Court spokesman Daniel Aguirre said the justices voted 13-2 Wednesday evening that legislation permitting the creation of special development zones outside the jurisdiction of ordinary Honduran law was unconstitutional, partly because it placed Honduran territory out of government control.
Proponents of the model cities project said Thursday that the court decision was a blow to Honduran efforts to attract more international investment. Opponents said they were happy with the decision, which was expected to put an end to the model cities idea.
Authorization for the private cities was passed by the Honduran Congress in January 2011 amid controversy that included objections to handing over control of Honduran territory. A U.S.-based investment group had been expected to put up $15 million to begin building basic infrastructure for the first model city near Puerto Castilla on the Caribbean coast.
An international group of investors and government representatives had promoted the project as a way to bring badly needed economic growth.
The project's aim was to strengthen Honduras' weak government and failing infrastructure, overwhelmed by corruption, drug-related crime and lingering political instability after a 2009 coup.
The "model cities" would have had their own judiciary, laws, governments and police forces. They also would have been empowered to sign international agreements on trade and investment and set their own immigration policy.
The project was opposed by civic groups as well as the indigenous Garifuna people, who said they didn't want their land near Puerto Castilla used in the project. Living along Central America's Caribbean coast, the Garifuna are descendants of the Amazon's Arawak Indians, the Caribbean's Caribes and escaped West African slaves.
Oscar Cruz, a former constitutional prosecutor, filed a motion with the Supreme Court last year challenging the project as unconstitutional and calling it "a catastrophe for Honduras."
"The cities involve the creation of a state within the state, a commercial entity with state powers outside the jurisdiction of the government," Cruz said.
The investors had envisioned textile manufacturing, small-product assembly and outsourced businesses like call centers or data processing as possible industries in the model cities.
They said workers would have been able to live in the cities, and the Honduran laws setting up the private areas guaranteed that any citizen of the country could also live there.