2. Legal and Policy Framework
Undertaking negotiations in the context of a robust legal and policy framework is the first step towards achieving clear outcomes from the negotiations for both parties. A country’s national development strategy provides guidance on its sustainable development objectives. However, its legislative framework will define key aspects of the negotiations including, for example, definitions of local and regional communities, taxes, tax incentives, licencing and permitting procedures and the duration of a project’s feasibility phase. Predictable and elaborate legislation not only smooths the negotiations process but also enables an attractive investment climate and enhances transparency and accountability.
In addition to petroleum and mining codes, negotiations may also involve other legal instruments, including laws relating to property, land, tax and contract, administrative and the constitution. It is helpful to have a clearly defined hierarchy of national legislation. Ideally this will include clarity on its interaction with any multilateral treaties to which the state is a party, such as treaties on climate change, marine pollution, investment and environmental law. The formulation and revision of national legislative frameworks should also consider international and regional best practices in the relevant field.