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1 Setting the Legal and Policy Framework

Stage 1:
Setting the Legal & Policy Framework

Setting the Legal and Policy Framework refers to the need for a country to formulate clear policies and strategies that both attract FDI and benefit the country.

Government Policies and Strategies Legislative and Regulatory Frameworks Sector-Wide Analyses
2 Pre-Negotiation

Stage 2:
Pre-Negotiation Stage

The Pre-Negotiation Stage refers to the period during which a government identifies a particular project or investment and conducts feasibility studies and impact assessments.

Feasibility Studies Impact Assessments Tender Process and Financial Structure
3 Contract Negotiation

Stage 3:
Contract Negotiation Stage

The Contract Negotiation Stage refers to the actual negotiation of investment contracts between a government and an investor.

Prepare for the Negotiation Assemble a Negotiation Team Develop a Negotiation Position Contract Negotiation
4 Contract Implementation and Monitoring

Stage 4:
Implementation & Monitoring Stage

The Implementation and Monitoring of the Investment Stage refers to the period during which an investment project is developed and operated pursuant to the terms of the investment contract.

Monitoring Implementation Grievance Mechanisms

Roadmap

Assemble a Multi-Disciplinary, Multi-Sectoral Negotiation Team

Content of this page:

The decision of who will sit at the negotiation table and will represent the different parties is of vital importance to the outcome of the negotiations and the sustainability of the investment. However, there is no one one-size fits all formula as to who should represent the government at the negotiations table. The structure will depend on the governance structure of a country, the way past negotiations were structured and the political will for a particular structure.

It is in the host government’s interest to assemble a multi-disciplinary, multi-sectoral negotiation team that is composed in a professionally balanced manner of relevant experts (legal, commercial, fiscal, technical) as well as of some of the government/ ministerial representatives from the sectors implicated by the investment. These could include, for example, representatives from the ministries of finance, justice, labor and employment, public works, national planning, indigenous peoples, the environment and water, etc. That way, the negotiation is more likely to be equitably balanced and lead to a fair outcome, while at the same time ensuring that the investment is aligned with national and sector development goals.

Key Tools At This Stage

Useful Resources

Negotiations

50 Pieces of Advice to an Official who is Engaged in the Negotiation of Mining Contracts Go to resource

The governments of resource rich countries have a responsibility to be well prepared and knowledgeable in contract negotiations for natural resource extraction and long-term 
land leases – not just for the sake of securing a balanced financial deal, but to promote high standards in labour and human rights, environmental protection, health, safety, transparency and fiscal management.

This handbook provides fifty pieces of advice to ensure good governance, capacity building and sustainable development for resource rich countries.

Getting a Better Deal from the Extractive Sector: Concession Negotiation in Liberia, 2006-2008 Go to resource

Getting a Better Deal from the Extractive Sector demonstrates the need for more equitable terms in natural resource contracts and the pivotal role that the contract process can play in economic recovery and development. The report was prepared for the Office of the President of Liberia by Natural Resource Governance Institute staff who were closely involved with Liberia's Firestone and ArcelorMittal negotiations. The report includes forewords by Liberian president Ellen Johnson Sirleaf and Open Society Institute chairman George Soros.

IISD Handbook on Mining Contract Negotiations for Developing Countries Go to resource

  • Date:  2015
  • Sector:  Extractive Industries, Mining, Oil & Gas
  • Source:  IISD

Many governments lack the experience or human resources to prepare effectively for a negotiation, and are unable to make the investments needed to overcome these difficulties. Yet without preparing properly, there is little hope of achieving the desired national and community objectives. This guide provides a comprehensive approach that allows governments to set priorities and address critical issues in the preparation process.  It will assist governments in developing internal capacity and understanding where outside experts can best help. The guide addresses the process before negotiations begin, where the hard work gets done to lay the groundwork for a successful negotiation.

Mining Contracts: How to Read and Understand Them Go to resource

A book created to highlight strong contract clauses and explore how others could be improved. It goes beyond legal considerations to explore the policy questions and company interests underlying contract provisions—issues that are crucial for understanding and negotiating contracts, and for monitoring their enforcement.

Available in English and French

Oil Contracts: How to Read and Understand Them Go to resource

  • Date:  2012
  • Sector:  Extractive Industries, Oil & Gas
  • Source:  OpenOil

Walk-through guide on oil contracts: what they are, who participates in them, how the revenues should be handled and divided, what the different impacts of an oil project are, what its role is in fostering economic development, and how disputes between parties can be resolved.

Contractual Terms

IISD Handbook on Mining Contract Negotiations for Developing Countries Go to resource

  • Date:  2015
  • Sector:  Extractive Industries, Mining, Oil & Gas
  • Source:  IISD

Many governments lack the experience or human resources to prepare effectively for a negotiation, and are unable to make the investments needed to overcome these difficulties. Yet without preparing properly, there is little hope of achieving the desired national and community objectives. This guide provides a comprehensive approach that allows governments to set priorities and address critical issues in the preparation process.  It will assist governments in developing internal capacity and understanding where outside experts can best help. The guide addresses the process before negotiations begin, where the hard work gets done to lay the groundwork for a successful negotiation.

Mining Contracts: How to Read and Understand Them Go to resource

A book created to highlight strong contract clauses and explore how others could be improved. It goes beyond legal considerations to explore the policy questions and company interests underlying contract provisions—issues that are crucial for understanding and negotiating contracts, and for monitoring their enforcement.

Available in English and French

Oil Contracts: How to Read and Understand Them Go to resource

  • Date:  2012
  • Sector:  Extractive Industries, Oil & Gas
  • Source:  OpenOil

Walk-through guide on oil contracts: what they are, who participates in them, how the revenues should be handled and divided, what the different impacts of an oil project are, what its role is in fostering economic development, and how disputes between parties can be resolved.