In 2022, the Honduran National Congress adopted certain Decrees (Nos. 32-2022 and 33-2022) attempting to repeal the ZEDE constitutional amendments and organic law originally enacted in 2013 and 2014. Additionally, on September 20, 2024, the Honduran Supreme Court issued a ruling (RI-CSJ-0738-2021) holding the ZEDE framework unconstitutional with purported retroactive effect.

These actions have created significant legal uncertainty and increased risks regarding the stability of residences, business operations, regulatory and tax authority, contracts, and property ownership within Próspera ZEDE (collectively, the “Risks”). These Risks include, but are not limited to, potential adverse judicial or arbitration determinations, political instability, property disputes, and claims of treaty violations.

Honduras Próspera Inc., St. John’s Bay Development Company LLC, and Próspera Arbitration Center LLC (the “HPI & Affiliates”) maintain that neither the Decrees nor the Supreme Court ruling can be lawfully applied to existing ZEDEs, such as Próspera ZEDE, under both international and Honduran domestic law, for the following legal reasons:

1. Article 94 of the Honduran Law on Constitutional Justice establishes that unconstitutionality judgments “will not affect legal situations that have already been definitively resolved and executed,” limiting the retroactive effect claimed in the ruling.
2. The principle of non-retroactivity of laws (Article 96 of the Honduran Constitution) protects rights acquired under previously valid legal frameworks.
3. International treaties including CAFTA-DR and the Agreement between the Government of the State of Kuwait and the Government of the Republic of Honduras for the Promotion and Reciprocal Protection of Investments guarantee legal stability of the ZEDE regime for a period of not less than 50 years (until at least 2064).
4. The Supreme Court ruling contains language that is legally unenforceable against private parties who were not represented in the constitutional proceedings, raising significant due-process concerns.

Despite these legal arguments, various Honduran public officials and agencies have attempted to act as if the Decrees and the Supreme Court ruling fully apply to Próspera ZEDE. HPI & Affiliates have characterized such conduct as illegal and expropriative, and have filed a Request for Arbitration with the International Centre for Settlement of Investment Disputes (“RFA”), among other legal remedies.

To the extent practicable, HPI & Affiliates intend to pursue the core vision of their respective business models in Próspera ZEDE as originally guaranteed under the ZEDE constitutional amendments and organic law. In doing so, HPI & Affiliates reserve the right to adopt risk-mitigation measures in their reasonable business judgment without intended third-party beneficiaries.

There is no guarantee that any countermeasures will successfully preserve the rights and privileges to which HPI & Affiliates are entitled, including the legal stability of Próspera ZEDE, or effectively mitigate the Risks. Accordingly, any continued reliance upon the legal stability, continued existence, and authority of Próspera ZEDE as contemplated in the ZEDE constitutional amendments and organic law entails the knowing and voluntary assumption of all risks of loss associated with the current legal situation.

The doctrines of force majeure, impossibility, and impracticability may excuse performance of otherwise binding obligations which are premised on the legal stability of Próspera ZEDE. HPI & Affiliates disclaim any and all responsibility or liability associated with, arising from, or relating to the Risks, the Supreme Court ruling, and the Decrees.

Relevant liability limits have been established by the Próspera Liability Shield Resolution, §5-1-183-0-0-0-1, et seq., approved (e)Resident Agreements of Coexistence, §5-1-180-0-0-1, and the Próspera Amended and Restated Charter, §1-1-36-0-0-0-0-1.01, et seq., all available at https://pzgps.hn/all-publications/. Independent legal counsel should be consulted regarding the implications of this disclosure and disclaimer.