Community-Investor Negotiation Guide 2: Negotiating Contracts with Investors

Deciding whether or not to allow an investor to use community lands and natural resources is one of the most important decisions a community can make. If an investment project is carried out in a respectful and inclusive way, it may help community members to achieve their development goals, which may include creating jobs and local economic opportunities. But investments come with risks. Investment projects may make the land that community members need for farming and other livelihood activities unavailable for some time. They may pollute local rivers, lakes, air, and soils, or block access to sacred areas or water sources. Investment projects may even violate community members’ human rights, or result in communities completely losing their lands.

Given these challenges, CCSI partnered with Namati, a legal empowerment organization, to produce two guides aimed at supporting communities and their advisors in their interactions with land-based investors.

This Guide 2 provides practical guidance on the issues to consider when a community has decided to negotiate a contract with an investor. Using example clauses, and guidance boxes for community discussion and seeking legal advice, it describes all of the various sections and clauses that should be in a contract, advises what protective language to try to include in the contract to make it enforceable, and warns against types of problematic contractual language that should be avoided.

An earlier guide, Guide 1, sets out practical guidance to help communities and their advisors to prepare both before potential investors arrive, and after an investor has approached a community. It covers topics and activities such as visioning a community’s desired future, understanding how valuable the land is for the community, and ensuring the inclusion of all voices within community decision-making, as well as pointers on meaningful consultation, information access, and knowing the community’s rights.

The guides are designed to apply to agriculture and forestry projects, although may have some applicability to agreements reached in other contexts, such as around mining or renewable energy projects.