"Every phase of the mineral industry, from extraction of the resources to the commercialisation of the minerals, is bound to be regulated by international laws and principles that not do not always find synchronicity with relevant domestic regulations."
This article intends to provide some notes on the latest international law trends and the current state of the natural resources industry. We will make specific reference to certain industry aspects of these international trends, and the adaptation and application of international law to local jurisdictions – and, therefore, domestic law.
There is little or no doubt nowadays that many industries – natural resources foremost among them – are subject to an increasing burden of international law regulation. For some time, scholars have taken the view that this trend will continue to increase in volume and complexity. The current geopolitical and market scenarios confirm these views.
Every phase of the mineral industry, from extraction of the resources to the commercialisation of the minerals, is bound to be regulated by international laws and principles that not do not always find synchronicity with relevant domestic regulations.
The world has become more global and uniform in some areas, and yet very diverse and unequal in others. Certaintly, this is a cause for concern in the Catholic Church, as evidenced by On Care for our Common Home: Laudato Si’, Pope Francis’ latest encyclical. The law as science, and its sociological dimension, are also affected by this global situation.
Countries may have different political organisations and legal systems with various impacts on the way resources are extracted and used; however, there is much common ground among them. The role of international law has been crucial in shaping guidelines and trends for the natural resources industry.
On the other hand, from the companies’ perspective, the challenge has become more complex. Mining companies are operating in a very difficult context, with high volatility in prices and a level of productivity that, in many regions of the world, is falling due to structural labour market forces, high and elevating input costs, and lack or shortage of water and energy. among other critical issues. A return to productivity, and to sustainable and substantive cost-reduction, has been the main concern for mining executives in recent years.
In this complex scenario, we see that current international law trends are set to continue and, indeed, intensify. The real challenge lies in addressing these trends.
A legal system is always based on a certain legal philosophy. This is true of both international and domestic law systems, even when applied to a range of different matters.
We adhere to the trialist theory of law, as conceived and explained by Werner Goldschmidt. This aims to explain legal science with a theory of objective values, comprising three perspectives or dimensions:
In other words: we see the legal system as a network of factual situations, which are evidenced in norms or laws aiming to build justice as the supreme value for the order of human relations.
No doubt a mining project can be seen and tested against these three dimensions. Local communities and the environment in which the project is to develop would represent the sociological dimension. The international and local regulations that would apply to the project, even in a dynamic context, would represent a normological or legal dimension. However, both of these dimensions will aim to achieve the sustainable development and success of the project in terms of equitable stakeholder engagement; in other words, try to achieve a just and fair situation for all parties involved.
We acknowledge the fact that philosophical views, especially for legal doctrines, are subject to debate. However, a clear system of values and philosophical support of any legal system is always necessary.
Moreover, in the mining industry – which has such an impact on communities and their long-term economic and social development – the values supporting a jurisdiction’s legal system certainly plays a crucial role.
In recent years, there has been a proliferation of standards and guidelines for the natural resources sector at an international level. Such standards have been embraced by companies and financial institutions, and have undoubtedly changed the landscape of natural resources operations in many parts of the world.
Many examples can be quoted in this regard, including the Equator Principles (guidelines adopted by many financial institutions adhering to sustainable development goals and standards) and the Performance Standards of the International Finance Corporation.
More and more companies, including Rio Tinto, BHP, Freeport McMoran and others, have adopted different standards and instruments, whose principles they have incorporated in their operations across the world. The sustainable development framework of the International Council on Mining and Metals, adopted by many mining companies, is an example of this trend.
These initiatives and guidelines have helped in many ways to harmonise the effect of mining company activities across the globe. International law, mainly “soft law” in the form of standards, guidelines and recommendations, is making a difference and helping to reshape the industry in a more equitable form for the many different stakeholders involved.
It is worth noting here that the evolution of international environmental law was initiated as part of the evolution of human rights. There is no doubt today that human rights issues can easily be applied in line with business development and profitable enterprises.
The increased international regulation influencing, and certainly being adopted by, the industry is in large part not self-applicable without the relevant mechanisms of the local domestic legislation.
The interaction between international and domestic law has been studied by scholars, giving rise to various means of incorporating international norms into national law.
The need to adequately implement international rules in the domestic sphere remains critical. It is not uncommon for treaties adopted by a country to need specific local regulation in order to apply them. In some cases, this poses a real challenge.
That said, we are by no means implying a need to dilute the traditional barrier between international and national law. On the contrary; we understand that due implementation of international law must follow the constitutional prescriptions of the local state and therefore its domestic law.
This notwithstanding, these traditional parameters are in revision; the penetrating effect of international law on domestic law can be considered part of a strategy driven by the development of human rights.
Moreover, adoption of international standards and guidelines by mining companies, even as “soft law” may engdender change among these established concepts.
Despite difficulties faced by the industry, mining companies and projects play an important role in international legal trends, and how such trends interact with domestic law. Traditional parameters for this relationship are being reshaped by the influence of recommendations, standards and guidelines as adopted by companies. This trend would result in a more equitable and harmonised way to conduct mining operations, despite the different jurisdictions and legal systems.
Evidence of this trend can be summarised by the following:
Finally and without prejudice of all the above, even when mining companies are internationally influenced, it is key to “think local”. The real success of a mining project lies in the interaction between applicable rules (at both international and national levels) and the local environment and communities. Therefore, any international guidelines, parameters, etc, must be adapted to, and reflected in, local needs and expectations. This is one of the main challenges for natural resources companies.