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Water privatization, some condoning views

Sunday, May 20, 2007

My JP article on the legal risks of water privatization gets a mixed response and was quoted in blogosphere and other sites. I feel the need to bring a balancing view.

What I said on that article was that privatization carries legal risks, in simpler terms, the state's controlling power toward water will significantly reduces if water services is privatized. The article did not lead to the conclusion of whether privatization should be rejected or not, it only warns the government on the risks.

Is water privatization all bad?

I am not an economist so I do not have the competency to argue. But here's some view:

Privatization is not a panacea, but Segerfeldt shows that, when properly done, it can play a huge role in bringing safe clean drinking water to the hundreds of millions of people who still lack it. In the meantime, Segerfeldt wonders, "why anti-privatization activists do not expend as much energy on accusing governments of violating the rights of 1.1 billion people who do not have access to water as they do on trying to stop its commercialization." Good question.

There are some who argues that it helps to reduce waterborne diseases:

In the 1990s Argentina embarked on one of the largest privatization campaigns in the world, including the privatization of local water companies covering approximately 30 percent of the country’s municipalities. Using the variation in ownership of water provision across time and space generated by the privatization process, we find that child mortality fell 8 percent in the areas that privatized their water services and that the effect was largest (26 percent) in the poorest areas.


Im not really sure on privatizing an already established regional waterwork service like the Argentina case above. As far as I know, the impact of privatization on water price, water quality and availability mixes between good and bad (with the majority suggesting "bad").

But, on the other hand, I tend to agree with Segerfeldt's approach. Why not blame the government for not providing water services to the needy people and why blame corporation instead? However the focus here is the provision of new water network. I'd say, privatization should be OK if the aim is to establish new water network. From what I've heard, privatization mostly occurs on extending existing network. Privatization which is aimed solely at establishing new network is quite rare.

Thus, the regulation must support and provide benefits of privatization which are aimed at providing completely new water services.


 

The Value of Privacy

Saturday, May 19, 2007

In my previous posts, I have argued that privacy has a value, and therefore might need to be taxed. My argument was that in the future, it would be difficult to obtain privacy, given the development of sensor devices. Thus, protecting privacy would require an effort that costs money and only the rich would be able to do so. This is why it need to be taxed.

Well, here's a link to an HBS paper discussing the value of privacy.

I assure you the the concept of privacy valuation would be important for the future. Can't wait to see it showing up on the balance sheet ;)

How can privacy be valued? Read it yourself.

 

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Water Privatization in Indonesia

I wrote an op ed-piece for the JP a few days ago:

Privatization that involves MNCs will cover generally three legal arenas, namely transnational, national and contractual. Each legal arena requires a different model of legal protection.

In the transnational arena, governments may face parent companies and shareholders of an Indonesian-incorporated subsidiary company in arbitrations. In typical water contracts between local water authorities and a locally incorporated company, there is always a clause that refers every dispute arising from the contract exclusively to a local jurisdiction.

The problem is, MNCs can always refer to Bilateral Investment Treaty (BIT) to which Indonesia is a party and use the "umbrella clause" in the BIT to transform a problem that was originally a contractual dispute into an international investment dispute. So, the central government can be dragged into a costly international arbitration.

One of the drawbacks of international arbitration is that the proceedings are often closed to the public. This transparency can no longer be ensured once a dispute is settled at an international arbitration venue.

Another disadvantage in dealing with an MNC is that there is currently no adequate accountability and responsibility standard in place. Thus, it is theoretically possible for an MNC to cause losses (to the environment or labor) in a host state and get away with it. This is because an MNC is a single economic unity, but is legally distinct.

The losses are not attributable to its parent company in United States or Europe, because those companies exist beyond Indonesia's jurisdictions and they possess a distinct legal personality from their Indonesian "avatar".

From the above explanations, there are some conclusions that can be drawn.

First, the legal protections granted at the national level will be obsolete at the transnational level if the government decides to conclude a contract with an MNC.

Second, the damages created by an MNC to the host state may be irrecoverable due their transboundary character. Put it simply, the control by the government towards water provision will considerably diminish when privatization is opted.

The second legal arena is the national fora. Protection towards the right to water in Indonesia is very weak. The first weakness is that our constitution does not explicitly recognize the right to water. The right to water in Indonesia develops only out of a judicial interpretation of the Constitutional Court when the water law was reviewed.

The second weakness is the water law itself, which does not specifically cite the right to water as a human right. This is a mistake because it should have cited Chapter XA of the Constitution, which regulates human rights. If it is only Article 33 that is cited, then water would be perceived nothing but as an economic good.

The third weakness is that the current regulations governing infrastructure projects do not distinguish water from other projects. Currently, a 2005 Presidential regulation is used as a "catch-all" regulation for infrastructure project, including water. This could be fatal if the government decides to privatize more water services in the future.

Water projects are among the most critical infrastructure projects for emerging economies. They have natural, cultural, political and legal characteristics that differentiate them from other infrastructure projects. Naturally, water is a limited resource, inseparable from the hydrological cycle, it is an indispensable element of life for human, animal and the ecosystem as a whole.

Regulations governing water infrastructure must contain provisions that obligate financial and legal due diligence toward the bidders. There has to be provisions that specifically regulate water service companies, especially its shareholding, lending structure and corporate executives. Its financial condition must also be declared to the public.

The last of the legal arena is the contract between MNC's subsidiary and the authority. Provision of this contract is very delicate as it must embody and guarantee constitutional, human rights, environmental and financial benefits of all stakeholders.

Ensuring the sustainability of the contract would be difficult because MNC tends to always have a more favorable position to ask for renegotiation once the contract is signed. On the other hand, the government's interest is in ensuring water service from being impeded, and the government will be compelled to do it at any cost.

I also wrote a conference paper on the issue of water privatization and a power point presentation available here. Still on the water topic, I also wrote a paper on the Judicial Review of Indonesian water law available here.

 

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Is Creative Commons license applicable in Indonesia?

Wednesday, May 16, 2007

I dare not to say 100 per cent "yes". If I am sitting in the judge chamber and have to decide on this matter, I think I would say "yes" and direct judicial interpretation in that favor. But unfortunatelly I am not a judge.

What underlies my doubt? Well, here's what the law says:

Article 45
(1) The Copyright Holder shall have the right to give a license to another party based on a letter of licensing agreement to carry out the acts as referred to in Article 2.
(2) Unless otherwise agreed, the scope of licence as referred to in paragraph (1) shall cover all acts as referred to in Article 2 for a period of the licensing agreement and is exercisable within the entire territory of the Republic of Indonesia.
(3) Unless otherwise agreed, the implementation of acts as referred to in Article (1) and (2) shall be accompanied by the obligation to pay royalty to the Copyright Holder by the licensee.
(4) The amount of royalty, which has to be paid by the licensee to the Copyright Holder shall be based on the agreement between the two parties by using the agreement of professional organization as a guide.

Article 46
Unless otherwise agreed, the Copyright Holder shall reserve the right to exercise or to give further licences to other third parties to carry out acts as referred to in Article 2.

Article 47
(1) A licensing agreement shall not contain any clauses, which may cause detrimental effect on the economy of Indonesia or to contain any clauses, which cause unfair business competition as provided for in the prevailing laws and regulations.
(2) In order to have legal consequences against a third party, a licensing agreement shall be recorded at the Directorate General.
(3) The Directorate General shall refuse any request for the recording of a licensing agreement, which contains clauses as referred to in paragraph (1).
(4) Further provisions regarding the recording of licensing agreements shall be regulated in Presidential Decree.

Letter of licensing agreement? Well, that is my rough translation of "Surat Perjanjian Lisensi".

Sure, agreements could be conducted verbally, as long as it complies with Article 1320 of the Civil Code. But is it enough to conduct a licensing agreement on copyright verbally?

Lets say that there is a guy named Tom who wants to publish his diary. The publisher has a telephone conversation in which he agreed to publish Tom's diary for a percentage of royalty. Is that sufficent? That is an agreement allright, it conforms Art. 1320. But is that a copyright licensing agreement? If Tom is a bad kid and he hires a lawyer, the lawyer will say: "My client has never conducted any agreement with you. The Copyright Law says that the Copyright Holder shall have the right to give a license to another party based on a letter of licensing agreement. If you think you had agreement with him, show me the contract".

Anyway, what it says there is that, it has to be done in written.

Now, will putting these icons on your blog constitute a "letter of licensing agreement"? You can say "yes", it is in fact a "license", there are terms and conditions, there are limitations. Is it "written"? Well, it is non verbal, so I guess, it is in a way "written".

But where are the party's signatures? If you said that it is a written agreement, there has to be a signature. Your answer: hey, this is 21st century dude, all we have to do is to click-through. You are right, there's shrink-wrap, click-wrap, browse-wrap, web-wrap, and other wrap wraps you name it.

That "I agree" button you see is a substitute of the signature. But in creative commons license, how can a signature be substituted so that the legal formalities is fulfilled? By citing it? By quoting it or putting it on your blog? Maybe. We can always theoritize that the expression of agreement is conducted when the licensee performs any action that is deemed to be within the realm of the CC agreement.

The problem of "expression of agreement" does not stop on CC alone, but to other non-conventional agreements in the internet and especially, a public license agreement.

I shall remind you that even in the US, the "wraps" agreement are subject to legal controversies. The validity of a browse-wrap agreement was denied by the San Jose Court on the case Comb v. PayPal, Inc. The Court held:

Having considered the terms of the User Agreement generally and the arbitration clause in particular, as well as the totality of the circumstances, the Court concludes that the User Agreement and arbitration clause are substantively unconscionable under California law and that arbitration cannot be compelled herein.

I'd love to hear your comment.


 

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Couping the Constitution, a Pakistan Way

Sunday, May 13, 2007

Holding a chief justice under hause arrest and then putting him on a suspension so that he does not got in the way on the next election is a not so cool way of doing a coup. This was said to be Pakistan's Chief Justice's first email after he was being 'detained' at the Presidential Palace:

So that as it may by passing restrained order by the council as well as the earlier order notified in notification no 529/(2)/2007 issued by the president of Pakistan which is equally contrary to the constitution I have suffered as under:

(A) Detained for all intend and purpose with my family members including my infant child of 7 years from the evening of March 9th, 2007 uptill now. My official residence is sealed with heavy continget comprising police and member of other agencies. For which there is no justification.

(B) The vehicles which were in my use have been taken away by means of a lifter out of which one has been brought back by a lifter without its keys.

(c) Staff of Supreme Court attached with me is reportedly missing and had been kept at an unknown place. I believe that they have been detained just to fabricate evidence against me. I have also learned reliably that my chamber was also sealed and reportedly files lying there have been removed and some of them had been handedover to ISI under the supervision of newly appointed registrar. Such act is contrary to all norms and practices. I being CJP is entitled to occupy my chamber along with my staff.

(D) On account of deployment of heavy contingencies I am not allowed to go outside nor my family members are allowed to do so. Similarly no one is allowed to meet me freely. In as my colleagues have no access to me and whenever they want to visit they have to wait on the gate for a considerable period during which permission is sought from high ups of Mr Justice Raja Fayyaz can be quoted as on one occasion he had to go back without meeting me. Similar treatment was offered to Mr Justice Munir A sheikh (Retd).

(E) My children are not allowed to go to school, college and university I am not getting facility of telephone cable and DSL. Similarly I along with my family members have been deprived from basic amenities of Life ie medicines and doctor etc. (F) No. panel of lawyers is available to discuss the legal and factual issues involved in this reference. This act I have already highlighted on the notice received on March 10th, 2007.


 

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Trend of Legal Wikis

Wednesday, May 9, 2007

Collaborative content management style enters the legal world. Not a new thing, but its becoming a trend now:

The key word in these experiments is collaboration and the engine driving them is a type of Web site known as a wiki, from the Hawaiian word for fast. A wiki allows any Web page visitor to easily add, remove or edit content.

Editing can be done quickly from within a browser and without any special knowledge of authoring formats. A wiki's simplicity and ease of use make it an ideal tool for group projects. The first wiki software, WikiWikiWeb, was written in 1994. But it wasn't until recently that wikis saw broader use. No doubt, a driving force has been the best-known wiki -- the collaboratively written encyclopedia Wikipedia.

Neither are wikis new to the legal profession. Denver lawyer John DeBruyn has been experimenting with wikis as a tool for lawyer-to-lawyer collaboration since at least 1997. But in the legal world, as elsewhere, wikis have become more widely used in the last year or two.

Last year, I wrote an op-ed piece about "wikislation" and it received feedbacks from a number of enthusiast. Now, I am beginning to think that the idea to wikislate is extendable to the creation of autonomous laws, such as "code of conduct", "term of reference" or "company regulation". I just haven't come up with a viable technical mechanism in doing this.

Another idea is to draft a wiki contract. Why not draft a wiki site containing boilerplate provisions? That way the whole world can collaborate in creating a draft contract. It also saves a lot of time. Interested?

 

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Careful with blogs!

Tuesday, May 8, 2007

There was a good article from Karina Widyani in JP a few days ago. The title was "listening to the blogs". Here's a quote:

Among these "questionable" contents was an article on one of the blogs where Fauzi was mentioned to have been unwilling to report the fund he allocated for the election campaigns as required by the election commission. Note, however, that this article was not written by the blog's author; it was first published by Rakyat Merdeka daily on April 12. Similarly, the other contested blog contained some articles originally published by popular news Web site detik.com.

 "We are going to take firm action if our wish is not respected. Stop this activity before our anger sweeps across Jakarta," the Fauzi defenders team said in its press release, without specifying what action would involve.

Words are mightier than swords. This is not the first time the "attacks of the blogs" rocks. Some companies has been reported to continously losing their shares prices following their IPO, because bloggers wrote something about their scandal on the net.

Let's just face it. Freedom of speech dude! :)