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Part A: General Topics - 20. Dispute Resolution | 20.4 Governing Law

Governing law is a principle that is often stipulated in contracts rather than in laws. When contracts choosing which law should govern disputes, the national law should apply. However, there are exceptions to this general principle which include instances where there is no applicable national law or the applicable national law is insufficient.

While some investors prefer the application of foreign governing law (e.g. Chinese Law, French Law, English Law), it should be a rare case where foreign law is chosen to govern mining disputes. Some mining laws provide for the parties to decide on the governing law in the mining contracts.

It should also be noted that choosing a foreign law to apply to investment mining disputes will have the result of nullifying any national mining law and all national laws which generally is not a good idea if a country wants to reinforce the rule of law in its country. Consequently, a mining law may choose to preclude choice of law provisions from contracts that derive from it and instead mandate the application of national laws.

20.4. Example 1:

Article [_]

The resolution of any dispute arising under any of the provisions of this [Law][Act][Code] between holders of minerals rights and between another holder of such rights and the [Country] shall be governed by the respective provisions provided for in such agreements.

Annotation

Drawn from Liberia’s mining code, this provision allows for the contracting parties to decide what law applies. As noted above, this language can effectively nullify aspects of the Liberian mining law with respect to mineral contracts that derive from it.

20.4. Example 2:

Article [_]

The laws of [Country] shall govern all contracts between the holders of mineral rights and the [Country], unless otherwise waived by the [Country] with the consent of the [National Legislative Authority].

Annotation

Unlike in example 1, this suggested language creates a default application of national laws in mining disputes unless the application of the law is waived through an open and democratic process. While this approach may not be attractive to foreign investors, it promotes the evolution and strengthening of rule of law locally.