It seems as though the Honduran charter cities project is back on. Congress just passed enabling legislation to establish “Zonas de Empleo y Desarrollo Económico (ZEDE).”
The previous project collapsed in two stages. First, the foreign members of the Transparency Commission that was supposed to oversee the charter city pulled out. Then the Supreme Court declared the whole thing unconstitutional.
The project also returned in two stages. First, in January 2013, by a vote of 110 to 13, Congress changed the constitution. The text of the new amendments can be found here. (An easier-to-read version can be found here.) Congress changed three articles, but only two had to do with charter cities.
Article 294 got a new sentence aimed right at the Supreme Court: “Notwithstanding the text of the preceeding two paragraphs, the National Congress may create zones subject to special regimes under Article 329 of this Constitution.”
The amendments then watered down Article 329, which gave Congress the right to establish the charter cities. This blog discussed the first version of Article 329 here, in detail. I am annoyed to say appears not to have been linked to by any of the usual suspects. They appear to prefer to operate in an atmosphere of hope and dreams.
Gone is the stuff about treaties and outsourcing executive functions to foreign countries and special trade laws and all. Instead, among the verbiage, you have these four key sentences:
The State may establish zones subject to special regimes which will have judicial personality, be subject to a special fiscal regime, have the power to take on obligations that will not require a guarantee or signature from the State, sign contracts until its goals are achieved over time and across administrations,and enjoy functional and administrative autonomy including the functions, facilities, and obligations that the Constitution and laws confer on municipalities.
The authorities of the zones subject to special regimes have the obligation to adopt national and international best practices.
The law can establish obligatory binding arbitration to resolve conflicts between nature and juridical persons resident inside the areas covered by these regimes.
Courts in zones subject to a special regime may adopt judicial systems and traditions from other parts of the world.
Today they passed the enabling legislation by a vote of 102 to 26. I have not yet been able to find a copy of the new law. (Help is always welcome.) Press reports are a bit vague. Here is Proceso:
The ZEDE will have its own juridical personality and may be created with the goal of creating international financial centers, international logistical centers, autonomous cities, international commercial courts, special investment districts, renewable energy districts, special economic zones, and zones subject to a special judicial system. They also may be special agroindustrial zones, special tourist zones, social mining zones, social forest zones or whatever other unspecified special regime that includes a combination of some of these other regimes.
That really does not say very much.
The special fiscal regime authorizes the ZEDE the right to create its own budget, to impose and collect its own taxes, to determine the fees charged for its services, to sign all types of contracts and agreements until its goals are accomplished, including across various administrations.
That was a little more specific.
The ZEDEs fall under special jurisdiction and shall have their own autonomous and independent courts with exclusive competence in all cases not subject to obligatory arbitration. The courts will be created by the judiciary through the Judicial Council under the supervision of the Technical Secretary and will operate under English common law.
In addition, the internal regulations of the ZEDE will establish that they are extraterritorial tax and tariff zones, distinct from the rest of the national territory.
If the above report is right, then the ZEDEs are little more than a low-tax free-trade-zone with their own special court system. Kind of like Delaware.
I kid. Delaware is inside the American customs area.
I am skeptical of the standard charter city idea. This is a very watered-down version. So ... good luck with that, Honduras. For the rest of you, don’t get too excited.