I. Investor Protections
These summary addresses protections to investors provided by free trade agreements and bilateral investment treaties signed by Honduras and provides detailed information on CAFTA DR using American citizens as examples.
Honduras has signed the following free trade agreements and bilateral investment treaties:
Free Trade Agreements

Dominican Republic
European Union
South Korea

Bilateral Investment Treaties (BITs)
Cuba (Signed/ not in force)
South Korea
Taiwan (Signed/ not in force)
United Kingdom

One important track record that needs to be highlighted is that never in it’s history Honduras has done a taking or expropriation of an asset other than land and in those case a fair and just compensation has been paid in order for the action to become effective. Contracts, licenses or industries have never been taken away from a private foreign investor by the government at any level.
CAFTA-DR affords to United States investors and their investments in Honduras. These protections include national treatment, a guarantee against expropriation without prompt and sufficient compensation, and other protections. Note that Honduras may deny these protections to an investor if that investor is owned or controlled by persons of nation not a party to CAFTA-DR, or if the investor has no substantial business operations in any nation party to CAFTA- DR other than Honduras. Article 10.12. However, Article 6 of the ZEDE’s enabling law extends those protections to investors of any citizenship.
CAFTA-DR imposes other obligations on Honduras regarding particular industries and activities that may be relevant to a company, including the cross-border provision of services (Chapter 11), financial services (Chapter 12), telecommunications (Chapter 13), and electronic commerce (Chapter 14), which are not discussed here. All of those provisions must be read in light of Annex I, which limits many of those provisions.

A. National Treatment

Article 10.3 requires Honduras to provide United States investors and their covered investments ("United States investors") treatment no less favorable than that accorded to Honduran investors and their investments. "Covered investment" is defined broadly and encompasses several enumerated forms of tangible and intangible property. Article 2.1, citing Article 10.28. Honduras also may not discriminate against United States investors when taking action related to investment losses caused by "armed conflict or civil strife." Article 10.6.

B. Guarantee Against Expropriation

Under CAFTA-DR, any expropriation or nationalization of the property of a United States investor must be for a public purpose, non-discriminatory, and in accordance with the due process of law. Article 10.7. "Expropriation or nationalization" does not necessarily require seizure of property or transfer of title, but rather also includes de facto expropriation. Annex 10-C. Further, any expropriation
or nationalization must be accompanied by "prompt, adequate, and effective compensation" equal to the fair market value of the

Investors should review Annex I, which contains a schedule that limits CAFTA protection by permitting unequal treatment for particular sorts of investments and activities, some of which may be relevant to certain companies. Such investments include, but are not limited to, the sale of petroleum products, casino operations, firearm sale and distribution, private security, land transportation and warehousing.

investment on the date of expropriation, not including any change in value caused by knowledge of the intended expropriation, plus appropriate interest. Article 10.7. CAFTA-DR also requires restitution or compensation for property requisitioning or destruction (where the destruction was "not required by the necessity of the situation") resulting from war or civil strife. Article 10.6.

C. Other Protections

CAFTA-DR requires Honduras to accord the United States most-favored nation status, meaning that investors from the United States must be treated at least as favorably as those from any other country. Article 10.4. CAFTA-DR further requires Honduras to provide investors with the minimum standard of treatment provided for aliens under international customary law. Article 10.5. International customary law "results from a general and consistent practice of States that they follow from a sense of legal obligation." Annex 10-B. Honduras may not prevent the transfer of investment assets into or out of the country except in accordance with the "equitable, nondiscriminatory, and good faith application of its laws" governing certain enumerated areas, including bankruptcy, criminal, and securities law. Article 10.8. Honduras also may not impose certain kinds of enumerated performance requirements, such as a requirement to purchase a certain amount of Honduran goods, unless justifiable on grounds of safety or environmental protection. Article 10.9; see also Article 10.11. Finally, Honduras may not require investors to fill senior management positions with persons of a particular nationality, but may impose nationality requirements on the membership of boards of directors. Article 10.10. Newspapers and broadcasting companies, however, are an exception to this protection, and only native-born Hondurans may serve in their senior management. Annex I, Sched. of Honduras 7.

II. Dispute Resolution and Enforcement Procedures

CAFTA-DR contemplates that actions for breach of its investor protection provisions may be brought in the courts of a party to the agreement, like Honduras. See Annex 10-E. Article 10 also creates rules governing an arbitration process for investors who feel that a CAFTA-DR party has failed to meet its obligations under Article 10, or of an investment agreement or authorization, and who have suffered a loss as a result. Note, however, that in the case of an investor from the United States, these options are mutually exclusive. If an investor brings a claim in a court or administrative body of Honduras, that investor is barred from the arbitration process; similarly, initiation of the arbitration process requires a waiver of any right to bring a claim in a court or administrative body. Id.; Article 10.18(2).

The first step of the arbitration process is simply consultation and negotiation with the CAFTA-DR party. Article 10.15. Should that step not resolve the issue, the investor may then submit to the CAFTA- DR party a written notice of intent to proceed to arbitration at least 90 days before submitting the claim to arbitration. Article 10.16(2). Note, however, that a claim may not be submitted until six months have passed since the occurrence of the incident giving rise to that claim. Article 10.16(3). Similarly, investors may not submit claims more than three years after they learned or should have learned of the CAFTA-DR party's breach. Article 10.18(1). The investor may choose either the arbitration rules contained in the Convention on the Settlement of Investment Disputes between States and Nationals of Other States ("ICSID") or the rules developed by the United Nations Commission on International Trade Law ("UNCITRAL"). Article 10.16(3). The arbitration panel must consist of three arbitrators, one appointed by each party to the dispute and one appointed by the agreement of both parties. Article 10.19. CAFTA-DR imposes other requirements on arbitration, including a transparency provision under which arbitral proceedings must be open to the public. Article 10.21.

Arbitrators may only grant specified types of relief: money damages, restitution of property, and attorney's fees. Article 10.26(1). They may not grant punitive damages. 10.26(3). In the case of restitution, the award must specify that the respondent has the option of paying money damages in lieu of restitution. Id. After an arbitral body makes a final award, the investor must wait 90 or 120 days (depending on the rules selected for the arbitration), or until revision or annulment proceedings provided for in the selected arbitration rules are complete, before seeking enforcement of the award. Article 10.26(6). CAFTA-DR also contemplates a dedicated appellate body to review arbitral awards, and contains a provision requiring the creation of a Negotiating Group to recommend an amendment creating such a body, but no such amendment yet appears in the agreement. See Annex 10-F.

CAFTA-DR requires parties to provide for enforcement of an award within their territories. Article 10.26(7). Investors are also free to seek enforcement under the provisions of the ICSID, the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards ("New York Convention"), or the Inter-American Convention on International Commercial Arbitration ("Inter-American Convention"). Both Honduras and the United States are parties to these three agreements. These agreements have similar provisions requiring signatories to enforce valid arbitration awards in their courts. See ICSID Article 54; New York Convention Article III; Inter-American Convention Article 4.

In addition to the enforcement mechanisms above, CAFTA-DR also provides that a CAFTA-DR party, such as the United States, may request an arbitral panel on behalf of one of its investors, and that such a panel is empowered to declare that the party with whom the investor has its dispute has failed to fulfill its obligations and to recommend that it enforce the original award. Article 10.26(8). For instance, if Honduras failed to enforce an award against it in favor of a United States investor, the United States would then have the option of initiating proceedings against Honduras.