Arias, Fábrega & Fábrega filed unconstitutionally action before the Supreme Court of Justice in order that article 129 of the law governing contracts with the State be reviewed and declared unconstitutional. Article 129 of the Public Contracting Law released the State from its obligation to pay loss of profit and consequential damages resulting from breach of contract, barring any affected claimant from exercising its right to seek a just compensation.

The District Attorney acknowledged the questioned article of law indeed represented an advantage to the State that altered contractual balance and justice.

The Supreme Court of Justice concluded that the existence of an article of law that would release the State from its obligation to pay consequential damages and loss of profit constitutes a breach of Panama Constitutional norms, as it denies those who are party to a contract with the State, their right to protect their assets from any omissions or actions incurred by the State in the performance of its contractual obligations.

The Supreme Court of Justice in rendering its decision also confirmed the principle that all contractual breach of bilateral obligations allows the non breaching party to request the other party either the fulfillment of the obligation, or the termination of the contract, which necessarily implies the right to seek indemnity for material damages and loss of profit