CHAPTER 12 PERSONNEL ISSUES IN INTERNATIONAL MINERAL TRANSACTIONS
| Jurisdiction | United States |
(Feb 1995)
PERSONNEL ISSUES IN INTERNATIONAL MINERAL TRANSACTIONS
Fulbright & Jaworski L.L.P.
Houston, Texas
TABLE OF CONTENTS
Background and Context
International Labor Law
Extraterritorial Application of United States Employment Laws
Expatriate Compensation, Benefits, and Taxes
Expatriates: Selecting, Training, and Keeping
Women Expatriates: Dispelling the Myths
Threats and Solutions for Employee Security Overseas
Host Country Labor Law and Human Resources
Conclusion
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BACKGROUND AND CONTEXT
I. Introduction to Written and Spoken Presentation.
A. Written Presentation.
1. This seminar paper combines research, personal interviews, and experience, both the author's and, more importantly, others.
2. The topic's nature commanded more research in business, trade, and professional journals than in law reviews and more interviews with human resource specialists than lawyers.
3. The best ideas for the energy and mining industries were taken from various articles and, if possible, reviewed with those human resource specialists.
4. The names, addresses, and telephone number of helpful sources are included. The exhibits to the seminar paper contain additional information about helpful sources.
B. Source and Reading Lists.
1. The seminar paper cites over one hundred recent articles, and those articles often contain footnotes and bibliographies citing many other sources. The articles cited in the paper are mostly practical ones from business, trade, and professional journals as well as scholarly business and social science research.
2. Ideas from various articles were selected, combined, and sometimes changed to reflect input from the interviews. Rather than footnote every idea, a "Source and Reading List" appears at the end of each major topic.
3. Certain special interest journals have made repeated contributions to their fields, and, therefore, to this seminar paper. They include the Journal of International Business Studies, Compensation and Benefit Review, Benefits and Compensation International, HR Focus, HR Magazine, Security Management, Risk Management, Business Insurance, Training and Development, and The Oil and Gas Journal.
C. Spoken Presentation. The spoken presentation will include a brief, practical, and cost conscious personnel business plan for a hypothetical domestic oil and gas company — Allied Resources and Technology, Inc. ("ART") — that would like to do business overseas. Today, ART has only a domestic business strategy. It explores mainly by taking farmouts from major companies in mature Gulf of Mexico blocks. It also buys existing onshore production in small Texas and
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Lousiana fields. ART believes it can master the technical aspects of overseas projects, which sometimes now include projects in mature areas and marginal field offerings, but is concerned about operating costs in such a new environment. ART shares the view of Dallas oilman Ray E. Hubbard that the oilman without a lot of money has to be a lot smarter than the oilman with a lot of money. Charlton, Texas Wit & Wisdom (1990) at page 59.
D. Thanks. Thanks to all the people in all the companies, law firms, and accounting firms that were pestered between Thanksgiving and New Year's Day. Of course, thanks to all the authors of all the articles cited in this paper. Special thanks to each of the following for permission to use the exhibits to this paper.
1. James M. Theis of ARCO for permission to reprint the ARCO International Oil & Gas Company's booklet: "Global Compensation Plan for U.S. Expatriates." See Exhibit A.
2. Robert Palmquist, Partner, Arthur Andersen & Co. (Houston) for permission to reprint its handbook on expatriate taxation. See Exhibit B.
3. Sunita K. Singh, President, World Wise, Inc., for permission to reprint the company's description of cross-cultural resources. See Exhibit C.
4. Debra Kelly of Prudential Resources Management for permission to reprint a description of that company's relocation services. See Exhibit D.
E. Disclaimer. Neither the paper nor the presentation constitutes the views of Fulbright & Jaworski. Nor do they constitute the views of any person, company, law firm, or accounting firm that allowed interviews and furnished materials. Neither the paper nor the presentation should be considered legal, tax, accounting, or business advice. Although Arthur Andersen, ARCO, World Wise, and Prudential were interviewed, they represented only a few of many companies helping, even though they furnished the exhibits. Because human resource matters are often proprietary, the seminar paper is based, as much as possible, on published works. Ideas in the seminar paper should not be considered any ideas except the author's (even where it appears the author could not possibly have had the experience to produce such a good idea unless someone gave it to him) or the sources cited in the Source and Reading List.
F. Comments. Because seminar papers are often updated, any corrections, suggestions, or experiences would be appreciated and can be addressed to Donald P. Butler, Of Counsel, Fulbright & Jaworski L.L.P., 1301 McKinney, Suite 5100, Houston, Texas 77010-3095 (Telephone: (713) 651-8207 and Facsimile: (713) 651-5246).
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II. Introduction: Distinguishing Personnel Issues In Mineral Transactions.
A. Consumer product sales and manufacturing companies as well as consumer service companies ("Product and Service Concerns") will locate their employees in cities because cities represent both a market and a labor resource. Mineral exploration, development, and production concerns ("Mineral Development Concerns") must usually operate in remote locations or at least areas where substantial development has not occurred.
B. Mineral Development Concerns are wasting asset businesses that must replace their reserves, and, unlike Product and Service Concerns, how long Mineral Development Concerns will remain in any country depends on many factors unrelated to employee performance, marketing success, or financial rewards. It depends on its success in replacing reserves rather than on its success in selling a product.
C. Product and Service Concerns may enter more developed countries because they offer a greater chance of marketing success and financial rewards. As wasting asset companies needing to replace reserves, Mineral Development Concerns will enter less developed and even politically unstable countries if they have mineral resource potential and lack the technology and financial resources to develop those resources.
D. Unless it builds a manufacturing plant, Product and Service Concerns may not require significant capital investment, but Mineral Development Concerns usually make significant capital investments, especially if they are successful.
E. Product and Service Concerns do not normally play a significant role in developing a country's mineral resources. Countries may link natural resource uses and environmental concerns, such as habitat destruction, that may not be a significant factor with most Product and Service Concerns. Because Mineral Development Concerns deal with a nation's natural resources, they have greater political visibility than most Product and Service Concerns.
F. Product and Service Concerns will emphasize marketing skills over technical and management skills while Mineral Development Concerns will emphasize technical skills over marketing and management skills because of the complex nature of mineral exploration, development, and production and the major investment required if production is obtained.
G. A Product and Service Concern usually has more control over staffing at any particular time than a Mineral Development Concern because a Mineral Development Concern's need for expatriate, third-country national, and national employees (or independent contractors) is driven by the work to be done at a particular time rather than by product supply and market demand.
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H. A Mineral Development Concern usually has closer ties with a national oil or mining company or foreign energy or mining ministry than a Product and Service Concern is likely to have with any national partner or national regulator. These ties mean more host country influence in employment matters.
INTERNATIONAL LABOR LAW
III. Employment as a Human Rights Issue.
A. A body of international law declares racial and other forms of discrimination unacceptable. For an extended discussion of this body of international law, see Linda Maher, Drawing Circles in the Sand: Extraterritoriality in Civil Rights Legislation after Aramco and the Civil Rights Act of 1991, 9 CONN. J. INT'L. L. 1 (1993) (hereinafter "Maher 1993"). This is one of a few law review articles that have extended discussions of both the development of the law and its current status after the Civil Rights Act of 1991. In addition, the International Labor Organization or ILO has been active in this area. The international agreements that concern labor matters include the following:
1. International Convention on the Elimination of All Forms of Racial Discrimination;
2. United Nations Charter;
3. International Covenant on Civil and Political Rights;
4. International Covenant on Economic, Social and Cultural Rights;
5. International Labor Organization's Employment Policy Convention;
6. International Labor Organization's Employment and Occupation Convention; and
7. American Convention on Human Rights.
B. In addition, a body of international law protects the rights of women in labor matters:
1. Convention on the Political Rights of Women;
2. Inter-American Convention on the Granting of Political Rights to Women;
3. United Nations Charter;
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4. Convention on the Elimination of All Forms of Discrimination Against Women;
5. International Labor...
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