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19 Jul 2023

Bretton Woods Project

Honduras threatens withdrawal from investment dispute tribunal over $11 billion claim by US firm Prospera

Honduras threatens ICSID withdrawal over $11 billion ‘neo-colonial’ special economic zone claim, 19 July 2023

"Honduras is threatening to withdraw from the World Bank’s International Centre for Settlement of Investment Disputes (see Inside the Institutions, What is the World Bank’s International Center for the Settlement of Investment Disputes (ICSID)?) over an $11 billion claim by Honduras Prospera, a US company, arguing ICSID has breached “law and procedure”. In April 2022, the Honduran government repealed a 2013 law that allowed the US company to establish a charter city in a special economic zone (SEZ) in 2021.

Prospera’s $11 billion claim for damages amounts to about two-thirds of Honduras’s annual budget. US-based publication The Atlantic described Prospera as neo-medieval and neo-colonial, while Bloomberg described it as “a mini startup nation with its own set of laws.”

The case highlights serious issues with both SEZs and investor-state dispute settlement (ISDS) arbitration panels like ICSID, raising critical questions about national sovereignty and effective democratic oversight over economic governance in the Global South..."