Hey lawyers, it’s not that hard to draft fair land lease agreements

The Sierra Leone government’s efforts to promote the country “as an el dorado for international investments” have been a boon to the legal community in recent years, with lawyers involved in the lucrative work of incorporating companies, securing titles and drafting lease agreements.  But lawyers must be more careful, writes Namati’s Sonkita Conteh. Unfair lease negotiations have resulted in wide equity gaps and are prompting increased public scrutiny. By shortchanging communities as some have, lawyers risk putting themselves in breach of the legal practitioner’s code.

Read the full article below or find it on Sierra Express Media.

How to write equitable large-scale land leases: advice for lawyers

The past four years have seen a significant influx of investors into Sierra Leone.  No doubt encouraged by the aggressive marketing campaign by the government to showcase the country as an el dorado for international investments- cheap and abundant land, cheap labor, generous tax holidays, secure environment and efficient conflict resolution mechanisms.  This campaign seems to have been effective- perhaps too effective. None of the relevant government institutions could say for certain how many companies currently operate in the country.

To give a sense of the scale of the inflow, the Chinese Ambassador is reported to have mentioned that there were 53 Chinese companies in Sierra Leone employing some 3000 personnel. There are companies from almost all the regions of the world and many more are lined up. Such booms are seldom without risk. The lack of information on numbers or of a system for selecting investors suggests the country may not have been adequately prepared for such a strong incoming tide. The costs to the environment and vulnerable rural communities might well outweigh the jobs and revenues these companies bring. There have been calls recently by civil society organizations for a moratorium on big land deals.

The inflow of investments, particularly in mining and large-scale agriculture has favored a particular set of professionals- lawyers. They have incorporated companies, helped secure licenses, provided legal representation and drafted lease agreements. For their efforts, they have been paid handsomely. Many go on to retain these companies as clients for many years. In economic terms, this is good for legal practitioners.

However, what is not so good, and perhaps even troubling, are the lease agreements that lawyers have been churning out on behalf of companies. Local authorities and landowners often sign these complex agreements with little or no understanding of their content. These leases are normally for 50 years and involve thousands of hectares of prime community lands. In recent times, some of these leases have come under intense public scrutiny with strong calls for their renegotiation. Non-governmental organizations like Namati are providing legal representation for communities and encouraging local authorities to avail themselves of independent legal assistance to renegotiate these leases.

Most, if not all of the lease agreements for large-scale agriculture are heavily weighted in favor of companies with rural communities coming off worse. Some of the big investors defend the provisions in their leases by pointing out that the local authorities or communities were on the same footing with them because they were represented by lawyers who could have objected. The problem with this argument, however, is that the investors paid the lawyers who represented the communities or local authorities. Even if the intention was noble, such cases amount to conflicts of interest. Besides, the content of these leases discredit any noble purpose. Companies got away with everything.

Some examples from registered leases clearly illustrate the imperious position of these corporations. A lease registered in 2010 stipulated that “the company… shall have… exclusive possession over all that forms part of the demised premises including villages, rivers, forests and all other forms of the environment.”This amounts to little more than legalized theft of community resources. It is an example of corporate disregard for the wellbeing of a community dependent on its natural resources for survival.

The lease further stipulated that no matter how badly the company acts the lease would never be terminated. Such a clause undermines the ability of communities to protect the land that will one day return to them. Also, the company will have little or no incentive to handle the leased property with care. These two examples have been widely mirrored in many subsequent leases. The same lease also provided for disputes to be resolved by arbitration in London. Another registered lease of the same year, gave the company right to free use of water resources for irrigation purposes and rather bizarrely, fishing rights.

A recent lease agreement that has been signed but not registered, contained provisions giving the company access to 10 acres of choice land without any consideration and free-of-cost access to sand on the river banks of the community. This particular agreement contained no fewer than a dozen problematic clauses and Namati is working with the community to review it.

Such contract negotiations have been woefully lopsided. Not only have rural communities faced companies with enormous resources and expensive, often politically connected lawyers, but the companies even controlled their access to legal assistance.

Nevertheless, lawyers involved in large-scale land deals, particularly those purporting to represent the interest of communities would do well to heed the following: the skill set required to draft equitable large-scale land leases is not difficult to master. Leave your cozy offices in the city and visit these communities. Talk to community members and leaders; ascertain which families traditionally own land and which are land users. Clarify whether the proposed lease would cover family holdings and/or communal holdings. Identify common resources such as rivers and discuss an equitable strategy for shared use. Remember that communities often live within or around their arable lands, so do not include residential areas within a proposed lease. Doing so would undermine their ownership rights and leave them at the mercy of less benign companies. Play fair- do not omit or allow manipulation of clauses meant to protect a community’s future rights to land and hold companies accountable for their breaches. To ensure equality of arms, don’t get paid by the company to represent communities. It doesn’t look good and you may be in breach of the legal practitioner’s code. Most importantly, take the draft lease back to the community and explain it to them clause by clause. You will be shocked to learn that though they may be illiterate, they are not unintelligent. They will not leave you in doubt about what they think of your draft. Take your cue from that. Unfair, company-sided leases may give the impression that you have secured a major commercial victory for your client – actually, you have not. You simply bamboozled a poor community into giving up their most valuable possession. Soon, these one-sided agreements will come back to bite your clients. Beware!

October 3, 2013 | Sonkita Conteh