Box 3.Using the IISD Model Clauses as a “tripartite” (or three-way) agreement
The IISD Model Clauses can be adapted and used in contexts where the party granting rights over the land to the investor (i.e., the grantor) is not the state.
Where the grantor is, for example, a group of local community landowners or legitimate tenure rights holders, the Model Clauses envisage a tripartite agreement between the grantor, the investor, and the “authority” (a government institution responsible for overseeing the agreement).
Even when the grantor is not the state, the body of best practice guidance on which the Model Clauses are based still foresees a significant role for the state in a responsible agricultural investment project. This includes reviewing and approving impact assessments, overseeing project implementation, and co-financing key elements for project success, such as infrastructure and training. These are roles that will be challenging for a grantor who is not a government institution to undertake, hence the inclusion of “the authority” as a party alongside the grantor in a tripartite, or three-way, contract with the investing company.
Where the grantor and the authority are one and the same (i.e., the government), then one of these two terms should be adopted and used consistently throughout.
In many countries, most land is owned by the state, or grants of rights over large amounts of agricultural land can only be made by the state.1 In light of this, the IISD Model Clauses are primarily designed to inform the drafting of investor–state contracts. These are contracts in which a “grantor,” that is, a government entity, grants rights to private (often foreign) investors for the large-scale and long-term lease of agricultural land. But the Model Clauses have been designed so they can be adapted and used by other types of grantors, for example, legitimate tenure rights holders, members of the local community, or private landowners (for more on this use case, see Box 1).
It is hoped that the IISD Model Clauses will support agricultural investment negotiators, state lawyers, and policy-makers in helping achieve their country’s sustainable development objectives for investment in agriculture and food systems.
- 1
International Institute for the Unification of Private Law and the International Fund for Agricultural Development. (2021). Legal guide on agricultural land investment contracts. Paragraph 2.22, p. 37.