Under trade agreements, corporations are given the right to sue governments using a controversial investor-state dispute settlement mechanism (ISDS), which allows private sector lawyers to determine whether the country has treated foreign investors fairly. Even though the government of Honduras announced its withdrawal from ISDS in February 2024, companies continue to sue governments for policies that may impact their profits, such as reforms to make electricity more affordable.
Given that Honduras is one of the poorest countries in Central America, the lawsuits from various corporations (totaling $19.4 billion, an amount equivalent to roughly 53% of the country’s GDP in 2024) add immense pressure on the government to implement policies that favor the companies’ interests. These actions often come with harmful consequences for environmental protection and human rights, as communities adjacent to the companies’ projects have denounced for years.