The Gazette, REPUBLIC OF HONDURAS - TEGUCIGALPA, M. D. C., 6 SEPTEMBER 2013, No. 33,222, p. 57

Legislature

DECREE No. 120-2013

NATIONAL CONGRESS,

WHEREAS: 236-2012 Decree dated January 23, 2013, published in the Official Gazette on January 24, 2013, amended Articles 294, 303 and 329 of the Constitution, ratified by Decree No. 9 dated January 30, 2013, published in the Official Gazette of March 20, 2013, authorizing the creation of Zones of Economic Development and Employment (ZEDE).

WHEREAS: The establishment of Zones of Economic Development and Employment (ZEDE), aims to generate sources of employment to ensure development opportunities in the areas of health, education, infrastructure, and public safety and otherwise to improve the living conditions of the Honduran population.

WHEREAS: Articles 303 and 329 of the Constitution authorize the establishment of courts with exclusive competence over the Zones of Economic Development and Employment (ZEDE), which may adopt legal systems or traditions from elsewhere, provided that they ensure equal or better protection of constitutional principles of human rights, subject to prior approval by the National Congress.

WHEREAS: The Constitution of the Republic establishes that systems instituted in the Zones of Economic Development and Employment (ZEDE) shall be defined by an Organic Law establishing the scope thereof. The Organic Law must be approved by Congress with a qualified majority of two-thirds of all its members.

WHEREAS: pursuant to the provisions of the Constitution in Article 205, attribution 1, it is within the competence of the National Congress to create, enact, interpret, amend, and repeal laws.

IT IS THEREFORE

D E C R E E D

As follows:

ORGANIC LAW OF ZONES OF ECONOMIC DEVELOPMENT AND EMPLOYMENT (ZEDE)

CHAPTER I

GENERAL PRINCIPLES

ARTICLE 1.- Zones of Economic Development and Employment, hereinafter referred to as ZEDE, are an inalienable part of the State of Honduras, subject to the Constitution and the national government on issues related to sovereignty, application of justice, territory, national defense, foreign affairs, electoral issues, issuance of identity cards, and passports, as stipulated in the seventh paragraph of Article 329 of the Constitution. Zones of Economic Development and Employment (ZEDE) have legal personality, are authorized to establish their own policies and regulations, are created for the purpose of accelerating the achievement of the goals of the National Plan and to facilitate the country's integration into world markets under highly competitive and stable rules. This they shall do by adopting technologies permitting high value-added production, in a transparent environment, able to attract the domestic and foreign investment required to grow rapidly, creating the jobs needed to reduce social inequalities and to provide the population with education services, health, public safety, and infrastructure, allowing a real improvement in the living conditions of Hondurans.

Within the ZEDE, Articles 10, 11, 12, 13, 15 and 19 of the Constitution shall have full applicability.

ARTICLE 2.- Zones of Economic Development and Employment (ZEDE) can be created with the aim of developing National and International Financial Centers, International Logistics Centers, Autonomous Cities, International Business Courts, Special Investment Districts, Renewable Energy Districts, Special Economic Zones, Areas subject to a Special Legal System, Special Agribusiness Areas, Special Tourism Zones, Mining Association Areas, Forest Association Areas, or any other special arrangements not specified in this Article or that include a combination of several of these regimes to ensure the development of investments under inclusive and similar models.

ARTICLE 3.- Zones of Economic Development and Employment (ZEDE) enjoy operational and administrative autonomy that includes the functions, powers and duties that the Constitution and laws confer upon municipalities. They shall have autonomous and independent courts with exclusive competence in the ZEDE, which can follow legal systems or traditions from elsewhere, and which must ensure the constitutional principles of human rights protection.

Acts and contracts entered into or issued within Zones Employment and Economic Development (ZEDE), are fully applicable in the rest of the country and abroad in accordance to the rules of reciprocity.

ARTICLE 4.- The special fiscal regime of the Zones of Economic Development and Employment (ZEDE) authorizes them to create their own budgets, the right to collect and manage their taxes, to determine the rates they charge for their services, and to be held to all types of agreements or contracts to meet its objectives over time, even if over several periods of government.

Obligations may be incurred within the country and abroad at any time without the guarantee of the State of Honduras. Officials of the Zones of Economic Development and Employment (ZEDE) must establish in agreements or contracts referred to in this Article that the State of Honduras is not responsible in any way for debts or financial commitments thereby acquired. Zones of Economic Development and Employment (ZEDE) may not require National or Municipal Government funds for support, except when they participating as members of Public - Private Alliances.

ARTICLE 5.- Zones of Economic Development and Employment (ZEDE) must create the appropriate economic and legal environment to position themselves as centers of national and international investment. They are authorized to adopt through their domestic legislation the international best practices suitable to attract domestic and international investment and the best national and international talent and to establish their own civil service system based on meritocracy.

ARTICLE 6.- Any natural or legal person may, without discrimination of any kind, be part of the Areas of Employment and Economic Development (ZEDE). Only real estate encompassed by their spatial ambit of competence is within the scope of the special scheme for incorporation within the same. In accordance with the national treatment standard and international conventions and treaties concluded by the State of Honduras or the principle of reciprocity, within the spatial ambit of competence of the Zones of Economic Development and Employment (ZEDE) third parties may own, use, and possess the land they occupy without discrimination on the basis of nationality.

ARTICLE 7.- Zones of Economic Development and Employment (ZEDE) are required to publish their internal rules and are allowed to create their own publication, which may be electronic, for disseminating current regulations within their spatial ambit of competence. When the rules must also be approved by the National Congress of the Republic, they must also be published in the Official Gazette.

ARTICLE 8.- The hierarchy rules applicable in Zone Employment and Economic Development (ZEDE) shall be:

1) The Constitution of the Republic as applicable;

2) International treaties concluded by the State of Honduras as applicable;

3) This Act on Zones of Economic Development and Employment (ZEDE);

4) The laws mentioned in the Final Provisions of this Act; and,

5) The internal regulations issued by the authorities of the Zones of Economic Development and Employment (ZEDE) or incorporated by them.

CHAPTER II

FUNDAMENTAL RIGHTS AND DUTIES OF THE RESIDENTS

ARTICLE 9.- All persons in the Zones of Economic Development and Employment (ZEDE) are equal in rights and duties without discrimination of any kind, except the provisions outlined in the Constitution or this Act that reserve to Hondurans or residents in the Zones of Economic Development and Employment (ZEDE) the exercise of certain functions.

ARTICLE 10.- The people and those who are within the Zones of Economic Development and Employment (ZEDE) should respect their peers, society, humanity, the Law, and the internal regulations of the Zones of Economic Development and Employment (ZEDE) pursuant to the Constitution and international human rights instruments.

To ensure the intent of this Article, the Zones of Economic Development and Employment (ZEDE) are authorized and required to:

1) Establish agreements of coexistence with people who wish to live or reside freely within their spatial ambit of competence, consistent with universal moral principles, and,

2) Create public spaces that allow residents to peacefully defend their rights without affecting in any way the rights of others. Zones of Economic Development and Employment (ZEDE) must always ensure the continuity of public services and the use of means and media of communication.

CHAPTER III

ADMINISTRATIVE STRUCTURE

SECTION I

COMMITTEE FOR THE ADOPTION OF BEST PRACTICES

ARTICLE 11.- Created hereby is the Committee for the Adoption of Best Practices, composed of twenty (21) persons of recognized integrity, leadership, executive capacity, and international reputation in the private or nonprofit sector, in academia, or in the public sector. Its functions shall be:

1) To approve its internal regulations;

2) To approve or disapprove the actions or conduct of the Technical Secretary of the Zones of Economic Development and Employment (ZEDE);

3) To appoint and remove the Technical Secretary for each Zone of Economic Development and Employment (ZEDE), the appointment shall be proposed by:

a) The residents of the Zone of Economic Development and Employment (ZEDE) when it is located in an area of high population density or,

b) The promoters or organizers of the Zone of Economic Development and Employment (ZEDE) if it is located in an area of low population density. Population density is defined under Article 37 of this Law.

4) To establish general guidelines for domestic policy and transparency of Zones of Economic Development and Employment (ZEDE) to accelerate fulfillment of the objectives of creating them;

5) To approve or disapprove the regulations approved by the Technical Secretary;

6) To propose to the Judicial Council a list of ten (10) persons for the post of judge or magistrate of the Special Jurisdiction of the Zones of Economic Development and Employment (ZEDE), appointed by competitive examination, and/or to recommend removal when appropriate;

7) To fill its vacancies;

8) Designate an adjacent area for future expansion and planning in the design of a Zone of Economic Development and Employment (ZEDE);

9) To engage the services of an internationally recognized auditing firm to audit the resources within the Zones of Economic Development and Employment (ZEDE) and publish respective reports; and,

10) To fulfill the other functions conferred on the Committee by this Act. The members of the Committee for the Adoption of Best Practices shall be appointed by the President of the Republic. This appointment must be ratified by Congress. The Committee for the Adoption of Best Practices is considered installed and enters upon its duties once its first twelve (12) members have been appointed.

The Committee for the Adoption of Best Practices shall meet in plenary session with the frequency it chooses and shall form a Standing Committee whose duties shall be those delegated by the Plenary. For this purpose it shall appoint five (5) members.

SECTION II

TECHNICAL SECRETARIAT

ARTICLE 12.- The Technical Secretary of a Zone of Economic Development and Employment (ZEDE) is its highest level executive officer and its legal representative, a position that runs for seven (7) years and may be renewable and revocable. He shall be responsible for his actions before the Committee for the Adoption of Best Practices. He must be a Honduran national by birth, and of recognized integrity, ability, and merit sufficient for the office entrusted to him.

His functions are:

1) Represent the Zone of Economic Development and Employment (ZEDE);

2) Subscribe to legal stability agreements for matters deemed necessary;

3) Establish trusts for the provision of all services, revenue management, procurement, property management, and other functions necessary to fulfill the purpose of the creation of the Zone of Economic Development and Employment (ZEDE);

4) Manage the administration and the government of the Zone of Economic Development and Employment (ZEDE) and implement policy measures that the Committee for the Adoption of Best Practices determines;

5) Suggest to the Committee for the Adoption of Best Practices measures he deems appropriate to ensure compliance with the purposes of the Zone of Economic Development and Employment (ZEDE);

6) Enact legislation for the Zone of Economic Development and Employment (ZEDE) and submit it for approval or disapproval by the Committee for the Adoption of Best Practices;

7) Apply the rules of the Zone of Economic Development and Employment (ZEDE) within the framework of this Law;

8) Appoint ad hoc Secretaries to assist him in the administration of the Zone of Economic Development and Employment (ZEDE);

9) Issue temporary resolutions in the form of ordinances to ensure the efficient delivery of public services within the area of Employment and Economic Development (ZEDE) or to promote competition in certain markets;

10) Develop a plan for promoting the Zone of Economic Development and Employment (ZEDE) and run it within the framework of its powers; and,

11) Any other powers conferred under this Act or delegated by the Committee for the Adoption of Best Practices.

SECTION III

AUDIT

ARTICLE 13.- The Committee for the Adoption of Best Practices should hire a prestigious international organization in order to audit at least once a year the funds raised within the Zones of Economic Development and Employment (ZEDE). The reports issued must be published and presented a copy to the Office of the President and to Congress.

SECTION IV

DISPUTE RESOLUTION AND INTERNAL SECURITY

ARTICLE 14.- Zones of Economic Development and Employment (ZEDE) are subject to a special jurisdiction and shall have autonomous and independent courts with exclusive competence in all instances on matters that are not subject to binding arbitration. They shall be created by the Judiciary through the Judicial Council at the proposal of the Committee for the Adoption of Best Practices and shall operate under the common law or Anglo-Saxon tradition, or any other in accordance with Article 329 of the Constitution of the Republic.

Those who dwell or operate in one of these areas may contractually agree to the submission to arbitral or judicial jurisdiction different from the Zones of Economic Development and Employment (ZEDE).

ARTICLE 15.- Judges and magistrates of the Zones of Economic Development and Employment (ZEDE) are appointed by the Judicial Council of the Judiciary from among the members of a list of candidates proposed by the Committee for the Adoption of Best Practices. The Committee for the Adoption of Best Practices shall make a selection process necessary to select the list of nominees to ensure that it is composed of those who hold the greatest ability to perform such work.

ARTICLE 16.- Zones of Economic Development and Employment (ZEDE) shall have a Court for Protection of Individual Rights. It shall protect those who are within the areas of Economic Development and Employment (ZEDE) against violations of their fundamental rights and shall be composed of as many people as decided by the Committee for the Adoption of Best Practices.

So that one or more affected can appeal to international tribunals to demand protection against violation of their human rights, it shall suffice if a final judgement is issued by said Court, or if in accordance with international human rights protection standards, a reasonable time has passed without the appeal filed being resolved.

Zones of Economic Development and Employment (ZEDE) are individually responsible to reimburse the indemnifications in the event that the State of Honduras gets condemned for violations that occurred within the ZEDE's spatial ambit of competence, as well as to comply with the recommendations, injunctions, or regulations issued by international human rights bodies.

ARTICLE 17.- The courts of Zones of Economic Development and Employment (ZEDE) must be composed of legal professionals of high standing and proven track record of domestic or foreign jurisdictions, always having to prove extensive knowledge and experience in the application of common law or Anglo-Saxon or other legal traditions in accordance with Article 14 of this Law.

The structure, powers and jurisdiction of the courts of each Zone of Economic Development and Employment (ZEDE) and the duration in office and the requirements for the appointment of judges and magistrates shall be fixed by the Committee on Adoption of Best Practices.

ARTICLE 18.- The courts of Zones of Economic Development and Employment (ZEDE) must decide matters before them in equity or in law as defined at the time of its creation. The judgments that issue must be reasonable. The judgments in criminal matters within the ZEDE may be decided by jury.

The decisions of the courts in the Zones of Economic Development and Employment (ZEDE) must, as decided by the Committee for the Adoption of Best Practices, constitute binding precedent that should only be revoked or modified by a court of equal or greater rank. If so authorized by the Committee for the Adoption of Best Practices and while creating a body of jurisprudence itself, those courts may use precedents from other jurisdictions or foreign law.

ARTICLE 19.- The courts of Zones of Economic Development and Employment (ZEDE) must exercise their functions independently, free from any interference. The legal regulations of the Zones of Economic Development and Employment (ZEDE) should establish penalties for those who interfere or seek to interfere with the exercise of the judicial function.

Those conducting the judicial work in the Zones of Economic Development and Employment (ZEDE) shall be immune from legal action only in the performance of their duties. The liability arising from their wrongdoing shall be deducted once they are separated from knowledge of the matter in which they have acted improperly.

ARTICLE 20.- Zones of Economic Development and Employment (ZEDE) should make use of binding arbitration for all matters involving contracts or property. Excepted from this provision are penal matters, those concerning children, and those concerning adolescents.

In cases subject to mandatory arbitration the parties may take their case to courts only if they previously signed an agreement in which they waived arbitration and established their decision to present their case to competent courts within the Zones of Economic Development and Employment (ZEDE).

Arbitration awards shall be equivalent to judgments of national or international courts according to the matter in question, only recognized against any motion to nullify them.

The execution of these arbitral awards should be made through the courts in the Zones of Economic Development and Employment (ZEDE) without interference from other courts outside the special jurisdiction of the same. However, courts in the Zones of Economic Development and Employment (ZEDE) may require the assistance of the courts of other domestic or foreign jurisdictions to enforce the execution of judgments when they are to be executed outside the jurisdiction of the Zones Employment and Economic Development (ZEDE).

ARTICLE 21.- Zones of Economic Development and Employment (ZEDE) must create the necessary legal assistance mechanisms to ensure equal access for those who lack the financial means to take such action in defense of their rights, including those instances subject to binding arbitration.

ARTICLE 22.Zones of Economic Development and Employment (ZEDE) must establish their own internal security organs with exclusive competence in the zone, including their own police, criminal investigation bodies, intelligence, criminal prosecution, and penitentiary system, as well as links with the country's security strategy.

CHAPTER V

OF ECONOMICS AND FINANCE OF ZONES OF ECONOMIC DEVELOPMENT AND EMPLOYMENT.

ARTICLE 23.- Zones of Economic Development and Employment (ZEDE) have a separate financial scheme, being authorized to use its financial revenues exclusively for its own purposes and shall transfer resources to authorities in the rest of the country as provided for in this Act. They are required to achieve a fiscal balance, avoid deficits, and keep their budgets in line with the growth rate of their gross domestic product (GDP).

ARTICLE 24.- When Zones of Economic Development and Employment (ZEDE) are declared in urban areas that have their own infrastructure, the Zones of Economic Development and Employment (ZEDE) must recognize the title to real estate there.

Zones of Economic Development and Employment (ZEDE) shall establish taxes on the value of privately owned land that benefits from development promoted by them and that are located within their spatial ambit of competence. For this purpose, they must use periodic assessments to determine the amounts payable based on updated market value of such real estate.

ARTICLE 25.- The ownership of land when Zones of Economic Development and Employment (ZEDE) are established in areas of low population density areas shall be administered by the Zones of Economic Development and Employment (ZEDE) on behalf of the State of Honduras. The State of Honduras may expropriate land after indemnifying the owners thereof. The fair value of such land is to be determined based on market reference values of equal quality real estate outside of the special regime.

ARTICLE 26.- The real estate within the spatial ambit of competence of Zones of Economic Development and Employment (ZEDE) can be incorporated into this regime in accordance with the provisions in Article 25 of this Law.

Real property owners who wish to incorporate their property in this regime should make a statement before a notary and register the same in the special registry set to take effect in the Zones of Economic Development and Employment (ZEDE). To forestall conflicts, each time it is incorporated in a property regime by purchase or association, there must be three (3) notifications in mass media and posters on the subject property for thirty (30) days. After this period, third parties who claim to have a right of ownership over the incorporated property may not reclaim or oppose the transaction judicially, but only request from the seller entering the Zones of Economic Development and Employment (ZEDE), restitution for the economic value of their property rights.

In case of opposition to the sale or associations by third parties, the Zones of Economic Development and Employment (ZEDE) may condemn the property escrowing its value.

ARTICLE 27.- In lands owned by the state and being administered by the Zones of Economic Development and Employment (ZEDE), they may enter into leases with those interested in making use of them for periods renewable before expiration. The Contracts for property administered by the Zones of Economic Development and Employment (ZEDE) can be leased, encumbered, divided, sublet, or held via any act or contract, provided that they are performed for lawful purposes. Income from these lease contracts shall be part of the budget of the Zones of Economic Development and Employment (ZEDE).

ARTICLE 28.- The State of Honduras through Zones of Economic Development and Employment (ZEDE) may declare the expropriation for public utility or necessity property deemed necessary for the development or expansion thereof, and must pay just compensation to cover the replacement value of the property, these cases requiring the prior approval of the Committee for the Adoption of Best Practices.

Opposition to the expropriation must be made by arbitration at the expense of the Zones of Economic Development and Employment (ZEDE). No precautionary measures should be taken to prevent or halt the expropriation process. When it is not known who owns the property because title is in dispute, the compensation value determined by a commission of experts must be deposited in a trust whose beneficiary is the successful bidder of the right to compensation in accordance with the relevant judgment. The expropriation shall be made once the compensation has been deposited in the trust. This value can also be deposited in a court.

ARTICLE 29.- Zones of Economic Development and Employment (ZEDE) must have a separate tax regime and should be guided by a policy of low taxes. The collection of taxes is the power of the Zones of Economic Development and Employment (ZEDE) and must be in accordance with the rules laid down in this Act. The tax regime may consist of one, several, or all of the following components and conditions as decided by the Committee for Adoption of Best Practices:

1) The income tax on individuals that may not exceed twelve percent (12%);

2) The income tax on legal persons that may not be more than sixteen percent (16%);

3) The value added tax that shall not exceed five percent (5%);

4) The property tax on unused land whose percentage is fixed by the ZEDE;

5) The property tax rate which shall be fixed by the Zones of Economic Development and Employment (ZEDE); and,

6) The flat tax or single tax whose rate is fixed by the Zones of Economic Development and Employment (ZEDE); Zones of Economic Development and Employment (ZEDE) shall determine the percentage of taxes to be collected in each case, within the parameters forth in this Article. Zones of Economic Development and Employment (ZEDE) are allowed to set reasonable rates to be charged for the provision of public services or infrastructure development and maintenance to recover the costs thereof.

ARTICLE 30.- Monetary exchange control policies do not apply within the Zones of Economic Development and Employment (ZEDE). The means of payment that circulate within them should be freely convertible. Currency markets, gold, securities futures, commodities, and the like can exist freely in the Zones of Economic Development and Employment (ZEDE). The ZEDE must safeguard the free movement of capital within, into, and out of its spatial ambit of competence. The flow of this capital of Zones of Economic Development and Employment (ZEDE) into the rest of the country or the national market must comply with the applicable national standards. Zones of Economic Development and Employment (ZEDE) are authorized to establish controls that limit the use of physical payment means within their spatial ambit of competence and to have domestic monetary policies.

ARTICLE 31.- Zones of Economic Development and Employment (ZEDE) must operate on a policy of free trade and competition, guaranteeing the free movement of goods, intangible assets, and capital.

Free entry of aircraft or boats is guaranteed in the Zones Employment and Economic Development (ZEDE). The regulation of sea and air, as well as control of ports and airports in the jurisdiction of the ZEDE, is under their responsibility, and they may establish rates that they deem appropriate.

ARTICLE 32.- Zones of Economic Development and Employment (ZEDE) are offshore tax and customs areas, different from the rest of the country. Imports made by legal persons operating in Zones of Economic Development and Employment (ZEDE), entering the national customs territory, shall be free from paying any taxes, tariffs, fees, surcharges, consular fees, excise, consumption, and charges which relate directly or indirectly to the import and export operations. They can be processed without the intervention of a customs broker or customs special agent, making use of a single customs declaration.

Purchases of goods and services that companies operating within one of the Zones of Economic Development and Employment (ZEDE) effectuate in the domestic market must pay corresponding taxes.

When companies operating within Zones Employment and Economic Development (ZEDE) sell products, goods, or services in the rest of the country they must pay duties or taxes as determined by the National Congress.

The individuals and companies that operate within the Zones of Economic Development and Employment (ZEDE) shall receive treatment based on the principle of Most Favored Nation (MFN), automatically extending to them any preferential treatment extended in the future, or currently extended, to parties of trade agreements with the State of Honduras.

CHAPTER VI

EDUCATION, HEALTH, SOCIAL SECURITY, SCIENCE, RELIGION, WORK AND ENVIRONMENT

ARTICLE 33.- Zones of Economic Development and Employment (ZEDE) are allowed to establish their own systems of education, health, social security, and promotion of science, as well as to guarantee freedom of conscience, religion, labor protection, and freedom of association. The rules of the Zones of Economic Development and Employment (ZEDE) regulate these matters.

ARTICLE 34.- Zones of Economic Development and Employment (ZEDE) must establish their own educational and curricular policies at all levels. The exercise of the professions or academic degrees in Zones of Economic Development and Employment (ZEDE) shall not be subject to licensing or association. However, the authorities of the Zones of Economic Development and Employment (ZEDE) may require appropriate academic accreditation for the exercise of certain professions.

ARTICLE 35.- Zones of Economic Development and Employment (ZEDE) are required to ensure the labor rights of workers within the parameters set by the international labor treaties concluded by Honduras and provisions emanating from international bodies such as the International Labor Organization (ILO).

Pursuant to the provisions of Article 139 of the Constitution, mechanisms of mediation, conciliation and arbitration for the peaceful settlement of disputes must be used. To this end, Zones of Economic Development and Employment (ZEDE) should create special regulations including pendulum arbitration.

ARTICLE 36.- All things being equal, preference shall be given to Honduran workers over foreign workers.

Prohibited are employers hiring less than ninety percent (90 %) of Honduran workers and paying them less than eighty-five percent (85 %) of the total wages earned in their respective companies. Both proportions can be modified in exceptional cases determined by the rules of the Zones of Economic Development and Employment (ZEDE) with the approval of Congress.

ARTICLE 37.- Zones of Economic Development and Employment (ZEDE) should adopt policies aimed at protecting and preserving the environment.

CHAPTER VII

FINAL AND TRANSITIONAL PROVISIONS

ARTICLE 38.- Corresponding to the National Congress creating the Zones of Economic Development and Employment (ZEDE) by decree, provided are the following rules:

1) When the area to be declared has a low population density, the National Statistics Institute (NSI) must certify the situation in accordance with the provisions of Article 329 of the Constitution and,

2) When the Zone to be declared is located in a high population density area, prior to its establishment, a plebiscite should be conducted in the area and a Zone can only be established if the result is favorable pursuant to Article 5 of the Constitution of the Republic.

ARTICLE 39.- In compliance with the provisions of Articles 10 and 329 of the Constitution, declared covered by this scheme are areas with low population density in the municipalities in the departments adjoining the Gulf of Fonseca and the Caribbean Sea. Property owners who wish to register their property in this regime should make a statement before a notary and register the same in the special register maintained for this purpose with the Zones of Economic Development and Employment (ZEDE). The National Statistics Institute (INE) shall write a list of areas with low population density located within these departments, and for these purposes the Committee for the Adoption of Best Practices should determine the procedure to comply with the provisions of this Article.

ARTICLE 40.- The National Telecommunications Commission (CONATEL) must yield by convention to Zones of Economic Development and Employment (ZEDE) spectrum management that has not already been assigned in the jurisdiction thereof. The renewal of licenses or contract to use the radio spectrum that has been assigned to and have coverage in the spatial area of competence of the Zones of Economic Development and Employment (ZEDE) must be made before the authorities of the same.

ARTICLE 41.- In the spatial ambit of competence of Zones of Economic Development and Employment (ZEDE) only the following national laws apply:

1) The legislative decrees by which are adopted the national anthem, national emblem, national flag and other national symbols;

2) Legislation concerning the Territorial Sea and the Contiguous National Zone and,

3) Until the Zones of Economic Development and Employment (ZEDE) create their own or incorporate by reference, subject to Congressional approval, others that are most efficient for achieving their purposes, the following laws apply: The Criminal Code and complementary legislation which criminalizes offenses and impose penalties or allow the extradition of nationals or foreigners, especially for crimes such as drug trafficking, money laundering, human trafficking, genocide, terrorism, child pornography, child exploitation, and organized crime.

ARTICLE 42.- While human resources are being formed and capabilities developed for the judicial work in the Zones of Economic Development and Employment (ZEDE), the appointment to the posts of judge or magistrate in the Special Court may be of citizens or foreign nationals who stand out by their work as judges, magistrates, academics or by the private practice of law in a foreign jurisdiction.

ARTICLE 43.- Authorities in Zones of Economic Development and Employment (ZEDE) should not carry out acts that violate the property rights of indigenous peoples and Afro-descendants on the land they have been granted by certificates granted by the Government of the Republic. Such securities shall retain full recognition by the authorities of the Zones of Economic Development and Employment (ZEDE). Convention 169 of the International Labor Organization (ILO) applies in the territories within the spatial ambit of competence of the Zones of Economic Development and Employment (ZEDE).

Officials of the Zones of Economic Development and Employment (ZEDE) may create cooperation and development programs in collaboration with indigenous and Afro-descendant peoples under conditions of mutual acceptance and ensuring full respect for their culture and customs.

ARTICLE 44.- Income from Zones of Economic Development and Employment (ZEDE) must be administered through a trust created for each, which shall include an International Bank, a National Bank, or both. Similarly, twelve percent (12%) of tax revenues of the Zones of Economic Development and Employment (ZEDE) within their spatial ambit of competence should be devoted to the creation of one or more trusts distributed in equal proportions and for the following purposes:

1) One-fifth for the creation of a fund for the strengthening of the judiciary that includes scholarships for the professional training of its personnel in world-class universities, and for infrastructure and equipment;

2) A fifth to a fund for community and departmental level projects in accordance with priorities established by the legislature;

3) A fifth to a fund for development, infrastructure, security and social projects in accordance with the priorities determined by the Executive;

4) A fifth to a fund for the development of municipal projects to be distributed to all municipalities in the country in accordance with their investment plans and,

5) A fifth for the defense of national sovereignty by strengthening the Armed Forces of Honduras.

The trust or trusts listed in this Article should be established by the Technical Secretary of each Zone of Economic Development and Employment (ZEDE).

ARTICLE 45.- In accordance with the provisions of Article 329 of the Constitution, this Act may only be modified, amended, interpreted or repealed by two-thirds (2/3) in favor of the members of Congress. It shall be necessary also to hold a referendum or plebiscite for the people living in the area subject to special arrangements when their population exceeds one hundred thousand inhabitants. In the event of the repeal of this Act, the same shall remain in force for the period specified in the clauses or legal stability contracts signed with natural or legal persons residing or investing in Zones of Economic Development and Employment (ZEDE). The transition period may not be less than ten (10) years, during which time the rights of residents and investors in the Zones of Economic Development and Employment (ZEDE) shall remain in effect.

ARTICLE 46.- This Decree shall enter into force from the day of its publication in the Official Journal "La Gaceta." Given in the city of Tegucigalpa, Central District Municipality, in the Hall of Sessions of Congress, to the twelve days of the month of June, Two Thousand Thirteen

JUAN ORLANDO HERNANDEZ ALVARADO

PRESIDENT

RIGOBERTO CHANG CASTILLO

SECRETARY

GLADIS AURORA LÓPEZ CALDERÓN

SECRETARY

To the Executive. Therefore: Execute.

Tegucigalpa, M.D.C. , September 5, 2013

PORFIRIO LOBO SOSA

PRESIDENT OF THE REPUBLIC

THE SECRETARY OF STATE IN THE OFFICE OF INTERIOR AND POPULATION.

CARLOS ÁFRICO MADRID HART