Free, Prior, and Informed Consent: Implications for Transnational Enterprises

Author:Tendai Zvobgo
Position:Holds a bachelor of laws degree (LL.B) from the University of Cape Town in South Africa and an LL.M from American University, Washington College of Law
Pages:37-40
 
CONTENT
372012–2013
FREE, PRIOR, AND INFORMED CONSENT:
IMPLICATIONS FOR TRANSNATIONAL ENTERPRISES
by Tendai Zvobgo*
INTRODUCTION
Inward foreign direct investment by multinational enter-
prises has been instrumental for the development of extrac-
tive industries and manufacturing exports in developing
countries.1 In some instances, however, large-scale industrial
and economic development has occurred without regard for the
rights of indigenous peoples’ and their ownership and usage of
land.2 During the past two decades, the protection of indigenous
peoples’ has increased
under international law as
a result of the free, prior,
and informed consent
principle (“FPIC”).3 This
paper examines the scope
of FPIC as an aspect of
environmental justice and a
tool for poverty alleviation.
It also explains some of the
difficulties encountered by
transnational enterprises
when they attempt to uti-
lize FPIC and the benefits
that accrue to indigenous
communities and trans-
national enterprises when
the principle is properly
applied.
FREE, PRIOR, AND INFORMED CONSENT IN
INTERNATIONAL LAW
FPIC empowers indigenous communities by providing them
access to environmental justice. The concept of “environmental
justice” mandates that all people, regardless of their race, ori-
gin or income, have the ability to “enjoy equally high levels of
environmental protection.”4 At the core of FPIC, is the right to
self-determination as enshrined in Article 1 of the International
Covenant on Civil and Political Rights.5 FPIC enables indige-
nous peoples to “assert that their territories should be recognized
by government and that their free, prior, and informed consent is
necessary before development activities can take place on their
territories.”6 FPIC is also significant in the development context
because, as noted by Amartya Sen, development is related to
freedom and freedom is undermined when people are restricted
from exercising their civil and political rights.7 Therefore, FPIC
gives the most vulnerable members of society a platform from
which they can express their rights.
The most significant instruments that recognize FPIC
are the International Labor Convention 169 of 1989 and the
United Nations Declaration on the Rights of Indigenous
Peoples (“UNDRIP”) passed in 2007. The former is a binding
treaty and has been ratified by 23 countries, most of which are
in South America.8 Although most states are not parties to the
Convention, it is still important as a “persuasive authority for
the global community regarding FPIC.”9 The UNDRIP, on the
other hand, is not a treaty
and therefore not binding
authority. One hundred and
forty three countries voted
in favor of the UNDRIP
while eleven abstained.
The United States, New
Zealand, Canada and
Australia voted against
it.10 These four countries
later abandoned their initial
position and endorsed the
UNDRIP.11
Although international
law does not impose an
obligation on transnational
enterprises to respect
FPIC, states will still be
affected by the principle’s
evolution within international law.12 The language utilized in the
International Labor Convention and UNDRIP makes it apparent
that states bear the primary responsibility for respecting FPIC.13
Article 32, section 2 of The United Nations Declaration on the
Rights of Indigenous Peoples explicitly refers to the notion of
free, prior, and informed consent and the process that states
should undertake in order to obtain it.14 As a result, national and
regional legal systems have begun to adopt the FPIC principle as
a guideline when making decisions that would impact the devel-
opment of indigenous populations.15 At times, this has culmi-
nated in the modification or denial of concessions that states had
offered multinational companies.16 Furthermore, international
institutions, such as the Inter-American Development Bank and
* Tendai Zvobgo holds a bachelor of laws degree (LL.B) from the University
of Cape Town in South Africa and an LL.M from American University, Wash-
ington College of Law. She previously worked as a Foreign Legal Specialist for
the Public International Law and Policy Group in Washington DC where she
advised governments in east Africa on decentralization of power and constitu-
tional reforms. For more information you can contact her at tendai.zvobgo@
gmail.com.
large-scale industrial and
economic development has
occurred without regard
for the rights of indigenous
peoples’ and their ownership
and usage of land
38 SUSTAINABLE DEVELOPMENT LAW & POLICY
the Roundtable on Sustainable Palm Oil (“RSPO”), have adopted
the principle of FPIC.17 The World Bank modified its safeguard
policies in 2006 to include free, prior, and informed consultation
as a requirement for its supported projects.18
THE SOCIAL LICENSE
FPIC requires that consent must be freely given and that
the decision must be made after indigenous peoples have been
educated about the project.19 Therefore, a neutral agent should
obtain FPIC before a transnational enterprise may proceed with
a development project and any agreement reached between the
indigenous peoples and the agent must not be influenced by
coercion.20 Furthermore, it is imperative during the negotiation
process that indigenous groups are made aware of their rights
over their ancestral lands, the risks associated with the project,
and the relationship between
their rights and their access to
natural resources, which the
community may be depen-
dent upon for sustenance.21
However, the process
of obtaining FPIC may con-
tain complicated obstacles,
making the procurement of
FPIC an arduous task for
transnational enterprises.22
For example, the process
of identifying the indig-
enous population that may
be greatly impacted by a
development project could
prove to be laborious and
time consuming and, even
after the group is identified,
the negotiation process may be riddled with difficulties.23 The
challenges encountered during the negotiation process can stem
from cultural beliefs that indigenous peoples maintain about
their territory. These beliefs may influence their perception of
foreseeable consequences. For example, the experience of indig-
enous inhabitants may hinder them from comprehending that a
river can run dry or that an industry’s activities could result in
the annihilation of a river, particularly if the rivers on their land
have always flowed generously for generations.24 Therefore, it
may be impossible to attain FPIC in contexts in which indig-
enous groups have never seen an example of a proposed project
or lack awareness of the potential consequences.
One proposed solution to this problem has been to uti-
lize videos to enable the group to envision what is proposed.
However, videos may also be insufficient, as they may not
capture the scale of the project adequately.25 Even if the group
has seen a road, it cannot be concluded that they understand the
scale and the implications of a proposed highway.26 Under such
circumstances, it may be necessary to provide transportation for
the indigenous group so that they can be taken to an area where a
similar project has been executed.27 They should also be granted
an opportunity to converse with the inhabitants within that area,
so that they can receive information about their personal experi-
ences concerning the completed project.28
Considering the obstacles that transnational enterprises
must contend with, it is essential to contemplate the benefits that
accrue when enterprises practice FPIC with fidelity. Businesses
are motivated by profits after all, whereas FPIC is most con-
cerned with empowering and protecting the poor and vulner-
able from exploitation.29 The application of the FPIC principle
by transnational enterprises has beneficial ramifications for the
companies–the states, and indigenous populaces.
In 2001, the Business and Industry Advisory Board to the
Organisation for Economic Co-operation and Development
stated that “companies cannot be required to resolve all the
world’s problems . . . they have neither the mandate nor the
organization to do so.”30
While there is some truth to
this statement, transnational
enterprises and corporations
are expected to respect human
rights.31 The UN Norms
on the Responsibilities of
Transnational Corporations
and Other Business
Enterprises with Regard to
Human Rights was approved
unanimously by the UN
Sub-Commission on the
Promotion and Protection
of Human Rights in 2003.32
When read together with the
interpretive guide of the sub-
commission, these norms
constitute an authoritative
guide regarding corporate social responsibility.33 In fact, they
represent the first set of “comprehensive human rights norms
specifically aimed at and applying to transnational enterprises
and other business entities.”34 The preamble of the UN Norms
on the Responsibilities of Transnational Corporations and Other
Business Enterprises with Regard to Human Rights stipulates
that, although states are primarily responsible for respecting,
protecting, and fulfilling human rights, “transnational corpora-
tions and other business enterprises, as organs of society, are
also responsible for promoting and securing the human rights
set forth in the Universal Declaration of Human Rights.”35
Therefore, transnational corporations and enterprises participat-
ing in extractive industries must be sensitive to human rights
issues, particularly when dealing with indigenous peoples and
local communities.36
The responsibilities of transnational enterprises to respect
human rights should not merely be regarded as an altruistic
obstacle to be overcome when establishing business operations
in another state. Rather, transnational enterprises’ adherence to
the FPIC principle benefits companies through the social license
to operate within or in proximity to indigenous communities.
FPIC requires that consent
must be freely given and
that the decision must be
made after indigenous
peoples have been educated
about the project.
392012–2013
The value of a social license must not be understated; its absence
can result in human and fiscal loss to the enterprise as well as
reputational damage.37
The Niger Delta in Nigeria is a consummate example of
mayhem in the absence of a social license. Political repression,
marginalization, land dispossession, and degradation of the
environment have incited a number of indigenous peoples of
the Niger Delta to join militant groups and to attack the workers
of oil companies.38 In 2006, one of the groups, known as the
Movement for the Emancipation of the Nigeria Delta (“MEND”),
gained international notoriety when it claimed responsibility for
the kidnapping of four foreign oil workers.39 MEND members
have even occasionally kidnapped the family members of oil
workers.40 The group claims its actions constitute an attempt
to obtain rights for local communities to participate in the oil
industry.41 The militants insist that they represent marginalized
communities that have been “alienated from the wealth of their
lands.”42 In addition, the Council on Foreign Relations has noted
that since 2006, MEND’s “attacks on oil pipelines and kidnap-
pings have reduced oil output in the Niger Delta by roughly one
third.”43 Nigeria is the fifth largest oil supplier to the United
States and, understandably, the U.S. government has expressed
concern about MEND’s capacity to unsettle global oil supply.44
Though MEND has garnered international attention
recently, protests in the Niger Delta are hardly a new occurrence.
Demonstrations commenced in the 1990s, initiated by members
of the Ogoni ethnic group, who were indigenous inhabitants of
the delta.45 The Ogoni people were vexed by the environmental
degradation of the delta as a result of oil operations and the lack
of economic development in their communities.46 The Movement
for the Survival of the Ogoni People (“MOSOP”) was the first
militant group in the delta to gain international attention.47 Led
by Ken Saro-Wiwa, they campaigned in a non-violent manner
against the operations of Royal Dutch/Shell that contributed to
the deterioration of their environment whilst their community
derived no monetary benefit.48
The efforts of MOSOP led Shell to cease operations in
Ogoni in 1993.49 However, allegations abounded that the
Nigerian government, backed with monetary support from Shell,
utilized deadly force against the Ogoni people throughout the
1990s.50 Furthermore, Saro Wiwa and eight other MOSOP
members were executed in 1995 by Nigeria’s military regime.51
The relatives of the executed MOSOP members filed a lawsuit
against Shell in 1996, suing Shell for their wrongful deaths. After
over a decade of litigation and reputational damage, Shell agreed
to pay $15.5 million to the families of the victims in 2009.52
When the African Commission on Human Rights delivered its
judgment concerning the Ogoni case in 2002, it highlighted the
importance of FPIC.53 The Commission noted that throughout its
dealings with oil consortiums, the Nigerian government failed to
involve the people of Ogoni in matters that were critical to their
region, Ogoniland.54 Additionally, the Nigerian government had
infringed upon the right of the Ogoni people to freely dispose of
their natural wealth and resources by issuing oil concessions on
Ogoni lands without consulting them.55
The conflict within the Niger Delta demonstrates that when
states do not esteem human rights and allocate rights to com-
panies which operate in those indigenous territories, companies
can share the burden of quelling the resulting social unrest. In
addition, this political and social climate may serve to undermine
the investments made by an enterprise in a particular territory.56
Adherence to FPIC, particularly in countries that voted for
the UN Declaration on Indigenous Peoples, lowers legal and
reputational risks in the long term for transnational enterprises.57
In fact, analysts have found the long term benefits derived from
the utilization of FPIC–such as the social license–outweigh the
obstacles oil and gas companies may encounter when seeking
public approval.58
FREE, PRIOR, AND INFORMED CONSENT AND
PROPERTY RIGHTS
Article 1 of the Indigenous and Tribal Peoples Convention,
1989, expresses the concept of indigenous and tribal peoples.
According to the convention, the former constitutes:
“[P]eoples in independent countries who are regarded
as indigenous on account of their descent from the pop-
ulations which inhabited the country, or a geographical
region to which the country belongs, at the time of
conquest or colonization or the establishment of pres-
ent state boundaries and who, irrespective of their legal
status, retain some or all of their own social, economic,
cultural and political institutions.”59
Available data reveals that approximately three quarters
(900 million) of the world’s poorest populations (1.2 billion)
inhabit rural areas; about one third of those living in rural areas
are indigenous peoples, inhabiting at least 70 countries.60 In
most cases, the level of poverty in indigenous communities is
exceptionally high.61 To illustrate, 86.6 percent of the indigenous
peoples in Guatemala and 80.6 percent of indigenous peoples in
Mexico are impoverished.62 Therefore, this relationship suggests
that assisting indigenous peoples in overcoming poverty will
also significantly reduce the number of the world’s rural poor.63
The material vulnerability of indigenous peoples can be
attributed to their tendency to inhabit areas where property
rights are ill defined.64 Indigenously owned territories often offer
sources of power generation, water, minerals and resources that
may not be available elsewhere within the state.65 Their ter rito-
ries may also present investment opportunities in ecotourism and
lumbering.66 When these resources are exploited in a manner
that degrades the environment of the territories they rely on for
sustenance their vulnerability is heightened.67
The FPIC principle provides indigenous peoples with a
measure of protection from imposed development and envi-
ronmental degradation. However, the protection and material
empowerment of indigenous peoples is dependent upon govern-
ment and corporations’ adherence to FPIC, the attainment of
collective land ownership, the characterization by participatory
mapping of territorial boundaries, and the legal demarcation of
land.68 In particular, the lack of legal ownership often causes
40 SUSTAINABLE DEVELOPMENT LAW & POLICY
indigenous communities to lose control over their ancestral ter-
ritories because it permits governments to utilize those lands for
development projects and to grant the property rights to foreign
companies. The Endorois indigenous community in Kenya69 is
an example of the former while the Saramaka, a tribal commu-
nity in Suriname, provides a point of reference concerning the
latter point.70
The Endorois community occupied their territory for over
300 years while the Saramaka have exercised control over their
territory since the 17th century.71 Notwithstanding, neither
community petitioned their respective governments for formal
recognition of the groups’ land ownership until they lost control
of their properties and their way of life was disrupted, prompting
legal recourse. However, when transnational enterprises adhere
to FPIC, they have the potential to catalyze the attainment of
formal property rights by indigenous peoples and this could
potentially strengthen property rights within the state.
The term “property rights” has been defined in a number
of ways.72 A definition proffered by Armen, Alchian and Harold
Demsetz in 1972 will suffice for the purpose of this discussion.
Their definition is comprised of three components the right to
control, to derive income from, and to transfer the resources
located on one’s property.73 It is difficult for indigenous com-
munities to strive to attain these rights because in most instances
the exact parameters of their territories are not known.74
Government maps “often do not reflect the precise traditional
land usage of indigenous peoples.”75 Therefore, before embark-
ing on the exploration stage, prudent enterprises that intend to
adhere to FPIC should retain the services of a social geographer
or other professionals that have intimate knowledge of land
use by indigenous groups.76 This will enable the transnational
enterprise to determine the precise indigenous group it ought to
consult.
The efforts of enterprises to determine property boundaries
could produce the evidence indigenous groups need to legally
claim and subsequently establish property rights.77 For example,
Western Mining Corp Ltd. in the Philippines utilized the ser-
vices of archeological and ethnographic teams for the purpose of
ascertaining the land that belonged to indigenous peoples.78 The
corporation’s determinations assisted the indigenous populace
when they sought title to their land because the results provided
clarity regarding the area’s parameters.79 Additionally, the ben-
efits for the enterprises of undertaking this process are twofold;
not only do adherents earn the trust of the community, but they
also create a legally unambiguous climate of operation for the
duration of their tenure in that state.80
CONCLUSION
Amartya Sen argued, “[t]he regions of the world are more
interlinked now than at any other time in history.”81 As a result,
land development is not solely influenced by governments, but
also by transnational enterprises, as they are among the sig-
nificant drivers of globalization.82 However, at the heart of the
concept of free, prior, and informed consent is the idea of self-
determination. The principle has far reaching implications in the
context of environmental justice while also enabling indigenous
communities to attain property rights and to overcome economic
marginalization and poverty.
The application of FPIC is beneficial for states, transnational
enterprises, and indigenous peoples. Shell’s involvement in the
Niger Delta exemplifies the burdens and consequences incurred
when corporations fail to adhere to the FPIC. Transnational
enterprises employing FPIC will be protected from the ire of
indigenous peoples constantly exposed to the dichotomy of
mineral wealth, environmental degradation and human poverty.
Further, by acquiring a social license, transnational enterprises
preserve their reputation and avoid their entanglement in human
rights abuses.
When properly applied, the FPIC principle plays a role in
reducing the effects emanating from forced relocation, such
as poverty and economic marginalization, and provides vital
support to the fight for environmental justice. The increasing
prominence of FPIC and the examples herein highlight the
wealth of factors that impact human development, such as local
governance, environmental protection, justice, trade, and human
rights while also illustrating the principle’s importance as an
essential mechanism in a highly globalized world.
Endnotes: Free, Prior, and Informed Consent: Implications for Transnational
Enterprises
1 See Kathryn Gordon, OECD, Multinational Enterprises in Situations of
Violent Conflict and Widespread Human Rights Abuses 3 (May 2002), http://
www.oecd.org/dataoecd/46/31/2757771.pdf; see also IAN GOLDIN & KENNETH
REINERT, GLOBALIZATION FOR DEVELOPMENT 59 (2006).
2 Helen Tugendhat & Valerie Couillard, Forest Peoples Programme; Jeremie
Gilbert & Cathal Doyle, MIDDLESEX UNIV. BUS. SCH., Business, Human Rights
and Indigenous Peoples: The Right to Free, Prior, and Informed Consent 1
(2010), http://www.forestpeoples.org/sites/fpp/files/publication/2010/10/ukgovt-
fpicsubmissionmay09eng.pdf.
3 Robert Goodland, Free Prior Informed Consent and the World Bank Group,
SUSTAINABLE DEV. L. & POLY, Summer 2004, at 66, http://digitalcommons.wcl.
american.edu/cgi/viewcontent.cgi?article=1381&context=sdlp.
4 Environmental Justice, THE CAL. ENERGY COMMN, http://www.energy.
ca.gov/public_adviser/environmental_justice_faq.html.
5 Tugendhat & Valerie Couillard, supra note 2, at 2; Article 1 International
Covenant on Civil and Political Rights 1976 http://www2.ohchr.org/english/law/
cescr.htm.
6 Patrick Anderson, Free Prior Informed Consent in REDD 71 (Feb 2011)
http://www.recoftc.org/site/uploads/content/pdf/FPICinREDDManual_127.pdf.
7 AMARTYA SEN, DEVELOPMENT AND FREEDOM 4 (1999).
8 Convention No. 169 http://www.ilo.org/ilolex/cgi-lex/ratifce.pl?C169.
9 AMY K. LEHR & GARE A. SMITH, IMPLEMENTING A CORPORATE FREE, PRIOR AND
INFORMED CONSENT POLICY: BENEFITS AND CHALLENGES 11 (Foley Hoag 2010).
continued on page 67