Step 10 - Negotiate agreements/contracts/statutes

From Municipal Cooperation

Establishing IMC
PHASE 1: Initiating cooperation
PHASE 2: Establishing cooperation
PHASE 3: Implementing IMC
PHASE 4: Evaluating IMC

Once all preliminary studies and negotiations are successfully completed, IMC must be given a legal basis, unless it takes the form of a handshake agreement. It is the responsibility of the task force to negotiate and prepare the legal documents for its establishment.

One of the following four possible legal documents needs to be prepared:

  1. a private law contract;
  2. a public law agreement;
  3. the statutes of a private law institution; and
  4. the statutes of a public law institution.

In the cases where it is decided to establish a private or public law institutions, it is often the case that the partner municipalities sign a preliminary agreement that regulates their mutual rights and obligations, responsibilities and tasks, as well as financial obligations over the period leading up to the formal establishment of the institutions.

Negotiating agreements, contracts and statutes seems like a purely technical aspect of the process, but it can be very delicate and requires considerable attention by the members of the task force (Box 20). The agreement, contract or the statute of the future IMC institution will provide the permanent common rule for the functioning of the IMC. Each must give clear and solid answers to all questions that can arise during the life of an IMC, since over time, no one will remember the initial negotiations. Public officers, citizens, contractors and state control authorities must find in the written text the correct and complete content of the founding agreement between the parties. Box 22 provides the typical content of an agreement/contract.

Box 21: Negotiating a cooperation agreement/contract

When working out the details of the agreement, articulate the expectations clearly. Include a definition of the problem, need or opportunity to be addressed using clear plain language. Identify all the stakeholders who might be affected by such an agreement and indicate what is expected of each one so that there is no confusion or lack of clarity later. Ensure that the decision makers in each municipality are aware of the implications, both positive and negative, of entering into the agreement, and are clear on the costs and obligations for each partner in terms of financial, material, equipment, infrastructure, or human resource commitments. Ensure that all potential partners share the same view of the situation and that the partnership under discussion meets the needs of all concerned.

Perhaps most importantly, negotiate honestly, openly and fairly. Know your own position well and be aware of what you can and cannot bring to the arrangement. Be sure your partner is equally aware. Be flexible: a little give and take on both sides will result in a more satisfactory arrangement for all involved

Source: Union of Nova Scotia Municipalities (2002)

It may be useful for the task force to obtain advice from a specialized lawyer or central government experts, to do some research on similar arrangements that may have been made locally, nationally or internationally, and to capitalize on the experience gained by others. The national local governments association may help in this respect. A look at the decisions of courts in this domain may be useful to detect and prevent the major difficulties in the implementation of similar IMC. The municipal council of each municipality will have to adopt the contract or statutes, generally by a vote that authorizes the mayor to sign the contract or take the necessary steps to establish the new legal entity.

Box 22: Typical content of an agreement/contract

  • Identification of the parties
  • Laws applicable to cooperation
  • Purpose of the agreement
  • Duration of the agreement
  • Field and scope of the agreement
  • Rights and obligations of each party
  • Regulations governing the Management Board (if applicable)
  • Regulations governing the Supervisory Body (if applicable)
  • Selection of the Director (if applicable)
  • Organization/management of activities
  • Budget, accounting and audit (if applicable)
  • Contribution of each municipality (finance and property)
  • Rights of ownership, use, distribution of assets
  • Visibility related to the services produced by IMC
  • Responsibilities of the parties for any liabilities
  • Amendments to the agreement
  • Admission and withdrawal of a partner
  • Dissolution
  • Settlement of disputes
  • Supervision/control
  • Monitoring and evaluation mechanisms
  • Work plan and schedule of activities (if applicable).

Box 23: The need for clear and fair management arrangements

Agree on a management arrangement and establish a chain of authority. Outline what needs to be done in order to achieve the listed objectives. This involves identifying and recording all of the tasks, sub-tasks and other activities that must be carried out in order to fulfill the terms of the anticipated partnership, and who will be responsible for each. It is important that each partner understands their decision-making authority and that roles and responsibilities are assigned on the basis of knowledge and know-how (and not according to financial capacity or power).

The roles and responsibilities should be assigned equitably among the partners so that no one partner is, or appears to be, able to exercise control over the others. Specify the areas of autonomy and interdependence for each. This will include defining the limits of what each partner can do without the approval or knowledge of the other partners. A conscious effort will be required for mutual consultation on issues that require the agreement of all partners, such as on budget, timetable and the replacement of key personnel.

Determine the procedures for decision making. In multi-partner partnerships, it is even more important to decide in advance how decisions are to be made – by consensus, majority vote, open or secret balloting, or by another manner. Sometimes, there are different decision-making processes for different kinds of questions. For example, do financial decisions need to go back to each partner for approval? In the case of disagreement or conflict between the individual partners, it is beneficial to provide for a conciliation or conflict resolution process.

Communications are essential in any working relationship. Identify the different means that will be used for exchanging and disseminating information. A process should be established that ensures that all of the partners have prompt, efficient means of communicating among themselves. Additionally, each of the partners should have mechanisms established within their own organizations to keep decision makers internally informed of issues or developments that can have an impact on the partnership.

Determine the rights of ownership, use, distribution and visibility of any technology or services that may be delivered by means of the partnership. Depending on the type of product or service that will result from the partnership, some consideration will need to be given to who will retain ownership of each particular asset; these ownership issues should be clearly defined in the formal agreement.

Specify the conditions governing the admission or withdrawal of a partner. The procedure to be followed when a potential new partner is admitted to the arrangement or the appropriate compensation to be paid if one of the partners withdraws should be defined in the agreement so that all stakeholders are aware of the arrangements.

Source: Union of Nova Scotia Municipalities (2002)