PANAMA Trends and Developments Contributed by: Roy C Durling, Arias, Fábrega & Fábrega
October 2023 to present two bills to the National Assembly: one calling for a referendum on the validity of Law 406 (so voters could vote in favour of the abrogation of Law 406) and the other a prohibition on new metal mining concessions. The National Assembly discarded the idea of a referendum on Law 406 and opted for allowing the Supreme Court to review its constitutionality. The other initiative (calling for a prohibition on new metal mining concessions) succeeded. Law 407 of 3 November 2023 (“Law 407”) provided for a prohibition on the granting, renewing, or extending of concessions for the exploration, extraction, or exploitation of metal mining. This prohibition also extended to applications for metal mining concessions that were in the pro - cess of review. Notwithstanding the above moves by the gov - ernment, the protests continued unabated. Simultaneously, the Supreme Court was review - ing the challenges filed against Law 406. On 27 November 2023, the Supreme Court unanimously held that Law 406 was unconsti - tutional because it had breached not less than 25 articles in the Constitution. In particular, the Court indicated that the granting of the con - cession should have been the result of a public bidding process (and not by means of a direct contract with MPSA) and that the contract had not taken into consideration environmental safe - guards. The Court’s decision was made public on 28 November 2023 and published in the Offi - cial Gazzette on 2 December 2023. Consequences As a result of the Supreme Court ruling, MPSA was left without a legal basis for continuing to operate the Cobre Panama project. It switched
its operations to care and maintenance of the site. In the weeks ensuing the ruling, its labour force was reduced to 1,000 employees. MPSA claims that it is spending USD13 million per month on the site, particularly in addressing environmental matters. At the time of the rul - ing, there were 120,000 tonnes of copper ore that could not be exported, and which remain at the site. First Quantum has announced that it has started arbitration proceedings against Panama before the International Chamber of Commerce in Paris pursuant to the arbitration clause in the contract-law approved by Law 406. It is reported to be claiming USD30 billion in damages. It has also threatened to start arbitration proceedings against Panama under the Canada-Panama Free Trade Agreement (the “Canada-Panama FTA”). Korea Mine Rehabilitation and Mineral Resourc - es Corp. (KOMIR), a Korean state-owned com - pany and holder of 10% of equity in MPSA, has also started arbitration proceedings against Panama pursuant to the South Korea Panama FTA. Komir is seeking damages of approximately USD1 billion. Franco Nevada Corporation, a Canadian royalty and streaming company, has also taken Panama to arbitration under the Canada-Panama FTA. It is seeking up to USD5 billion in damages. Liebherr Mining, a multinational company sup - plying mining equipment, has also sent notices to Panama of its intention to start arbitration proceedings under the France-Panama FTA. Liebherr is seeking more than USD100 million in damages resulting from its investments in Panama to serve the Cobre Panama project.
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