AMEC National Congress 2006 Pre-Congress Seminar 6 June 2006 : AMEC National Congress 2006 Pre-Congress Seminar 6 June 2006 Mark Gregory
Telephone (08) 9429 7567 ‘Tips and traps’ of making agreements with Aboriginal people
Introduction : Introduction Two topics:
negotiating an agreement
contents of an agreement
Negotiating an agreement : Negotiating an agreement Have a negotiation strategy
A strategy can cover many things:
a timeline for negotiations
background of relevant statutory processes
a ‘fall back’ position in case negotiations do not succeed
Choose your team carefully : Choose your team carefully include a senior person, with authority to make binding decisions
include people who are likely to 'stay the distance'
include people with sufficient knowledge about the project
consider an independent, trusted third party to assist
consider resourcing the Aboriginal group (eg. negotiator, lawyer, anthropologist)
Negotiate with the right people : Negotiate with the right people consider statutory basis for dealing with the other party (NTA: native title claim group, via native title representative body; ALRA: Land Council)
an experienced anthropologist may assist identify correct people
Process of negotiation : Process of negotiation For major negotiations, consider first entering a ‘process’ agreement: establish frequency of meetings (usually several are required)
agree location of meetings (where the community requests, if possible)
Allow plenty of time : Allow plenty of time Negotiations with Aboriginal groups can take a long time: decision making within Aboriginal groups is highly consultative
commence negotiations at the earliest possible stage of the project
avoid short, unreasonable deadlines (but keep the negotiations moving forward)
Don’t present a ‘fait accompli’ - genuinely negotiate : Don’t present a ‘fait accompli’ - genuinely negotiate Aboriginal people often have bad experiences of being ‘consulted’ as an afterthought
avoid fixed, intransigent positions
consider statutory provision (eg. NTA ‘right to negotiate’ requires ‘good faith’ negotiations)
Other matters : Other matters listen, don’t just talk
spend time establishing relationships, don’t press for decisions too quickly
don’t be tempted to discuss the merits of a pending native title claim (even though it may inform your negotiation strategy)
remember that, after the agreement is signed, ongoing liaison may be necessary
‘Good faith’ negotiations under the NTA : ‘Good faith’ negotiations under the NTA Under the NTA, 'good faith' is determined by looking 'at the conduct of a party as a whole'
Practical example – right and wrong ways to approach negotiations : Practical example – right and wrong ways to approach negotiations Two companies, each wants to start a new mine within 12 months owing to high commodity prices: Borroloola Acquisition and Development Company Pty Ltd
(BAD Co)
Gove Onshore Ore Development Company Pty Ltd
(GOOD Co)
Negotiation strategy : Negotiation strategy BAD Co
BAD Co has no strategy, and indeed does not think of Aboriginal consultation until many months into the project plan. GOOD Co
GOOD Co knows that the project lies within a registered native title claim area. The company understands that the grant of its tenement will need to go through the ‘right to negotiate’ provisions of the NTA. The company decides that it will allow 6 months for negotiations, and if those negotiations fail will seek an arbitral decision.
Time : Time BAD Co
BAD Co spends 10 months developing mine plans and applying for tenements. With two months to go, the company realises it needs native title sign off and contacts the local land council.
Because of the wet season, roads are cut and no one can get to the community for at least two months.
Result:
the delay in initiating communications lacks ‘good faith’
GOOD Co
At the outset GOOD Co makes contact with the land council to explain the proposal and set up an initial meeting. The first meeting is held within a month:
a senior officer explains the project
the company puts on a barbeque for the community
does not ask for decisions; explains the mining project
suggests a process for negotiating the agreement (ie. monthly meetings at the community)
The right people? : The right people? BAD Co
Desperate, BAD Co flies three members of the Aboriginal community to Perth. Bad Co pays their travel and accommodation expenses and gives them $500 each. At the end of the meeting the company is told that the plan must be discussed with senior elders, none of whom are at the meeting.
Result:
Payment of fees to the 'wrong' three people upsets the community when words get back.
GOOD Co
By initially consulting with the land council, GOOD Co has involved all the right Aboriginal people.
The company's senior officer attends all remaining negotiation meetings over the next several months.
The next meeting : The next meeting BAD Co
Finally, BAD Co arranges a meeting at the community:
a more junior company officer attends
meeting hampered by ill will arising from 'wrong' payments
company says 'we want to start mining next month. Here's an agreement for you to sign'.
Result:
Aboriginal community feels pressured and does not sign the agreement.
Non-negotiable position counts against ‘good faith’, as might the attendance of a junior officer
GOOD Co
At the second meeting, GOOD Co:
explains the mine project again
• explains that the company wants to proceed with community support
• outlines some compensation options for the community to consider, including the establishment of a trust for long-term community benefits
• listens to the community's concerns and answers questions
Progressing the negotiations : Progressing the negotiations BAD Co
BAD Co does not follow up when a month goes by with no response. Eventually Bad Co calls a meeting, but to its dismay, no one from the community attends the meeting.
Result:
the failure to follow up on the lack of response counts against 'good faith'
the company adjourns the meeting and spends the next month in 'damage control' mode.
GOOD Co
The community has requested additions to the proposed compensation package including:
cultural awareness training for mine workers
an employment program for Aboriginal community members.
The company agrees that these requests can be included in the compensation package.
Where does it end? : Where does it end? BAD Co
Unable to pursue negotiations with the local community, BAD Co is forced to seek an arbitral decision.
At the first directions hearing BAD Co is accused of failing to negotiate in ‘good faith’. A preliminary hearing on the ‘good faith’ issue is listed for the following month.
Result:
the Tribunal decides that the company has not negotiated in good faith, and recommends that the grant of the mining tenement be refused.
GOOD Co
At the fourth meeting, agreement is reached. A few weeks later, a ‘signing ceremony’ is held in the community and the first payment is made to the Aboriginal community:
the mining tenement is granted to the company, which is able to commence mining on time;
note that if the negotiations had broken down, the company’s approach to negotiations would have met the ‘good faith’ test under the NTA ‘right to negotiate’ process.
Part B – contents of an agreement : Part B – contents of an agreement Introduction
Agreements vary widely, and are usually confidential.
Considerations that apply to contracts generally: Who will do what?
How, exactly, will it be done?
When will it be done?
What happens if it is not done?
How does the agreement come to an end?
Part B – contents of an agreement (cont’d) : Part B – contents of an agreement (cont’d) Matters of particular importance in agreements with Aboriginal people: execution by correct parties
compensation package
securing all project rights
ongoing liaison
assignment
confidentiality
dispute resolution
Execution by the proper Aboriginal parties : Execution by the proper Aboriginal parties Understand any statutory basis of the Aboriginal party’s entry into the agreement:
eg. NTA, sections 41 and 62A – have each ‘named applicant’ execute the agreement
in the Northern Territory, on 'Aboriginal land‘, the relevant Land Council executes the agreement
Execution by the proper Aboriginal parties? : Execution by the proper Aboriginal parties? BAD Co
Parties:
BAD Co
John Smith and Wilma Hayes (‘Traditional owners’)
Uncertainty:
Do these two Aboriginal people have authority?
GOOD Co
Parties:
GOOD Co
John Smith, Wilma Hayes and Fred Johnson, the named applicants in the ABC native title claim, on behalf of the ABC native title claim group (‘Applicants’)
Additional authority clause:
The Applicants warrant that they have authority to enter into this agreement on behalf of the whole claim group, and to bind all members of the claim group to the obligations under this agreement.
What is to be done? When? How? : What is to be done? When? How? Impose (reasonable) time limits.
Be specific about obligations.
Consider statutory requirements:
eg. NTA, s 31(1)(b) negotiated agreement; s 35(3) application for arbitral determination withdrawn when agreement reached
What is to be done? When? How? : What is to be done? When? How? BAD Co
The traditional owners will allow the mining lease to be granted to the Company.
Uncertainties:
How exactly? Are there any statutory requirements?
When must it be done?
GOOD Co
The Applicants will, within 7 days after the execution of this agreement lodge with the NNTT a notice that negotiations are complete and mining lease [X] can be granted.
The Applicants will take no further steps to impede the grant of mining lease [X] to GOOD Co.
Compensation payments require close consideration : Compensation payments require close consideration A properly structured compensation package:
• reduces commercial risk to the miner
• may establish stages for the payment of compensation
helps to maintain an ongoing relationship between the miner and the Aboriginal group
• helps to ensure lasting benefits to the Aboriginal community
Compensation payments require close consideration : Compensation payments require close consideration BAD Co
BAD Co will pay compensation of $20,000upon signing this agreement, and $20,000 per annum thereafter.
Uncertainties:
How are payments made?
To whom are payments made?
Are there any preconditions for payment?
GOOD Co
The company will pay to the Applicants:
(a) $10,000 within 7 days after the grant of mining lease [X];
(b) $10,000 on the Company obtaining all approvals to mine;
(c) $10,000 on completion of mine construction;
(d) $20,000 per annum on the anniversary date of completion of mine construction, while mining operations continue.
All payments under this clause are to be made to the Applicants’ charitable trust.
Securing all project rights : Securing all project rights If the mining project is a major one, ensure that the Aboriginal group agrees to all necessary approvals, including future approvals.
Securing all project rights : Securing all project rights BAD Co
(The agreement only relates to the grant of mining lease [X]).
Uncertainties:
Are any further mining tenements required to develop the project?
Are any other regulatory approvals required, which may require Aboriginal consent (eg. environmental approvals)?
GOOD Co
(An earlier clause of the agreement has secured the grant of a mining lease [X]).
The Company will notify the Applicants in writing at least 2 weeks before applying for any ancillary mining tenement.
The Applicants will take no action to object to, or otherwise impede, the grant of any ancillary tenement or approval that the Company requires, in the Company’s absolute discretion, anywhere in the ‘Project Area’.
Ongoing relationships after signing the agreement : Ongoing relationships after signing the agreement For major projects, it is prudent to ensure that ongoing liaison between the proponent and the Aboriginal community is established in the agreement. Ongoing liaison:
helps to reduce the likelihood of disputes
• assists with Aboriginal engagement in the project
• helps maintain personal relationships, which are important for Aboriginal people.
Ongoing relationships after signing the agreement : Ongoing relationships after signing the agreement BAD Co
The company will provide annual written reports to the Applicants about the mining project.
Problems:
written reports may not be the best form of communication
a written report does not help maintain the relationship. Face-to-face meetings would be better.
GOOD Co
The agreement establishes a liaison committee that:
meets at least every 6 months
meets at the Aboriginal community
includes senior members of the company and the Aboriginal group
provides project updates to the community
may deal at first instance with disputes
Assignment : Assignment In agreements with Aboriginal people, there are special considerations regarding assignment of contractual rights and obligations:
• the consultative nature of Aboriginal decision making may delay assignment, if consent of the Aboriginal group is required
• Aboriginal groups may have concerns beyond commercial ones (eg. the 'ethics' or 'track record' of the proposed assignee) • typically, the rights and obligations of the Aboriginal people are not assignable (except as authorised under relevant statutory provisions).
Assignment : Assignment BAD Co
The Company can assign […] with the consent of the Applicants, to an assignee which is acceptable to the Applicants.
Uncertainties:
places no limitations on the Aboriginal group's ability to withhold consent
contains a vague notion: 'acceptable to the Applicants'
GOOD Co
The Company can assign[…] to an assignee that undertakes to assume the company's obligations under the agreement:
The company will notify the Applicants of any proposed assignment, at least a month before the assignment is proposed to occur.
(Applicants' consent not required, or at least not to be 'unreasonably withheld')
Dispute resolution : Dispute resolution It is common in agreements with Aboriginal groups to have sophisticated dispute resolution clauses. The desirability of robust dispute resolution clauses arises from:
• the consultative decision making processes of Aboriginal groups
• the desirability of avoiding confrontational litigation or other overly formal methods of dispute resolution
• the desirability of ensuring that relationships survive dispute
Dispute resolution : Dispute resolution BAD Co
If a dispute arises, the parties will meet to discuss and resolve the dispute.
Uncertainties:
How can you be sure there is a dispute?
Where will the parties meet?
Who will attend at the meeting?
What happens if the meeting does not resolve the dispute?
GOOD Co
The agreement provides a detailed dispute resolution clause requiring:
a written notice of dispute
a first meeting of the liaison committee to attempt to resolve the dispute, within 14 days of a notice of dispute
if the meeting does not resolve the dispute within 28 days, either party may elect mediation
if mediation does not resolve the dispute within 3 months, either party may seek arbitration or litigation
Confidentiality : Confidentiality Confidentiality of information is often of high importance to Aboriginal people:
• the subject matter of agreements may include sensitive cultural information, such as the existence and nature of secret/sacred sites under traditional law. Such information may be highly sensitive and the maintenance of secrecy may be an important cultural obligation
• the commercial arrangements of the agreement are often confidential
Confidentiality : Confidentiality BAD Co
The payments made under this agreement are confidential.
Limitations:
no mention of Aboriginal cultural confidentiality
no exemptions to the confidentiality provisions
GOOD Co
The agreement imposes confidentiality obligations with respect to:
Aboriginal cultural information
the commercial aspects of the agreement
Exemptions for the commercially confidential information include disclosure:
to a potential assignee
under legal and ASX requirements, etc.
Conclusions : Conclusions Negotiations with Aboriginal groups are not as straightforward as ordinary negotiations between commercial parties:
the Aboriginal group's rights (including negotiation rights) are often created by statutory provisions, which set out negotiation requirements
Aboriginal groups do not usually have a clear corporate identity. Ensure that negotiations are carried out with the right parties, and that an agreement is executed by the right parties
personal relationships are important, both in the negotiation of an agreement and in maintaining good will after the agreement is signed
negotiating agreements takes a long time, so start the process as soon as possible.