MCC Agreement & Clauses – how detrimental are they to Sri Lanka?
Posted on January 11th, 2020

MCC has been in the news for all the wrong reasons. It is important that we are all aware of the clauses and demands as well as commitments made by Govt and officials and question some of these assurances completely overlooking the concerns of the public & the future interest of the Nation as well as future generations. No agreement can or should be signed overlooking long term repercussions that will impact on future generations and the sovereignty of a nation.

Millennium Challenge Compact signatories are:

US Govt & GOSL

MCC acting on behalf of US Govt

Min of Finance acting on behalf of SL Govt

MCC Agreement has 8 ARTICLES as contents

  1. Goal & Objectives
  2. Funding & Resources
  3. Implementation
  4. Communications
  5. Termination/Suspension/Expiration
  6. Compact Annexes, Amendments, Governing Law
  7. Entry into Force
  8. Additional Government Covenants

There are 5 Annexes

  1. Program Description
  2. Multi-Year Financial Plan summary
  3. Compact Monitoring & Evaluation Summary
  4. Conditions Precedent to Disbursement of Compact CDF
  5. Definitions

PREAMBLE

This Millennium Challenge Compact (Compact”) is between the USA, acting through the Millennium Challenge Corporation, a US government corporation (MCC”) and the GOSL acting through the Ministry of Finance (the Government”) – Individually Party” and collectively the Parties”.

Comment: Does this mean that all interests of Sri Lanka are to be undertaken by the Ministry of Finance & the Finance Minister?

RECITALS

Recalling that the Government consulted with the private sector and civil society of Sri Lanka to determine the priorities for the use of MCC assistance and developed and submitted to MCC a proposal for such assistance to achieve fasting economic growth and poverty reduction”

Comment: Why didn’t the Ministry of Finance consult line Ministries impacted by MCC in particular the Defense Ministry & the Armed Forces/Police Heads and their senior legal officers as well as land law experts?

ARTICLE 1

Section 1.1 b) to increase the availability of information on private land and under-utilized state lands in order to increase land market activity.

Comment: increase land market activity for whom? Why ‘information on private land’

ARTICLE 2

Section 2.2 Compact CDF

  1. Upon the signing of this Compact, MCC shall grant to the Government under the terms of the Compact and in addition to the Program Funding described in Section 2.1 an amount not to exceed thirty-two million five hundred thousand united states dollars (US$32,500) Compact CDF” under Section 609 (g) of the MCC Act of 2003 as amended (MCA Act) for use by the Government to facilitate implementation of this Compact including for the following purposes
    1. Financial management & procurement activities
    1. Administrative activities (staff salaries/administrative support/rent/computers/IT or capital equipment)
    1. Monitoring and evaluation activities
    1. Feasibility, design and other project preparatory studies
    1. Activities to facilitate Compact implementation as requested by Government & approved by MCC

Comment:

MCC is giving the funds to MCA not the GOSL MCC is going to directly administer funds and it is going to be directly audited by US. What is the role of the GoSL in this bilateral agreement?

Section 2.2 f)

Without limiting the generality of Section 2.2 a) the Government agrees that MCC shall directly administer and manage a portion of the Compact CDF for the purpose of undertaking one or more feasibility studies for the Transport Project, as may be agreed in writing by the Parties (MCC Contracted Compact CDF Activities) Notwithstanding anything to the contrary in this Compact or the Program Implementation Agreement, MCC shall utilize applicable United States Government procurement rules and regulations in any procurement it administers and manages in connection with MCC Contracted Compact CDF Activities and shall disburse Compact CDF from time to time for the MCC Contracted Compact CDF Activities directly to the relevant providers upon receipt of value invoices approved by MCC

Comment:

On what basis is the GoSL agreeing to allow MCC to directly administer and manage Compact CDF?

How much is this ‘portion’ which is not mentioned

How compatible is US Govt procurement rules with procurement rules applied by Sri Lanka?

Sri Lanka follows standard FIDIC procurement rules & regulations – is FIDIC compatible with US Procurement or vice versa?

Has Sri Lanka studied US procurement procedures before accepting that US procurement procedures would apply to MCC Compact Agreement?

If Sri Lankan team did study US procurement against FIDIC procurement – where is that report?

What is this Program Implementation Agreement (PIA) – why is that not made available?

How can an agreement be signed without first looking at PIA clauses which may either conflict or incorporate detrimental acts that must first be looked into before signing a bilateral agreement.

Section 2.4 Disbursement

In accordance with this Compact and the Program Implementation Agreement, MCC shall disburse MCC funding for expenditures incurred in furtherance of the Program (each instance a ‘Disbursement’). Subject to the satisfaction of all applicable conditions precedent, the proceeds of Disbursement shall be made available to the Government at MCC’s sole election, by

  1. deposit to one or more bank accounts established by the Government and acceptable to MCC (each a ‘Permitted Account’) or
  2. direct payment to the relevant provider of goods, works or service for the implementation of the Program. MCC Funding may be expended only for Program expenditure

Comment:

If this is supposed to be a mutual agreement why is it that GOSL has to simply agree to all that the US Govt through MCC private corporation demands – selection of bank / amounts disbursed etc

Why is the money going to a private bank? Why is it not being designated in the Agreement?

US Govt is disbursing this amount directly to MCA Account in a private bank in a foreign country but according to the Agreement the Finance Ministry on behalf of the GoSL has to be accountable though the funds are directly sent by US Govt to the MCA Account.

What is the role of the Central Bank? Is the money coming through the Central Bank of SL?

Page 6: Section 2.6 (a)

Why is GOSL committing to providing ‘all funds & other resources’ and to take all other actions necessary to carry out the Government’s responsibilities when the grant is supposed to cover entire project?

Our Questions:

  • What does GoSL imply by agreeing to provide ALL FUNDS?
  • What does the GoSL imply by agreeing to provide OTHER RESOURCES?
  • What does the GoSL imply by agreeing to take ALL OTHER ACTIONS NECESSARY
  • What are the GoSL’s RESPONSIBILITIES under taken by MCC?
  • Are GoSL’s RESPONSIBILITIES that which the CITIZENS of Sri Lanka requested? The Parliament of Sri Lanka has requested? The Judiciary of Sri Lanka has approved of? Or are these responsibilities that the MCC officials have pushed through various government officials and subject Ministers as well as private lobby groups tasked to somehow push MCC into reality?
  • Shouldn’t the GoSL demand the entire program activity and the powers of the new company BEFORE it agrees to consider signing the MCC?
  • It doesn’t matter what the Govt in power is – can any Govt consider signing an agreement with a foreign govt WITHOUT examining the DOCUMENTS and CONSIDERING THE LEGAL IMPLICATIONS of signing such?

Section 2.7 Limitations to the use of MCC Funding 

The Government shall ensure that MCC Funding is not used for any purpose that would violate United States law or policy, as specified in this Compact or as further notified to the Government in writing, including but not limited to the following purposes:

  1. for assistance, or training of, the military, police, militia, national guard or other quasi-military organization or unit
  2. for any activity that is likely to cause a substantial loss of US jobs or a substantial displacement of US production

Comment:

This means that MCC or the United States Government over a period of 5 years in which the Compact is valid can issue demands in writing to which the Government of Sri Lanka is bound to adhere but does not know…can GoSL sign such an open-ended agreement?

Though 2.7a) says that MCC funding cannot be used for National Army/Police etc it is contradicted in the Transport project details where GoSL has to compensate

As per 2.7 b) GoSL (that is the tax payer) has to end up paying for loss of US jobs and US production and it is not even specified how many jobs lost or how much of loss of production!

Section 2.8 Taxes:

  1. Unless the Parties specifically agree otherwise in writing, the Government shall ensure that all MCC Funding is free from the payment or imposition of any existing or future taxes, duties, levies, contributions, or other similar charges (but not fees or charges for services that are generally applicable in Sri Lanka, reasonable amount and imposed on a non-discriminatory basis) (Taxes”) of or in Sri Lanka (including any such Taxes imposed by a national, regional, local or other governmental or taxing authority of or in Sri Lanka).

Specifically, and without limiting the generality of the foregoing, MCC Funding shall be free from the payment of

  1. Any tariffs, customs duties, import taxes, export taxes and other similar charges on any goods, works, or services introduced into Sri Lanka in connection with the Program
  2. Sales, tax, value added tax, excise tax, property transfer tax, and other similar charges on any transactions involving goods, works or services in connection with the Program,
  3. Taxes and other similar charges on ownership, possession or use of any property in connection with the Program
  4. Taxes and other similar charges on income, profits or gross receipts attributable to work performed in connection with the Program, and related social security taxes and other similar charges on all natural or legal persons performing work in connection with the Program, except in the case of this clause (iv): 1) natural persons who are citizens or permanent residents of Sri Lanka & 2) legal persons formed under the laws of Sri Lanka

c)  If a Tax has been paid contrary to the requirements of Section 2.8 a) or Annex V, the Government shall refund promptly to MCC (or to another party as designated by MCC) the amount of such Tax in US dollars or the currency of Sri Lanka within sixty (60) days in writing (whether by MCC or MCA-Sri Lanka) that such Tax has been paid. Failure to refund such amount within the specified time shall result in interest accruing on the unpaid amount in accordance with Section 5.4

Comment:

Our understanding is that MCC is giving $480m to improve our land and transport system. While it is natural that a grant amount is not charged any taxes/levies why is there such an in depth detail that Sri Lanka shall ensure that MCC Funding shall be free from payment of a series of taxes once signed as well as in the future?

So far every clause has restrictions/limitations only on GoSL

Though this Agreement looks simple enough what about the other Cabinet papers passed all linked to the MCC pre-conditions ex: $160m Parcel Fabric Map? Land Surveying given to Trimble Navigation US firm for $154m – there are likely to be many more cabinet approved projects already rolled out as part of MCC preconditions which the public are not privy too. The former Prime Minister/ Minister of Finance has to be held responsible for these secret provisions using tax payers money.

Why is 2.7

c) MCC’s Environmental Guidelines also mentioned in limitation to MCC Funding (Does MCC funding not fund environmental issues)

d) under limitation to MCC Funding referring to paying for abortions (why should such be included?)

ARTICLE 3 IMPLEMENTATION

Section 3.1 Program Implementation Agreement:

The Parties shall enter into an agreement providing further detail on the implementation arrangements, fiscal accountability and disbursement, and use of MCC Funding, among other matters (the Program Implementation Agreement” or PIA”) and the Government shall implement the Program in accordance with this Compact, the PIA, any other Supplemental Agreement, and any Implementation Letter.

Comment:

This means the MCC Agreement is not an exclusive agreement but is linked with 3 other sets of agreements

* Program Implementation Agreement

* Other Supplemental Agreements

* Implementation Letters

Does the GoSL know what these separate Agreements & their contents are?

why are the contents of these not made public?

Section 3.2 Government Responsibilities

  1. The Government has principal responsibility for overseeing and managing the implementation of the Program. The designation of MCA-Sri Lanka to act on behalf of the Government contemplated by Section 3.2 b) below does not relieve the Government of any obligations or responsibilities hereunder or under any related agreement, for which the Government remains fully responsible.
  • With the prior consent of MCC, the Government shall designate an entity, to be established as a company limited by guarantee under Sri Lanka’s Companies Act No7 of 2007 as the accountable entity to implement the Program and to exercise and perform the Government’s right & obligation to oversee, manage, and implement the Program, including without limitation, managing the implementation of the Projects and their Activities, allocating resources, and managing procurements. Such entity shall be referred to herein as MCA-Sri Lanka” and shall have the authority to act on behalf of the Government with regard to all Program activities. Any provision of this Compact obligation MCA-Sri Lanka to take any action or refrain from taking any action, as the case may be means that the Government shall cause MCA-Sri Lanka to take such action or refrain from taking such action, as the case may be. The Government hereby also designates MCA-Sri Lanka to exercise and perform the Government’s right & obligation to oversee, manage, and implement the activities described in the Amended and Restated Grant & Implementation Agreement, date June 18, 2018 as amended between the Government and MCC (CDF Agreement). MCC hereby acknowledges and consents to the designation in this Section 3.2b)

d)   The Government shall take all necessary or appropriate steps to achieve the Project Objectives during the Compact Term (including without limiting Section 2.6(a) funding all costs that exceed MCC Funding and are required to carry out the terms hereof and achieve such objectives, unless MCC agrees otherwise in writing.

Comment:

This reads like a Treasury operating within a Treasury wherein Sri Lanka’s Finance Ministry is giving full power-of-attorney to a US governmental company registered as a company in Sri Lanka which is superior to a sovereign government or rather the sovereign government is abdicating sovereignty to a US governmental company in Sri Lanka.

Is this not a violation of Article 1, 4, of the Constitution?

Where is this 28 June 2018 Agreement? What are the changes in that agreement?

How can MCA-Sri Lanka a company be given authority to act on behalf of a Government?

According to 3.2 d) the GOSL has to even fund anything exceeding the MCC Funding – and how is GoSL going to generate any income if everything coming into Sri Lanka and going out of Sri Lanka under this project is tax free and without levies while State land ends up privatized leaving GoSL no source of income from sovereign land?

Section 3.3 Policy Performance

In addition to undertaking the specific policy, legal and regulatory reform commitments identified in Annex 1, the Government shall seek to maintain and to improve its level of performance under the policy criteria identified in Section 607 of the MCA Act, and the selection criteria and methodology used by MCC.

Comment:

What is this Section 607 of the MCA Act – who in the GoSL or Ministry of Finance has seen this before agreeing to sign any Agreement?

Section 3.5 Implementation Letters:

From time to time, MCC may provide guidance to the Government in writing on any matters relating to this Compact, MCC Funding or implementation of the Program. The Government shall use such guidance in implementing the Program. The Parties may also issue jointly agreed-upon writings to confirm and record their mutual understanding on aspects related to the implementation of this Compact, the PTA, or other related agreements. Both type of writings are referred to herein as Implementation Letters”.

Comment:

So in other words MCC Agreement is an open-ended agreement because GoSL has to be dancing to the tune of something called ‘Implementation Letters’ which binds the GoSL to act upon them whether these Letters” come daily – weekly – monthly we do not know!

Section 3.6 Procurement and Grants

  1. The Government shall ensure that the procurement of all goods, works and services by the Government or any Provider to implement the Program shall be in accordance with MCC’s Program Procurement Guidelines (MCC Program Procurement Guidelines”. Accordingly, neither the Government Procurement Guidelines (2006) nor any other laws or regulations of Sri Lanka regarding procurement shall apply to procurements to implement the Program.

Comment:

What are MCC Program Procurement Guidelines are they the same as US Govt Procurement Guidelines that Sri Lanka was asked to follow in an earlier clause

Why should Sri Lanka Govt Procurement Guidelines be totally abolished simply to satisfy a grant project?

How can Sri Lanka have parallel Procurement Procedures?

Section 3.7 Records: Accounting: Covered Providers: Access

  1. Government Books & Records. The Government shall maintain and shall use its best efforts to ensure that all Covered Providers maintain, accounting books, records, documents and other evidence relating to the Program adequate to show, to MCC’s satisfaction, the use of all MCC Funding and the implementation and results of the Program (Compact Records). In addition, the Government shall furnish or cause to be furnished to MCC, upon its request, originals or copies of such Compact Records.
  2. Accounting: The Government shall maintain, and shall use its best efforts to ensure that all Covered Providers maintain, Compact Records in accordance with generally accepted accounting principles prevailing in the United States, or at the Government’s option and with MCC’s prior written approval, other accounting principles, such as those (i) prescribed by the International Accounting Standards Board or (ii) then prevailing in Sri Lanka. Compact Records must be maintained for at least 5 years after the end of the Compact Term or for such longer period, if any, required to resolve any litigation, claims, or audit findings or any applicable legal requirements.
  • Access: Upon MCC’s request, the Government, at all reasonable times, shall permit or cause to be permitted, authorized representatives of MCC, the Inspector General of MCC (Inspector General”) the United States Government Accountability Office, any auditor responsible for an audit contemplated herein or otherwise conducted in furtherance of this Compact, and any agents or representatives engaged by MCC or the Government to conduct any assessment, review or evaluation of the Program, the opportunity to audit, review evaluate or inspect facilities, assets and activities funded in whole or in part by MCC Funding.

Comment:

a) If MCC is setting up a Company in Sri Lanka where funding is directly coming – shouldn’t this Office be keeping a track of all matters related to its Program & Funding? Why should MCC private company have any right to look into Government books?

b) What is this ‘accepted accounting principles prevailing in the United States’ & do these contradict with Sri Lanka?

c) Why should the GoSL permit a private company to inspect its facilitites?

d) If MCA is delegated powers why should MCC appoint a ‘Inspector General of MCC” – how can a US state entity be broaching through records of a sovereign country?

Section 3.8 Audit Reviews:

  1. Government Audits: Except as the Parties may agree otherwise in writing, the Government shall, on at least a semi-annual basis, conduct or cause to be conducted, financial audits of all disbursements of MCC Funding covering the period from signing of this Compact until the earlier of the following March 31 or September 30 and covering each six-month period thereafter ending March 31 or September 30, through the end of the Compact Term as well as the one hundred twenty (120) day period following the expiration of the Compact Term. In addition, the Government shall ensure that such audits are conducted by an independent auditor approved by MCC and selected in accordance with MCC’s Guidelines for Financial Audits Contracted by the Millennium Challenge Corporation’s Accountable Entities (the Audit Guidelines”. Audits shall be performed in accordance with such Audit Guidelines, and/or other processes and procedures directed from time to time by MCC. Each audit must be completed and the audit report delivered to MCC no later than ninety (90) days after the applicable audit period, or such other period as the Parties may otherwise agree in writing. Any changes to the period to be audited shall be included in an audit plan developed and implemented by MCA-Sri Lanka in accordance with Audit Guidelines and Program Implementation Agreement and as approved by MCC (the Audit Plan”
  • Audits of Other Entities: The Government shall ensure that MCC financed agreements between the Government or any Provider, on the one hand and i) a US non-profit organization on the other hand, state that the US non-profit organization is subject to the applicable audit requirements contained in the Uniform Administrative Requirements, Cost Principles and Audit Requirements for Federal Awards, issued by the US Office of Management & Budget; ii) a US for-profit Covered Provider, on the other hand, state that the US for-profit organization is subject to audit by the applicable US Government agency, unless the Government & MCC agree otherwise in writing; and iii) a non-US Covered Provider (whether a for-profit or nonprofit organization) on the other hand state that the non-US Covered Provider is subject to an audit in accordance with Audit Guidelines.

d)    Audit by MCC: MCC shall have the right to arrange for audits of the Governments use of MCC Funding

e)   Cost of Audits, Reviews or Evaluations: MCC Funding may be used to fund the costs  

      of any audits, reviews or evaluations required under this Compact.

Comment:

a) How can a private company demand how a sovereign government chooses as auditor? Have the Sri Lankan negotiators looked and studied the Audit Guidelines & Program Implementation Agreement before agreeing even in principle to the project? What are these Audit Guidelines and do they conflict with the Government audit guidelines?

b) Why so much of US audit guidelines when money is being disbursed not to GOSL but to MCA Sri Lanka a private company? Have all these areas been studied and looked at by Sri Lankan officials? Well the National Economic Council have made it clear that the Sri Lanka Government should not sign the MCC for socio-economic & political reasons.

d) If MCA is set up to channel funding why should MCC arrange audits of the Government?

e) How much of MCC Funding is allocated for audits and what is the likelihood of GoSL having to pay additionally for audits from its pocket – since it has to be a US approved auditor?

Page 12 & 13 were missing from document released to public. Two pages have later been inserted and improper alignment shows that it is not part of original document.

Page12

Section 3.9         Intellectual Property:

The Government grants to MCC a perpetual, irrevocable, royalty-free, worldwide, fully-paid, assignable right and license to practice or have practiced on its behalf (including the right to produce, reproduce, publish, repurpose, use, store, modify or make available) any portion or portions of Intellectual Property as MCC sees fit in any medium, now known or hereafter developed, for any purpose whatsoever.

Comment:

Are we insane to give a foreign our entire intellectual property right – current and future?

Article 5 : TERMINATION-SUSPENCION-EXPIRATION

(ALSO PART OF MISSING PAGE 12)

Section 5.1 Termination: Suspension

  1. Either party may terminate Compact without cause by giving the other party 30 days prior written notice. MCC can terminate Compact or MCC Funding without cause in part by giving GoSL 30 days prior written notice
  2. MCC may after written notice to GOSL suspend or terminate Compact or MCC Funding in whole or part and any obligation related due to but not limited to the following

i) GoSL failure to comply with obligations and commitments under Compact or any other agreement in relation to Compact or Program

ii) If the GoSL has made any incorrect or misleading data in the Compact/PIA or Supplemental Agreement

iii) an event or series of events that shows Project Objectives are not going to be achieved during Compact term or that the GoSL is not able to perform its obligations under Compact.

iv) MCC Funding violating US Policy

v) GoSL or any other person receiving MCC Funding acting against national security interests of US

vi) If Sri Lanka is ineligible for foreign assistance due to Foreign Assistance Act of 1961

vii) If Govt is engaged in activities inconsistent with MCA Act

vIII) If Govt or person or entity receiving MCC funding is convicted of narcotic offences or engaged in drug drufficking

Comment:

a) While it says either party can terminate Compact giving 30 days written notice – MCC only can terminate giving 30 days notice.

b) Why is all the obligations and commitments on the part of Sri Lanka only?

Section 5.2 Consequences of Termination: Suspension : Expiration

  1. If Compact or MCC Funding is suspended or terminated in whole or part – provisions of PIA shall govern the post-suspension, post-termination or post-expiration treatment of MCC Funding – any related Disbursements & Program Assets. If Compact, MCC Funding, PIA, or any other Supplemental Agreement is not suspended or terminated it remains in full force & effect.
  2. MCC may reinstate any suspended or terminated MCC Funding

Comment:

This means Sri Lanka if terminating or suspending any MCC related agreement it must ensure all docs are terminated otherwise those agreements remain in force. What are the provisions in the Programme Implementation Agreement – why has this not been made public?

Section 5.4 Late Payment Interest:

If the Government fails to pay any amount under this Compact or the Program Implementation Agreement when due (including amounts under Section 2.8 (c) and 5.3 (a) the Government shall pay interest on such past due amount. Interest shall accrue on such amount at a rate equal to the then current US Treasury Current value of Funds Rate, calculated on a daily basis and a 360-day year from the due date of such payment until such amount is paid in full. Any such payment shall first be credited against interest due and once the interest due amount is extinguished, then payments shall be credited against outstanding principal.

Comment:

Firstly, we are all under the impression that this $480m was an absolute grant with no strings attached. A gift horse we are told – but now Section 5.4 says otherwise. This is what the US envoy told the Ceylon Chamber of Commerce in June 2019 the United States has offered the government and people of Sri Lanka a $480 million grant.  A gift, not a loan, but a gift from the people of the United States.  This is not a loan that might mortgage the future of the country”

https://lk.usembassy.gov/remarks-of-ambassador-alaina-b-teplitz-at-3rd-agm-of-the-ceylon-chamber-of-commerce-sri-lanka-usa-business-council/

What is this amount the Govt is due to give under MCC Compact/PIA?

Section 2.8 c) says MCC Funding cannot be used by the Govt that violates MCC Environmental Guidelines (what are these Guidelines – have the Govt looked at these before agreeing to them)

Section 5.3 a) says if MCC Funding / interest or earnings / any Program Asset is used for any purpose in violation of terms of Compact, GoSL may have to repay MCC in USD the value of misused MCC Funding, interest, earnings or asset plus interest in accordance with Section 5.4 within 30 days after MCC makes formal request from the GoSL. MCC Funding or Program Asset cannot be used to make such payment.

Section 5.5  Survival

This section lists out Govt’s responsibilities which also covers Sections 2.7 (Limitations on use of MCC Funding) Section 2.8 (Taxes), Section 3.7 (Records, Accounting, Covered Providers, Access) Section 3.8 (Audits, Reviews) Section 3.9 (Intellectual Property), Section 5.2 Consequences of Termination, Suspensions or Expirations), Section 5.3 (Refunds, Violation), Section 5.4 (Late Payment Interest) and Section 6.4 (Governing Law)

The Govt is thus bound by Section 6.4

Comment:

Section 6.4 says this Compact is an international agreement & shall be governed by international law. What does this mean? Does Sri Lanka need to amend its laws to be on par with all international laws? There’s a list of international treaties that US has not signed or ratified. Are US laws compatible with international laws if not which applies in case of MCC vis a vis Sri Lanka?

https://en.wikipedia.org/wiki/List_of_treaties_unsigned_or_unratified_by_the_United_States

Section 6.4  Governing Law

MCC Agreement is an international agreement and shall be governed by international law

Comment: MCA Sri Lanka the company to be set up after signing MCC is to be legally immune from all wrong doing – but Sri Lankan Government is not immune!

(MCA Sri Lanka can go to courts against Sri Lanka Govt/Citizens but Sri Lankan Govt/Citizens cannot take MCA Sri Lanka to court)  

How can a locally registered company not be subject to Sri Lankan laws but international laws simply because an agreement states so?

There is all possibility of Sri Lanka being taken to international court/tribunal if MCC is signed and GoSL backs out of any commitments or assurances given most of which are revealed earlier are unclear & undisclosed”.

Should any Govt be allowed to commit Sri Lanka to such future international arbitration which will be borne not by Govt making the mistake or by officials signing but ordinary tax payers footing millions of dollars as compensation?

When international law is being applied and Sri Lanka by signing MCC commits to that – no amount of political drama and theatrics will allow Sri Lanka’s government to renegade from the agreement. It will be subject to international law and Sri Lanka if going back on its word will end up in an international court and charged heavily. Do we want to go through with all this just for a paltry $480m when we are likely to end up paying millions more after realizing the dangers or rather facing the dangers once MCC is signed?

Section 6.6 References to MCC Website

References in Compact, PIA or any other agreement entered into in connection with Compact – document, information notified by posting on MCC Website shall be deemed reference to such document or information as updated or substituted on MCC website from time to time.

Comment:

Does this mean that Sri Lanka will have to place someone 24×7 to be looking at the MCC website to see what updates have been placed as that is deemed as latest updated information!

Section 6.8 MCC Status

MCC is a US govt corporation acting on behalf of the US Govt in its implementation of this Compact.

MCC & the US Govt assume no liability for any claims or loss arising out of activities or omission under this Compact. The Govt waives any and all claims against MCC or the US Govt or any current or former officer or employees of MCC or the US Govt for all loss, damage, injury or death arising out of activities or omissions under this Compact and agrees that it shall not bring any claim or legal proceeding of any kind against any of the above entities or persons for any such loss, damage , injury or death. The Govt agrees that MCC or the US Govt or any current or former officer or employees of MCC or the US Govt shall be immune from the jurisdiction of all courts and tribunals of Sri Lanka or any claim or loss arising out activities or omissions under this Compact.

Comment:

Section 6.8 clearly establishes that MCC is a US govt entity and forming MCA would be allowing US to open a US govt office in Sri Lanka allowing it to even audit Sri Lankan Govt. What’s more as per this section MCC & US Govt are immune from all liabilities including loss, damage, injury or death in any court or tribunals in Sri Lanka.

So where is the law of reciprocity as applicable under international law which Section 6.4 refers to?

This immunity taken together with immunity given to US troops, personnel and contractors under ACSA and SOFA mean that US can do anything in Sri Lanka and Sri Lanka cannot take any legal action against it. For $480 is this worth it?

http://www.neelakandan.lk/Compendium%20of%20Law/Laws%20of%20Property%20and%20Contracts.php

see Unfair Contract Terms Act 26 of 1997 imposes limits on the extent to which civil liability for breach of Contract or for negligence or other breach of Duty can be avoided by Means of Contract terms and otherwise.  

Article 7 ENTRY INTO FORCE

7.1 Domestic Procedures:

The Government shall proceed in a timely manner to complete all of its domestic requirements for this Compact and PIA to enter into force. The Parties understand that, consistent with Sri Lankan law, prior to the Government sending the letter described in Section 7.3, this Compact is to be submitted to and enacted by the Parliament of Sri Lanka.

Comment:

We are under the impression $480 is a gift by US to the people of Sri Lanka, if so why does the GoSL have to complete all of its domestic requirements to enforce Compact & PIA. What are these ‘domestic requirements’?

What is this letter that the GoSL has to send described in Section 7.3?

If MCC is giving a gift of $480m why should the MCC Agreement have to be enacted by Parliament?

According to the Congressional Notification Transmittal Sheet dated 25th April 2019 requests funds to be made ready in 15 days – this was days after Easter Sunday terrorist attacks.

$480m is to be given across 5 years

Land Project: The Government has prepared two draft legislative acts that seek to (1) convert permits and grants to State Lands to absolute land grants that allow permit-holders to sell or lease their land or use it as collateral with few restrictions, and (2) create a data base that gathers information on State Lands and facilitates investment in underutilized State Lands. Prior to enactment of these acts, the Government must address legislative gaps focused on decentralizing authority for the approval of absolute land grants, simplifying procedures, and ensuring gender equality in the issuance of absolute land grants, among other issues.”

Clearly indicates what MCC plan is

https://assets.mcc.gov/content/uploads/cn-042519-sri-lanka-intent-to-sign.pdf

Further observations is the circulated map of an economic corridor which had been part of a MCC Presentation shown by MCC in Temple Trees where in the said economic corridor (5miles to left & 5 miles to right of railway line gives extent of 1.2million acres (200miles x 10miles) is to cover the very districts that the MCC is proposing to digitalize and where the State is said to be currently rolling out accelerated title registrations in. With railways leased out via State Land Bank Act through the megapolis ministry the MCC or US allies can lease area for 100 + 100 years. The previous government has already given 1million title deeds to people and in their poverty and loan hardship the opportunity and risk to sell their lands to foreign investors is a threat to Sri Lanka’s national security, agriculture and livelihood.

Leaving all of the detrimental clauses and concerns aside, what is even more worrying is Sri Lanka’s own land laws still subject to colonial statutes, sudden and impulsive cabinet changes, circular approvals, provincial council malpractices etc all of which are undermining Sri Lanka’s ability to uphold its sovereignty vis a vis foreign agreements that seek to establish ventures in Sri Lanka. Should Sri Lanka not address these internal issues first before going and landing up with bigger issues and international litigation ignoring such.

Shenali D Waduge

One Response to “MCC Agreement & Clauses – how detrimental are they to Sri Lanka?”

  1. Cerberus Says:

    Shenali, As usual you have put out all the information. Thank you for this great service. Shall read this slowly to digest it all.

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