Legal Market Overview
Honduras’ economy was severely affected in 2020 by the double blow of the Covid-19 pandemic and two Category Four hurricanes, which led GDP to drop by 9%. However, the country saw a recovery, with the economy growing by 11% in 2021 and forecast to increase by 3.1% in 2022, according to figures from the World Bank.
It is also to be hoped that Honduras’ more stable political environment will benefit the economy, following the historic election of Xiomara Castro, the country’s first woman president, of the centre-left Libre party in November 2021. Castro, who ran on an anti-corruption platform, was sworn in in January 2022, only months before former president Juan Orlando Hernández was extradited to the US to face trial in New York on drug and weapons charges.
Due to election-year uncertainty and the cloud of allegations surrounding Hernández, local and international investors were wary of entering into transactions in Honduras in 2021, but more recently firms have seen an increase in M&A activity and company incorporations. In particular, the impact of the pandemic has led to an increase in transactions in the healthcare and fintech and payment services sectors (as well as an uptick in related licensing and regulatory matters).
Another significant development which is likely to increase firms’ workloads was the National Congress’ repeal of the controversial law on “charter cities” (zonas de empleo de desarrollo económico or zones for employment and economic development), self-governing zones intended to increase foreign investment, in April 2022.
In the dispute resolution field, the year-long closure of the court system during the pandemic has led to a severe backlog of cases, causing many clients to turn to arbitration as an alternative route to resolving conflicts.
In the tax sphere, firms continue to advise clients on Honduras’ many special tax regimes, designed to offer incentives to companies based in the country’s free trade zones and corporations in the export manufacturing and renewable energy sectors, among others.
Work in the energy sector has been affected by the closure of the body overseeing public-private partnerships in Honduras, meaning that many projects have been brought to a standstill. However, Congress’ approval in May 2022 of the New Energy Law, which enables the government to renegotiate electricity tariffs with renewable energy generators (and to nationalise plants if generators refuse), is likely to lead to a surge in demand for advice.
The legal market in Honduras has remained stable in 2022. Key regional players include Arias, Consortium Legal, Aguilar Castillo Love, BLP, García & Bodán, CENTRAL LAW, Lexincorp, Mayora & Mayora, S.C., Alta Melara & Asociados and Latamlex / Matamoros Batson y Asociados. Full-service domestic firms López Rodezno & Asociados and Bufete Gutiérrez Falla & Asociados are also stand outs, while boutiques Bufete Casco, Bufete Durón and Bufete Mejía & Asociados remain the go-to firms for IP matters. Global firms ECIJA and Dentons Muñoz Zacapa have also established a presence in the market.
Most firms are based in the capital of Tegucigalpa, but many also have offices in the industrial hub of San Pedro Sula in the north of Honduras.