On November 27, 2023, the Supreme Court of Panama rendered a verdict declaring Article 1 of Law No. 406, dated October 20, 2023, unconstitutional. Article 1 of Law No. 406, enacted on October 20, 2023, explicitly approves the Mining Concession Contract between the State and MINERA PANAMÁ, S.A. (referred to as the 1997 Contract), asserting legislative authority to approve or disapprove contracts involving the State. This approval is conditioned on compliance with the Authorization Law, specified in numeral 75 of article 759 of the Political Constitution. The Mining Concession Contract, endorsed by Law 9 on February 26, 1997, grants MINERA PANAMÁ, S.A. exclusive rights to explore, extract, and exploit gold, copper, and other minerals in the "Cerro Petaquilla" area. By virtue of this Contract of 7997, MINERA PANAMÁ, S.A., has developed and operated in the area given in concession, the mining project known as "Panama Copper Mine", authorized under the Environmental Impact Study approved by Resolution DIEORA IA -1210-2011 of December 28, 2011, and other Environmental instruments. 

However, Law 9 of February 26, 1997, approving the 7997 Contract, was declared unconstitutional on December 21, 2017, by the plenary session of the Supreme Court of Justice. Subsequently, negotiations between the State and the concessionaire led to the formulation of a new concession contract aimed at safeguarding employment, fostering economic growth, and ensuring the State's benefit from resource exploitation. The new concession contract, executed as a result of negotiations, grants MINERA PANAMÁ, S.A. exclusive rights over specified zones for twenty years, starting from December 22, 2021. The contract includes the rights to explore, extract, exploit, benefit, process, refine, transport, sell and market the mineral metallic copper and, in conjunction with the exploration and exploitation of copper. Environmental compliance is mandated, with the mining project subject to an approved Category III Environmental Impact Study (EIS). The EIS was approved by the National Environmental Authority, today the Ministry of the Environment, through Resolution DIEORA-IA1210-2011 of December 28, 2017. The concessionaire is also obliged to adhere to environmental laws, undertake continuous improvement, and bear responsibility for environmental damages.

In challenging Article 1 of Law No. 406, Mr. Juan Ramón Sevillano Callejas contends that it violates articles 257, 259, and 266 of the Political Constitution of Panama. He asserts that the violation of article 257 stems from the non-application of the Public Procurement Law and Cabinet Decree No. 267 of 1969 during the initial Contract, which required mining concessions to be granted through fair public bidding. Additionally, the transgressions of articles 259 and 266 are alleged due to the perceived failure of the National Assembly to safeguard collective interests and uphold public interest, leading to benefits favoring the concessionaire. For example, the concessionaire benefited from a series of rights, exemptions and disproportionate tax deductions. 

During the court proceedings, several arguments were presented by members of the Supreme Court, emphasizing the violation and threat to social interests and constitutional and international regulations of a social and environmental nature. Notable dissenting opinions include concerns about constitutional principles, human rights, equality before the law, public interest, and compliance with international agreements such as the Escazú Agreement.

Ultimately, the Supreme Court, recognizing the constitutional conflict, determined that the clash between fundamental rights, such as the right to life, health, and a pollution-free environment, and private investment interests necessitates a resolution in favor of protecting the rights and obligations previously acquired by the Panamanian State. The decision underscores the duty of the State to guarantee a healthy environment and adhere to international environmental standards. The court concludes that the particular interests arising from private investments must not override the supreme values enshrined in the Panamanian Constitution.

Considering that in Chapter VII of Title III of the Political Constitution of Panama, recognizes the duty of the State regarding the Ecological Regime, it is necessary to cite the following norms: "Article 118. It is the fundamental duty of the State to guarantee that the population lives in an environment "healthy and pollution-free entity, where air, water and food satisfy the requirements for the adequate development of human life." Given that there is a legal relationship between the recognition of environmental obligations in the constitutional framework and respect for international standards in this matter, the State ratified, through Law 21 of 1992, the Protocol of San Salvador, recognized as additional to the American Convention on Human Rights. It recognizes the obligation of the State to protect and promote a healthy environment in Article 11. 

Consequently, the international policy of the Panamanian State has supported this environmental protection. Through the Stockholm Declaration, both the Panamanian State and the signatory States committed that "the natural resources of the Earth, including air, water, land, flora and fauna, and especially representative samples of these natural ecosystems, must be preserved for the benefit of present and future generations through careful planning or management, as appropriate (Principle 1), considering that "the Earth's nonrenewable resources should be used in a way that avoids endangering their future," exhaustion and ensure that all humanity shares the benefits of such employment" (Principle 5), recognizing that "All countries, large or small, must deal in a spirit of cooperation and on an equal footing with international questions relating to protection and improvement of the environment, it is essential to cooperate through multilateral or bilateral agreements or by other appropriate means. to effectively control, avoid, reduce, and eliminate the harmful effects that activities carried out in any sphere may have on the environment, taking due account of the sovereignty and interests of all States" (Principle 24). For the Plenary Session of the Supreme Court of Justice, there is no doubt that we are in the presence of a constitutional conflict of a specific type, in which the fundamental rights of the Panamanian population such as the right to life, health and a healthy environment free of pollution come into collision with the particular interest arising from private investments that seek economic growth. 

In effect, the Supreme Court warns that one of the incompatibilities or normative contradictions noted in this case consists of the prohibition that the Political Constitution imposes on the National Assembly related to the issuance of laws that contradict its spirit. In accordance with numeral 1 of article 163, as well as distorting the concept of retroactivity of the laws contemplated in article 46 of the Magna Carta, which were not observed when the Law Contract was approved, which is the object of the unconstitutional action under judicial scrutiny of the Court. On the other hand, a clash is observed between the fundamental rights to life, health and a healthy and pollution-free environment provided for in articles 17, 109 and 118 of the Political Constitution, which contain supreme values of the population of the Republic of Panama against the particular interest that is recognized in article 182 of the Political Constitution, which was superimposed on the contract approved with the censored Law, ignoring that these constitutional rights enjoy a special category.

The Court further reinforced the guidance of the Inter-American Commission on climate change, which calls on States to reexamine policies that affect the climate in a way that is transparent and participatory. The Law No. 406 of 2023 does not specify the environmental management instruments that would allow effective access to information about environmental adaptation programs, mitigation measures, and effective compensation for affected populations. This is contrary to Principle 13 of the UN Guiding Principles of Business and Human Rights, which stipulates that "The responsibility to respect human rights requires that companies": "Seek to prevent or mitigate the negative consequences on human rights directly related to their operations, products, or services provided through their business relationships, even when they have not contributed to generating them."

This aspect is important because, despite the State presenting clauses that could be considered insufficient in light of human rights protection instruments, such as citizen participation and environmental law, the contracting company could not bypass them by arguing that it did not bear that responsibility. The Plenary of the Supreme Court of Justice of Panama believes that companies, in their management and economic activities, cannot leave the task of protecting human rights solely to the contracting State. They also have a duty of respect, which in this case was materialized in the stipulation of clauses that were effective in reducing, mitigating, and preventing social and consequential consequences.

The Court also emphasized that the law in question violates the rights of children (art. 56 of the constitution), especially considering the state of the climate in which we inserted. This calls on States to observe the precautionary principle in its decisions. In this sense, the Court specifically refers to the Committee on the Rights of the Child General Comment 26 on Child Rights and the environment, with a special focus on climate change.

Callejas v. Law No 406 (unconstitutionality of mining concession)

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Callejas v. Law No 406 (unconstitutionality of mining concession) - judgment

Filed

On November 27, 2023, the Supreme Court of Panama rendered a verdict declaring Article 1 of Law No. 406, dated October 20, 2023, unconstitutional. Article 1 of Law No. 406, enacted on October 20, 2023, explicitly approves the Mining Concession Contract between the State and MINERA PANAMÁ, S.A. (referred to as the 1997 Contract), asserting legislative authority to approve or disapprove contracts involving the State. This approval is conditioned on compliance with the Authorization Law, specified in numeral 75 of article 759 of the Political Constitution. The Mining Concession Contract, endorsed by Law 9 on February 26, 1997, grants MINERA PANAMÁ, S.A. exclusive rights to explore, extract, and exploit gold, copper, and other minerals in the "Cerro Petaquilla" area. By virtue of this Contract of 7997, MINERA PANAMÁ, S.A., has developed and operated in the area given in concession, the mining project known as "Panama Copper Mine", authorized under the Environmental Impact Study approved by Resolution DIEORA IA -1210-2011 of December 28, 2011, and other Environmental instruments. 

However, Law 9 of February 26, 1997, approving the 7997 Contract, was declared unconstitutional on December 21, 2017, by the plenary session of the Supreme Court of Justice. Subsequently, negotiations between the State and the concessionaire led to the formulation of a new concession contract aimed at safeguarding employment, fostering economic growth, and ensuring the State's benefit from resource exploitation. The new concession contract, executed as a result of negotiations, grants MINERA PANAMÁ, S.A. exclusive rights over specified zones for twenty years, starting from December 22, 2021. The contract includes the rights to explore, extract, exploit, benefit, process, refine, transport, sell and market the mineral metallic copper and, in conjunction with the exploration and exploitation of copper. Environmental compliance is mandated, with the mining project subject to an approved Category III Environmental Impact Study (EIS). The EIS was approved by the National Environmental Authority, today the Ministry of the Environment, through Resolution DIEORA-IA1210-2011 of December 28, 2017. The concessionaire is also obliged to adhere to environmental laws, undertake continuous improvement, and bear responsibility for environmental damages.

In challenging Article 1 of Law No. 406, Mr. Juan Ramón Sevillano Callejas contends that it violates articles 257, 259, and 266 of the Political Constitution of Panama. He asserts that the violation of article 257 stems from the non-application of the Public Procurement Law and Cabinet Decree No. 267 of 1969 during the initial Contract, which required mining concessions to be granted through fair public bidding. Additionally, the transgressions of articles 259 and 266 are alleged due to the perceived failure of the National Assembly to safeguard collective interests and uphold public interest, leading to benefits favoring the concessionaire. For example, the concessionaire benefited from a series of rights, exemptions and disproportionate tax deductions. 

During the court proceedings, several arguments were presented by members of the Supreme Court, emphasizing the violation and threat to social interests and constitutional and international regulations of a social and environmental nature. Notable dissenting opinions include concerns about constitutional principles, human rights, equality before the law, public interest, and compliance with international agreements such as the Escazú Agreement.

Ultimately, the Supreme Court, recognizing the constitutional conflict, determined that the clash between fundamental rights, such as the right to life, health, and a pollution-free environment, and private investment interests necessitates a resolution in favor of protecting the rights and obligations previously acquired by the Panamanian State. The decision underscores the duty of the State to guarantee a healthy environment and adhere to international environmental standards. The court concludes that the particular interests arising from private investments must not override the supreme values enshrined in the Panamanian Constitution.

Considering that in Chapter VII of Title III of the Political Constitution of Panama, recognizes the duty of the State regarding the Ecological Regime, it is necessary to cite the following norms: "Article 118. It is the fundamental duty of the State to guarantee that the population lives in an environment "healthy and pollution-free entity, where air, water and food satisfy the requirements for the adequate development of human life." Given that there is a legal relationship between the recognition of environmental obligations in the constitutional framework and respect for international standards in this matter, the State ratified, through Law 21 of 1992, the Protocol of San Salvador, recognized as additional to the American Convention on Human Rights. It recognizes the obligation of the State to protect and promote a healthy environment in Article 11. 

Consequently, the international policy of the Panamanian State has supported this environmental protection. Through the Stockholm Declaration, both the Panamanian State and the signatory States committed that "the natural resources of the Earth, including air, water, land, flora and fauna, and especially representative samples of these natural ecosystems, must be preserved for the benefit of present and future generations through careful planning or management, as appropriate (Principle 1), considering that "the Earth's nonrenewable resources should be used in a way that avoids endangering their future," exhaustion and ensure that all humanity shares the benefits of such employment" (Principle 5), recognizing that "All countries, large or small, must deal in a spirit of cooperation and on an equal footing with international questions relating to protection and improvement of the environment, it is essential to cooperate through multilateral or bilateral agreements or by other appropriate means. to effectively control, avoid, reduce, and eliminate the harmful effects that activities carried out in any sphere may have on the environment, taking due account of the sovereignty and interests of all States" (Principle 24). For the Plenary Session of the Supreme Court of Justice, there is no doubt that we are in the presence of a constitutional conflict of a specific type, in which the fundamental rights of the Panamanian population such as the right to life, health and a healthy environment free of pollution come into collision with the particular interest arising from private investments that seek economic growth. 

In effect, the Supreme Court warns that one of the incompatibilities or normative contradictions noted in this case consists of the prohibition that the Political Constitution imposes on the National Assembly related to the issuance of laws that contradict its spirit. In accordance with numeral 1 of article 163, as well as distorting the concept of retroactivity of the laws contemplated in article 46 of the Magna Carta, which were not observed when the Law Contract was approved, which is the object of the unconstitutional action under judicial scrutiny of the Court. On the other hand, a clash is observed between the fundamental rights to life, health and a healthy and pollution-free environment provided for in articles 17, 109 and 118 of the Political Constitution, which contain supreme values of the population of the Republic of Panama against the particular interest that is recognized in article 182 of the Political Constitution, which was superimposed on the contract approved with the censored Law, ignoring that these constitutional rights enjoy a special category.

The Court further reinforced the guidance of the Inter-American Commission on climate change, which calls on States to reexamine policies that affect the climate in a way that is transparent and participatory. The Law No. 406 of 2023 does not specify the environmental management instruments that would allow effective access to information about environmental adaptation programs, mitigation measures, and effective compensation for affected populations. This is contrary to Principle 13 of the UN Guiding Principles of Business and Human Rights, which stipulates that "The responsibility to respect human rights requires that companies": "Seek to prevent or mitigate the negative consequences on human rights directly related to their operations, products, or services provided through their business relationships, even when they have not contributed to generating them."

This aspect is important because, despite the State presenting clauses that could be considered insufficient in light of human rights protection instruments, such as citizen participation and environmental law, the contracting company could not bypass them by arguing that it did not bear that responsibility. The Plenary of the Supreme Court of Justice of Panama believes that companies, in their management and economic activities, cannot leave the task of protecting human rights solely to the contracting State. They also have a duty of respect, which in this case was materialized in the stipulation of clauses that were effective in reducing, mitigating, and preventing social and consequential consequences.

The Court also emphasized that the law in question violates the rights of children (art. 56 of the constitution), especially considering the state of the climate in which we inserted. This calls on States to observe the precautionary principle in its decisions. In this sense, the Court specifically refers to the Committee on the Rights of the Child General Comment 26 on Child Rights and the environment, with a special focus on climate change. 

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An aim to achieve a quantifiable outcome within a given time-frame, set by an institution such as a national government.

Policy instruments are techniques or tools used by governing authorities to promote certain policies in order to achieve predetermined goals. Put simply, instruments are how a government tries to achieve its goals, with this taxonomy being focused on national policy instruments.

Risk is the potential for adverse consequences resulting from the dynamic interplay between (climate-related) hazards, exposure, and vulnerability of affected human or ecological systems.

Groups  of people who are adversely affected by climate change or the response to it

A set of principles, processes, and practices that build economic and political power to shift from an extractive economy to a regenerative economy.

Justice is the ethical and political framework that addresses fairness, including issues of responsibility, rights, and structural inequity.

Renewable energy means all forms of energy produced from renewable sources in a sustainable manner.

Fossil fuel is a generic term for non-renewable energy sources such as coal, fossil gas, and oil (including crude oil, and petroleum products), that can be used for electricity and heat generation. Fossil fuels are hydrocarbons formed from pressurised and heated organic material buried over millions of years.

Molecules in the atmosphere that play a key role in the greenhouse effect by trapping heat radiating from Earth’s surface.

Area of the economy in which actors engage in identical or related activities.

In human systems, the process of adjustment to actual or expected climate change and its effects, in order to moderate harm, increase resilience or exploit beneficial opportunities. In natural systems, the process of adjustment to actual climate change and its effects; human intervention may facilitate adjustment to expected climate change and its effects.

The management and allocation of funds, assets and investments to meet various objectives

People who are less able to respond to the effects of climate change due to having limited financial or physical assets

A tax advantage is a fiscal incentive where the government reduces or exempts selected activities, goods or actors from taxes.

A loan is a policy instrument where funds are provided to a borrower with the expectation of repaying the principal plus interest.

Direct investments by the governments using public funds. This can be to support climate initiatives or integrate climate into other projects.

Financial support to help individuals manage the effects of unexpected events, securing their livelihoods and increasing the resilience of people and businesses to the changing climate. It’s especially vital in developing regions where everyday risks, climate-related weather extremes, or crop failures can push people into poverty. Without insurance, people may have to resort to selling assets or cutting consumption to cope with losses.

Codes and standards are regulatory instruments that specify minimum standards to protect health and safety. This ranges from performance standards, which prescribe outcomes while allowing flexibility to achieve compliance, to the more prescriptive approach of technology-specific standards.

Zoning and spatial planning are both methods for guiding the distribution of people and activities in a space, and are regulatory restriction.

The processes through which enterprises can identify, prevent, mitigate and account for how they address their actual and potential adverse impacts. Due diligence is the idea that reasonable precautions should be taken to avoid causing harm to people, the environment, or society. It also involves identifying and mitigating risks before they occur.

A ban is a legal action that prevents the sale or supply of a product or service, or that recalls a product from the market. Examples are bans on SF6, greenwashing, fossil fuel advertisement or single-use plastics.

An integrated system of hazard monitoring, forecasting and prediction, that enables individuals, communities, governments, businesses and others to take timely action to reduce disaster risks in advance of hazardous events.

Using laws and the legal system more broadly to protect vulnerable entities

Aligning the skills of the workforce with the requirements of the just transition.

Either money or something of monetary value is transferred between two or more organisations, people or countries.

Conditions that enhance the feasibility of adaptation options. Enabling conditions include finance, technological innovation, strengthening policy instruments, institutional capacity, multi-level governance and changes in human behaviour and lifestyles.

Actions or measures to adapt terrestrial systems to climate change.

Actions or measures to adapt freshwater systems to climate change.

Actions to adapt human health, healthcare systems and well-being to climate change.

Coastal zone and marine-related actions and measures to adapt and increase resilience to climate change

Actions or measures to adapt freshwater, coastal and marine systems to climate change.

Hot temperature extremes are daily maximum temperatures  that were exceeded on average once in a decade or once in 50 years, and includes heatwaves.

Agriculture mitigation refers to practices used to mitigate greenhouse gas emissions at every level of the agrifood systems, from production to consumption.

Replacing technologies that burn fossil fuels directly with alternatives powered by electricity.

Actions to reduce emissions in energy generation and supply.

Extreme weather refers to events where a weather variable exceeds (or falls below) a threshold. Meaning it is significantly different from the average or usual weather pattern.

Terrestrial means "of the earth" and relates to the risks to ecological system that includes all living organisms and their interactions within land-based environments, such as forests, grasslands, and deserts.

Air pollution involves harmful contaminants in the air, affecting both indoor and outdoor environments. It can lead to health issues like respiratory diseases and heart problems, and climate impacts such as global warming. Pollutants can damage plants, trees, habitats, and water bodies like rivers and lakes.

Social protection systems consist of policies that help people manage social risks in order to prevent poverty and maintain decent incomes and living standards

Social inclusion is the process of improving the terms on which individuals and groups take part in society—improving the ability, opportunity, and dignity of those disadvantaged on the basis of their identity.

Electrical energy generated from mechanical devices driven by flowing fresh water.

Oil is a combustible liquid fossil fuel composed mainly of hydrocarbons, occurring as crude oil and refined into petroleum products such as petrol, diesel and kerosene.

Fossil gas, commonly known as natural gas, is a fossil fuel consisting chiefly of methane with smaller amounts of other hydrocarbons and trace gases, found in underground deposits.

Coal is a combustible sedimentary rock formed from carbonised plant matter, rich in carbon and hydrocarbons, and occurring in several main types including hard coal and brown coal.

People with different national or cultural traditions from the dominant population

Work that is productive and delivers a fair income, security in the workplace and social protection for all, better prospects for personal development and social integration, freedom for people to express their concerns, organize and participate in the decisions that affect their lives and equality of opportunity.

Social and cultural groups that share collective ancestral ties to the lands and natural resources where they live, occupy or from which they have been displaced

People whose health, both mental and physical, makes them more vulnerable to the effects of climate change

Any compulsory, unrequited payment to the government levied on corporations or individuals. This can be for environmental reasons, such as introducing a Carbon tax to set a price that emitters must pay for the greenhouse gases they emit.

Activities of industries that extract natural resources, such as mining, oil, and gas, for commercial use.

The activities of industries that transforms raw materials into finished goods through industrial processes.

The activities of industries involved in the production, distribution, and sale of energy, including electricity, gas, and renewables.

This sector involves managing waste treatment, sanitation, pollution control and environmental cleanup.

Activities that involve planning, designing and building infrastructure, residential, and commercial structures.

This sector involves the wholesale and retail selling of goods.

This sector involves activities to move goods and people, alongside the storage of products.

This sector creates and distributes information and entertainment through television, radio, print, and digital platforms.

This sector provides communication services, software development, and IT solutions.

This sector involves activities that impart knowledge and skills to individuals, including formal schooling, vocational training and educational support.

Activities of government agencies and institutions that provide public services, enforce laws and manage public resources.

Activities of businesses and institutions that provide financial services and products to individuals and organisations.

Activities that relate to the production of goods and services from forests.

This sector involves the distribution, treatment, and conservation of water resources.

Climate change impacts our society by disrupting the natural, economic and social systems we depend on. Physical hazards and underlying vulnerabilities can lead to increased resource competition for food and water, which can heighten the risk of conflict.

Geohazards are adverse geological phenomenon's that are capable of causing widespread damage or loss to property, life and the environment, such as earthquakes, volcano eruptions and tsunamis. Climate change can increase the frequency and severity of some geohazards, such as landslides, and soil erosion.

Callejas v. Law No 406 (unconstitutionality of mining concession) - judgment

Target

Policy instrument

Risk

Impacted group

Just transition

Renewable energy

Fossil fuel

Greenhouse gas

Economic sector

Adaptation/resilience

Finance