The company which signed this agreement is Sime Darby Plantation (Liberia) Inc. The company is fully owned by Sime Darby Plantation Investment (Liberia) Private Limited, which is a company registered in Singapore.
Sime Darby Berhad, a large Malaysian company, is the overall parent company. Sime Darby Berhard owns 100% of Sime Darby Eastern Limited (Singapore), which is a company registered in Singapore. Sime Darby Eastern Limited (Singapore) owns 100% of Edible Products Limited, which is also registered in Singapore. Edible Products Limited owns 100% of Sime Darby Plantation Investment (Liberia) Private Limited, which is also registered in Singapore. Sime Darby Plantation Investment (Liberia) Private Limited owns 100% of Sime Darby Plantation (Liberia) Inc, which is registered in Liberia. Sime Darby Plantation (Liberia) Inc. is the owner and operator of the Sime Darby Plantation.
The term of the contract may be extended if the parties, Sime Darby Plantation (Liberia) Inc and the Government of Liberia, agree to terms for an extension before the contract expires. The parties must meet at least ten years before the contract expires to discuss terms of a possible extension.
The total concession area is 220,000 hectares of land for the concession area and an additional 44,000 hectares of land for the implementation of the outgrowers' program.
The term of the contract is 63 years from the date the contract comes into force, unless otherwise extended or terminated earlier in accordance with the contract.
Environmental impact assessment and management plan
Sime Darby Plantation's responsibilities with respect to the environment are determined by the Environmental Protection and Management Law of Liberia, other applicable laws or regulations of Liberia, regulations of the Environmental Protection Agency, and the Principles of the Roundtable on Sustainable Palm Oil.
Sime Darby Plantation can take and use, free of charge, water that it considers necessary or useful for its activities. It can take water from within the concession area or from any other area it acquires. However, this water use must not interfere with the rights of people, communities, other companies, or with use by the government. Sime Darby Plantation may not dam any streams or use amounts of water if the damming or water usage could interfere with the activities of farmers or residents whose activities were ongoing since before the contract came into force. Before damming any streams or other bodies of water, Sime Darby Plantation shall seek approval from the relevant governmental authority. The authority should not unreasonably deny Sime Darby Plantation’s request to dam, unless there is evidence that the construction of the dam or dams would violate this section of the contract. Unless the government gives notice that it has withheld approval within 60 days of the Sime Darby Plantation’s application to dam or use water, it shall be deemed to approve the dam or water use. Sime Darby Plantation can supply water to buildings and other facilities within the concession area and any other acquired land. The Liberian government will not charge Sime Darby Plantation for the provision of water unless Sime Darby Plantation generates profit from the water supply. If Sime Darby Plantation produces more water than it needs, it can agree, but is not required, to provide water to the government or individuals/communities/other businesses outside the concession area at a price less than or equal to the cost of its production, unless another price is agreed with the government. The government has a priority right to buy any surplus of water at a price less than or equal to the lowest price offered to the public.
Sime Darby Plantation will have its books of account audited within 3 months after the close of each fiscal year (starting from July 1 and ending on June 30 of the succeeding year) unless the Minister of Finance of Liberia approves an extended timeframe to complete the audit. The audit will be conducted by an independent reputable international accounting firm selected by Sime Darby Plantations as an auditor. A copy of Sime Darby Plantation's annual financial statement with any management letters will be provided to the Liberian government by Sime Darby Planation as required by the laws of Liberia. The Liberian government may carry out its own audit of the books of account of Sime Darby Plantation, provided that Sime Darby will be provided with a copy of the such audit within 45 days of receipt. Once either Sime Darby Plantation or the Liberian government have audited the books of account, the financial statement of Sime Darby Plantation should be considered acceptable and the audit results binding and conclusive, save for any major errors. Sime Darby Plantation agrees to keep a comprehensive set of its own books and records in Liberia at all times. If these books and records are needed for review outside Liberia, and are removed from the country, the Liberian government should receive copies of these documents needed to complete the audit in a timely manner.
If the Sime Darby Plantation obtains certified emission reduction credits, other carbon or carbon-equivalent emission reduction credits, or any corresponding monetary value or cost savings that result from greenhouse gas emission reductions, such credits, monetary value or savings must be declared as taxable income and are taxable in accordance with the laws of Liberia. (This includes credits, value or savings created by Sime Darby Plantation or a third party working under the direction of Sime Darby Plantation.) For tax purposes, credits, value and savings shall be valued at a fair market value, meaning the value which is estimated should be paid in a fair transaction of sale.
For a period of 8 years from the date the contract comes into force, Sime Darby Plantation shall not be subject to import duties on capital goods and capital spare parts and items used directly in production. For the period between 8 years and 15 years from the date the contract comes into force, Sime Darby Plantation shall not be subject to import duties for capital equipment which is imported specifically for and is used in the construction or operation of its oil mill and vegetable oil refinery. A list of the capital equipment which is imported for and used in such construction and operation is to be provided by Sime Darby Plantation to request these exemptions. Farm supplies sold or conveyed to Liberian rubber farmers or Liberian oil palm farmers by Sime Darby Plantation shall be exempt from taxes and duties on their importation. Sime Darby Plantation shall not be subject to import duties on goods and materials imported by Sime Darby Plantation to meet its social obligations, including approved medical and educational materials. Sime Darby Plantation shall be subject to import duties on rice imported into Liberia to be provided to its employees at the rates established by the laws of Liberia. However, for a period of 7 years from the date the contract comes into force, such import duties shall not exceed US$ 1.00 per 50 kg bag of rice. Sime Darby Plantation shall pay taxes and duties on the import of fuel and other goods at rates established by laws of Liberia, However, for a period of 7 years from the date the contract comes into force, such taxes and duties on fuel shall not exceed 50% of the rates established by the laws of Liberia. All goods and materials imported by Sime Darby Plantation that are not exempted from import duties shall be taxed in accordance with the laws of Liberia. Sime Darby Plantation shall pay a customs service fee on imports as required by the laws of Liberia on all items not otherwise subject to import duties. However, during the term of the contract the rate at which such fee is imposed shall not exceed 1.5% of the imports CIF value.
Financial obligations - community or commodity funds
Sime Darby Plantation will make an annual contribution of US$5.00 per hectare of land under cultivation to a community development fund. The fund is to be administered by a management team of not more than 10 members. The members of the management team are to be selected by the surrounding community, the Liberian government and Sime Darby Plantation. Amounts received by the community development fund will be placed into a federally-insured, interest-bearing depositary account and be administered jointly by the fund's management team. The community development funds are in addition to any separate social or development expenditures included in the agreement. The development contributions will be tax deductible and may be carried forward for an indefinite period during the term of the contract. Sime Darby Plantation will contribute 1 % of its annual revenue from sales of oil palm products to the oil palm development fund. The revenue from which this percentage contribution is taken will be total revenue accrued at the end of each year of the term of the contract and excluding sales of oil palm derivatives or by-products. The obligation provide this percentage contribution will not arise until the oil palm development fund has been duly established and constituted by the laws of Liberia. The government may agree to lower the agreed contribution rate to the oil palm development fund. The fund will be administered by a management team selected by the surrounding community, the Liberian government and Sime Darby Plantation or as otherwise required by the laws of Liberia. Amounts received by the community development fund will be placed into a federally-insured, interest-bearing depositary account. The funds will be administered jointly by the fund's management team or as otherwise required by the laws of Liberia. Sime Darby Plantation will also contribute 1 % of its annual revenue from sales of to the rubber development fund. The terms and conditions of contributions to the rubber development fund will be the same terms and conditions applicable to the oil palm development fund.
Determining the taxable income and income tax bill of Sime Darby Plantation:
- Losses: For the first ten years after the date that the contract comes into force, net operating losses may be carried forward for 10 years from the year in which the loss was incurred.
- Losses: For the remainder of the term of the contract, net operating losses may be carried forward for the period allowed by the laws of Liberia.
- Losses: In any calendar year within 40 years of the date the contract comes into force, Sime Darby Plantation's total income tax bill, exclusive of any loss carried forward, shall be limited to 120% of the amount that would have been payable for that year if Sime Darby Plantation's taxes were computed in accordance with the laws of Liberia effective on the date the contract came into force.
- Incentives and Allowances: Sime Darby Plantation is also entitled to claim maximum capital allowances and incentives provided by the Revenue Code of Liberia. It is also entitled to an additional incentive deduction of 30% of the purchase price of equipment and machinery used in Sime Darby Plantation's activities in the year that the equipment and/or machinery is placed in service; an additional 5% incentive deduction on all capital expenses incurred in counties in which the concession area is located; and, when certified by the Minister of Finance of Liberia, an additional 5% incentive deduction for investment activities if Sime Darby Plantation employs more than 1,000 people in Liberia.
- Turnover Taxes as Credits Toward and Prepayment of Income Tax: Sime Darby Plantation will pay the turnover tax quarterly pursuant to the laws of Liberia. The amount of the turnover tax payments due will not exceed 1 % of Sime Darby Plantation's gross income. Sums paid as turnover tax shall be treated as a prepayment of income taxes payable by Sime Darby Plantation pursuant to the laws of Liberia. Additionally, if the amount of turnover tax paid in any year during the term of the contract exceeds the amount of income tax payable by Sime Darby Plantation during that year, the excess amount shall be carried over as a credit against income taxes payable in the succeeding year. If any uncredited amount remains, the balance of such uncredited amount shall be carried over as a credit against income taxes in the succeeding year and in each following year until such credit is fully used.
- Turnover Taxes as Credits Toward and Prepayment of Income Tax: Sime Darby Plantation will pay the turnover tax quarterly pursuant to the laws of Liberia. The amount of the turnover tax payments due will not exceed 1 % of Sime Darby Plantation's gross income. The sums paid as turnover taxes will be treated as prepayment of income taxes payable by Sime Darby Plantation under the laws of Liberia. Additionally, if the amount of turnover tax paid in any year during the term of the contract exceeds the amount of income tax payable by Sime Darby Plantation during that year, the excess amount shall be carried over as a credit against income taxes payable in the succeeding year. If
- Turnover Taxes Credits in the Event of Contract Termination: If the Liberian government fails to fulfill its obligations under the contract, Sime Darby Plantation may, upon providing the Liberian government with a notice of termination of the contract triggered by such failure, apply without exception any unused turnover tax credit against any financial obligation owed by Sime Darby Plantation to the Liberian government.
Sime Darby Plantation shall be taxed on its net taxable income pursuant to the laws of Liberia. However, the income tax rate is not to exceed 25% for a 25-year period from the date the contract comes into force. If the rate of tax is less than 25% during the 25-year period, then Sime Darby Plantation will be entitled to be taxed at a lower rate.
Sime Darby Plantation has the right to sell rubber and oil palm products at prices it considers to be appropriate, provided it informs the Liberian government of its terms and conditions every 6 months. Sime Darby Plantation is subject to the Economic Community of West African States (ECOWAS) Trade Levy on all goods from non-ECOWAS states which it imports into Liberia. The rate of this Levy is established by the Laws of Liberia, but is not to exceed 1% of the CIF value of those goods, unless that higher rate is generally applied in all ECOWAS member states. The Liberian government affirms that the investments of Sime Darby Plantation qualify for tax benefits under section 204(e) of the Revenue Code of Liberia.
Restrictions on transactions with affiliated parties
Any transactions between Sime Darby Plantation and its affiliates (ie. buyers) in relation to the sale of rubber, crude palm oil and crude palm kernel oil shall be on the basis of international prices: for technically specific rubber (dry rubber) the export sales price shall be the daily closing price quoted on the Singapore Commodity Exchange of TSR20 rubber. For liquid latex concentrate, the export sales price shall be the daily closing price established by the Malaysian Rubber Board. And for crude palm oil and crude palm kernel oil, the export sales price shall be the daily closing price quoted on the Bursa Malaysia Derivatives Berhad. However, these prices are only a reference. For all “forward” sales and contracts (sales and contracts which are agreed upon on a certain date for sales which are to take place in the future, after the date of agreement), the price can be adjusted based on the quality, nature, grade, quantities of the products, duration of the contract (in the case of contracts for long-term purchasing agreements between Sime Darby Plantation and a buyer), mode of delivery, market conditions, price projections, and price forecast at the time of sale. However, all forward sales or forward contracts must be fair, competitive and consistent with the terms and conditions (including the price and any price adjustments) of similar, fair transactions. Sime Darby Plantation must provide the Liberian government with any sales or services agreements with its affiliates.
Sime Darby Plantation will pay the Liberian government land rent fee of US$ 5.00 per hectare of land where rubber trees or oil palms have been planted during each year of the term of the contracts. Land rent fees are to be paid to the Liberian government annually in advance, on or before January 15th of the year for which the payment is made, to the Ministry of Finance of Liberia (unless otherwise specified by the Liberian government). The land rent fee rate should be adjusted once every 5 years beginning from the 5-year anniversary after the date the contract comes into force. The first adjusted amount should be equal to the fees charged at US$ 5.00 per hectare multiplied by the ratio of the harmonized consumer price index for Liberia (published by the Central Bank of Liberia) effective on the date the contract came into force. For subsequent adjustments, the new land rent fees will be calculated by multiplying the previous fees by the ratio of the harmonized consumer price index effective at the time of the adjustment (i.e. on the five-year anniversary following each adjustment). No adjustment will exceed 20 % of the prevailing surface rental fee for the previous five-year period. Within the first 8 years of the term of the contract, Sime Darby Plantation will also pay US$1.25 per hectare of land not cultivated but within the concession area. After the 8th year, the rent fee for land within the concession but not within the cultivated areas will be US$2.50 per hectare.
Commencing on the date the contract came into force and continuing until the expiry of the initial 63-year term, Sime Darby Plantation shall withhold the amount of taxes and duties to be paid under the laws of Liberia on the interest the Plantation pays to individuals and legal entities which are not in Liberia. If the contract is extended, the Government of Libera and Sime Darby Plantation shall renegotiate this withholding tax agreement for the extended term. Commencing on the date the contract came into force and continuing until the expiry of initial 63-year term, Sime Darby Plantation shall withhold the amount of taxes and duties required by the laws of Liberia to be withheld on dividends paid to its shareholders or owners. These withholdings are not to exceed 10% of the dividend payments. If the contract is extended, the Government of Liberia and Sime Darby Plantation shall renegotiate this withholding tax on dividends for the extended term. Sime Darby Plantation shall withhold an amount required by the laws of Liberia from the payments due to any legal entity outside of Liberia for the items set forth in the Revenue Code of Liberia. These withholdings should not exceed 10% of the payments due to legal entities that are outside of Liberia. Sime Darby Plantation shall withhold an amount required by the laws of Liberia from the payments due to any individual that is a national of Liberia for the items set forth in the Revenue Code of Liberia. These withholdings should not exceed 8% of the payments due to individuals that are nationals of Liberia. Sime Darby Plantation shall withhold an amount required by the laws of Liberia from the payments due to any individual that is not a national of Liberia for the items set forth in the Revenue Code of Liberia. These withholdings should not exceed 10% of the payments due to individuals that are not nationals of Liberia.
Sime Darby Plantation’s employment practices, including compensation and working conditions, must be in compliance with the laws of Liberia. In no case shall Sime Darby Plantation hire non-Liberian nationals for unskilled labor position. Sime Darby Plantation will not knowingly hire or facilitate the hiring of any minor. Preference for hiring is to be given to qualified Liberian nationals who meet the expectations of Sime Darby Plantation for skilled positions. If qualified candidates are available, Sime Darby Plantation will hire Liberian nationals for at least 50% of the ten most senior management positions within 5 years after the contract comes into force, and at least 75% of such positions within 10 years after the contract comes into force. Sime Darby Plantation must report on its compliance with this requirement. Failure to meet the 50 % or 75% targets for Liberians in senior management positions may require Sime Darby Plantation to demonstrate that all efforts were made to fill the positions with Liberian nationals. Any compensation to the employees of Sime Darby Plantations will be made in compliance with the laws of Liberia. The Government of Liberia and Sime Darby Plantation agree that, for compliance with any law of Liberia regarding minimum wages, “wages” will include employee's salaries only. The value of “wages” will not include the value of any additional benefits, such as housing, medical care and education for the dependents of the employees.
Preference to be given to goods (excluding sundry goods) produced in Liberia by Liberians, and to services provided by Liberians in Liberia, provided that such goods and services are equal to or better than goods or services available outside Liberia. Sime Darby Plantation must include a provision in each contract or work order with a contractor that requires the contractor and any sub-contractors to also give preference to Liberian goods and services for any activities undertaken in Liberia on behalf of Sime Darby Plantation.
From time to time, Sime Darby Plantation will provide to the Minister of Commerce of Liberia a list of proposed suppliers for related goods and services. The Minister of Commerce will certify within 30 days that such suppliers do or do not qualify. If the Minister of Commerce does not respond within 30 days, the list is considered to have been approved.
Sime Darby Plantation will establish an outgrowers' program within 3 years after the contract comes into force. Details about the program will be included in the development plan. Under the outgrowers' program, Sime Darby Plantation will develop and exclusively manage the land designated for the program on a cost recovery basis (i.e. not for profit) for the benefit of Liberian small land holders (called “outgrowers”) that were chosen to participate in the program and have agreed to be bound by its requirements. The government will provide 44,000 hectares of land that is outside the concession area, but within the gross concession area, for the purpose of the outgrowers’ program. The government will also seek funding for the program, select the small land holders to participate as outgrowers, and manage any social or environmental issues that may arise from the program. Sime Darby Plantation has the exclusive rights to, and is required to, buy the fresh fruit bunches and rubber harvested within the outgrowers' program, provided that the fruit and rubber meet the quality standards generally accepted in the palm oil industry. Sime Darby will assist the government in seeking funding for the program, identify suitable land and outgrowers for the program, and support outgrowers in purchasing equipment and fertilizers, and provide technical and management training. Liberian small land holders chosen for the program will agree to become members of a cooperative, pay agreed upon crop and management fees to Sime Darby Plantation, adhere to Sime Darby Plantation’s work methods and standards, and participate in training sessions. If funding cannot be obtained for the program, the government will not be in breach and Sime Darby does not need to start the outgrowers’ program.
Protections or benefits for employees, dependents, or others
Sime Darby Plantation agrees to provide primary education and high school education free of charge to each person who is a dependent of Sime Darby Plantation, and to the minor children and/or spouses of Government officials who are assigned to and/or resident in the developed parts of the concession area. Sime Darby Plantation may invest in existing local schools if such local schools are in sufficient number to educate all dependents, are not overcrowded, and are either within the developed areas or less than 30 miles from such areas. If such local schools are located outside the developed areas, Sime Darby Plantation shall provide free transportation for the dependents who attend such local schools. If there are no schools located within a reasonable distance to the developed areas, Sime Darby Plantation should construct educational facilities, at a speed and in a number approved by the Liberian government. Sime Darby Plantation should also invest not less than US$25,000 annually in skills training and adult literacy programs for its employees. Sime Darby Plantation shall provide one unit of adequate housing facility per family for each of its employees and the dependents, which must be equal to or better than the minimum housing standards issued for general application by the Ministry of Public Works of Liberia and other relevant government agencies of Liberia. Sime Darby Plantation shall ensure that all employee residential communities within the developed areas are being supplied on a regular basis with clean and safe drinking water and all common water sources are easily accessible from employees' homes within the developed areas. Sime Darby Plantation shall construct a sufficient number of wells or provide other common sources of drinkable water to provide an uninterrupted supply of clean and safe drinking water in each of its developed plantation sub-divisions. Sime Darby Plantation shall provide for its employees commonly used medicines, basic medical treatment, and medical care and attention in accordance with the laws of Liberia and the standards as are generally applicable in Liberia. Such treatment, care and attention shall be free of charge for Sime Darby Plantation employees and their dependents. To ensure that care is available for its employees and their dependents, Sime Darby Plantation shall construct, maintain, and operate health facilities to ensure the availability of basic medical treatment, care and attention in accordance with the laws of Liberia and standards that are generally applicable in Liberia during the duration of the contract. Sime Darby shall construct and operate at least one centrally located hospital with basic facilities within 10 years of the date the contract comes into force, and adequate outpatient clinics in the developed areas within standards that are generally applicable in Liberia.
Sime Darby Plantation may request that certain settlements be relocated if it can demonstrate that such existing settlement and its inhabitants impede the development of the concession area and interferes with its activities. Both Sime Darby Plantation and the Liberian government share the responsibility of resettlement, including the management of any resettlement plans and the execution of resettlement logistics. Sime Darby Plantation will compensate resettlement expenses up to a maximum of US$200 per hectare of resettled land, and the government will compensate resettlement expenses that exceed US$200 per hectare of resettled land. Sime Darby Plantation is entitled to a 50% tax credit of resettlement expenses that it may incur. The Liberian government and Sime Darby Plantation agree to establish a resettlement supervising committee with six members (3 chosen by the government and 3 by Sime Darby Plantation); two of those members shall be community representatives (1 chosen by the government and 1 by Sime Darby Plantation).
Right to access concession area (non-contracting parties)
Sime Darby Plantation will permit independent farming activities within areas of the concession which are not suitable for production, provided that independent farmers: (i) limit farming activities to non-commercial food cultivation, (ii) live within the concession area or had lived there before resettlement that occurred because of Sime Darby Plantation’s investment, and (iii) seek the permission of Sime Darby before beginning such farming activities. Sime Darby Plantation may deny such permission if it reasonably believes such independent farming activities would interfere with its activities or pose a security risk, but it may not unreasonably deny such permission. Determinations of which areas of the concession area are not suitable for production are within the discretion of Sime Darby Plantations but may be reviewed and disputed by the Liberian government. All roads across the concession area that have traditionally been used by the population shall remain open to free use by the public for commercial and public purposes as long as such use does not unreasonably interfere with Sime Darby Plantation's activities.
Sime Darby Plantation will provide for the training of Liberian nationals in order to qualify them for management and other skilled positions and as required for work in its operations. Sime Darby Plantation will provide necessary on-the-job and skills training, as well as opportunities for employees to learn new techniques that will allow them to progress into other positions. Sime Darby Plantation agrees to implement a policy of technology transfer to Liberian nationals, which will include a transfer of operational techniques and modern management techniques.
Sime Darby Plantation has the right to develop and maintain infrastructure (buildings, facilities, etc.) within the concession area and any other acquired areas, provided that it obtains approval of the Liberian government on the design, location, size and environmental impact before building. Sime Darby Plantation shall only be responsible for the on-going maintenance or repair of infrastructure which they build to the extent specified in the relevant governmental approval. Nothing in the contract restricts Sime Darby Plantation's right to construct necessary or desirable farm roads within the concession area. All roads across the concession area that have traditionally been used by the population shall remain open to free use by the public for commercial and public purposes as long as their use does not unreasonably interfere with Sime Darby Plantation's activities. Sime Darby Plantation may deny public access to private areas within the concession area and, with prior notice to the Liberian government, Sime Darby Plantation is allowed to impose reasonable restrictions to protect the security of its assets and safety of its employees, and dependents. In addition, Sime Darby Plantation has the right to develop and maintain infrastructure outside the concession area, provided it obtains written approval by the Liberian government prior to building. All highways and roadways constructed by Sime Darby Plantation outside the concession area will become public property, and Sime Darby Plantation has the right to use these roads without charge. The Liberian government has no obligation to repay Sime Darby Plantation for the development and maintenance of infrastructure it builds outside the concession area, and Sime Darby Plantation has no obligation to maintain and/or repair such infrastructure.
Sime Darby Plantation may lease or otherwise acquire any private land in Liberia that is not owned by the Liberian government to produce or process agricultural products. Sime Darby Plantation is NOT allowed to acquire private land for the sole purpose of receiving any carbon rights to reduction in emissions (i.e. “carbon credits) caused by the development of the concession area or other areas. Sime Darby Plantation will notify the Liberian government of lease or acquisition of private land within 3 months of the beginning of such lease/acquisition. Such additional areas shall be subject to the same rights and conditions set forth in the contract, however Sime Darby will not pay land rental fees to the Liberian government for such land.
Sime Darby Plantation agrees to a minimum local sales amount; it must sell at least 25% of the volume of its estimated annual total sales of crude palm oil within Liberia. All sales of Sime Darby Plantation crude palm oil within Liberia will be made at free-on-board Monrovia prices. The first 5% of the minimum local sales amount will be sold at a price which is at or about the domestic price in Liberia. The remaining 20% will be sold at a price determined by international and market rates. If there are no buyers in Liberia for crude palm oil, Sime Darby Plantation may export 100% of its crude palm oil. If any manufacturing facility is established in Liberia that uses rubber wood as a basic raw material, the government may require that Sime Darby Plantations sell to these Liberian manufacturers a minimum of 35% of its estimated total production of rubber wood for the year at fair market price (unless Sime Darby Plantation has other contract arrangements which would make selling rubber wood to Liberian manufacturers impossible). In addition, if any manufacturing facility is established in Liberia that uses other processed rubber products or certain oil palm products as basic raw materials, the government may require that Sime Darby Plantation sell to these Liberian manufacturers at least 5% of its estimated total production for the year (unless Sime Darby Plantation has other contract arrangements which would make selling these products to Liberian manufacturers impossible). If, however, Sime Darby Plantations commences downstream processing of oil palm products in Liberia, the requirement to sell its oil palm products to manufacturers in Liberia would not be applicable.
Sime Darby Plantation is authorized by the Liberian government to establish, manage and maintain its own security services either directly or through a contract for the purpose of protecting the concession area or any other areas where Sime Darby Plantation maintains property or assets. With the prior approval of the Ministry of Justice of Liberia, Sime Darby Plantation may establish its own plant protection department. The members of the plant protection department must be specially trained and qualified, and certified by the Ministry of Justice to possess the required training and skills. Members of the plant protection department will have: enforcement powers within the concession area; the power stop and detain people in accordance with the laws of Liberia and the contract; and the power to search, deny entry to, or remove unauthorized persons from the concession area and other areas of restricted access in accordance with the laws of Liberia. Sime Darby Plantation must coordinate the activity of the plant protection department with relevant Liberian law enforcement, and periodically report to the Ministry of Justice on its activities. The Liberian government may assign at its own expense personnel to assist the plant protection department and to monitor its actions, including the monitoring of any security gates created under the contract.
The Liberian Government will provide an additional 100,000 hectares of land to Sime Darby Plantation for the explicit use of downstream processing activities in Liberia. Sime Darby Plantation will start downstream activities in Liberia, including the construction of a vegetable oil refinery, once there is adequate supplies, good conditions, and it is economically viable. Within 10 years after the date the contract came into force, Sime Darby Plantations will assess the viability of constructing a vegetable oil refinery within 15 years from the date the contract came into force. The assessment will be based on the commercial viability of the project and the availability of raw materials. If the project is commercially viable, the vegetable oil refinery should be constructed within 15 years from the date the contract came into force. If it is not commercially viable, Sime Darby Planation will have the option either to review the assessment results with the Liberian government and discuss other possible downstream (processing) activities; or surrender the underdeveloped land which was granted by the government. Surrendering the land will suspend the obligation to pay land rental fees for that land. Sime Darby Plantation should notify the Liberian government in writing of its intention to invest in the processing or refining of Liberian agricultural products outside Liberia.
Sime Darby Plantation will implement a program to plant and/or replant rubber trees and oil palms in the concession area as specified in the development plan. Sime Darby Plantation's is required to have 75% or more of the concession area planted and/or replanted with commercially viable oil palms or rubber trees, in accordance with the development plan, by the end of the 15th year after the contract comes into force. Sime Darby Plantation is also required to have 100% of the concession area planted and/or replanted by the end of the 20th year. Sime Darby agrees that as long as there is enough time left in the concession contract and adequate conditions to viably continue the replanting program, Sime Darby Plantation will begin replanting the parcels of land in the concession area which are meant for planting within 12 months of the end of the growing cycle of each parcel of land. If new oil palms or rubber trees are not planted within 12 months of the end of the cycle for a viable parcel of land, or if Sime Darby Plantation gives notice to the Liberian government that it will neither replant nor use the relevant parcel of land for its activities, then the Liberian government may repossess the parcel of land that has not been replanted. The government of Liberia must approve any plan for Sime Darby Plantation to stop using a land parcel. Sime Darby Plantation shall be deemed to have satisfied its obligation to replant as long as it has begun the replanting process prior to the end of the 12-month period and diligently continues its efforts to replant.
Any dispute between the Liberian government and Sime Darby Plantation about or relating to the contract shall be settled by binding arbitration, unless a section in the contract specifically allows for for resolution by an expert. The arbitration shall be under the rules of the International Centre for Settlement of Investment Disputes (ICSID) effective on the date the contract comes into force. If there is a conflict between ICSID rules and the contract, the contract will be followed. Either party to the contract may apply to begin arbitration proceedings by giving notice to the other party and the Secretary General of ICSID. Each party appoints one arbitrator, and the Secretary General of ICSID will appoint a third arbitrator who is neither a citizen of Liberia or Malaysia and will serve as president of the arbitral tribunal. All arbitrators will be qualified to serve as arbitrators in the matter submitted and none will have an interest in the matter. Arbitration proceedings will be held in English, in Washington, D.C. (or a different place agreed upon by the government, Sime Darby Plantation, ICSID, and the arbitral tribunal). The arbitral tribunal will determine how the costs of the proceedings (costs and fees required by the ICSID and the arbitrators) are divided between the government of Liberia and Sime Darby Plantation. Each party shall pay for its own costs and attorney fees. Any procedural issue that can't be determined under the rules of ICSID will be determined under the laws of Liberia. The arbitrators, by majority vote, will publicly share a written decision within 3 months after the hearing has ended. Any monetary award (eg. fine, settlement) shall be payable in dollars through a bank chosen by the recipient. Any money awarded to Sime Darby Plantation will not be subject to taxes and duties. Neither party shall be ordered to pay consequential damages, exemplary damages, or punitive damages. Interest on monetary awards shall be applied at a rate of LIBOR (London Interbank Offered Rate) plus one percent from the date of the award until satisfaction. If LIBOR is no longer reported, then another agreed substitute rate should be applied. If the decision of the arbitral tribunal is significantly harmful to either party, the tribunal may allow a grace period for payment to prevent defect or default, up to 180 days from the time that payment would have been required. The Liberian government cannot claim any defense related to sovereign immunity. The right to arbitration will not be affected by the fact that either party has received some compensation from another person for a loss or injury related to the claim or dispute. That person may participate in the proceedings. An arbitration award may contain orders such as performance/behaviour requirements for the future, and/or fines. Sime Darby Plantation or the Government of Liberia shall take all actions necessary to completely fulfill the terms of the arbitration ruling if they are ordered to do something. The agreement to use ICSID as the arbitrator shall apply even if different parties take over the contract (eg. if Sime Darby Plantation sells the concession to another investor). Should ICSID be replaced by or its arbitration functions are transferred to another international organization, Sime Darby Plantation and the Government of Liberia will have the right to submit any dispute to that body for settlement. If ICSID ceases to exist without replacement, Sime Darby Plantation and the Government of Liberia may submit disputes to other arbitration organizations which are mutually agreed upon by both parties. At all times, the right to arbitration is fully binding on both parties. Sime Darby Plantation can continue operations consistent with the terms of the contract during while awaiting the decision of a dispute arbitration. If Sime Darby Plantation and the Government of Liberia agree, any dispute can instead be referred to a single referee appointed by the Secretary General of ICSID, as opposed to a tribunal of multiple people. The single referee option does NOT apply to disputes arising out of provisions of the contract related to the grant of rights, conduct of operations, income taxation, land rent, payments to Liberian government, financial reporting and currency; records, reports and inspection; termination; disposition of assets; governing law; periodic review and survival and severability provisions; unless Sime Darby Plantation and the Government of Liberia agree the dispute is not over an essential part of the agreement. The decision of the referee will be final and binding unless appealed by either party to arbitrators. The arbitrators shall review the decision only to assess whether there were major issues in the procedure of the referee, such as a clearly incorrect reading of the law, findings of fact not supported by credible evidence, abuse of authority, misconduct or other unauthorized act by the referee.
Sime Darby Plantation shall not assign its rights under this contract to any individual or legal entity without the prior consent of the Liberian government. The Government of Liberia shall be deemed to have given consent if it does not indicate a decision to the contrary within 60 days of notice of a proposal to re-assign or change of control in Sime Darby Plantation. In no event can an assignment be made, either directly or indirectly, to any individual or legal entity defined as a 'Prohibited Person' in the contract. A 'Prohibited Person' is an individual or legal entity that is subject to sanctions (ie. punishment or exclusion rules) by any international organization Liberia is a member of; or is subject to sanctions under an international treaty Liberia is a party to; or has been identified by the Liberian government as an infidel or legal entity imposing a serious risk to the national security, public health and safety of the economic or political stability of the Liberian government. Immovable assets: Upon termination of the contract, all permanent and non-movable material assets of Sime Darby Plantation (including rubber trees and oil palms) in the concession area will become property of the Liberian government without charge. If Sime Darby Plantation terminates the contract due to the Liberian government's failure to comply with its contract responsibilities, the above-mentioned assets are to be bought by the Liberian government at their fair market value. Movable Assets: If Sime Darby Plantation wishes to sell any of its movable assets located in Liberia, the Liberian government will enjoy priority to purchase them at a fair market price, paid in dollars. If the Liberian government does not use this option within 60 days of being informed of the sale, Sime Darby Plantation may sell the asset to any other person, including the Liberian government or its affiliate, for any price it can obtain or remove the assets from Liberia. The money from the sale will go to Sime Darby Plantation, subject to taxes or duties. If the Liberian government purchases any asset, it shall pay the purchase price within 60 days of the price being agreed upon, unless the Sime Darby Plantation and Government of Liberia agree otherwise. The Liberian government can provide notice to Sime Darby Plantation within one year of termination of the contract and require reasonable disposal or removal of movable assets, including unusable assets, remaining within the concession area. If Sime Darby Plantation does not reasonably dispose of or remove assets within a reasonable period, the Liberian government may complete the disposal or removal at the expense of Sime Darby Plantation, but Sime Darby Plantation is entitled to any income received from sales of those assets or parts of those assets.
The contract terminates at the end of its term unless the Sime Darby Plantation and Government of Liberia agree to terminate earlier. Early termination can be called in the following situations. Sime Darby Plantation may terminate the contract without cause 365 days after giving notice to the government; in case of a force majeure event (unexpected, major event or disruption which makes continuing the contract exceedingly difficult) as provided for in the contract; or if the Liberian government fails to comply with any of its material obligations under the contract. In the event of early termination, Sime Darby Plantation is responsible for any responsibilities or costs under the contract which are incurred prior to the date of termination. In the case of the government's failure, Sime Darby Plantations should notify the government of such failure. If the failure is not fixed within 60 days after the notice (or a longer period specified in the notice), then the contract is deemed terminated. The Liberian government may terminate the contract, subject to an occurrence of a force majeure event (unexpected, major event or disruption which makes continuing the contract exceedingly difficult), if any of the following events of defaults take place and continue: (a) Sime Darby Plantation fails to comply with any of its material obligations under this contract; (b) Sime Darby Plantation voluntarily assigns its assets to creditors (to pay its debts) without the prior approval of the Liberian government (other than an assignment made to settle debts incurred in the ordinary course of business); a petition or application is filed to any tribunal for trustee or receiver appointment for all or most of Sime Darby Plantation's investments; proceedings for bankruptcy, reorganization, arrangement, or insolvency of Sime Darby Plantation are commenced and steps are not taken to dismiss proceedings within 90 days; or if any order is entered appointing trustee or receiver, or finding Sime Darby Plantation bankrupt or insolvent, or approving petition in any proceedings and no steps are taken to set aside proceedings or dismiss the order within 90 days from date the petition or order is served to Sime Darby Plantation; (c) Sime Darby Plantation stops production for more than 365 consecutive days, unless the Liberian government gives approval for the stoppage or the stoppage results from force majeure (unexpected, major event or disruption which makes continuing the contract exceedingly difficult) or any government act of prevention or failure to comply with an obligation under the contract. If there is an event of default (ie, Sime Darby Plantation’s action or inaction causes the Liberian government to call for early termination), the Liberian government must provide notice to Sime Darby Plantation and offer a fair opportunity to resolve the matter. If after a reasonable period of consultations, the Government believes that the disputed matter cannot be resolved with additional consultations, the Liberian government must notify of its intention to terminate. If an event of default is not cured within 60 days after the relevant notice (or a longer period specified by the government), the contract is terminated. If the Liberian government disagrees that it has failed to comply with an obligation or if Sime Darby Plantation disagrees that there has been an event of defaults, either party has 90 days after the notice of termination to refer the dispute to arbitration in accordance with the contract. If so, then a termination will not take place until the arbitration is complete and only if the arbitration decision permits termination. In case of a termination, Sime Darby Plantation and the Government of Liberia shall set up a winding up commission. Sime Darby Plantation should present to the winding up commission a detailed status report on operations so that the commission can recommend steps to the Liberian government to preserve the viability of the growing area, employment in the area, and the centers of population. At the request of the Liberian government, the winding up commission will establish plans for full or partial stoppage of operations, including the disposition of assets and their demolition or removal. If Sime Darby Plantation fails to develop the concession area in accordance with its minimum development obligations, the Liberian government may send a notice to Sime Darby Plantation of the alleged default and of its intention to reclaim any undeveloped portion of the concession area. The Liberian government shall offer Sime Darby Plantation a fair opportunity to consult with it to resolve the matter. Within six months following receipt of a notice of undeveloped area, Sime Darby Plantation must provide a plan to solve such failure (including performance metrics and a schedule for completion of those metrics), and evidence to the reasonable satisfaction of the Liberian government that the matter will be resolved. If, after the end of the 6-month period, the Liberian government is of the reasonable opinion that the issue cannot be solved, then the undeveloped portion of the concession area shall be put in control of the Liberian government.
Confidential information provided by one party to the other party of the contract can only be used by the party receiving the confidential information and its representatives, and only for the purpose for which it was obtained. The confidential information may be released if required by law or if such confidential information becomes publicly available. If any individual or legal entity in course of formal dispute resolution applies to a court in Liberia the production of confidential information from the information receiving party, such party shall notify the information producing party about such event.
The Liberian government undertakes not to nationalize or unlawfully take or seize (or take any measures which would have the same effect as nationalization or expropriation) in relation to: infrastructure and property of Sime Darby Plantation, its affiliates, associates and those of their respective employees, agents and representatives, to the extent that this may affect the activities of Sime Darby Plantation as an investor; agricultural products produced in course of Sime Darby Plantation's activities; shares, equity or ownership interest of Sime Darby Plantation; any structure or entity put in place for the activities of Sime Darby Plantation under the contract; and any capital invested by Sime Darby Plantation or its affiliates or associates in Liberia. If the no-expropriation/ nationalization duty is breached, the government is required to pay the fair market value of the expropriated/nationalized investment as defined under the contract; and Sime Darby Plantation may terminate the contract.
In case of a dispute among the parties the governing law will be the laws of Liberia, including any labor, environmental, health, safety, customs and tax statutes and any international treaties Liberia is a party to. When resolving a dispute the arbitral tribunal shall construe and interpret the rights and obligations of the parties under the contract in accordance with the laws of Liberia and by such rules and principles of generally accepted international law in the area of international investment that may be applicable. In case of a conflict between the provisions of the contract and any provisions of the laws of Liberia enacted after the contract came into force, the provisions of the contract shall prevail. The Constitution of Liberia shall always prevail.
If a party is unable to meet its obligations due to a force majeure event (unexpected, major event or disruption which makes continuing the contract exceedingly difficult), it must give a notice to the other party of that force majeure event as soon as practicable. If the force majeure event causes a complete abandonment of the concession area and impacts Sime Darby Plantation's ability to operate in it, then Sime Darby Plantation's obligation to make payments will be limited to amounts accrued prior to start of the force majeure event. All time periods in the contract affected by force majeure, except continued obligation to make payments of money, completion of the minimum development obligations and Outgrower's program obligations, will be extended. All obligations are to be reinstated once the force majeure event stops, as if such suspension had not occurred. If the force majeure affects Sime Darby Plantation's rights for one year or more or affects the Liberian government's rights for four years or more, either party can terminate the contract by giving 60 days' prior notice.
The Government of Liberia and Sime Darby Plantation agree to compensate and reimburse the other party for any third party claims, liabilities or damages suffered as a result of contractual breaches by the first party, including those deriving from the breach of the contract. Both will further compensate and reimburse the other party for any claims arising from the death or injury to any legal person or individual or damage of any property in Liberia as a result of its willful misconduct or gross negligence.
Sime Darby Plantation will maintain all records, as required by the laws of Liberia relating to its operations under contract. Sime Darby Plantation will also report to the Liberian government as required about its progress and development within 90 days of each anniversary of the date the contract comes into force within the term of contract on the same date as the delivery of the development plan.
In the event of a conflict between this contract and any law of Liberia enacted after the contract came into force (except the Constitution of Liberia), the rights, duties and obligations of Sime Darby Plantation and the Liberian government are the ones listed in the contract.