Wednesday, October 17, 2012

Model Cities definitively unconstitutional

The Supreme Court of Honduras ruled today that the Honduras legislation establishing charter or model cities was unconstitutional.  A ruling two weeks ago from the constitutional branch of the court established by a 4-1 vote that the law was unconstitutional. Because that decision was not unanimous, the entire Supreme Court had to consider and vote on the issue.

The full court voted 13-2 that decreto 283-2010 which reformed two constitutional articles to enable the model cities legislation violated the constitution.  

The court will release the reasoning behind its finding tomorrow. 

Grupo MGK reacted to the constitutional branch decision on October 8, stating:
We hope and expect that whether or not the full Supreme Court chooses to invalidate particular articles of the Constitutional Statute, that they will preserve enough of it intact that Grupo MGK along with other organizations will be able to create hundreds of thousands of jobs in Honduras.

While Honduras's model cities initiative was on hold, we learned a little more about Grupo MGK.  It is not a fully formed business entity, but rather is said to be part of a newly formed Nevada limited partnership that is not fully set up under the laws of Nevada.

La Prensa reported that Grupo MGK is part of Grupo de Desarrollos Especiales LLC, a company registered with the state of Nevada on September 4, 2012, by Kevin Lyons, a business partner of Michael Strong..  Like MGK, this is a newly registered company, with no track record.  It has until October 31 to file its list of officers, pay fees, and obtain a Nevada business license

Kevin Lyons was also responsible for setting up Grupo Ciudades Libres, a never-legally-established Nevada company whose goal was to set up a Free City in Honduras, according to The Economist.  Grupo Ciudades Libres LLC's filing as a partnership was revoked by the state of Nevada for not paying any of the associated legal fees that were due as part of establishing the company in 2011.

Now that the full Supreme Court has invalidated the Model Cities law, it will be interesting to see whether Grupo MGK persists in its efforts to create a free business colony in Honduras. Meanwhile, we would be willing to bet that the legal arrangements for Grupo de Desarrollos Especiales LLC won't be completed by October 31.

Wednesday, October 3, 2012

Model Cities Law Unconstitutional

The law enabling Regiones Especialles de Desarrollo (RED) sometimes referred to as Model or Charter Cities, has been found unconstitutional by the Constitutional Law branch of the Supreme Court in Honduras.  Justices  José Antonio Gutiérrez, José Ruíz, Gustavo Enrique Bustillo, and  Edith María López voted to sustain the legal challenge brought in 2011.  Only justice Oscar Fernando Chinchilla voted to reject the legal challenge.

Justice Chinchilla traveled to southeast Asia to visit Korean economic development zones with President of the Senate Juan Orlando Hernandez and refused to recuse himself from the case.

Because the decision was not unanimous, Chief Justice Jorge Rivera Aviles will have to assemble the full court of 15 justices and get their votes over the next 10 days before there is a final determination.