Foreign investor lawsuits impede Honduras human rights & environment protections

Sarah Brown
12 Dec 2024

Honduras faces billions of dollars in lawsuits from corporations, many tied to controversial investments made after the 2009 coup, creating a deterrent effect on the government’s ability to make sovereign decisions and making it the second-most-sued country in Latin America over the period of 2023 to August 2024, after Mexico.
Some local communities in Honduras are divided over foreign investment projects, with several expressing resistance due to concerns about their impact on the environment and land rights. Honduras’ recent energy reforms and mining bans are facing backlash and legal challenges, as foreign corporations resist changes aimed at protecting natural resources and human rights.

Foreign investors in Honduras enjoy “extraordinary privileges” that hinder the government’s ability to implement reforms that could benefit human rights and the environment, a report has found. These advantages allow corporations to sue the Central American country for policy changes that allegedly harm their investments using controversial investor-state dispute settlement (ISDS) mechanisms, resulting in a surge of lawsuits amounting to billions of dollars.

The report from the Institute for Policy Studies, the Transnational Institute, TerraJusta and the Honduras Solidarity Network reveals that the impact of these legal disputes creates a “chilling effect,” otherwise known as a “deterrent effect,” in which the state may be discouraged from enacting public interest legislation due to the costly risk of liability under investment agreements.

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The ISDS provision allows private sector lawyers to determine whether countries are treating foreign investors fairly. The report says that many lawsuits in Honduras stem from companies that made questionable investments after the 2009 coup d’état, with around a third of the investments facing significant resistance from affected communities.

ISDS is a controversial mechanism that companies across the world are increasingly using to sue governments for policies that may impact their profits, often with harmful consequences for environmental protection and human rights. In a 2023 report, U.N. human rights rapporteur David Boyd described ISDS as “a major obstacle to the urgent actions needed to address the planetary environmental and human rights crises,” noting that such cases contribute to a “regulatory chill,” discouraging governments from enacting stricter regulations.

“These [lawsuits] are an incredible amount of money that would absolutely erode what Honduras has available for health, education, infrastructure and other public investments,” Jen Moore, associate fellow at the Institute for Policy Studies and co-author of the report, told Mongabay.

More:
https://news.mongabay.com/2024/12/foreign-investor-lawsuits-impede-honduras-human-rights-environment-protections/