Nikachu Hydropower Project got extended like other hydropower projects in the country. Hydropower brings highest revenue for the nation. Hydropower also makes our largest public debt, in billions, and any delay has a ripple effect, doubling or tripling the initially projected expenditure. Poor negotiation of contractual terms and conditions, particularly dispute settlement mechanism, is suspected to be a major contributing factor in losing our money, as it is often Bhutan who bears the loss and not the other party. Unless we make a radical change in building Bhutanese contract law experts, we may continue to lose even more money as more joint ventures and an increasing number of Foreign Direct Investments (FDI) are getting established in the country.
Today, Bhutan has over 200 private lawyers and few hundreds working in the civil service and corporate sector. Yet we don’t have a single Bhutanese lawyer who is globally recognised as competent enough on negotiation and contract drafting. We are used to a copy-paste template in contract drafting and negotiation is often ignored. Going by the reports, every contract we negotiate for big projects such as hydropower projects are drafted by other party and our bureaucrats’ sign without much idea of its future consequences.
Our senior bureaucrats, corporates and other senior officers who take decisions on behalf of Bhutan in numerous hydropower and now FDIs in the country hardly take cognizance of the importance of guidance and support of contract law experts. The contract drafting process is a very complex and tedious job, requiring enormous skills as it involves both drafting skills and thorough knowledge of the law and negotiation. Further, every contract is prone to breach for various reasons whether deliberate or otherwise as a contract is about the future endeavor.
Therefore, the ability to draft a comprehensive contract on mechanisms to deal with breach of contracts, particularly the dispute settlement mechanism and ability to negotiate that the forum for dispute settlement to be in Bhutan, is paramount to Bhutan’s interest. Arbitration is often the most preferred method of dispute settlements in commercial and business contracts. It is cheaper, takes less time and allows the parties the ability to negotiate how the arbitration will be done including choice of arbitrators, forum and waivers and rights. All these must be included in the contract itself as an arbitration clause or an arbitration agreement in addition to the subject matter contract.
However, any form of upskilling, including academic qualification in any area including legal expertise in Bhutan are often disincentivised. They lose years in the promotion, allowances and other opportunities. They face unreasonable study obligations and are treated like bonded employees. The government hardly revises stipends for those studying in other countries. The stipend for current government scholarships is many times less than minimum daily wages of those countries when Bhutanese are sent to study.
Such system needs urgent review and change. To upskill contract expertise, the institutions such as the government, Druk Green Power Corporation, Druk Holding and Investments must invest in upskilling Bhutanese legal experts in these areas, including emerging technologies. The return for such investment would be in billions.
Disclaimer: The views expressed in this article are author’s own.