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Parliamentary ratification of PDAs

By Ratna Sansar Shrestha, FCA
ratna-sansar-shresthaSAARC Power Trade Agreement (PTA), signed on November 27, 2014, was ratified by Nepal’s parliament on August 29, 2016 under Article 279 of Nepal’s Constitution, which paved path for SAARC member countries to sell and purchase electricity amongst them.
CONSTITUTIONAL PROVISION
Sub Article (1) of Article 279 makes provision for ratification of treaties or agreement to which the State of Nepal or the Government of Nepal is a party. Sub Article 2 stipulates that treaties or agreements dealing with (a) peace and friendship, (b) security and strategic alliance, (c) the boundaries of Nepal and (d) sharing of (i) natural resources or (ii) their uses. It also specifies that treaties/agreements with far-reaching, grave or long-term impact shall be ratified by two third majority of the total members of the parliament; otherwise will have to be ratified by simple majority.
Therefore, treaties/agreements signed by state/government of Nepal related to sharing of natural resource or sharing of uses of natural resources are required to be ratified by the parliament. With regard to water resource, sharing of it signifies assigning one particular river to one party and another river to another party. While sharing of uses of water resources connote sharing of, for example electricity generated by using water resource. Electricity trading is tantamount to sharing of natural resources and for this very reason SAARC PTA required parliamentary approval. Since there is no provision as such in Indian constitution, India didn’t need to ratify SAARC PTA.
Parliamentary Ratification of PDAs
However, project development agreements (PDAs) for export oriented projects like Arun III, Upper Karnali, etc. have not been ratified by the parliament yet. Superficially, these agreements do not deal with export of power – sharing of use of natural resource. But these PDAs are to implement export-oriented projects and the developer would export power from these projects upon completion; use natural resource, water, to generate power and export electricity (sharing of use of natural resource) in the same way as under SAARC PTA. Therefore, these PDAs need ratification by the parliament.
Failure as such has not only resulted in breach of constitution but also resulted in infringement of authority of parliament, thus undermining it. Parliamentarians are known to raise ruckus when they do not like food served in the canteen in the parliament premises. But they kept resoundingly silent in the matter of parliamentary ratification of PDAs. Trust legislature is not performing the function of an accomplice of executive in this aberration.
History of Parliamentary Ratification
In all constitutions promulgated prior to 1990, there was no provision for parliamentary ratification. Perhaps it was due to the fact that sovereignty and state authority was vested in the King and agreements with his blessing did not require parliamentary ratification. Various institutional mechanisms under those constitutions, called by different names, were not sovereign.
For the first time, the provision for parliamentary ratification for treaties/agreements dealing with specific subjects was incorporated in the constitution of 1990 in Article 126. It is clear that drafters of this constitution did not wish to vest such authority to the executive arm of the government and made provision for ratification by parliament. This provision was replicated in Interim Constitution in Article 156 and present constitution in Article 279.
Judiciary
A writ petition was filed in Supreme Court as agreement for export-oriented West Seti project was not ratified by the parliament and this scribe too had appeared in the hearing on behalf of the petitioner before a division bench comprising justices Anup Raj Sharma and Kalyan Shrestha. In handing down a verdict (number 8059) the court ruled that parliamentary ratification is not necessary as the agreement was not contractual agreement for division of natural resources between two countries or a number of countries. It implies that parliamentary ratification is only necessary if such agreements are executed between two states/governments or number of states/governments.
Under this interpretation PDA for Arun 3 will require parliamentary ratification as it was signed by the government of Nepal with Sutlej Jal Vidyut Nigam (SJVN), which is owned jointly by Indian federal government and a state government. Effectively, it constitutes an agreement between governments of Nepal and India. A writ petition filed against the agreement for Arun 3 is under consideration at Supreme Court and it is hoped that the Court will not rule that ratification would be required only if agreement is signed by government of Nepal with Indian government, not with a company owned by Indian government.
1990 Constitution
Drafters of 1990 Constitution were clear about their intention and had constructed Article 126 very wisely. This article stipulates that agreement signed by Nepal state or government on the subjects specified in Article 126(2) require parliamentary ratification. It doesn’t say that only agreements signed between Nepal state/government and another state/government or a number of states requires ratification.
Therefore, treaties/agreements related to subjects specified in Article 126(2) [Article 279(2) of current constitution] whether signed between Nepal state/government and another state/government or a number of states or by Nepal state/government with any party (whether foreign state/government or public/private company, institute, agency etc.) has to be ratified by the parliament.
Confusion between treaty and agreement
Generally agreements concluded between two states/governments are called treaty, which is covered by Article 2(a) of Vienna Convention on the Law of Treaties. While agreements signed between non-government institutions and between government and other non-government institutions are called agreement; such agreements are not referred to as treaties.
With this in view, the constitution drafters have used both words: treaty and agreement. In an important document like constitution, an extra word would not have been inserted unnecessarily if it were not absolutely essential. The constitution would not have mentioned the word “agreement” if the intention was just to cover inter-government treaties or treaties between a numbers of nations. Only one word, treaty would have been sufficed.
Power Trade Agreement
Nepal government has signed Power Trade Agreement with India in 1997 and although it constituted a treaty, it was called an agreement and it required parliamentary ratification; for the failure to get it ratified by the parliament the agreement became defunct. Nepal signed another Power Trade Agreement in 2014. It becomes clear from this that although treaties are signed between government-to-government; these are at times also called agreements. Moreover, not only treaties come under purview of Article 279 but also agreements come under it. Further, merely because a document is called an agreement, it doesn’t become exempt from parliamentary ratification if it comes under the purview of article related to parliamentary ratification.
PTA signed in 2014 is an agreement subject to parliamentary ratification in accordance with precedent set by Supreme Court; it has yet to be ratified by the parliament. Seemingly, GoN is not getting it ratified by the parliament by interpreting that since it is an “agreement,” it doesn’t need parliamentary ratification. This not only constitutes transgression of constitutional provision but also infringement of authority of the parliament. Further, it also amounts to breach of precedent set by Supreme Court in West Seti case. It is hoped that Supreme Court would take sou moto notice of the matter and direct GoN to get PTA with India ratified by the parliament.
Transfer of Project to GoN under BOOT
Supreme Court, in handing down the verdict in West Seti case, also contented that the Project would be returned back to GoN after completion of specific period, e.g. 25 years and inferred that, therefore, the project doesn’t have long-term adverse impact. What has been lost sight of is the fact that, although civil structures like dam, canal etc. have life of about 50 years, but plant, equipment like turbine, generator etc. have limited life and when the project is handed over, these would be in almost dilapidated condition. It can be compared with the practice of girls being put under bondage called Kamlari in Nepali, wherein a girl is given away till her parents are able to repay money borrowed by which time her reproductive age would be over. This adversely impacts more than imagined; Nepal will be deprived of electricity when the project is in robust condition (while Nepal is not able to meet demand, including latent demand) and returned after it is not in optimum condition will again deprive Nepal from reaping benefit from the project.
At the risk of being charged with contempt of court, this scribe has to state that judiciary has become silent witness to unconstitutional acts of GoN.  An important question arises: does it imply that if an agreement is signed with private sector no parliamentary ratification is required? Then all agreements related to Article 279(2) would be signed with private sector thus avoiding botheration of getting ratified by parliament. In any case even intergovernmental agreement like PTA has not been subjected to parliamentary ratification, committing contempt of Supreme Court and infringing power of parliament.
If agreements signed by GoN with private sector is not subject to parliamentary ratification, how about similar agreements related to (1) peace and friendship (2) security and strategic alliance and (3) the boundaries of Nepal signed by GoN with private sector? Would these too be exempt from parliamentary ratification? If so, what will happen if an agreement is signed with a private sector modeled after East India Company handing over certain territory of Nepal?
There could be another logic that agreement signed by GoN with private sector related to (1) peace and friendship (2) security and strategic alliance and (3) the boundaries of Nepal is subject to parliamentary ratification and only agreements with private sector related to natural resource is exempt from parliamentary ratification. This would be a very irrational logic.
As Nepal is a sovereign country any agreement on subjects specified in Article 279(2) requires parliamentary ratification whether signed between Nepal state/government and foreign state/government or any other institution, agency, private sector or amongst number of states/governments.

(The writer can be reached at: ratna.sansar@gmail.com)

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