STATE JURISDICTION OVER NATURAL RESOURCES

Ownership of Natural Resources

 The ownership of a natural resource in Ghana depends on
the type of resources involved.

 Water resources: are vested in state (s:12 Act 522) Water

Resources Commission Act.

 Prior to the enactment of Act 522 water in in rural

communities was considered as communal asset and as such
was under the control & management of traditional
authorities

 Water was managed as an appurtenance of land therefore

the owner of a land exercises certain automatic rights over
the waters contiguous to the land.

 The Constitution only provides for the establishment of water

resources commission to regulate and manage the utilization
 Forestry: ownership of forest is based on the traditional
system of land inheritance (matrilineal & patrilineal
system)

 Forest on stool land forms an integral part of landed

resources of the stool

 Art. 295(1) defines stool lands as “any land or interest

in, or right over, any land controlled by a stool or skin,
the head of a particular community or the captain of a
company for the benefit of the subjects of that stool or
the members of that community or company”

 Again, Article 269 only provides for the establishment

of Forestry Commission and says nothing about
ownership of Forest.
 Oil & Gas (Petroleum): s:1(1) of PNDCL 84 vest all
petroleum in its natural state within Ghana is vested in
the state and held in trust by the president for and on
behalf of the People of Ghana. (repeated in the recital
to the Model Petroleum Agreement)

 Land: land may be owned by stools, skins, families,

individuals and the state
 Natural resources particularly oil & gas, minerals,
forest and water are a major sources of conflict in
many developing countries if not well handled.

 These resources often serve as the main sources of

national income and therefore issues of ownership and
management tend to be highly emotive.

 This emotional issue is a reflection of conflicting claims

of:
 Private ownership/title (individual or corporate ownership)
 Communal or customary land rights
 State ownership

 However, a distinction ought to be made between

ownership & management, control & sharing of the
revenue of these resources
 In attempt at resolving these issues, Constitutional
provisions are used as a means of to decide what
state/gov’tal institutions should have the mandate
to make and administer laws on the exploitation &
development of natural resources.

 This translate into real power to control, regulate

and manage natural resources which may
sometimes be more important than ownership of
the resources itself.

 This is often significant in jurisdictions where natural

resources are a major source of income for the
national economy
Why Treatment of Natural Resources in a
Constitution/fundamental laws of the land
 In post-conflict or divided societies, such arrangements
are usually intended to be the basis for a new social
compact

 In post-colonial era, it was a means of proclaiming

national sovereignty with emphasis on state ownership of
the resources for the entire country in contradistinction to
ownership & exploitation by foreign entities.

 In later-generation constitutions use this as a tool for

resolving claims by competing internal groups over
ownership, control and sharing of natural resources.

 Political reason: (a) serves as a foundational element of

any new national compact; (b) constitutions are intended
to protect the core elements of a new national compact
by preventing them from being changed except by super-
majorities & special procedures.
 Ownership of Natural Resources in General
Natural resources ownership has become a crucial issue because
where the resource revenues form greater part of the country’s
economy and also where the geographic distribution of the
natural resources is uneven across, ethnic, sectorial or regional
groups.

 Ownership involves balancing the contest between competing

claims by private title, communal and state ownership.

 In homogenous jurisdictions the provision of issues of natural

resources is intended to address national development & how
these resources are shared between gov’ts & private interests.

 But in divided societies such constitutional provisions are

concerned with how the resources are shared among often
antagonistic communities.

 But these constitutional provisions usually do not address the

nagging issues of management, regulations and sharing of the
Constitutional Practice:
 Constitutions may or may not guarantee private
property rights & the extent to which private, foreign,
ownership is permitted. (Art.

 Usually ownership of natural resources is vested in

the sovereign state for the benefit of the generality of
the people.

 Constitution when it guarantees private property right

also provides for right to receive compensation for
the deprivation of their property. (Art. 20 of the
Constitution 1992)

 It may also regulate the right of the state & the

private individual by limiting the uses or the ways of
exercising one’s property rights (environmental
 Constitutions may also distinguish between surface
rights (private & communal ownership) and
subterranean minerals and resources often owned by
the state.

 Implications:
 Clarity in ownership rights & regulatory authority
is crucial for political stability and thereby
avoiding dispute
 Certainty is needed to attract investment

Allocation of Power of control over resource

management
Allocation of Power of control over resource management
 Allocation of legislative & executive authority over natural
resources is potentially more important than the issue of
ownership of natural resources.

 This is because such powers determines who has the ability to

make & administer laws affecting development & exploitation
of natural resources.

 The power to legislate & regulate natural resources

development also determines the respective rights, and the
limits of the rights, of ownership and even who has the right to
collect revenues from the exploitation.

 Also, determines which court to settle natural resource related

disputes.

 Issues covered by the allocation of regulatory authority

include: contracting authority & procedures, licensing,
taxation, royalty regimes, environmental & safety standards,
Constitutional practice on allocation of control of
over Resource.

 Mostly in unitary countries the legislature sets

policy for the entire sector and specialised agencies
of the executive branch, such as the ministry of
lands & natural resources, are responsible for
applying relevant laws & policies

 Specialised matter related to exploitation may be

handled by specific agencies, e.g. Energy
Commission, EPA, Minerals Commission, Water
Resources Commission etc

 There is usually the requirement of parliamentary

ratification as a way of oversight of the sector.
 Ownership of Mineral Resources
Mineral right ownership simply refers to who has the right to
extract the mineral concerned from the soil.

Mineral rights ownership in the USA:

 Private individuals own much of the minerals (including
oil & gas) underground as opposed to the central/federal
government.

 Surface owner may also have the right to extract

minerals underneath his land.

 Hence companies interested in extracting such mineral

must contact and negotiate with the private individual
directly.

 However, it must be noted that by law ownership of the

surface land can be separated from the mineral rights.
 Mineral right ownership in Ghana
 Apart from the United States almost all countries in the
world are the owners of mineral resources.

 Means that the surface owner has no right whatsoever

with respect to mineral ownership.

 Minerals resources are usually vested in the states and

held in trust by the governments.

 In Ghana, every mineral in its natural state is vested in

the state & held in trust by the President for and on
behalf of the citizens. [Art. 257(6)] {see also s:1 Act 703}

 This include all minerals found within the territory called

Ghana, i.e. land surface, rivers, streams, waters,
territorial sea, continental shelf, EEZ
 Incidents of Ownership
 Right to transfer interest
 Right to terminate grant
 Right to receive rent (royalty)

Where ownership of minerals is vested in the state the

critical question is whether those in charge of the
management of these resources have adequately advance
the interest of the citizens especially negotiating the terms
of an agreement.
The Constitution 1992 attempts to address this critical
question in Art. 268.
 The constitutional requirement that any transaction, contract, or
undertaking involving the grant of right for the exploitation of
minerals, water or other natural resource should be subject
parliamentary ratification.

 Some contract may be exempted from the requirement of

ratification but ought to be by a resolution of not less than 2/3 of
Does the constitutional provision creates an
enforceable trust?
 Trust imposes an equitable obligation on the legal
owner (trustee) to act in good faith when dealing with
the trust property and must act at all times in the
best interest of the beneficiary.

 A trustee holds the property in trust for the

beneficiary.

 Art. 257(5) creates an express trust

Adjaye & Ors v A-G (1994) per Aryeetey J (as he

then was)
3 plaintiff sued the gov’t for its decision to sell 25% out
of 55% of its shares in Ashanti Goldfields Corporation
Reliefs:
 The gov’t holds the 55% shares in trust for the
people of Ghana
 The decision to sell 25% to Lonhro PLC is a breach of
that trust
 Injunction to restrain the gov’t from selling the
shares to Lonhro until Ghanaians have been given
the first right of refusal
Issues:
 Whether or not the 55% shares creates trust
arrangement between the gov’t and the citizens

 Was there a breach of that trust through the share

offer

 Whether ordinary citizens can institute legal action to

enforce such trust if any
Held:
 The trust relationship between the gov’t and the
people of Ghana is a trust in a “higher sense”and
not the trust in the “lower sense” which equips
ordinary citizens to take actions against the trustee
(gov’t) on the ground of lack of good conscience
dealing with the trust property.

 Court relied on British case of Tito & Ors v

Waddell (No.2) [1977] 1 Ch 106
 Phosphate discovered in Banaban Island

 A british firm was granted an exclusive right to mine the

phosphate subject to payment of royalties to the Crown.

 There was in existence an ordinance which required that

royalties accruing to the indigenous people were to be paid
into special fund
Plaintiffs being landowners & council leaders sued arguing
that;
 The royalties were lower than the “proper rates”
 Crowns was in a fiduciary position (trustee)
Held:
 Trust in relation to the Crown created no enforceable legal
obligation but merely gov’tal obligation not capable of being
enforced in a court of law

 Where property is administered in exercise of gov’tal functions, is it

possible to have a “lower sense trust”?

 Megarry VC seems to think that this is a matter of interpretation of

the particular instrument.

 Can the constitutional provision be interpreted to mean trust in a

lower sense?

 Is the higher sense trust argument applicable to the Ghanaian