The US-backed developers of the Próspera charter city on Roatán claim Honduras expropriated their investment by repealing the ZEDE special economic zone regime in 2022. The opening damages figure was $10.775B, roughly two thirds of Honduran GDP, though later reporting puts the trimmed claim at about $1.63B. Honduras denounced the ICSID Convention in 2024 in part because of this case and rejoined it in August 2026.
LATEST DEVELOPMENT · MAY 6, 2026
The tribunal declined to bifurcate on 19 March 2026 (PO 6) and on 6 May 2026 ruled on amicus curiae applications (PO 7) after inviting non-disputing party submissions. Honduras’ ICSID re-accession took effect on 16 August 2026.
BACKGROUND
Próspera is a private, US-backed charter city project built on the Honduran island of Roatán under the country’s 2013 ZEDE (Zona de Empleo y Desarrollo Económico) law, which allowed semi-autonomous special economic zones with their own courts, regulations and taxation. After a change of government, Honduras’s Congress repealed the ZEDE legal framework in 2022, which the Próspera developers say destroyed a business built on that regime’s guarantees. The claimants, entities tied to the Próspera project and its founders, gave notice of intent to arbitrate in September 2022 and filed a request for arbitration with ICSID that December, invoking the investment chapter of CAFTA-DR.
The claimants originally sought damages north of $10.7B, an amount widely reported as roughly two thirds of Honduras’s annual GDP, later trimmed in subsequent submissions. Honduras contested the tribunal’s jurisdiction on several grounds, including failure to exhaust local remedies, and also tried unsuccessfully to disqualify one of the claimants’ arbitrators. In February 2025, the tribunal rejected Honduras’s preliminary objections, finding CAFTA-DR’s parallel-litigation waiver provision excused exhaustion of local remedies and that pursuing them would have been futile in any event.
The case has become a flashpoint in the debate over private governance zones and treaty protection. Honduras denounced the ICSID Convention in 2024, citing this and other investor claims as a reason, before a new government reversed course and rejoined ICSID, with re-accession taking effect in August 2026. The tribunal has since declined to bifurcate the merits phase and has ruled on competing bids by outside groups to file amicus curiae submissions. The arbitration continues on the merits, with no final award yet issued.
TIMELINE
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AUG 16, 2026PROCEDURALHonduras’s ICSID re-accession takes effectHonduras’s return to the ICSID Convention, ratified after a change of government, took effect, reversing its 2024 denunciation that was driven partly by this case.
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MAY 6, 2026PROCEDURALTribunal rules on amicus curiae applications and invites submissionsThe tribunal issued Procedural Order No. 7 on applications to intervene as amicus curiae, inviting non-disputing party submissions under DR-CAFTA.
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MAR 19, 2026PROCEDURALTribunal declines to bifurcate the proceedingThe tribunal issued Procedural Order No. 6, declining Honduras’s request to bifurcate the arbitration into separate jurisdiction and merits phases.
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FEB 26, 2025PROCEDURALTribunal dismisses Honduras’s exhaustion-of-local-remedies objectionThe tribunal issued its Decision on Preliminary Objections under CAFTA-DR Article 10.20.5, finding that CAFTA-DR’s parallel litigation waiver provision excused exhaustion of local remedies and that pursuing local remedies would in any case have been futile.
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DEC 15, 2024PROCEDURALTribunal rejects early amicus applicationsThe tribunal issued Procedural Order No. 3, rejecting non-disputing parties’ initial applications to intervene as amicus curiae as unhelpful to the preliminary objections then before it.
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SEP 19, 2024PROCEDURALTribunal issues Procedural Order No. 1The tribunal composed of Juan Fernández-Armesto, David W. Rivkin and Raúl E. Vinuesa issued its first procedural order setting the framework for the case.
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AUG 7, 2024PROCEDURALICSID Chair dismisses disqualification bid against RivkinThe Chair of the ICSID Administrative Council dismissed Honduras’s proposal to disqualify arbitrator David W. Rivkin, allowing the case to proceed with the original tribunal.
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JUL 29, 2024PROCEDURALIndependent expert recommends dismissing bid to disqualify RivkinPierre-Marie Dupuy issued a recommendation on Honduras’s proposal to disqualify claimant-appointed arbitrator David W. Rivkin, addressing whether he should be removed from the tribunal.
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DEC 19, 2022FILINGRequest for arbitration registered with ICSIDHonduras Próspera Inc., St. John’s Bay Development Company LLC and Próspera Arbitration Center LLC filed their request for arbitration against Honduras, opening ICSID Case No. ARB/23/2.
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SEP 16, 2022FILINGClaimants file notice of intent to arbitrateHonduras Próspera Inc. and affiliated entities served notice of intent to submit claims under Article 10.16 of CAFTA-DR, represented by White & Case LLP.