Revisiting the landowner problem in the PNG LNG project

A protest in August 2016 (Credit: Michael Main)
A protest in August 2016 (Credit: Michael Main)
Written by Colin Filer

On the 25th of January this year, Papua New Guinea’s Post Courier newspaper reported that the National Court had just overturned a decision made by a provincial land court magistrate in 2006. The decision in question was meant to resolve a dispute between two members of a Huli clan about the ownership of land in the Moran petroleum development licence area, which is one of eight licence areas that now form part of the PNG Liquefied Natural Gas (LNG) project. But it seems that the magistrate ‘mistakenly’ granted one of the disputing parties rights to land in an adjoining licence area that belonged to a Fasu clan, and this had led to unlawful encroachment by members of the Huli tribe, onto land that rightfully belonged to members of the Fasu tribe.

The consequences might have been more serious if the royalties owing to the landowners had actually been distributed, since a group of Huli landowners might then have collected the money that should have gone to a group of Fasu landowners. But nearly all the landowners attached to the LNG project are still waiting for these payments to be made, four and a half years after the PNG government began to collect the royalties on their behalf. The ‘landowner problem’ is a problem for the government and the developers because they cannot work out who is actually entitled to receive the various landowner benefits promised under the benefit-sharing agreements signed in 2009. Even when money has been distributed in one form or another, the result has generally been a barrage of complaints about the misappropriation of these benefit streams by so-called ‘paper landowners’ in league with corrupt politicians and public servants. Anthropologist Michael Main has documented the moment, in August 2016, when some of the Huli landowners shut down one of the project’s main facilities to express their “immense frustration, disappointment and palpable anger at the absence of benefits”. He also claims that Huli people saw last year’s massive earthquake, which closed down the whole operation for several weeks, as a further manifestation of the ‘resource curse’ that has undermined the promise of development that was contained in the benefit-sharing agreements.

In previous posts on this blog, there has been a good deal of discussion about who, or what, is to blame for the absence of a solution to the landowner problem. In 2016, Sam Koim and Stephen Howes placed the blame on an ongoing contest between bureaucratic and judicial approaches to the problem of landowner identification, arguing that this contest had been exaggerated by changes to the law that governs the incorporation of groups of customary landowners. Last year, I argued that the problem had also been compounded by a disjunction between the forms of knowledge produced by lawyers and anthropologists engaged in their own pursuit of a solution under the terms of the Oil and Gas Act 1998. I also argued that this gap had been widened by the government’s failure to produce an additional regulation that should have governed the conduct of the social mapping and landowner identification studies that are a legal precondition to any benefit-sharing agreement in the oil and gas sector. Anthropologists Monica Minnegal, Michael Main and Peter Dwyer have suggested that the problem is further compounded, and certainly not resolved, when cash benefits are actually distributed to landowners or their representatives, citing evidence of fraud and corruption in the distribution of business development grants to landowner companies that actually did begin during the project’s construction phase. But a person called Vailala, who has commented extensively on both of last year’s blog posts, contends that anthropologists themselves are partly to blame for the absence of a solution, since their form of knowledge has disguised the true nature of local custom, intensified local struggles over access to landowner benefits, and, in the process, even denied the rights of local women. From Vailala’s point of view, the judicial approach is the only one that makes sense, and if it were not for the interference of anthropologists and bureaucrats, the judicial process would already have solved the problem.

In order to untangle and evaluate these different lines of argument, I have now written a discussion paper in which I place the search for solutions to the landowner problem in a much broader historical context. The roots of the problem and its possible solutions are traced back to a succession of policies and practices that have their origin in the late colonial period, that were subsequently applied to the development of major mining projects, and then to the development of PNG’s oil export industry in the 1990s. Particular attention is paid to the way that the problem came to be addressed in the Oil and Gas Act and to the way that this legislation framed the unsuccessful search for a solution during the negotiations that led to the agreements under which the LNG project now operates. If the landowner problem has proven to be a bigger problem for this than for any other project, with the possible exception of the Bougainville copper mine, then that is simply because it is such a big project, there are so many landowners involved, and so much is at stake in the distribution of landowner benefits.

Read the full discussion paper here.

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Colin Filer

Dr Colin Filer is an Honorary Professor at the Crawford School of Public Policy, ANU.

4 Comments

  • I thank Colin Filer for his blog-post and discussion paper.

    I think it is useful to examine the many issues that Colin Filer mentions by broadening the discussion and focusing on the legal basis of the statutory requirement for petroleum project social mapping and landowner identification studies. A very distant progenitor and source of the inspiration behind the PNG Land Disputes Settlement Act 1975 is the Indian Evidence Act 1857 (IEA), Sections 13 and 48. The IEA abruptly broke with the English common law tradition and by mandating that the customary law relevant and applicable to a court hearing is to be found in the testimony of the disputing parties and not, as under English common law, by judicial reference to recognised law books and their references to ‘time immemorial’. The IEA had a rippling effect across many of the British colonial jurisdictions that were faced with the problem of integrating or conjoining with established, often chiefly, native courts in both east and west Africa.

    In PNG, Village Courts, Urban-Village Courts and Local/District Land Courts are empowered to hear cases about land, arbitrate and make decisions on the basis of the testimony of the disputing parties as to the facts ‘on the ground’ and with reference to the customs of the disputants. The leading question is how should we understand the jurisprudence of these courts in relation to the issue of custom.

    I have benefited from many conversations with Village Court Magistrates. My interest centred not on the details of individual cases (which would have been improper) but on how did a Magistrate decide a case when there was no relevant or applicable statute law and when the judicial doctrine of precedent was either weak or absent. At first I found the answers I was given rather vague but a constant theme emerged that the judicial solutions were always to be found entirely within the facts and the arguments made by the contending parties. My understanding of what was going on in the Magistrates’ minds was greatly assisted by reading the work of the anthropologist Lloyd Fallers (Law Without Precedent: Legal Ideas in Action …) and here (https://scholarship.law.duke.edu/lcp/vol27/iss4/5/).

    Unremarked upon by Fallers is that customary law courts typically decide cases by invoking decision points that are equal to or related to those found in the English law of equity, the law of fairness and natural justice. For example, what is at play in the case described above by Fallers is the equitable doctrine of laches. In other words these ‘lower’ courts decide cases on the basis of evidence given by the parties and measured by the standards of natural justice and fairness as understood by the parties. Equitable maxims or doctrines are indeed understood by the parties even if they are not always well-liked by by those who find the judgments unfavourable to their interests.

    The issue of fixing land boundaries is not often of interest in land dispute cases. Rather what is at issue is the balance of competing interests and the possibility that some disputants may have no legal land occupation-based landownership interest.

    PNG legislation determines that occupation of land for 12 years establishes a customary ownership right. Different jurisdictions and legal systems use different measures in relation to land (Roman law 2 or 3 years, Islamic law (Maliki school) 25 years). This legal view of customary landownership has a long PNG case law history and played a large part in the rationalisation of some land law legislation at PNG independence. Justice Amet’s (as he then was) Hides Gas Case 1992 decision provides an excellent summary as to how a PNG court may interpret ‘occupation’ in the context of a customary landownership dispute.

    Once the legislative and policy background and relevant judicial practice is understood the task of social mapping and landowner identification studies is made conceptually simple. These studies need to record populations, settlements, habitations, cultivation and land usage, and all the ancillary details that add to the facts of occupation. I would expect that any well-designed social mapping and landowner identification study exercise could achieve a very high level of success, if appropriately funded and resourced. The social mapping and landowner identification studies would identify persons, ILGs and self-identfying groups who have not yet achieved incorporation by registration but who, nevertheless have ‘occupant’ status.

    Payments to identified by Ministerial gazetting beneficiary landowners are made from trust funds. The money in these funds is strictly the property of beneficiary landowners. If the fund trustees were to pay money to persons other than properly identified landowners they would face heavy sanctions. The introduction of ILGs does solve the legal problem that trust fund payments must be made to somebody, some entity, that qualifies as a customary landowner.

    Before registration as an ILG a customary landowning group is the legal equivalent of a ‘friendly society’. There is no reason for a customary landowning group ‘friendly society’ to register as an ILG unless it wishes to enter into a relationship with the outside world. In this case the outside world involves the collective group ownership of trust-held funds and the legal basis of the payment of these funds to the group as a collectivity.

    There is no doubt in my mind that the process of paying resource project benefits to customary landowners introduces social change which may, for some, be unwanted. It may be helpful to describe an ILG as a PNG Province in miniature. Like a Province an ILG must take control of and direct its own future. Its ability to achieve coordination, and to implement its own regulations and move towards a desired future is something that GoPNG, located in the capital, can only support and encourage. There are indications that some landowner groups are achieving new and innovative levels of cooperation.

    The legal system of PNG is difficult to categorise. Some describe it as ‘legal pluralism’ and refer to the Village Courts as ‘hybrid courts’. I prefer to describe PNG as a ‘legal multiplex state’. I would suggest that central government (GoPNG) and provincial governments improve the resourcing of Village Courts in the petroleum project areas. There is a continuing need for education for all to both deepen the understanding of ‘natural justice’ within the framework of the PNG Constitution and to recognise the development need, as civil and personal law issues arise, following payment of the benefits to ILGs.

    Vailala

    • Earlier this week the Post Courier and The National newspapers published reports that the Petroleum Minister Dr Fabian Pok had signed the ministerial determination for the landowner beneficiary lists for PDL1 and PDL7. The signing took place at Para Primary School for PDL7 and Yuni for PDL1 landowners on 9 March.

      The Mineral Resources Development Corporation (administrator of the landowner beneficiary trusts) will shortly be visiting PDL1 and 7 to assist beneficiary landowners to open bank accounts for receiving their benefit payments.

      At the signing Hela Governor Philip Undialu said ‘I will talk to Bank South Pacific to open branch or agency or have ATM machines in Hides PDL7 and PDL for people to access their cash component of the benefits.’

      All the people involved, Minister Pok, Governor Undialu, other Ministers and MPs, Department of Petroleum personnel, landowner leaders and the thousands of beneficiaries are to be congratulated on cooperating to bring to an end an extraordinary and unnecessarily long period of uncertainty and confusion. That the long years of waiting gave rise to feelings of frustration and anger is very understandable. That so many people have now put these feelings behind them and moved towards the future earns my respect.

      The National reported on 14 March that Chief Justice Sir Gibbs Salika intends to strengthen the Village Court system. The Village Courts have shown that they have the capacity to breathe life into the PNG Constitution by addressing issues such as the rights of citizens, gender equality and fairness and joining these large issues with customary practices at the base level of the village. Broadening and deepening the capacity of the Village Courts will make a substantial contribution to law and development in PNG.

      Vailala

  • An Environmental Social Feasibility Study needs to be conducted before, during, and after the money or ceases production. Proper social feasibility study needs to be done and Gender Programming Analysis allow all partners to address the needs of women, man, boys and girls.

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