CHAPTER 9 USE OF ROCKY MOUNTAIN MINERAL LAW FOUNDATION'S FORM 5 IN CIVIL LAW JURISDICTIONS--WHAT TO WATCH OUT FOR
| Jurisdiction | Derecho Internacional |
USE OF ROCKY MOUNTAIN MINERAL LAW FOUNDATION'S FORM 5 IN CIVIL LAW JURISDICTIONS--WHAT TO WATCH OUT FOR
Shareholder
Parsons Behle & Latimer
Salt Lake City, UT
Carlos Vilhena
Partner
Pinheiro Neto Advogados
Brasilia, Brazil
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R. CRAIG JOHNSON is a Shareholder with Parsons Behle & Latimer in Salt Lake City. Mr. Johnson is a shareholder in the firm's Corporate and Environmental, Energy & Natural Resources departments and concentrates his practice on mergers, acquisitions, mining law and related transactions. Before joining Parsons Behle & Latimer, Mr. Johnson served as general counsel for Rio Tinto in the United States and South America, where he was responsible for legal matters including mergers, acquisitions and divestitures. Prior to that he served in the capacities of legal head of Rio Tinto's Copper & Diamonds Product Group and as V.P. of legal for Rio Tinto. Before working at Rio Tinto, Mr. Johnson handled legal affairs for Resolution Copper Company. From 1994 to 2007, he was a shareholder at Parsons Behle & Latimer where his practice emphasized international and domestic natural resources projects in North America and Latin America including mining, commercial and finance law.
CARLOS VILHENA is a Partner at the law firm of Pinheiro Neto Advogados, in Brasilia, Brazil. In recent years, Mr. Vilhena has given legal advice for a large number of clients, including major and junior mining companies, in all areas related to the mining sector, including policy, regulatory, M&A, land, community relations, infrastructure, indigenous populations, processing, sales, tax, environment, power, contracts, corporate, financing and litigation. For many years he has been appointed as one of the top practitioners in Brazil for mining legal expertise by The International Who's Who of Mining Lawyers published by Who's Who Legal, as well as the leading mining law practitioner in Brazil by the Latin Lawyer. In 2011, Chambers Global recognized Mr. Vilhena as the one of the most reputed mining lawyers in Brazil. Mr. Vilhena acts as the International Affairs Officer of the Brazilian Mining Association - Ibram. He also acts as Secretary of the Mining Committee of the Section on Energy, Environment, Natural Resources and Infrastructure Law of the International Bar Association. He has been an Independent Director of TriStar Gold, Inc. since June 23, 2011. Mr. Vilhena holds an LLM Degree in Natural Resources Law from the Centre for Energy, Petroleum and Mineral Law and Policy at the University of Dundee, Scotland and an LLB in Law from the University of Brasilia Law School.
DISCLAIMER: This paper, the attached appendices and any presentations related to it, was prepared as an introduction to the basic concepts of law and is summary in nature. The information contained herein, therefore, is general and is not to be considered or relied on as legal advice or legal opinion. It is not intended to provide a complete analysis of the matters covered, and there are potentially important exceptions and qualifications that are not reflected herein. Any sample provisions contained herein are intended only to serve as examples of hypothetical provisions and should not be relied on as applicable to a particular transaction. This paper, including any presentations related to it, does not create either an attorney-client relationship or an attorney-client privilege.
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TABLE OF CONTENTS
I. GENERAL.
II. OVERVIEW OF THE CIVIL LAW SYSTEM.
A. Introductory Remarks
B. Historical Origins of Civil Law
C. Definition
D. Convergence?
III. OVERVIEW OF THE COMMON LAW SYSTEM.
A. Definition.
B. Development of "Common Law".
C. Distinction with the Civil Law.
IV. ORIGIN AND DEVELOPMENT OF "FORM 5".
A. Introduction -- Evolution of a Mining Project.
B. Types of Common Law Exploration, Development Agreements.
1. Common Law Joint Ventures.
2. Earn-In.
3. Limited Liability Company Model.
4. Form 5.
5. Form 5 LLC Variants.
V. ANALYSIS AND KEY ISSUES OF "FORM 5" UNDER CIVIL LAW.
A. General.
B. "Synthetic" Form 5.
C. Key Issues.
1. Form of Entity.
2. Mining Tenures.
3. Dilution and Adjustments of Interests.
a. Deemed Value
b. Normal Dilution
c. Default Dilution
d. Forced Resignation
e. Civil Law Differences
4. Fiduciary Obligations to Company and to Members.
5. Manager's Authority and Liability.
6. "In-Kind" vs. Profit Company.
7. Force Majeure.
8. Definitions
9. Interpretation
VI. CONCLUSION.
APPENDIX I
APPENDIX II
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I. GENERAL.
The Rocky Mountain Mineral Law Foundation, based in Denver, Colorado, is a focal point for many of the forms and templates used in North American mining ventures. One form, called Form 5, has been developed extensively over the years and now forms the core for most of the mining deals in North America. To aid the Civil Law practitioner, this paper will highlight some of the key points and expectations that exist under Form 5, and how those can be adapted or distinguished in the Civil Law system.
In 2012, at the Fifty-Eighth Annual Institute meeting, a paper was presented entitled "Form Cinco Revisited: A Brazilian Case Study" by Peter L. Webster and Carlos Vilhena, a co-author of the present paper. That paper is an excellent discussion of certain of the topics that are somewhat further elaborated or discussed in the present paper and the read is encouraged to review that paper for additional understanding of this topic.1 While some of the topics in this paper overlap, the authors have attempted to further elaborate some of the issues and to raise some additional issues in the application of Form 5 in the general Civil Law context.
II. OVERVIEW OF THE CIVIL LAW SYSTEM.
A. Introductory Remarks
The first thing to bear in mind when trying to differentiate the Civil Law from Common Law is that there is just not one system of Civil Law. In general, when Common Law scholars refer to a Civil Law system as opposed to a Common Law System, they usually mean the legal systems of Western Europe and Latin America. However, the so-called Civil Law is a family of legal systems, with historical origins in Roman Law. Civil Law scholars tend to makes distinctions between the different families, such as the Romanic, Germanic or the Nordic family.
It is important to highlight, as an example, that there are significant differences of legal and judicial interpretation methods between the Romanic and the Germanic families. Hence, it is hard to state that there is a single, coherent "Civil Law system." It is true though that there are also similarities between the different families, the principal common feature being that they adopt civil codes.
Having said this, for the purpose of this paper we will refer to the different families as Civil Law in a broader sense.
B. Historical Origins of Civil Law
What is referred as the English term "Civil Law" is actually a translation of jus civile or Roman Law, an evolution from classical times to the Justinian's compilation in the mid 500's AD. From there, Roman law evolved from being oral, administered by nonprofessionals and applicable to a small part of the population, to being codified, administered professionally and valid universally.
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The establishment by Carlos Magno of a large and single landmass under the new Western Sacred Empire and the spread of formal legal education with the foundation of the first modern university in Bologna in 1174 AD, followed by Padua, Paris and others, helped shape a jus commune system in a common empire in Continental Europe.
In comparison with the English system, where due to the lack of formal education and incapacity to read at the time, lead to jury trials and oral pleadings, in the Continent the system evolved to be a highly intellectual one, a university scholarly law.2
The XVII century saw the jus commune come to an end, because of growing opposition between the different territories (what today is France, Germany, Spain and Portugal, for example), the 30 Year War (1618-1648) and the consequent birth of what we today understand as sovereign states.
Naturally, the rulers, or sovereigns, of these newly emerged states bestowed on themselves the right to create new laws for their respective jurisdictions. In doing so, they followed the Justinian model of encompassing, widespread and sound features when creating their own codes.
In the end of the XVIII century, the General Laws of the Prussia States were codified, under the orders of Frederik the Great; the Empress of Austria, Maria Theresa, directed the preparation of a code of all the lands.3
But the most significant event that influenced the shaping Civil Law as we know today was the French Revolution. The changes introduced by the Revolution set out the basis for what we today understand as Civil Law. New schools of law were created, the judiciary was completely renovated and the legal profession was reorganized.
The three level of courts system that we see in most of the Civil Law jurisdiction counties comes from this time. Those three levels are "first instance" judges that are spread around the territory, "regional courts of appeal" to review first instance decisions and a "higher court" to uniformly apply the law.
Napoleon's Code Civil des Français, which once again emerged from the Roman model of power to the people, became the true template for any modern codified system. It dramatically influenced the legal systems of many countries, like Italy, Greece, Spain, and many Latin American nations, as well as of countries in Africa and Asia.
The Code Napoléon also led to a myriad of codes, like the penal code, the commerce code, the code of civil procedure and the code of criminal procedure, among others.
German Civil Law, however, initially went back to the roots of classic Roman law, before...
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