What this chapter covers:
Successful design and use of resource utilization and goods and services procurement contracts depend on the existence of both coherent forestry policy and an effective and efficient legal system, including laws and regulations which define clearly the responsibilities and authority of government agencies. This chapter discusses the role of these legal instruments in the management and administration of public forest lands, including the design and use both of resource utilization and of goods and services procurement contracts.
The chapter begins with a discussion of the framework of legal systems. This is followed by an analysis of the individual components of the legal system and the role of governments in the promulgation, application, enforcement and revision of statutes, laws, regulations and other legal instruments.
In most countries, legal systems are made up of six components which must function together for the successful execution of public policy. These six components are:
Legislative bodies comprise the elected and appointed bodies of representatives at the federal, state or provincial and local levels. These legislative bodies propose, debate and create laws relating to a wide range of public policy issues. This includes laws that define the responsibilities and authority of government agencies in writing, negotiating, signing, supervising and enforcing contracts. These laws may result from a formal policy development process, such as that described in the preceding chapter, or may come directly from the policy agenda of the cabinet, ministers, ministries, individual legislators, or from special interest groups.
The executive comprising the president, or prime minister, the cabinet, and ministers of ministries or departments will often initiate legislation to be debated, voted on and passed by the legislature. The executive may also legislate directly by means of presidential or ministerial decrees.
Ministries, departments and other government agencies may initiate legislation following a policy process, such as described in the previous chapter. Sometimes they may bypass the policy process, perhaps in response to an urgent need for action.
Government ministries, departments or agencies are normally charged with writing regulations for laws passed by legislative bodies, presidential and ministerial decrees. Regulations usually have the full force of the law.
Enforcement procedures and the agencies involved will vary widely among countries. Enforcement procedures and agencies may include a wide range of organizations and personnel depending on the type of law and penalties for non-compliance. Enforcement may be carried out by staff of government administrative agencies (e.g. the forest service, forestry department or forest directorate), forest inspectors, resource officers, environment conservation officers, the police, military, or by private companies under government contract. They may undertake a variety of activities to encourage compliance, apprehend and/or sanction violators, and collaborate with the courts in prosecution. Enforcement procedures are discussed in detail in Chapter 10, including issues of contract compliance and the contracting out of enforcement services.
The judicial system includes appointed court officials such as judges, government lawyers, clerks, bailiffs, juries and associated staff involved in the prosecution of accused offenders, and the sentencing of those found guilty in criminal law cases, or the settling of claims in civil law cases.
The courts play two important roles. First, they decide on the constitutionality of new laws, acting as a check on legislative bodies. This constitutional role indirectly affects the design and application of contracts by defining government responsibilities and authority to grant contracts. Second, the courts interpret laws and regulations by hearing specific cases and through their decisions establish precedents that define the limits of applicability of the laws and regulations. They also establish the level of deterrence and penalties by means of fines, prison terms and other sentences. The second role has a more direct effect on the design and use of contracts by establishing the effectiveness of contract penalty provisions as deterrents to breaches of contract.
An efficient and effective legal system depends on each of these components operating effectively and in coordination. Legislative bodies and government agencies when drafting laws, regulations, contracts and other legal instruments must be cognizant of the monitoring and enforcement procedures required, the conditions for successful prosecution of offenders, and the penalty provisions required to encourage compliance. Enforcement agencies must understand the intent of the laws, regulations and other instruments, and the desired behaviour intended. They will also need the skills and knowledge required for enforcement and, when necessary, successful prosecution (see Chapter 10). Similarly, the courts must understand the intent of the law for successful prosecution, the setting of fines and other penalties, and for prosecution to serve as a deterrent. Finally, the laws and regulations themselves must be unambiguous, comprehensive and clear if they are to provide the proper incentives for performance and contract compliance.
The various legal instruments that apply to forestry and conservation are categorized into six levels and discussed below, along with examples of each. In the sections that follow, each of the six levels is discussed in turn. The implications of each for the design of contractual arrangements, resource utilization contracts and procurement contracts are discussed.
The activities of countries are to a certain extent constrained by international law, by international bodies such as the World Trade Organization (WTO), and by international and regional agreements among countries which function as laws. WTO, the successor to the General Agreement on Tariffs and Trade (GATT), is the legal and institutional foundation of the multilateral trading system among countries. It regulates international trade relations between countries, as well as influencing and constraining domestic investment policies and internal trade policies.
The Convention on Biological Diversity established at the 1992 Rio “Earth Summit”, commits those signing countries to conserve biological diversity within their jurisdiction. Under this agreement, many countries are developing national strategies, plans and programmes for the conservation and sustainable use of biological diversity.
Other examples of international agreements include the International Tropical Timber Agreement (ITTA), and the Convention on International Trade in Endangered Species of Wild Flora and Fauna (CITES). Under the CITES agreement, for example, countries have had to develop policies to control and manage the harvesting of mahogany. Examples of regional agreements among countries include the treaty for Amazonian cooperation, the ASEAN agreement on the conservation of nature and natural resources, and the convention on the conservation of nature in the South Pacific.
The constitution is the highest and most formal level of a country’s legal system. The constitution prescribes the role of the different levels of government and their powers; central, regional and local governments, the relationships between them, and assigns responsibilities to each level. The constitution establishes and enumerates specific powers of the legislature, the executive and cabinet, and the judiciary.
The constitution establishes the basis for policies that directly or indirectly affect the management and use of forests on public lands. In Indonesia, Pancasila, the five philosophical principles of the 1945 Constitution, guide state policy and establish the basis for each five-year National Development Plan. In many countries, the constitution defines the ownership and legislative authority over natural resources, and therefore impacts directly on the design and application of resource utilization contracts. For instance, the Mexican Constitution states that, regardless of their land tenure, all forests belong to the nation (Castilleja, 1993). Other countries have similar legislation. Therefore, it is important that the national constitution establish an enabling environment for the sustainable use and management of public forest lands (Schmithüsen, 1995).
Statutory laws include statutes passed by national legislatures and in federal countries by state or provincial legislatures, and ordinances or by-laws passed by local governments (cities, towns, municipalities, etc.). In many countries, local governments are created by the national state or provincial governments. As a result, their ordinances or by-laws have to conform to the legislation of the higher governments.
Statutory legislation can address the full range of issues relating to public forest land, including how government contractual arrangements can transfer resource rights to private parties. Statutory legislation also establishes the responsibilities of ministries, departments and governmental officials in management of public forests. It also establishes the basic fiscal and managerial arrangements for forest management and administration, criminal acts relating to public lands, taxation and incentive programmes. Forest legislation should clearly define the forest management and administration arrangements in integrated rural development, multiple-use forest management, community and village forestry, etc. (Schmithüsen, 1986).
Criminal laws deal with crimes against the state and against individuals. Criminal laws are often enacted by the federal/national parliament or legislature and contained in a criminal code. These laws are designed both to denounce and punish wrongful behaviour and to deter people from committing crimes or engaging in behaviour that presents a serious risk of harm to individuals, the public, public property or institutions. Forestry examples include illegal cutting of timber, non-payment of fees or royalties, illegal timber marking (considered theft) and setting incendiary fires (arson). Punishment for criminal offences is usually imprisonment, fines, or both.
Criminal codes contain many crimes, but they constitute only a small number of all forestry offences. Most forestry offences are regulatory offences under legislation enacted by the national (federal) parliament, states or provinces and local governments. Regulatory offences in forestry include failure to comply with a management plan, environmentally damaging road construction or logging operations, cutting timber outside licence boundaries, transportation of timber without a permit, and non-compliance with health and safety regulations. The punishment for regulatory offences is usually a fine, but may, in some cases, include imprisonment. The accused is frequently a corporation, which may only be fined but not imprisoned. In criminal offences, senior executives may be held criminally responsible and imprisoned.
A contract is an agreement between two or more legal entities (individuals, partnerships, corporations or organizations) to undertake or engage in a lawful activity. The agreement usually, but not necessarily, involves a financial transaction or payment for a monetary consideration or value. As mentioned in Chapter 2, there are two general types of contract employed by governments in the management and administration of public forest lands: resource utilization contracts, contracts for the outputs of public forests (timber and non-timber forest products and diverse services); and procurement contracts, contracts for the supply of goods and services for the management and administration of public forests. Resource utilization contracts exist within the general framework of the national legal system, and thus are subject to other acts and regulations (Schmithüsen, 1977). The same applies to the granting of procurement contracts for goods and services. In general, contract law applies to any “sale or purchase of goods”, and thus would include, sales or purchases such as the sale of timber rights, logs, rights to non-timber forest products, ecotourism use rights in public forests, and carbon sequestering rights, the purchase of monitoring and inspection services, contracting for forest inventories, purchase of fire protection services, and the export and import of forest products.
Investment laws govern both foreign and domestic investment. They provide benefits and incentives for investment, or place restrictions and conditions on investments. Investment incentives may include such things as tax holidays, or tax reductions on income taxes or excise taxes, duty-free import of equipment and supplies, duty-free export of products, waiver of exchange control restrictions, ability to repatriate capital and profits, and guarantees against expropriation or nationalization. Restrictions and conditions on investments may include requirements to provide employment opportunities for the local population, requirements to provide training programmes, or requirements to provide local infrastructure such as roads, hospitals or clinics.
To implement investment programmes in the forestry or other sectors, the government must be able to evaluate the investment in terms of its effect on that sector and on the national economy, and to evaluate the potential response of the company.
Forest laws govern the management and utilization of forest lands and forests. They stipulate methods of allocating rights to forest resources on public lands, general forest tenure provisions and the contractual arrangements for allocating forest rights. Forest laws govern forest fees and royalties for public timber and other forest products and services, the methods of payment, etc. They cover the silvicultural requirements for harvesting and reforestation, forest protection provisions, offences, penalties and appeal procedures. Like other legislation, forest law must be written in clear terms to ensure comprehension and facilitate compliance. Forest regulations spell out in detail the legal, administrative, technical and financial requirements for the various types of forest contract.
Forest legislation should incorporate the following elements:
Environmental laws are intended to promote ecological responsibility and sustainability in the use and management of the natural environment. Environmental legislation based on “command and control” of private sector activities and liability for damage to the environment is no longer sufficient. Environmental legislation, regulations and operational procedures need to also include performance incentives, economic instruments, prices and taxes.
The above list of the types of legislation is not exhaustive. There are other laws important to forestry, what de Montalembert and Schmithüsen (1993) referred to as “functional forest laws”. These include a wide range of laws and regulations that have an indirect impact on forest conservation and development, and on the design and implementation of forest contracts. Such laws may include legislation in the areas of taxation, agriculture, water protection and management, parks and protected areas, rural development, land use planning, fisheries, range management and animal husbandry, and labour legislation.
Presidential or Royal Decrees, as well as ministerial decrees, are directives from the head of government or cabinet ministers on how forests are to be managed and utilized. Such decrees carry the full force of law and are the key legal instruments of forestry policy in many countries. For example, in Indonesia many key components of forestry policy and legislation, both on forest management and on forest concessions, are contained in presidential decrees and decrees of the Minister of Forests.
In Thailand, a Royal Decree was issued in 1992 suspending all logging concessions (Chaiyapechara, 1993, in FAO 1993). This suspension of logging was intended to preserve Thailand’s forest from deforestation, but encouraged illegal logging in Thailand, and led to deforestation in the neighbouring countries of Laos, Cambodia and Myanmar and the smuggling of logs.
Forest regulations provide the administrative means for implementation of the Forest Act. They provide the legislated administrative rules, procedures and requirements for administration and management of forests. Regulations have the full force of legislation. They prescribe how forest ministries operate and manage forests. They have a major impact on forestry policy. Regulations, like laws, define both incentives to encourage compliance with the regulations and penalties for non-performance to discourage actions that are counterproductive.
The initial set of regulations and major revisions may be passed by the legislature. Changes or amendments are normally approved and passed by Cabinet, or by the Minister of Forests. Writing or amending regulations is usually done by bureaucrats within the appropriate ministry with the assistance of the legal department. A clear separation of provisions between laws and regulations is important for effective forestry legislation, but it places special burdens on the drafting process (Cirelli, 1993). Generally, the law should set out the basic requirements to implement the established policy. The administrative rules for implementation of policy and forest management practices are likely to need frequent revisions, so procedures for revision should be included in the regulations or in ministerial orders.
Although not formal legal documents, operative policies and procedures manuals establish operational procedures for the day-to-day administration and management of public forests and forest contracts. Forest management and silvicultural procedures and prescriptions are covered in forest management operative policies and procedures manuals. These elaborate on the forest regulations, but must be consistent with the regulations.
Resource utilization contracts and procurement contracts are important legal instruments that represent the means of assigning obligations and responsibilities between the government owner and the private sector. They may be used to delegate much of the development and management of public forest lands to private licensees and can have a significant effect on how forest management is carried out. Resource utilization contracts and procurement contracts are discussed in detail in Part III, and particularly in Chapters 6, 7 and 9.
In designing resource utilization contracts and procurement contracts, it is important that the contract and the specific provisions be consistent with pertinent laws and regulations. Ministries and other government agencies should develop standard contracts and resource utilization agreements. These should be developed by a team which includes legal experts and administrative and technical bureaucrats.
Contract enforcement procedures involve legal instruments exercised by the forestry ministry and by the judiciary. Depending on the severity of the offence, ministerial or departmental staff may impose penalties in the form of fines for more minor offences. For serious offences, perpetrators are tried in courts. Issues related to enforcement are discussed in detail in Chapter 10, including factors that relate to the design and administration of forest contracts.
A clearly articulated forestry policy is a prerequisite for development and promulgation of coherent legal instruments, whether they are statutory laws, regulations, presidential or ministerial decrees, resource utilization or procurement contracts, or other legal instruments. Implementation of new or revised forestry policy will undoubtedly require writing or revising one or more laws, regulations or other legal instruments.
Major review and revision of legislation and the legal policy instruments may be carried out by a specially appointed task force involving legal experts in relevant areas (international, constitutional, contract, commercial, natural resource and environmental law), policy experts, and senior officials from the forest ministry and, where appropriate, related ministries. For less significant and a more regular review and revision of legal instruments, this may be carried out by a team of legal, policy and administration experts within the forest ministry.
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