The Challenge
Stabilization clauses have long been included in investor–state mining contracts and, increasingly, in national mining and investment laws. These clauses are designed to protect investors from changes in laws or regulations over the life of a project. They can be broad in scope, freezing both fiscal and non-fiscal legal provisions for decades.
However, this practice can limit governments’ ability to regulate in the public interest and update laws to meet modern standards and align with national priorities. For example, fiscal stabilization that impedes tax reforms can lead to significant revenue losses over time and prevent countries from aligning with international tax norms.
Representing the broadest international consensus to date, the OECD Guiding Principles on Durable Extractive Contracts call for a more limited and targeted use of stabilization clauses, focusing narrowly on fiscal terms while excluding non-fiscal areas such as human rights, environmental protection, and labour standards.
Governments require practical tools and guidance to
- review stabilization clauses to align their legal frameworks with these evolving norms
- protect their right to regulate and legislate according to their needs and objectives.
Our Response
The practice note Evolving Standards on Stabilization: A Practical Guide to the OECD’s Guiding Principles on Durable Extractive Contracts, Principles VII and VIII provides practical guidance on implementing Principles VII and VIII of the OECD Guiding Principles on Durable Extractive Contracts. The report traces the evolution of stabilization clauses and offers actionable advice to align with the latest standards on the issue. It includes recommendations for drafting stabilization provisions that are balanced, transparent, and adaptable.
The webinar Evolving Standards on Stabilization: New Norms, Practical Insights, and Emerging Risks brought together legal and policy experts to unpack the implications of the OECD’s latest guidance. Speakers discussed how norms have evolved, shared country experiences, and offered strategies for reforming outdated stabilization provisions. The event also explored the broader relevance of these principles beyond the mining sector.