source: Mongabay
Aimee Gabay. Mongabay. July 24, 2025
Honduras is currently facing a total of $19.4 billion in lawsuits from corporations, an amount equivalent to roughly 53% of the country’s GDP in 2024, according to new data by the Institute for Policy Studies, Transnational Institute, Honduras Solidarity Network and TerraJusta. More than $1.6 billion of the claims are from the energy sector alone, most of which are investors or companies involved in renewables.
The lawsuits, most of which are tied to controversial investments made after the 2009 coup, undermine government efforts to implement reforms aimed at protecting the environment and human rights, the organizations say.
Companies and investors are using these tribunals to resist government measures to protect natural resources and human rights, such as the rollback of policies that favor privatization and expensive private energy contracts, according to Karen Spring, a coordinator for the Honduras Solidarity Network and author of a 2024 report by the same organizations that released the new figures.
“The companies do not like these re-negotiations and refuse to sit down with the government of one of the poorest countries in the western hemisphere to negotiate, and with greed and arrogance, appeal to these neocolonial international arbitration tribunals to force Honduras to give them what they want – consistent corporate profits at the expense of the public good,” Spring told Mongabay over email.
The $19.4 billion is a jump from the $14 billion reported by the same organizations in 2024, with two new claims filed in May 2025.
Corporations sued the government using a controversial investor-state dispute settlement mechanism, which allows private sector lawyers to determine whether the country has treated foreign investors fairly. This mechanism, from which Honduras announced its withdrawal in February 2024, is increasingly being used by companies around the world 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 add immense pressure on the government to implement policies that favor the companies’ interests, the organizations behind the new data said. These actions often come with harmful consequences for environmental protection and human rights, as communities adjacent to the companies’ projects have denounced for years.
When questioned about specific measures in place to ensure foreign companies do not use the ISDS mechanism in bad faith, an ICSID spokesperson told Mongabay the framework includes provisions, such as conducting screenings of each claim before it is registered, “to ensure the independence and impartiality of its dispute resolution processes.” In addition, disputes are decided by an arbitral tribunal or a conciliation commission, and the ICSID framework provides challenge and disqualification mechanisms to allow parties to challenge arbitrators or conciliators if there is any doubt as to their independence or impartiality.
Regarding investment protection, “the ICSID Convention does not mandate the protections that States provide to foreign investors,” the spokesperson added.
“Rather, States have the sovereign discretion to establish the level of protection they provide to foreign investors, which may be set out in contracts, investment laws, or international agreements.”
The Public Ministry of Honduras did not respond to Mongabay’s request for comment by the time of publication.
Community concerns
Seven lawsuits totaling more than $1.6 billion in claims are from the electricity sector alone, the new data found. A 2023 claim for $200 million, one of the largest compensation amounts sought, comes from KLP Norfund, Norway’s finance development institution and investment fund, which invests equity in renewable energy projects. More recently, in 2024, the renewable energy company X-Elio Energy, which is owned by the Canadian asset management firm Brookfield Renewable, initiated a claim for $65 million.
KLP Norfund did not respond to Mongabay’s requests for comment by the time of publication. X-Elio Energy declined to comment.
In a public forum held recently in Honduras’ Choluteca department, local community members from across the region shared their concerns about the impacts of large-scale solar energy projects on their lands. Several attendees said solar energy companies often fail to fulfill promises made to them. Instead, the companies deforest their lands and dry up local water sources to build solar panels on viable and scarce agricultural land.
Denia Castillo, a lawyer from the Network of Women Human Rights Defense Lawyers, who was at the forum, told Mongabay over WhatsApp voice messages that many of the concerns of the 22 communities that attended were about the lack of consultations carried out by the renewable energy companies, the lack of guaranteed access to the energy generated, the loss of access to productive lands and health issues among residents.
Leonardo Amador, a leader from the Los Prados community, in Choluteca’s municipality of Namasigüe, told Mongabay over WhatsApp voice messages that his community has been affected by the Los Prados solar project, owned by Scatec ASA, another Norwegian company, and Norfund. He explained that “without prior consultation, the [companies] come to set up shop, and when people oppose them, they try to buy people’s consciences to get what they want.”
Amador said the companies deforested his community’s lands to install the solar panels and destroyed their water sources. “Thirty-six of us were criminalized for fighting to defend our land,” he explained. “The persecution has been quite severe, even to the point of death threats. They promise development in the community, but it is not true.”
According to Spring, “These private energy companies and their claims fully undermine Honduras’ ability to not only provide affordable energy to its population, but also risk adding to the growing public debt.” This, she added, “will cripple the state’s ability to respond to growing climate disasters and related social strife, such as the annual flooding faced by populations in the north and south of the country.”
