Negotiations


9. Industry View

Despite the fact that industry counterparts may approach negotiations from a more informed position than government officials, there is a range of issues that could have an impact in their decision to invest, some of which they cannot influence. To begin with, the exploration area and period of exploration, work and financial obligations directly related to the geology of the area and a reasonable definition of what constitutes a commercial discovery would be among the first issues that are likely to be addressed by the company during negotiations. Furthermore, investors may often be willing to discuss amounts to a cash requirement from the company at the time the agreement is signed and production bonus, if any, is made. Many governments would like to mention the details of any state participation, amortisation, or profit sharing to the investor. In both mining and petroleum contracts, sovereign immunity, the applicable law, assignment extraterritorial application of laws of a foreign company’s country of incorporation, stabilisation and arbitration clauses will be taken into consideration.