JULY 2013
Legal Focus
59
dialogue between the concessionaire and the relevant government officer has been cited as being a strong contributor to a successful Concession bid.
troubled Concessions: Structural failure or few bad apples? While the Cambodian Government is heading in the right direction in its attempts to create a level playing field for all investors wishing to invest in land concessions, some investors have regrettably taken advantage of the Land Concession program to engage in abuses. Unfortunately, these relatively few, high profile cases have dominated the press.
At this stage, within the existing legal and regulatory regime much of the responsibility for ethical dealing is placed on the concessionaires themselves. Therefore, without specialized advice, investor, could be exposed to risks, specifically:
1) Cambodian history has left a legacy of disputed land rights and ownership. Limited Governmental due diligence mean that land concessions can include occupants who, while not holding legal title, have lived on and used the land for a significant period of time. Often, these occupants are marginalized people who did not have the resources or access that would have allowed them to convert their possession into ownership. Other times, opportunistic parties may challenge an otherwise valid concession with the hope of obtaining a payout.
2) The limited scope of environmental review during the application process can lead to environmental concerns arising later in the concession project.
Minimizing Risk, Maximizing Potential In light of these challenges, investors need make themselves aware of the risks associated with Land Concessions. The following three steps will help investors guarantee a reliable, profitable and responsible land concession project:
1) due diligence: The robust legal framework for land concessions in Cambodia is an excellent tool for investors to identify the potential impact of their proposed land concession activities. Even if detailed environmental and social impact assessments not required by the government, these tools can help the investor to understand whether or not their proposed project will disrupt local communities or harm protected nature areas. Such due diligence requires an on-the-ground partner who knows the country well and can communicate successfully with the local communities regarding the proposed concession. By proactively identifying and addressing potential issues, investors can ensure that the concession they receive holds the value which they have given for it.
2) Go Beyond the Contract While a properly executed Economic Land Concession Agreement does create valid rights, in practice these rights may be subject to a variety of valid as well as opportunistic challenges. These challenges can disrupt the project and cause reputational damage. The first step in addressing them is a constructive dialogue. Speaking directly with local claimants throughout the concession process can often resolve issues before they become problems. The Second step is to ensure legal protection for the investor in the long run. This can be achieved through third party contracts and agreements.
3) (Re) define your rights Lastly, it may be necessary to redefine the concession itself, once any issues have been resolved. By formally recognizing the steps taken to ensure the integrity of the concession, the legal value of that concession is significantly strength- ened. There are several ways in which the revised arrangement can be formalized and protected, depending on the specifics of the particular case. A clear and comprehensive Title Certificate, as well as unequivocal physical possession are two crucial tools. However, failure to properly execute this final step can undermine the integrity of the concession in the long run, and jeopardize the flow of project funding.
Conclusion Land Concessions in Cambodia remain an excellent opportunity for investors seeking to establish long term development projects in this rapidly expanding market. Although challenges remain, voluntary legal compliance, careful due diligence and a good on the ground advice help to ensure a successful investment. LM
Contact: Gavin Batcheler Senior Counsel VdB Loi & Yun
Mobile: +855 77 555 431 tel: +855 (23) 964 430 W:
www.vdb-loi.com
Level 6, Phnom Penh tower, 445 Monivong Blvd., Phnom Penh
www.lawyer-monthly.com
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