Monday, July 14, 2025

Supporting Honduran communities affected by corporate assault on Honduras: New data reveals gravity of ISDS claims against Honduras

This week, from July 14-16, the Institute for Policy Studies (IPS), Transnational Institute (TNI), Honduras Solidarity Network (HSN) and TerraJusta will co-host a three-day convening with local partners, the Network of Women Human Rights Defenders (RADDH), MASSVida y Caritas Honduras, in Choluteca, Honduras: ‘Without Human Rights, Energy Sovereignty Does Not Exist: A Meeting of Communities Affected by Energy Projects in Southern Honduras.’ The Central American country is facing an onslaught of international arbitration claims in secretive corporate courts, over a third of which have arisen from the renewable energy sector. This convening will shine a critical spotlight and offer an in-depth look at the negative impacts and community-driven opposition to the solar energy projects that benefited from deepening privatization and slew of renewable energy contracts approved in 2014, during the period known as the narcodictatorship.

As part of this vital gathering, on July 14, IPS, TNI, HSN and TerraJusta released updated figures on the arbitration claims against Honduras to complement their groundbreaking September 2024 report, ‘The Corporate Assault on Honduras’. New suits and greater detail about the amount companies are claiming from Honduras exposes the gravity of the corporate onslaught against government reforms and community-driven resistance to policies and projects that threaten environment, community health, and human rights. The investments involved almost all took place during the twelve-year narco-dictatorship, from 2010 to 2022, many of which gave rise to significant community-led protest and national opposition.

Companies are using international arbitration against Honduras as a means of corporate lawfare to undermine measures that would cut into their potential profits, such as reforms to make electricity more affordable and the repeal of legislation permitting privately governed charter cities. They are also seeking to profit from failed investments. For example, a private toll booth project is at the centre of a $180 million claim — backed by big U.S. banks, including JP Morgan Chase Bank and two Goldman Sachs funds. It was halted after local communities fought back given how it threatened to hike the price of food, bus fares, and their daily commutes.

Since the 2024 report was published, the number of arbitration claims that transnational and Honduran corporations have brought against Honduras has risen, with two new claims filed in May 2025. Recent data further reveals that the total amount that companies are demanding in claims against Honduras, the second-most impoverished country in the hemisphere, is now $19.44 billion dollars – or roughly 55% of Honduras’ GDP in 2024.

Seven claims have arisen from the electricity sector alone. These claims total over $1.6 billion dollars, more than the estimated savings that the Honduran government anticipates from renegotiating renewable energy contracts under a new law passed in 2022. The electricity companies that are suing Honduras include Norwegian finance development institution and investment fund, KLP Norfund Investments, and X-Elio, which is fully owned by Canadian asset management firm Brookfield.

Transnational corporations have exclusive recourse to sue governments before secretive tribunals through a global web of over 2,500 bilateral or multilateral trade agreements with investment chapters. In the case of Honduras, corporations can sue under provisions in bilateral investment treaties, free trade agreements, contracts and a 2011 Law for the Promotion and Protection of Investments that was passed shortly after a 2009 military backed coup to make Honduras “open for business”.

The economic punishment of corporate claims and the pressure they exert on public decision making has led some governments to reconsider the risk and start to eliminate Investor State Dispute Settlement (ISDS) provisions from investment agreements. After receiving a slew of claims in 2023 and 2024, Honduras announced its withdrawal from the World Bank’s International Center for Settlement of Investment Disputes (ICSID), where corporate claims are most frequently brought. While a notable indicator of the government’s unconformity with the investor protection system, this has not been enough to prevent further suits against the country.

In May 2025, two companies brought new claims against Honduras.

Palmerola International Airport (PIA) initiated a second claim against Honduras for $300 million dollars shortly after discontinuing its initial claim of $10 million over alleged failures on the part of the state as part of a public-private partnership contract. PIA is owned by the EMCO Group and controlled by Lenir Pérez, a member of the Honduran elite who benefited under the government of ex-president Juan Orlando Hernández, now in prison in New York for narcotrafficking and arms-related charges. Grupo EMCO also owns a highly contentious iron ore project in the municipality of Tocoa, where well-known environment defender Juan López was murdered in September 2024.

Despite the Honduran government having announced that PIA would and did discontinue its first case earlier this year, PIA announced a new claim under the United Nations Commission on International Trade Law (UNCITRAL) arbitration rules in May, citing breaches of the DR-CAFTA and the Central America-Panama FTA. The company alleges that the government has not fulfilled a reported Memorandum of Understanding reached and has interfered with its operation of the airport.

Further to this, after threatening potential arbitration in 2024 over the repeal of legislation enabling charter cities, known in Honduras as Employment and Economic Development Zones (ZEDE by their initials in Spanish), U.S. company Overseas Real Estate LLC launched a case under ICSID Additional Facility arbitration rules in May over its investment in the Morazán ZEDE in Choloma. The company cites breaches of DR-CAFTA and an Agreement for Legal Stability and Investor Protection. Honduran media outlet Criterio Hn reports that the company is suing for at least $100 million dollars.

This troubling corporate assault on Honduras is yet another wake-up call to the deep injustice of the investor protection system that privileges private profit at the expense of everything else. It is the Honduran people who ultimately pay the price in terms of the pressure such suits bring to constrain public decision making, as well as in terms of the economic costs of any amount awarded to private corporations or spent in the state’s legal defense. We previously acknowledged Honduras’ decision to leave the World Bank’s ICSID as a good first step, but recent developments confirm that without revising or withdrawing from agreements that give companies recourse to ISDS, the country will continue at risk of more unjust corporate claims.

The gathering in Choluteca, Honduras from July 14 to 16 will contextualize and link the local impacts of renewable energy investments to the international claims that not only undermine the Honduran people’s sovereignty to decide over policies and projects in the sector, but have had serious social and environmental impacts for the adjacent communities.

A public forum and press conference on July 16 will be livestreamed on Facebook by TerraJusta at which time we will also release a joint news release with local organizations and affected communities who attend the event.

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