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Part A: General Topics | 20. Dispute Resolution

Generally, dispute resolution provisions lay out processes for resolving disputes related to mining activities within and outside the court system between companies, the government, impacted communities, and others with legal standing. It is good international practice to provide in a mining law what will happen if there is a dispute between the rights holders in the mining sector. This creates trust that any dispute that arises will be dealt with in a clear foreseeable manner. When provided for, the provisions are often limited in scope in order to accommodate issues that may arise in contract negotiations with investors and/or obligations undertaken by countries who are party to Bilateral Investment Treaties (”BIT”). These provisions may include reference to arbitration or mediation for disputing parties, and will frequently designate which authorities possess the jurisdiction to adjudicate disputes and the scope of disputes to be adjudicated. It is important to ensure consistency with other laws that may also address this topic such as investment laws.

Jurisdiction provisions are different from governing law provisions which provide for the law which should apply to the dispute when the courts, arbitral tribunals or other alternative dispute resolution entities have jurisdiction.

Where the mining law provides for jurisdiction (such as national courts), it should explicitly establish whether such jurisdiction is exclusive or not. This is because when the jurisdiction provision is not exclusive, the result will be that each mining permit and concession and other contractual documentation could have different dispute jurisdictional mechanisms, such as courts and arbitral tribunals, which could give rise to forum shopping as well as different types of decisions in the same type of dispute. This gives flexibility to the parties but not necessarily foreseeable results which can be relied on in future disputes, thus defeating the objective of a consistent legal regime. An exclusive jurisdiction clause could have multiple layers such as the obligation to mediate prior to filing a claim before an arbitral body or a court.

Best international practices suggest that whatever mechanism is chosen that it be clear as to which types of disputes will be covered by the jurisdictional provision disputes. For example, will the provision (courts or arbitrators or dispute boards or mediators etc.) cover administrative disputes such as license and permit granting and revocation of such license and permits; third party complaints such as human rights and environmental issues; expropriation of land; disputes between the parties to a permit or concession over taxes, revenue, royalties, mine safety etc.

For a clear and stable regime, it is also best to have a simple rule where the scope of subject-matter jurisdiction is universal, meaning it applies to all disputes arising out of the sector. The reason for this is that parties will often waste precious time disputing which matters fall within the jurisdiction of the body (courts, arbitration, administrative tribunals, dispute boards, mediators etc.) as a litigation strategy to avoid a decision on the underlying dispute.

Mining laws generally encourage alternative dispute resolution mechanisms such as amicable resolution amongst the parties followed by mediation, a process of negotiation with the support of a neutral third party. While very similar to arbitration, mediation differs in that there is no need to submit evidence or testimony, as is typically expected in an arbitration process. It also differs in the sense that, mediation is usually not binding on the parties. While mediation is not binding, it does provide a mechanism for the parties to address many of the matters at issue, and in some cases, resolve some of the matters at issue, prior to resorting to arbitration or the national courts.

Due to the instability of certain judicial systems at least as perceived by investors, many investors prefer international arbitration. Some of the perceived advantages of arbitration are: it is private, the parties choose the arbitrators, the arbitral forum is deemed more neutral and it usually involves sector-specialized arbitrators, arbitration may be more efficient because the deadlines are fixed by the parties with the arbitrators, the decision is final and can only be appealed in limited circumstances. In addition, for countries who are signatory to the New York Convention, arbitral decisions are automatically enforceable (subject to exceptions detailed under Article 5 of the Convention) making it relatively easy to get an arbitral award executed.

It is essential for a mining law to properly outline the dispute resolution process as a key piece in building a transparent legal framework for the country’s mining sector. Given that mineral development agreements in Africa often establish dispute resolutions forums outside the resource country, it may be beneficial to consider requiring the utilization or exhaustion of local dispute resolution processes (judicial and non-judicial) prior to seeking out international forums in order to further the local development and/or consolidation of rule of law culture for the sector. However, this also requires that any dispute resolution structure created locally be independent, above reproach and fully equipped with the resources and expertise necessary to effectively resolve disputes. When the national courts are neutral, fair and efficient and investors can be convinced of their reliability, then national courts are a good choice because they promote the rule of law in the country.

Ultimately, drafters of contracts and agreements entered into in the context of the mining law are advised to be vigilant to ensure coherence between the dispute resolution clauses in the contract and those in the mining law.