Reform and Revise the Legislative and Regulatory Frameworks
A comprehensive and clearly drafted legal and regulatory framework improves the investment climate for investors, promotes transparency and government accountability, facilitates better contract negotiations, and makes it easier to implement and regulate investment projects.
Governments should formulate or revise their laws according to their democratic processes, as a part of which relevant stakeholders, including communities which stand to be affected, should be consulted. A government’s national policies and policy objectives, as well as international and regional best practices should also be taken into account in the formulation or revision of such laws. Some governance frameworks and initiatives are available to assist with this process.
If a public-private partnership (PPP) in an investment is envisaged, the PPP legal and regulatory framework may also need to be revised or updated. There may also be scope for leveraging investments in natural resource-related infrastructure (such as power, ports, rail, water, ICT) to address national infrastructure developments goals, which should be considered. For more information, see the Columbia Center on Sustainable Investment's work on Leveraging Mining-Related Infrastructure Investments for Development.
In relation to any investment, comprehensive environmental, social and human rights protections should also be included in the legal framework. Laws and regulations setting out such protections should reflect international and regional standards and best practices. They also need to address such issues as what data should be collected for impact assessments and management plans, which government agency or department should review and approve them, the process for revisions and corrections, and what the penalties are for non-compliance.
Setting out such provisions in the laws governing contracts rather than in the contracts themselves could also limit their (re)negotiation at the contract stage, though some investors may seek to introduce stabilization clauses in the contracts that circumvent some of those standards.
The implementation of model contracts based on best practices and public consultations could further minimize the discretion in the contract negotiating process, with guidance as to which provisions may be amended in the course of negotiations and which may not.
Finally, the implementation of bilateral investment treaties may need to be considered. Where local content legislation is or has been implemented, governments need to ensure that the provisions in the investment treaties and local content requirements do not conflict.