Drafting & Negotiation of Investment Agreements

Historically, the mining industry relied extensively on investment agreements with national governments for the development of major mining projects. From the 1950’s through the 1980’s, such investment agreements tended to be designed to create a comprehensive legal and regulatory framework for the particular investment involved.

Since the early 1990’s, although some such agreements continue to be negotiated in certain environments, the international trend has been towards the reliance on agreements that stabilize rather than replace the terms of existing national legislation on minerals licensing and the related fiscal, export-import, foreign exchange and environmental and social rights and obligations of minerals exploration and production companies.

In addition to negotiating mineral investment agreements and assisting in the resolution of disputes thereunder, Duncan & Allen has conducted studies of the use of such agreements in the world-wide mining industry for The World Bank and has developed model investment and stability agreements for use in conjunction with the minerals legislation of several countries.

In reforming the legal framework of the mining sector in Madagascar, Duncan & Allen assisted the Malagasy in developing an original form of investment agreement for large scale investments that guarantees the Malagasy government a sufficient and stable stream of revenues from large mining projects while giving the investors generally recognized legal, tax, foreign exchange and customs advantages, but not exemptions, as well as the stability of such provisions.

For purposes of ease of administration and transparency, the terms of the investment agreements were standardized in an investment law for large scale mining projects which applies in a non discriminatory manner to all investments of a specified size. Those investments must be certified by governmental decree pursuant to a simple and transparent procedure outlined in the law and its implementing regulation. The initial investments under this framework were made in 2007.

From August 2008 to November 2009, Duncan & Allen was retained by the Privatization Steering Commission of the DRC (“COPIREP”), an agency of the DRC government collaborating with, and receiving financial support from, the World Bank to provide legal assistance to the national electric utility of the DRC (Société Nationale d’Electricité or “SNEL”) as part of COPIREP’s institutional capacity building efforts in the power sector.

Our assistance to SNEL involved primarily three major tasks, all of which were performed entirely in French. First, we provided support in negotiating infrastructure financing agreements with foreign investors - in particular, for the rehabilitation of turbines and related generation and transmission infrastructure at the Inga II hydroelectric station on the lower Congo River - and power sale agreements for exports to SNEL’s counterparts in interconnected countries to the south and east. We participated in onsite negotiations in the DRC as requested and we also provided comments and suggestions on multiple agreements under negotiation from our Washington office.

Second, we developed a set of annotated model agreements for the financing of rehabilitation and construction projects relating to SNEL’s electric infrastructure. We presented the model agreements to SNEL at a workshop in Kinshasa, which attracted the keen interest and participation of senior SNEL staff. The workshop also included a training component on negotiation principles and techniques.

Third, we developed an analysis and recommendations for the reorganization of SNEL’s legal department.