honduran Supreme Court Rejects Claims of ZEDE Unconstitutionality

Constitutional Chamber Unanimously Upholds ZEDEs Compatible with Sovereignty

EspañolAccording to a written verdict from May 26, the Constitutional Chamber of the Honduran Supreme Court has rejected an appeal against the establishment of Zones for Employment and Economic Development (ZEDEs). That came after lawyer Marta Adeline Ávila Sarmiento presented the opposition case on February 8 of this year.

The Honduran Supreme Court fails to find unconstitutionality grounds that would bar the ZEDEs.

According to records accessed by the PanAm Post, Ávila Sarmiento offered 16 arguments for unconstitutionality. In particular, she alleged that the ZEDEs would violate the territorial sovereignty of Honduras, the nation’s form of government, and the general public interest. The construction of the ZEDEs, the lawyer inferred, would be a danger to the personal and legitimate interests of Hondurans — both in the private and public spheres — who have a right to their nationality.

Among other concerns presented by Ávila Sarmiento, she challenged the constitutionality of tax collection in the ZEDEs. Her contention was that only the Honduran Congress has the authority to establish taxes and fees, and to earn seigniorage on the currency. Given that the ZEDEs do not have geographic restrictions, and could potentially be on the border with Guatemala, El Salvador, or Nicaragua, she alleged that the nation could also lose its territorial integrity.

The Constitutional Chamber Responds

In a unanimous vote, the members of the Constitutional Chamber did not accept any of the grounds for unconstitutionality. They affirmed their decision with reference to 18 articles of the Honduran Constitution; the International Covenant on Civil and Political Rights; the UN Universal Declaration of Human Rights; and the Organic Law of the ZEDEs.

Guillermo Peña Panting, executive director of Eleútera — Honduras’s classical liberal policy institute — explained to the PanAm Post that “The resolution of the [Supreme Court] is the final hurdle towards the legal and political formalization of the Organic Law of the ZEDEs, and in the same manner for the reforms to the Constitution of the Republic approved by the Honduran National Congress with more than 100 votes in favor out of a total of 128 deputies.”

The Drawn-Out Legal Process

After the first venture failed in court, the Honduran National Congress approved on January 23, 2013, a new Law for the Creation of Special Development Regions. With this revised legislation, the Constitutional Chamber of the Supreme Court agreed to review the case from Ávila Sarmiento against the creation of what were now known as ZEDEs, and the chamber sought the input of the Honduran Ministry of the Public.

The lawyer’s argument then targeted Articles 294, 303, and 329 — that the ZEDEs would infringe upon these. Even more than the specific articles, though, she contended that the zones would contradict the unalienable principles of the constitution as the fundamental law of the Honduran territory.

More than 50 NGOs joined with Ávila Sarmiento to file the motion with the Constitutional Chamber against the ZEDEs. At that time, the coalition’s legal representative was Óscar Cruz, and he expressed his dissent on the grounds that the revised law was merely a new coat of paint: a “change of name for the project but not the purpose, to cede national territory to be the property of foreign investors, with their own laws, courts, and tax system.”

Cruz contended that “these cities need not be up for debate, since there exists no prohibition but the same ruling of unconstitutionality that came with the first startup-cities project, which established that the project could not be resumed; however, three months after the sentence, the Congress — with less appreciation for the nation’s constitutionality towards institutional balance — proceeded to approve a second startup-cities project.”

Smooth Sailing for the ZEDEs

The latest resolution from the Constitutional Chamber gives the support necessary to hasten the path forward for the ZEDEs. In this regard, Peña Panting adds, “With this decision, the investors, national developers, and interested foreigners … now have the legal backing necessary to proceed forward with project implementation. The arguments against were, up until now, used to discredit the project, but they have been refuted by a unanimous vote from the final and definitive arbiter of the Constitution of the Republic.”

The Honduran ZEDE delegation is meeting with representatives in South Korea and advancing an agenda from June 11 to 26. These meetings are with both the public and private sector of South Korea, those interested in developing the first startup or “model” city in Honduras. That is according to the National Party deputy from the Valle department, Marcos Velásquez, who is a member of the delegation from the executive branch, the National Congress, and the municipalities of Amapala, Alianza, and Nacaome.

One of the chief points to be addressed by the Honduran delegation will be the results of the feasibility study conducted by the South Korean firm, Posco Plantec. This study was to determine the preferred location for the construction of a ZEDE.

Amapala, Alianza, Nacaome, and San Lorenzo were those preselected to be on the shortlist for examination by the South Korean firm’s experts. These first four locations, it was widely understood, were chosen as prospective hosts given that they are part of the Gulf of Fonseca.

The port set to be the first to construct a startup-city ZEDE is Amapala, given a natural bay with appropriate conditions and depth for the navigation of ships of any size. Amapala is a very small, island town, so the logistics center will likely be 42 kilometers (26 miles) away in Nacaome, the Valle capital. Whether Alianza will play a role, and what that might be, remains to be seen. Similarly, no plans are available for San Lorenzo.

The other key topic for discussion will be the nature of the investment that the South Koreans have in mind for Honduras. The specifics may well dictate the precise startup-city planning for the tailored ZEDE promoted by the Honduran central government.

Translated by Fergus Hodgson.

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