New Guides Help Communities to Negotiate Fair Contracts with Investors

WASHINGTON, DC — With investors increasingly turning to more remote locations for the establishment of forestry, agribusiness, mining, and infrastructure projects, it is critical that communities worldwide gain a practical understanding of contract negotiations, according to two new guides by Namati and the Columbia Center on Sustainable Investment (CCSI).

The Community-Investor Negotiation Guides provide communities and frontline advocates with concrete strategies to protect themselves from unjust land-based investment projects and ensure that the community’s long-term prosperity is at the center of all negotiations. These practical and accessible guides are the first of their kind.

Deciding whether or not to allow an investor to use community land and natural resources is one of the most important decisions a community can make. If an investment project is carried out in a respectful and inclusive way, it may help communities to advance their development goals by creating jobs, building clinics, or constructing roads and wells. “But investment projects also come with great risks,” said Sam Szoke-Burke, a legal researcher at CCSI and one of the guides’ authors.

"If the project is not governed by a fair, detailed and enforceable contract, the community will have fewer legal protections and there will be less pressure on the company to avoid polluting local rivers, air, and soils, blocking community access to sacred areas or water sources, or otherwise violating community members’ human rights.”

Rachael Knight, Namati’s senior advisor for land and another of the guides’ authors, said that at the heart of the problem is the fact that consultations between communities and investors are often characterized by significant information and power imbalances.

"International investors commonly approach communities accompanied by powerful government officials, while national investors are often members of the police force, military or government—or elites with ties to these groups,” said Knight. “Community members often agree to investment projects not because it is in their best interest, but because they are intimidated or coerced into doing so.

"In instances where negotiations do take place, investors often promise impressive benefits but the communities lack the legal literacy to negotiate enforceable contracts that hold the investors accountable to these commitments.”

The two guides draw from dozens of investor-community contracts and community experiences from around the world. Using plain language and examples, they provide exercises for determining the value of the land and the community’s goals, describe the sections and clauses that should be in a contract, advise on what protective language to include in the contract, and warn of “red flag” language to avoid.
 

• The Community-Investor Negotiation Guides can be accessed and downloaded separately:

  • • Guide 1: Preparing in Advance for Potential Investors

    • Guide 2: Negotiating Contracts with Investors