Panama Allocates $7.88 Million for Legal Defense Amid $33 Billion Arbitration Claims
Panama's government has approved a supplementary budget of approximately $7.88 million for legal defense against arbitration claims totaling $33 billion. The funding aims to formalize contracts with external law firms to address significant legal exposures related to various disputes, including those stemming from the Cobre Panamá mine closure.
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The Panamanian government has allocated about B/.7,882,484 ($7.88 million) in its 2026 budget for legal defense against arbitration claims estimated at $33 billion. This funding will support the Investment Arbitration Office within the Ministry of Economy and Finance (MEF) as it engages specialized law firms for litigation before international arbitration bodies like ICSID and the International Chamber of Commerce.
Notably, the largest claim arises from the November 2023 cancellation of the Cobre Panamá contract, which led to a $20 billion arbitration demand from First Quantum Minerals. In addition to legal expenses, Panama faces a national emergency due to drought affecting 11 river basins, impacting electricity generation and water supply, alongside reduced daily ship transits through the Panama Canal. The ongoing challenges highlight the financial strain on the treasury, complicating the government's revenue initiatives.
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