‘Scaling up and out'

States have failed to adequately protect smallholder community rights and to address environmental and social problems posed by land use acquisition for land-based investment, such as in industrial plantation and mining sectors across the globe.

In response to activism, global campaigns, and market pressures, international human rights law developed voluntary guidelines and principles. These developments have led to commitments to private regulatory initiatives, which present new opportunities for transnational litigation. We thus see the rescaling of issues beyond the jurisdiction of the nation-state. This global process involves creating new governance processes and spaces to address adverse formalisation and uphold indigenous and local peoples’ rights, including private certification processes (e.g., by the Forest Stewardship Council [FSC] and the Roundtable on Sustainable Palm Oil [RSPO]).

These instruments draw on global human rights discourse, including recognition of indigenous rights. They require shifting decision-making along with dispute- and conflict-resolution ‘up’ and ‘out’ from the state. They simultaneously require demanding more local participation and decision-making power in the investment processes, such as through the implementation of Free, Prior and Informed Consent (FPIC). FPIC is now inscribed in many international norms and industry standards for dealing with affected communities.

There is evidence that such private regulatory processes have led to improved outcomes on the ground. In many cases where the communities have been affected by adverse formalisation (especially where there is an overt conflict), the international (non-state) mechanisms have helped redress past wrongs. However, the outcomes are still lower than what people may have expected. In a conflict in Sambas (West Kalimantan) involving a palm plantation, a community unsuccessfully attempted (numerous times) to obtain redress at the district level. They then scaled up their actions by collaborating with local, national, and transnational activist networks (TAN) to bring pressure on the companies (Dhiaulhaq, McCarthy, and Yasmi 2017). With help from NGOs, the community filed a case before the Compliance Advisor/Ombudsman Office (CAO) of the International Finance Corporation (IFC) that had funded the company's operations. The controversy that emerged had wider ramifications. It led the World Bank Group to revisit its strategy for dealing with palm oil investments. The CAO also sent an investigative team to consult with the villagers and found that the palm oil investment did not meet the IFC's Performance Standards.

In another case, in 2004, some 220 members of the Pangean customary community in Riau demanded that a palm oil company, PT Citra Riau Sarana (CRS), return 450 hectares of customary lands that the community had originally developed as rubber gardens (Afrizal and Anderson 2016; Afrizal 2015). The land had become part ofthe company's 12,299-hectare palm oil plantation in the late 1990s. The community claimed that the company had taken the land from them without free, prior, and informed consent. Wilmar, the current holding company, inherited this dispute when they purchased CRS in 2005. After five years of community requests that Wilmar comply with the RSPO standard on FPIC (Afrizal 2015) and following an NGO-facilitated mediation process, the community and company eventually reached a resolution agreement in 2010. Wilmar replaced the disputed land with 225 hectares of palm oil plantation in another location to compensate the Pangean customary community for the loss of their customary land. With this agreement, Wilmar eventually obtained consent from the Pangean community to continue using the customary land for its corporate palm oil plantation (Afrizal and Anderson 2016).

These examples show how private, international land governance provides points of leverage: subaltern groups and social movements have new opportunities to forge supra-local alliances using international governance arrangements. But this transnationalisation also poses risks of ‘adverse formalisation.' While the processes described above require community consent (as opposed to the top-down state processes that compulsorily remove people from their land), the transnationalism approach facilitates the purchase, exchange, or transfer of land to corporations for commercial (non-public) uses, although all parties involved must agree.

The question remains whether such emerging, international, non­state norms governing land-based corporate practices can be an effective counter to adverse formalisation. The experience has been mixed (McCarthy, Vel, and Afiff 2012; Colchester 2016). Although these schemes seek to go beyond state law, they have to operate within national legal frameworks that still inadequately recognise indigenous or customary land rights (Colchester 2016). In other words, these private regulatory processes lack structural power (McCarthy, Vel, and Afiff 2012). Consequently, they cannot fully uphold or remedy rights violations. Moreover, regulations built upon international norms and law do not necessarily lead to domestic policy changes. In Indonesia, they have not yet shifted the social, political, economic, and legal mechanisms that shape outcomes. Voluntary regulatory mechanisms face the reality that state-based actors remain disinclined to implement existing state laws in a thoroughgoing manner, let alone to support the normative concerns of developed world consumers embedded in voluntary standards. Ultimately, national legal reforms are critical to securing community rights and to improving the implementation of the international regulatory mechanisms. Certification systems provide some protection of rights and scope for redress of violations. However, critics suggest that to maximise the regulatory mechanisms’ effectiveness, the mechanisms need to be more rigorously upheld, including penalising violations by corporate actors (Colchester 2016).

Here a principal limitation remains the lack of recognition of indigenous and local peoples’ land rights. Their weak property rights as well as other power-related asymmetries (e.g., the lack of economic power and negotiation skills) place communities in a weak position vis­a-vis the state and corporate actors who control the land. The companies have a robust legal position under state law and considerable economic resources and power (Dhiaulhaq, McCarthy, and Yasmi 2017). Given such power asymmetries, companies are better prepared to negotiate over benefit sharing and communities tend to settle for what they can get (McCarthy, Vel, and Afiff 2012).