Envío Digital
Central American University - UCA  
  Number 390 | Enero 2014



Truths about the canal concession all Nicaraguans should know

Last August, 183 Nicaraguan citizens presented 31 suits of unconstitutionality to Nicaragua’s Supreme Court, respectively against President Daniel Ortega and National Assembly president René Núñez, for presenting and approving Law 840, for the construction of an interoceanic canal through Nicaragua. On December 18, as expected, the Court rejected all the suits. According to Supreme Court President Alba Luz Ramos, “Law 840 is not unconstitutional. It remains exactly as it was approved in the National Assembly.” The following is the introduction to one of the suits, drafted by a young Nicaraguan lawyer.

Mónica López Baltodano

My name is Mónica López Baltodano. I am 29 years old. I am a lawyer and notary public with a master’s degree in political studies and am an expert on climate change. I have studied each of the known legal instruments on the concession of the interoceanic canal through Nicaragua, and based on that, in my capacity as a citizen, I presented a suit of unconstitutionality on Monday, August 12, against the President of the Republic, Daniel Ortega Saavedra, and the National Assembly for having approved Law 840 and the Canal Concession Framework Agreement.

This suit does not only refer to Law 840 (and its 25 articles), it also examines in detail the clauses that make up the 120 pages of provisions in the Concession Framework Agreement and its related documents. In the 103 pages of this suit I present in detail violations of over 40 articles of the Constitution and in particular analyze the illegalities related to environmental management and administration of the natural resources, which are the nation’s heritage. The seriousness, dimensions and scope of the concessions established in Law 840 and the Framework Agreement make it impossible to group them in order of importance. As an introduction, I am presenting “25 truths on the canal concession” that all Nicaraguan citizens should know.

In English, without consultation
or parliamentary debate

1. The canal concession should be analyzed in the light of the Framework Agreement’s clauses. In this suit, we argue that those clauses are not the law of the republic, although Law 840 mentions its provisions 56 times. That Agreement was subsequently signed by public officials lacking legislative authority. They should therefore not be recognized by the citizens and all public officials of Nicaragua.

2. The Framework Agreement obliges a constitutional reform to be made within 18 months to legalize its own provisions, with the aim of adjusting our Magna Charta to big capital’s corporate interests.

3. It is intended that all documents in English or not publicly known—such as the Deed of Cooperation, the Shareholder’s Agreement or the HKND Statutes—form part of the canal concession. I clearly challenge them because they are unconstitutional.

4. According to the Constitution, legislation and jurisprudence, this law must be declared unconstitutional because it has been approved without the necessary consultation with professional guilds, associations, collectives or grassroots organizations. Ten people from the business sector—from the Nicaraguan American Chamber of Commerce (AMCHAM) and the Superior Council of Private Enterprise (COSEP)—were the only ones consulted. Not a single woman was consulted, which is discriminatory.

5. As a corollary to the lack of consultation, the National Assembly, the representative body of popular sovereignty, infamously approved the President’s bill with no modification or observation.

How many corporations
are really involved?

6. Law 840 privatized the canal project. What was established in Law 800 (2012), which guaranteed 51% of the shares for the Nicaraguan State, was annulled. The State will now have only 1% of the shares once the canal goes into operation and half a century will have to pass before we can aspire to 50% of the shares.

7. As an aggravating factor, only two corporations appear in all of the documents: HKC (headquartered in Hong Kong) and EDGI (headquartered in Nicaragua). But in the law, the company that will deliver the shares on behalf of Nicaragua is HKND (headquartered in the Cayman Islands), which has not signed any official or public document establishing its obligations in relation to the Nicaraguan State.

8. The Canal Commission, created in Law 840 and made up of 14 public officials subordinated to the executive branch, is illegitimately set up as a “mega-ministry” that represents the whole Nicaraguan State, including both municipal governments and authorities of the Caribbean Autonomous Regions.

9. There is no certainty about the sources that will provide the US$40 billion required to finance the projects, leaving a window open for part of it to come from illicit sources given that the Framework Agreement has a regime of exception and establishes that the financial entities need not register with the Superintendence of Banks and that the State cannot block those funds from entering the country.

10. There is no clarity on the corporate relationship between HKC (Hong Kong), HKND (Cayman Islands) and EDGI (Nicaragua), despite the fact that the HKND Group brand is publicly treated as if we were dealing with a single company, although the concession was not, in fact, granted to it. It is highly probable that a fourth corporation is intervening in the concession, whose name is unknown. The clauses, which are extremely confidential, will absolutely and ad eternum keep its partners from being known.

The concession hands
over our national territory…

11. Potentially the whole national territory has been handed over through the concession as no specific routes or locations are defined for any of the ten sub-projects associated with the canal included in the concession.

12. All use rights of the land, air, water, maritime spaces and natural resources have been handed over, without valuing the importance of environmental integrity to guaranteeing the life of Nicaraguans and with no economically quantified compensation. Even the right to alter and dredge the Great Lake [Lake Nicaragua, also known as Cocibolca], our main drinking water reserve, has been ceded.

13. It has been said that the concession is for 100 years, but legal analysis demonstrates that it was issued for an unlimited time.

14. The concession is multiple and unlimited as it includes 10 sub-projects and a “black box” of projects that could be anything, all covered by this law and with no need for any public tender process.

…and violates the environment

15. The concession was approved without any prefeasibility or environmental impact studies having been done, leaving it to the concession holder’s discretion under what parameters to conduct them, thus ignoring the environmental legislation, the environmental permits regime and the most basic common sense. These studies will surely not be public knowledge due to the strict confidentiality clauses the concession establishes.

16. In the Agreement, the investor is exempted from responsibility for “pre-existing environmental conditions” without it being made clear who will define such conditions or how responsibility will be attributed for environmental damages subsequently caused by the construction works.

17. The protected areas regime in effect in the country is utterly violated. According to the tentative canal routes, two biosphere reserves and another eight protected areas could be affected, including Indio Maíz, La Flor and Río Escalante-Chacocente, which are essential to maintaining the region’s environmental balance.

18. The clauses of the Framework Agreement oblige the Attorney General of the Republic to issue within 30 days a “legal opinion” that confirms the legality of everything undertaken to date, which is improper and humiliating in the light of our legal and institutional framework.

So what will we get in return?

19. The Nicaraguan State has handed over all of its resources, assets and faculties in exchange for up to $10 million a year for ten years after the canal goes into operation. But the Agreement literally states that they could pay us between $1 and $10 million. The investor can deduct from the amount any current and even future debts it deems it is owed.

20. Any property of the Nicaraguan nation of a municipal, regional or national nature could be expropriated in favor of the concession holder, without it having to pay any compensation. The nation’s lands and assets, including its natural resources, are practically being given away.

21. The national budget will not receive a single córdoba in the form of taxes or duties for any of the works. They do not even have to pay to register the properties they expropriate from private or community parties or the State.

22. The National Assembly illegally confers constitutional ranking on Law 840 by establishing that it can only be reformed with the votes of 60% of the legislators, as if it were a partial reform of the Constitution, rather than with half plus one of their votes, as corresponds to ordinary laws.

Under threat and blackmail

23. The National Assembly is directly threatened in the Framework Agreement as any “change of law” will be considered a “destabilizing event” that obliges the State to compensate the investor.

24. There is a threat to and direct blackmail of the Supreme Court of Justice in that the Framework Agreement establishes that if [the Court] declares [the Agreement’s] unconstitutionality, the State will have to compensate and indemnify the private businesspeople or concession holders for any losses and damages they suffer.

25. The Central Bank is inexcusably obliged to issue within a 30-day period renunciation of its sovereign immunity in two forms: one in favor of HKC and the other in favor of HKND. This means that all assets and accounts of the Nicaraguan State could be intervened “in favor of the investor or concession holder.”

Mónica López Baltodano is a lawyer, notary public, political analyst and environmentalist. Subtitles inserted by envío.

Print text   

Send text

<< Previous   Next >>


The Army is the final piece in Ortega’s political Project


What mutations have turned the FSLN into what it is today?

Truths about the canal concession all Nicaraguans should know

El Salvador
First reflections on the first round of elections

The energy reform: A great loss and a betrayal

How does Cuba surf the net?

“Illegal” migration of Central Americans and Chinandegans
Envío a monthly magazine of analysis on Central America