Calls for the EU to help prevent conflict funded by exploitation and trade of minerals in Democratic Republic of Congo (DRC)

In 2010, the US Congress passed the Dodd-Frank Wall Street Reform and Consumer Protection Act, Pub. L. No. 111-203, 124 Stat. 1376 (2010) (Dodd-Frank). Section 1052 of the Dodd-Frank, which relates to ‘conflict minerals’, aims to prevent violence and violation of human rights that are funded by exploitation and trade of certain minerals (such as gold, columbine-tantalite, cassarite and wolframite – referred to as the ‘3TG’) in the DRC and surrounding countries. Section 1052 of the Dodd-Frank is seen by some as being flawed as (in their view) it unfairly stigmatises Central African states and requires companies to declare minerals as ‘not conflict free’ resulting in companies withdrawing from business.

Global Witness, an international organisation which investigates and campaigns to prevent natural resource related conflict, is now pushing the EU to implement legislation that builds on section 1052 of the Dodd-Frank. The proposed legislation would require companies doing business in the DRC and surrounding countries to conduct supply chain due diligence and meet the Organisation for Economic Co-operation and Development’s guidelines for Multinational Enterprises. This will ensure that companies only stop sourcing minerals from mines where human rights abuse is taking place, rather than excluding entire regions.

Herbert Smith Freehills Partner and Co-Chair of the International Bar Association CSR Committee, Stéphane Brabant, agrees it is time for change. ‘No company wants to be faced with allegations that its use of minerals has funded conflict and contributed to human rights violations,’ he says. ‘Such allegations would damage the reputation of the company and ultimately the success of the business […]. By being proactive, companies are better able to anticipate human rights issues and defend against allegations of complicity in abuses.’

To read the full article on the International Bar Association website, click here to be redirected.

For further information, please contact Stéphane Brabant, Partner, or Jay Leary, Partner, or your usual Herbert Smith Freehills contact.

Red tape reforms to assist mining industry in Victoria

The Victorian Government have announced a number of “red tape reforms” designed to reduce regulatory burdens on business in Victoria.

The mining industry will be impacted by four of these reforms:

• Native vegetation offsetting on public land: Currently native vegetation offsets for private land clearing can be sourced only on private land. The government reform will allow native vegetation offsetting on public land, making it cheaper and easier for businesses to meet their native vegetation offsetting obligations.
• Reduced rehabilitation bonds: Currently, rehabilitation bond requirements for mining licence or extractive industry work authority holders require the provision of 100% bonds upfront. Under the government’s reform, where the risk of default is low and additional liability to the Government is minimal, reduced rehabilitation bonds of up to 50% will be allowed during the start-up phase of new mining and quarrying projects. Further, as an alternative to bank guarantees, the government will accept a cash bond for individual bonds up to $10,000, reducing costs and barriers to entry.
• Streamlining of the return of bonds for land rehabilitation: Currently, the process for the return of rehabilitation bonds in the mining sector is protracted. The government reform will simplify the bond return process to ensure that bonds are returned as soon as possible following the successful conclusion of landowner consultation.
• Transition from paper-based to online administration of mining exploration licences: Currently, the administration of mining exploration licences is paper-based. The government reform will move mining application and reporting systems online. It will also enable online searches for existing licences and online applications for new licences.

While relatively limited in scope, these four regulatory reforms are likely to be welcomed by those involved in the energy and resources sectors in Victoria.

For further information, please contact Myra Stirling, Senior Associate or Liam Hickey, Solicitor, Melbourne, or your usual Herbert Smith Freehills contact.

Hong Kong: The new Hong Kong Companies Ordinance

Hong Kong’s new Companies Ordinance (Ordinance) will come into effect on 3 March 2014. The new Ordinance introduces a number of changes that impact, among other things, company meetings, resolutions, the execution of documents and communications with shareholders.

Key changes that will be introduced include:

• time periods for holding AGM’s will be required to be set by reference to the company’s accounting reference date,
• a company will be able to dispense with AGMs with unanimous consent;
• the threshold for demanding a poll will be reduced from 10% to 5% of members having the right to vote,
• general meetings will be able to be held at multiple locations,
• there will be clearer rights and obligations regarding proxies (including that all members will be allowed to appoint a proxy),
• a new statutory procedure for proposing, passing and recording written resolutions will be established;
• directors’ conduct that amounts to negligence, default, breach of duty or breach of trust will have to be approved by disinterested shareholders,
• the requirement for a mandatory company seal will be abolished;
• the indoor management rule will be codified, and
• new provisions governing communication to and from companies in electronic and hard copy form will be introduced (including provisions that set out deemed receipt).

In preparation, Hong Kong companies should:

• plan ahead for the next AGM to ensure that it is held in accordance with the Ordinance requirements;
• review their Articles of Association to assess whether any changes are desirable to take account of the new provisions in the Ordinance, and
• consider whether to continue to use the company seal and review internal controls and policies on execution of documents.

Please click here for the full report.

For further information, please contact Austin Sweeney, Partner, or your usual Herbert Smith Freehills contact.

Qld: Court of Appeal considers the meaning of ‘construction work’ under the BCIP Act

On 20 December 2013, the Queensland Court of Appeal delivered its judgement, finding for the appellant, in J & D Rigging Pty Ltd v Agripower Australia Ltd & Ors [2013] QCA 406.

The dispute arose out of a contract between the parties to dismantle a number of large treatment and storage tanks (Plant) on land subject to a mining lease near Cape York. The appellant, who was engaged to dismantle the Plant, claimed $3.1 million for the work it had performed. When the respondent did not pay the claimed amount, the matter was adjudicated pursuant to the Building and Construction Industry Payments Act 2004 (Qld) (BCIP Act). The adjudicator awarded the appellant an amount just over $2.5 million.

The respondent brought proceedings in the Supreme Court seeking to have the adjudicator’s decision declared void on the basis that the dismantling of the plant was not ‘construction work’ as defined in the BCIP Act and, therefore, that the adjudicator did not have jurisdiction to determine the dispute.

The Supreme Court held that the dismantling of the Plant was not ‘construction work’ under a ‘construction contract’ and consequently the adjudicator’s decision was void. In coming to that finding the Supreme Court noted:

•  the meaning of ‘construction work’ in section 10 of the BCIP Act includes ‘dismantling of buildings or structures, whether permanent or not, forming, or to form, part of the land’,
• ‘land’ in section 10 of the BCIP Act (which defines ‘construction work’) does not include mining leases,
• the Plant may have formed part of the mining lease, and
•  the Plant did not ‘form part of the land’ within the meaning of section 10 of the BCIP Act and therefore the BCIP Act did not apply.

The Court of Appeal unanimously overturned the Supreme Court’s decision which, in effect, resulted in the reinstatement of the adjudicator’s decision. Their Honours held that:

• the phrase ‘forming, or to form, part of the land’ in section 10 of the BCIP Act should be interpreted in accordance with its ordinary meaning which does not import the requirements of the law of real property (in respect of the ownership of things affixed to the land),
• while a mining lease may not be legally characterised as ‘land’, the actual land on which the building, structure or plant is affixed does not change its character by reason of the existence of a mining lease,
• section 10 simply requires consideration of the physical characteristics of the thing that has been (de)constructed or is to be (de)constructed and the thing’s relationship to the land which will determine whether it forms part of that land for the purposes of the BCIP Act, and
• the Plant formed part of the land and the contract between the parties was to carry out ‘construction work’ within the meaning of the BCIP Act.

The decision clarifies that work undertaken on mining tenements or petroleum and gas tenements (by analogy) will not be excluded from the operation of the BCIP Act on the basis that the tenement holder has no estate or interest in the land. Principals engaged in construction contracts will be subject to the BCIP Act adjudication regime (regardless of their interest in the land) if the building, structure or plant the subject of the contract forms part of the physical land upon which it is (or will be) situated.

For further information, please contact Jay Leary, Partner, Roger Allingham, Graduate, or your usual Herbert Smith Freehills contact.