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PES Contract Clauses > Forum and Choice of Law Example 2

18. APPLICABLE LAW

This agreement is subject to the Constitution of [country], [the applicable forest, environmental, and other applicable laws], current Ministerial Accords, and other valid regulations issued for the benefit of the Program in force in [country] as of the signing of this agreement.

Notes

This applicable law clause is slightly different from a typical choice of law clause. Because of the context (a participation agreement in a government REDD+ program), it is self-evident that the law of the host country will apply. But this clause clarifies that laws issued for the benefit of the program (such as the programs rules and regulations) that are applicable to the agreement are those that were in force as of the signing of the agreement. This is meant to reassure participants and stakeholders that the ministry cannot unilaterally change the contract terms after the agreement is signed.

Context of this Clause

• Participation agreement for a national REDD+ program
• Ecosystem service: forest carbon emissions reduction credits or conservation/restoration services expected to yield forest carbon emissions reduction or removal
• Single seller signing a government-provided form contract (which is backed up by detailed program guidelines) with a representative of the government ministry that administers the REDD+ program
• Source: Lessons Learned for REDD+ from PES and Conservation Incentive Programs, Examples from Costa Rica, Mexico, and Ecuador

About: Forum and Choice of Law

Disclaimer: Materials on this site are meant to highlight issues that should be considered in PES transactions, not to provide a substitute for experienced legal counsel. It will be essential to engage legal counsel in conjunction with any PES transaction to ensure that any agreements reflect the latest developments in the field and comply with current local and national legislation.

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