Honduras Denounces The ICSID Convention

• Published date: 18 March 2024
• Law Firm: Herbert Smith Freehills
• Author: Ms Hannah Ambrose, Lucila Marchini, Daniela Paez and Carlos Hafemann

Honduras Denounces the ICSID Convention

On February 24, 2024, the Republic of Honduras ('Honduras') sent a written notice to the World Bank denouncing the ICSID Convention. Honduras's decision follows its threat on May 31, 2023 to withdraw from the ICSID Convention due to alleged procedural mismanagement by ICSID in the of the multi-billion Honduras Próspera case, the commencement of nine ICSID arbitrations against Honduras since the election of the left-wing candidate Xiomara Castro as President in January 2022 (bringing the total to ten pending ICSID arbitrations), and additional notices of dispute served on Honduras that have not yet led to arbitration proceedings.

Honduras has followed the path of other countries in Latin America, becoming the fourth country to denounce the ICSID Convention after Bolivia in 2007, Ecuador in 2009 (although re-joining in 2021), and Venezuela in 2012. Countries in other regions have also expressed their intention to leave the ICSID system. Last year, the Prime Minister of Albania announced that the state was contemplating denouncing the ICSID Convention after a tribunal rejected Albania's application for revision of an award under Article 51 of the Convention ordering it to pay '110 million over the expropriation of a television station.

Ongoing proceedings against Honduras

Although Honduras gave notice of its withdrawal from the ICSID Convention in February 2024, according to Article 71 of the ICSID Convention, this decision 'shall take effect six months after receipt of such notice' by the World Bank - i.e., on August 25, 2024. Pursuant to Article 72 of the ICSID Convention, claimants...