Workshop on International Law, Natural Resources and Sustainable
Development
Rule of Law without the State? Positive and Negative Implications of Mining Agreements
between MNCs and Communities for Rule of Law
Ronald Janse
Faculty of Law, University of Amsterdam
The past decade has witnessed a proliferation of mining agreements between multinational
corporations (MNCs) and communities, including in fragile and conflict affected states
(FCAS). These agreements aim to ensure that communities benefit from mining projects
(business opportunities, employment, revenues); that the economic, social, cultural and
environmental costs of such projects are minimized; and that conflicts surrounding these
projects are reduced. At the same time, these agreements aim to ensure that MNCs can
continue to profit from mining projects without facing local resistance and disruptive
activities and with a lesser chance of lawsuits and reputational damage.
From the point of view of rule of law, the proliferation of mining agreements appears to be
a welcome trend. Rule of law is essentially about subjecting the exercise of power to law.
The relation between communities and MNCs is obviously deeply asymmetrical in terms of
power and influence and this asymmetry explains why communities usually bear heavy
costs of mining projects while the benefits accrue to national capitals and international
financial markets. By balancing the interests of MNCs and communities and subjecting the
relation between the two to law, mining agreements promise to bring rule of law.
Moreover, state legal systems are by definition weak in FCAS and attempts by development
agencies to strengthen legal and related institutions in FCAS have had very limited success.
Non state justice systems, which development agencies are currently attempting to
strengthen, are also generally incapable of addressing relations between communities and
powerful outsiders such as MNCs. Mining agreements thus promise to fill an important gap
by advancing rule of law in contexts which neither state law nor non-state justice systems in
FCAS are sufficiently capable of regulating. Finally, the emergence of CSR appears to ensure
that MNCs are committed (for principled and pragmatic reasons) to the same international
norms and guidelines (ILO standards, relevant human rights treaties, et cetera) that one
would expect to guide regulatory interference by the state or international organizations.
Unsurprisingly, some development agencies, faced with deep budget cuts and always eager
to find a magic bullet, have recently started to suggest that business can take over the role
traditionally performed by bilateral and multilateral donors and the state in rule of law
promotion. Some academics have advanced similar claims.
But there is also a body of literature which suggests that mining agreements are deeply
problematic from the point of view of rule of law. Some concerns evolve around inequitable
distribution of costs and benefits in agreements because of unequal bargaining power, the
definition and the representation of communities, and capture. Another persistent concern
is lack of enforceability and implementation.
This paper aims to assess whether mining agreements contribute to rule of law in FCAS on
the basis of a literature review. The first part discusses what rule of law means, and what its
constitutive elements are, in the relation between MNCs and communities (a matter which
deserves some explanation given the fact that rule of law has traditionally been discussed
from a state-centric perspective). The second part discusses theories and case studies which
suggest that mining agreements advance rule of law. Third part, the chapter discusses
theories and case-studies which suggest that mining agreements pose challenges and
concerns for rule of law. The conclusion offers a balanced assessment of the extent to which
mining agreements advance rule of law in FCAS.