Panama’s Supreme Court Rules First Quantum Mining Contract Unconstitutional

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By LatAm Reports Editor

In a landmark decision, the Supreme Court of Panama declared a contract with First Quantum Minerals, a Canadian company, unconstitutional. This contract allowed the company to operate the largest open-pit copper mine in Central America. The ruling was announced following intense national protests and roadblocks that erupted after the Panamanian Congress passed a law in October, granting the Canadian firm a 20-year operating license with a possible extension.

The decision to deem Law 406 unconstitutional, which governed the contract, was announced by the Supreme Court’s president, Maria Eugenia Lopez, after a four-day deliberation among the nine court members. This ruling was celebrated by protesters, including environmentalists like Raisa Banfield, who saw it as a triumph for democracy. The protests, considered the largest since the fall of dictator Manuel Antonio Noriega in 1989, had caused significant disruptions, including on the Pan-American Highway, leading to substantial economic losses.

Despite the government’s defense of the contract, citing its annual $375 million contribution to the state and its significant role in job creation and GDP growth, environmental concerns and the perceived inadequacies of the deal sparked widespread opposition. Critics highlighted the mine’s destructive impact on forest areas and the environment.

First Quantum Minerals, having invested over $10 billion in Panama, indicated its intention to initiate arbitration claims under a free trade agreement but expressed a preference for dialogue. Following the ruling, the Panamanian government stated its readiness to defend national interests in any arbitration process. Legal experts suggest that the Supreme Court’s decision could facilitate the government’s ability to annul the contract.