Community-Investor Negotiation Guide #2: Negotiating Contracts with Investors

In some legal jurisdictions, communities have the right to Free Prior Informed Consent; Indigenous Peoples have the right to Free Prior Informed Consent under international law (UNDRIP). However,  consultations are often characterized by very significant information and power asymmetries: investors may arrive for the first time, accompanied by government officials who tell the community “that they are being consulted” and demand an immediate “yes.” Even worse, investors and/or government officials may run “consultations” as opportunities to only inform the community that an investment is happening. Community members  - and their leaders - often do not know their rights, or may feel powerless in the face of influential government officials. The consultation may not even take place in the local language, making it very hard for community members to understand what is being discussed.

Furthermore, potential investors also often make elaborate promises of jobs, infrastructure, rental payments, etc. - yet never put these promises into an enforceable contract. Community members may welcome an investment on the assumption that the investor will bring needed/promised jobs and development, yet not know that if these promises are not put in writing, they are absolutely meaningless and may never happen.

After searching in vain for a low-literacy guide for communities about how to prepare to negotiate and then negotiate with potential investors, Namati and CCSI decided to write these guides for community members, leaders, and their advocates/paralegals/NGO activists, etc..

Guide 2 is designed for communities who have agreed to negotiate with a potential investor and are beginning negotiations. It describes all of the various sections and clauses that should be in a contract, advises what protective language to try to include in the contract, and warns against what “red flag” language to avoid and take care is not in the contract.

It is designed to help communities and their frontline advocates to negotiate clear, fair, and enforceable contracts that require investors to respect community interests, conserve the local environment, and support the community’s development—all on the community’s own terms.