The Practice of Independent Accountability Mechanisms (IAMs) : Towards Good Governance in Development Finance [1 ed.] 9789004337787, 9789004337770

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The Practice of Independent Accountability Mechanisms (IAMs)

The Practice of Independent Accountability Mechanisms (IAMs) Towards Good Governance in Development Finance Edited by

Owen McIntyre Suresh Nanwani

LEIDEN | BOSTON

The Library of Congress Cataloging-in-Publication Data is available online at http://catalog.loc.gov LC record available at http://lccn.loc.gov/2019039730

Typeface for the Latin, Greek, and Cyrillic scripts: “Brill”. See and download: brill.com/brill-typeface. isbn 978-90-04-33777-0 (hardback) isbn 978-90-04-33778-7 (e-book) Copyright 2020 by Koninklijke Brill NV, Leiden, The Netherlands. Koninklijke Brill NV incorporates the imprints Brill, Brill Hes & De Graaf, Brill Nijhoff, Brill Rodopi, Brill Sense, Hotei Publishing, mentis Verlag, Verlag Ferdinand Schöningh and Wilhelm Fink Verlag. All rights reserved. No part of this publication may be reproduced, translated, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without prior written permission from the publisher. Authorization to photocopy items for internal or personal use is granted by Koninklijke Brill NV provided that the appropriate fees are paid directly to The Copyright Clearance Center, 222 Rosewood Drive, Suite 910, Danvers, MA 01923, USA. Fees are subject to change. This book is printed on acid-free paper and produced in a sustainable manner.

Contents Preface vii List of Figures and Tables xi Notes on Contributors xii 1 Introduction 1 Owen McIntyre and Suresh Nanwani 2 Origin and Evolution of International Accountability Mechanisms 5 Richard E. Bissell 3 Independent Accountability Mechanisms as Agents of “Global Administrative Law” 21 Owen McIntyre 4 Addressing and Resolving Problem Projects through Independent Accountability Mechanisms and Other Avenues 42 Suresh Nanwani 5 Innovating Conflict Resolution Mechanisms for International Finance 60 Karen Wendt 6 Human Rights Standards in International Finance and Development: the Challenges Ahead 105 Mara Tignino 7 Evaluating the Access to Information Policies of the Multilateral Development Banks 134 Maeve McDonagh 8 The Independent Accountability Mechanisms and International Standards of Accountability 162 Susan Park 9 Comprehensive Methodologies to Facilitate Learning within the IAM Community of Practice 182 Andria Naudé Fourie

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10 Interpretation and Application of the World Bank’s Operational Policies and Bank Procedures Relating to Environmental Issues by the World Bank Inspection Panel 237 Wei-Chung Lin 11 Independent Accountability Mechanisms in Further Pursuit of Accountability: Directions, Cooperation and Engagement 262 Suresh Nanwani 12 Civil Society in the Independent Accountability Mechanism Community of Practice 291 Komala Ramachandra 13 Independent Accountability Mechanisms as Guardians of a Kaleidoscopic Legal Accountability 308 Vanessa Richard 14 Independent Accountability Mechanisms: Promotion of Standards, Good Governance and Accountability 339 Suresh Nanwani and Owen McIntyre 15 Conclusion 373 Owen McIntyre and Suresh Nanwani Index 383

Preface In a forest with timber concessions, along the construction of a road or pipeline, upstream of a proposed dam, powerless people perceive that they are about to be harmed or have been harmed by a multilateral development bank project, and that they have no voice. The independent accountability mechanisms in the multilateral development banks offer them such a voice. When I investigated complaints in the field, whether in South or Southeast Asia, Africa, Latin America or elsewhere, I heard the same plea over and over: “We are poor, and what little we have is about to be taken away from us; we are taking our lives in our hands in coming to you, and we do so because we have nothing left to lose. You are our only channel of appeal and our only hope.” This is the context in which this book on the independent accountability mechanisms (IAMs) is written. It deserves attention from all those concerned with issues of development and accountability. We are living in a kaleidoscopic world. Change takes place rapidly. States, international organizations, corporations, nongovernmental organizations, ad hoc coalitions, and billions of people are all important actors. At the same time, we are living in a world of serious and persistent problems of social and economic justice. While we have dramatically improved the economic situation in many countries since 2002, when close to half of the population lived on little more than $3.00 per day, we still have much to do. Extreme poverty still exists in some countries. Moreover, a major concern today is the growing economic disparities within countries. The 2018 Oxfam report Reward Work, Not Wealth indicated that one percent of the world’s population captured eighty-two percent of the wealth generated, while the wealth of the poorest fifty percent did not increase. Many sources of financial assistance for development exist today: multilateral development banks, bilateral State assistance, private and public banks, sovereign wealth funds, foundations, nongovernmental organizations, crowd sourcing, and even wealthy individuals. The present volume focuses on multilateral development banks, with one chapter devoted to other sources of financing and the Equator Principles. The multilateral development banks provide billions of dollars to low and middle income economies every year. In 2016, the six multilateral development banks committed more than $112 billion dollars in loans, grants, equity investments, and guarantees. Development projects and programs financed by multilateral development banks promise many benefits. In the process, though, some people may suffer harm and promised benefits may not be realized. Policies and procedures may be in place to

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protect affected people and ensure effective development, but they may not be complied with. In other cases, complaints may arise, but are unrelated to the development assistance. In 1993, the World Bank Board of Executive Directors established an independent Inspection Panel in response to complaints from countries that Bank projects were causing harm and that a “culture of approval” for proposed projects had developed, which did not sufficiently consider whether they met Bank policies and procedures. Other multilateral development banks followed this initiative as a way of trying to ensure accountability for their actions and the funds they provided. Within the twenty-first century, accountability has emerged as a fundamental norm in international law. This norm is embedded in all cultures. It is based in the general direction “to do what is right.” A common definition of accountability is “being obliged to account for one’s actions.” Legal and other scholars frequently use the term “accountability” to mean that actors can hold others to certain legal rules or standards in order to determine whether they have fulfilled their obligations, and to impose sanctions if they have not. In many situations, though, accountability needs to be conceived as a dynamic process in which learning can take place as part of holding actors accountable and in which consequences other than sanctions may be the appropriate response. In considering accountability in multilateral development banks or other sources of financing, we must ask the following questions: Who is accountable? To whom are they accountable? For what are they accountable? When are they accountable? How are they held accountable? With what consequences? And what has been learned in the process of accountability? The present volume considers most of these issues as they apply to the independent accountability mechanisms (IAMs) that have been established by the multilateral development banks to hold themselves accountable for following their own policies. These independent accountability mechanisms are a relatively recent development. The Inspection Panel of the World Bank, the first of these mechanisms, celebrated its twenty-fifth anniversary in fall 2018. Today the World Bank, the African Development Bank, the Asian Development Bank, the European Bank for Reconstruction and Development, and the Inter-American Develop­ ment Bank all have such mechanisms. Moreover, the United Nations Deve­ lopment Program, the European Investment Bank, and several national departments responsible for economic development assistance host related initiatives. These independent accountability mechanisms are essential to gaining the trust of all parties, whether people affected by development programs, governments, civil society, or business communities, that the institutions will be held

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accountable for the actions they finance. If concerns arise, they offer affected people a voice in the actions taken and the results from those actions. This is critical to ensuring that the development efforts do not cause harm and to helping ensure that they are effective. While the accountability mechanisms address specific complaints that are brought to them, they have a much broader impact. They can induce greater care in the preparation and implementation of future projects so that harms do not occur and benefits are realized. They can be especially important for innovative projects that may entail significant risks, because they provide an avenue for affected people to seek accountability should harm occur. The findings and observations from investigations into complaints that concern compliance with policies may have broader significance beyond the specific target of the complaint. They can lead to changes in policies and procedures, whether in a specific sector such as forests or infrastructure, in a policy such as that for indigenous peoples, or in a given region. The work of the accountability mechanisms promotes transparency and engagement by local people in the development process. The mechanisms are especially appropriate for a kaleidoscopic world characterized by bottom-up empowerment. As we look ahead, such mechanisms to promote accountability, wherever located, face many challenges. The effectiveness of the mechanisms depends on their ability to maintain the confidence and trust of all parties: those who bring the complaint, governments, management and staff of the institution providing the financing, and civil society. This means that the independence, impartiality, and integrity of the accountability mechanisms and their staff are critical and must be zealously guarded by all concerned. It is all too easy for an institution to treat such accountability mechanisms as part of management and not as the independent bodies that they need to be. Recruitment processes are critical in ensuring competent and independent members. Efforts must always be made to ensure that those working for such accountability mechanisms do not feel pressures from management to compromise their findings and other efforts. The people affected by the projects or programs must be confident that their voices are heard, and the issues impartially addressed. For complaints related to compliance with policies and procedures, this generally means going to the field to listen to them, maintaining communication, and discussing results of their investigations and findings with them. Conversely, management and staff must be confident in the integrity and impartiality of the mechanisms, lest a culture develop of “panel-proofing” project or program design so as to avoid becoming subject to the mechanisms. If the independent accountability mechanisms are to flourish, we need to foster a culture of accountability and to provide the necessary resources to

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ensure accountability. The benefits of doing so are very significant, especially in the longer term. The authors in this volume provide a detailed look into the experiences of the existing independent accountability mechanisms and some of the policies related to their effectiveness. Their accounts are especially timely. Edith Brown Weiss

Francis Cabell Brown Professor of International Law Georgetown University Law Center Former Chairperson, World Bank Inspection Panel, 2003–2007

Figures and Tables Figures 5.1

5.2 5.3

9.1 9.2 9.3 9.4 9.5 9.6

Costs of conflict: delay in 190 oil & gas projects for non-technical issues according to Goldman Sachs. From Goldman Sachs Investment Research (2008) 69 Cooperation model between mediator and client (Karen Wendt). Based on German law, “Mediationsgesetz,” 26 July 2012 93 LOCOG / CDRM-inspired complaints handling process for the Equator Principles Financial Institutions (EPFI). From The Equator Principles  93 The research methodology 195 Components of the IAM practice database 198 Database construction as a process of evolutionary prototyping 203 A model of (quasi-) judicial review 205 Excerpt from data model (‘issue tree’) 206 IAM practice database – excerpt from issue overview-component 208

Tables 5.1 5.2

Types of costs of conflict 68 SWOT analysis of the complaint mechanisms of EBRD, EIB, FMO / DEG, and the London 2012 Olympic Games (LOCOG) 81 5.3 Comparing mediation, litigation and arbitration 88 7.1 Dates of entry into force of the latest version of the current policies 137 7.2 Exceptions provided for in the ATI policies of MDBs 148 8.1 The IAMs of the MDBs 172 8.2 Unpacking the IAM-MDB accountability relationship 173 9.1 Comparative overview (excerpt – illustrative) 214 9.2 Statistical overview (excerpt – illustrative) 218 9.3 Structured summary of IAM case – EBRD IRM Georgia BTC Pipeline (Atskuri) 226 9.4 Index overview (excerpt – illustrative) 230 9.5 Issue overview: data model (excerpt) 234 9.6 Issue overview: data entries (excerpt) 235 11.1 IAMs and claims filed or registered as of 15 January 2016 (up to 30 June 2013 for the CAO Office) 277 13.1 Tentative cross-tabulation of the specific purposes of IAMs and the general purposes of international legal accountability 336

Notes on Contributors Richard E. Bissell a United States national, is the former Executive Director of the Policy and Global Affairs Division at the National Academy of Sciences in Washington, D.C. From 1997–1998, he was the head of the interim secretariat of the World Commission on Dams, a joint initiative of the World Bank and the World Conservation Union (IUCN). He served as a member of the World Bank Inspection Panel from 1994–1997 and was chair from August 1996 to July 1997. From 1986–1993, he was a senior official at the U.S. Agency for International Development (USAID), directing the Bureau of Policy and Program Coordination and the Bureau of Research and Development. He has previously held a variety of teaching and research positions, including at Johns Hopkins University, Georgetown University, the University of Pennsylvania, and Princeton University. Wei-Chung Lin is Assistant Professor at National Chung Cheng University, Taiwan. He taught previously at Macau University of Science and Technology in China (2016 to 2017). He holds a Ph.D. and LL.M. in Public International Law from the University of Nottingham. His recent research has been published in peer-reviewed journals such as Cambridge Journal of International and Comparative Law and International Community Law Review. His research interests mainly focus on international investment law, international environmental law and public international law. Maeve McDonagh is an academic lawyer specialising in information law. She has published widely in the field of information law and has advised various governments on the drafting and implementation of FOI legislation. She has been engaged as an expert on information law matters by the Organisation for Security and Cooperation in Europe (OSCE) and by the European Commission. Professor McDonagh has taught law at National University of Ireland Galway, La Trobe University, Melbourne, Australia and University College Cork, where she has served as Dean of Law. Professor McDonagh was Deputy Chair of the inaugural Press Council of Ireland from 2007–2013. In 2012, she was appointed a member of the newly established Independent Appeals Panel on access to information of the Asian Development Bank. In 2013, she was appointed to the Irish FOI Implementation Review Group and in 2015 to the board of the Broadcasting Authority of Ireland.

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Owen McIntyre is a Professor and the Director of the LL.M. (Environmental & Natural Resources Law) Programme at the School of Law, University College Cork (UCC), a constituent college of the National University of Ireland. He is also Co-Director of the newly established Centre for Law and the Environment (CLE) at UCC. From 2004–2019 Professor McIntyre served as an Expert Panel Member of the Project Complaints Mechanism of the European Bank for Reconstruction and Development. Suresh Nanwani is a CEDR Accredited Mediator; Honorary Associate Professor, Australian National University; Visiting Professorial Fellow, University of New South Wales; Honorary Research Fellow, Birkbeck University of London; and Visiting Fellow, Global Policy Institute, Durham University. He is Member, Practi­ tioners’ Board, Global Policy; and Executive Council Member, Society of International Economic Law. He has 30 years of development work experience in international organizations, including the World Bank, and was formerly Advisor at the Asian Development Bank and Counsel at the European Bank for Reconstruction and Development. He has published on international financial institutions, law and development, and governance and accountability. Andria Naudé Fourie is a Research Fellow with the department of International and European Union Law at the Erasmus School of Law, Erasmus University Rotterdam. Andria’s professional experience extends across countries and industries, having worked both as a business consultant with Accenture and as an academic researcher and lecturer. Andria holds Ph.D. and LL.M. degrees in Public International Law from the Erasmus University Rotterdam, and has graduate as well as post-graduate qualifications in law, business administration and alternative dispute settlement from the University of Pretoria in South Africa. Her research focuses on the accountability mechanisms set up by multilateral development banks. Susan Park is an Associate Professor in International Relations at the University of Sydney. She focuses on how state and non-state actors influence the Multilateral Development Banks (MDBs) to become greener and more accountable. Susan has published in numerous journals, most recently in the Review of International Political Economy. Her new book is International Organisations and Global Problems: Theories and Explanations (Cambridge University Press, 2018). In 2010 she published The World Bank Group and Environmentalists: Changing

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International Organisation Identities (Manchester). Her new co-edited book is Global Environmental Governance and the Accountability Trap (2019, MIT Press with Teresa Kramarz). Susan is an Associate Editor of the journal Global Environmental Politics. Komala Ramachandra is a Senior Researcher in business and human rights at Human Rights Watch. Her current research focuses on inequality and predatory corporate practices. Previously Komala was a staff attorney and later the South Asia Director at Accountability Counsel, where she supported communities in Peru, Mexico, India, and Nepal defending their rights and natural resources, and holding companies and banks accountable. She has been engaged in policy advocacy around the world, seeking to ensure that national laws and institutional policies support transparency, accountability, and access to remedy. She has a B.A. in economics and political science from Northwestern University and a J.D. from Harvard Law School. Vanessa Richard holds a Ph.D. in International Law and is a tenure researcher of the French Centre National pour la Recherche Scientifique (CNRS). She works at the Center for International and European Studies and Research (CERIC), Joint Research Unit DICE no. 7318 CNRS/ Aix-Marseille Université. Her main research areas are the making and implementation of international environmental law in a global governance context, and international freshwater law. Her research project on ‘International Grievance Mechanisms and International Law & Governance’ (IGMs, 2012–2016) has received funding from the European Research Council under the European Union’s Seventh Framework Programme (FP/2007–2013) / ERC Grant Agreement no. 312514. Mara Tignino is currently a Reader at the Faculty of Law and the Institute for Environmental Sciences of the University of Geneva and the Lead Legal Specialist of the Geneva Water Hub’s Platform for International Water Law. She has been Visiting Professor at Renmin University of China, the University of Barcelona, the LUISS in Rome and the Catholic University of Lille. In 2017, she was awarded the prize “Women Peacebuilders for Water” from the “Fondazione Milano per Expo”. Dr. Tignino acts as a legal adviser for States and expert for international and non-governmental organisations.

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Karen Wendt is editor of the Sustainable Finance Series with Springer Science Publishing. She merges 20 years investment banking with social and green economy finance, leadership 4.0, design thinking and ideation. She implements Portfolio engineering, assessment and value based decision making, choice architecture and theories of change and advises on Sustainable Development Goals Economics (SDG Economics) in her programme scaling4impact. Karen co-created the Equator Principles, the First Global Sustainability Standard in investment banking – based on impact assessments, creating mitigation strategies and impact action plans. She won the Financial Times Sustainability Award together with peers for this pioneering and created Responsible Investment Banking.

chapter 1

Introduction Owen McIntyre and Suresh Nanwani The initial idea for this collection of essays arose from the Open Symposium on the Practice of Independent Accountability Mechanisms hosted by the European Bank for Reconstruction and Development (EBRD) at its London headquarters on 17th September 2014. The Symposium formed part of the programme for the 11th Annual Meeting of the IAMs Network. The Independent Accountability Mechanisms (IAMs) Network brings together the independent accountability mechanisms of 18 multilateral development banks (MDBs) and other international and national institutions,1 and aims to allow practitioners in this emerging field to engage in the regular exchange of ideas and experience, and to assist with institutional capacity-building in environmental and social accountability and compliance. Such a forum for mutual learning among the expanding accountability community is important because IAMs today variously function to ensure compliance with applicable environmental and social safeguard standards, to provide general advice to bank management regarding the nature, scope and application of the safeguard standards concerned, and to facilitate communication between financial institutions and affected communities and individuals with a view to resolving project-related disputes. It has been apparent for some time, therefore, that MDBs, along with other international and national institutions involved in financing development projects and activities around the world, are playing a pioneering role in extending the normative content and ambition, scope of application, and practical enforceability of a rapidly emerging corpus of global governance standards for environmental and social sustainability. Such standards are being adopted simultaneously in a diverse range of fields, including international trade, public health, chemicals handling and management, supply-chain management, climate mitigation and product labelling, covering myriad aspects of transnational commercial activity. However, the adoption since the mid-1990s of increasingly far-reaching and sophisticated environmental and social safeguard policies by MDBs exemplifies this wider phenomenon, and such safeguards now apply to a wide range of different types of project finance including, for example, equity investments in client companies and the funding of financial 1  (accessed 24 August 2018).

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intermediaries, as well as more traditional project lending and technical assistance activities. Further, more recent iterations of such MDB safeguard policies tend to incorporate human rights requirements, recognising the need to adopt a human rights-based approach to development activities. Thus, while the normative standards that may be applied by IAMs enjoy greater breadth and depth, supplemented by the wealth of human rights standards and jurisprudence available regionally and globally, traditional human rights requirements are benefitting from a new and additional avenue for their effective, if informal and unofficial, enforcement. However, the subsequent establishment by all MDBs of institutional, yet independent, accountability mechanisms and processes has received rather less attention. By operating to scrutinise the performance of MDB managements in the implementation of their safeguard policies, and to ensure bank managements’ accountability to project-affected persons, civil society and beyond, IAMs play an absolutely critical role in defining and elaborating the applicable environmental and social standards and, more generally, in inculcating a culture of responsive, transparent and participative administrative governance – both within and beyond the financial institutions concerned. In addition to providing an avenue for accountability, and occasionally redress, IAMs are intended to serve as learning mechanisms which authoritatively inform the practice of MDBs and other funding institutions and, by so doing, they can function to drive forward the progressive development of these institutions’ environmental and social governance frameworks. It initially occurred to the editors of this volume during the IAMs Symposium in September 2014 that sufficient time has now elapsed since IAMs were first established, and enough IAMs practice has accumulated in that time, to permit one to take stock of the operation of these mechanisms and of their contribution to environmental and social governance at their associated institutions and beyond. Happily, our invited contributors with diverse experiences and backgrounds largely agreed and the stock-taking exercise that this volume represents has sought, inter alia, to identify where IAMs work efficiently, and why, as well as where they struggle to meet the expectations of complainants and to exert a significant influence on institutional practice. As regards the utility of such a line of enquiry, the editors believe that it might, for example, assist those engaged in the use and operation of accountability mechanisms to anticipate and confront regressive threats to hard-won advances in environmental and social governance and accountability within their respective institutions. In addition, this volume has sought to chart the expanding remit of such accountability mechanisms by exploring, for example, their role in relation to MDB public information policies (PIPs), and the opportunities and challenges

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for IAMs presented by the recent permeation of human rights values into MDB safeguard policies. It also explores the potential future role of similar mechanisms in relation to private-sector project lending, particularly in the case of banks which have signed up to the Equator Principles. These provide a voluntary framework of environmental and social risk management for privately financed projects based largely on the Performance Standards adopted by the International Finance Corporation (IFC), and had, at the time of writing, been officially adopted by 94 private-sector lenders in 37 countries, thereby representing the vast majority of international project finance debt within developing and emerging markets. At a more general level, this collection aims to inform critical understanding of the role of IAMs in the emerging global governance framework and of the complex relationship between formal legal frameworks and proliferating standards of global governance. For example, some MDB safeguard policies are largely based upon or defer to corresponding standards adopted by the World Bank, or existing in national or international law, whilst others only apply where the relevant and applicable legal standards are considered inadequate. One way or another, however, all IAMs are tasked with interpreting and facilitating the practical and equitable implementation of environmental and social requirements, which largely reflect widely applicable legal rules and standards. Few would argue that the quasi-legal character of the role of IAMs, and of the safeguard policies they apply and enforce, as well as the related legal implications for the banks, their clients, affected communities and individuals, and State actors, are issues which remain somewhat underexplored. At a purely practical level, this exercise of documenting and critically commenting upon the broad spectrum of quasi-judicial practice of IAMs aims to locate these mechanisms within a “community of practice”, guided by shared administrative standards and values. Quite apart from the obvious desirability of having such bodies subject to common standards of administrative governance, this community makes available to the actors involved a wealth of established principle and practice which can help to inform the interpretation and elaboration of rules and standards of environmental and social governance through a process of mutual recognition and cross-fertilisation of ideas and approaches. Such mutual learning can only function to reinforce the external legitimacy of such rules and standards of governance and to enhance their increasingly significant role in promoting compliance with formal legal and human rights requirements. The contributors are all practitioners, civil society advocates, researchers and/or academic commentators with a wealth of combined knowledge and experience of the origins, establishment, evolution and operation of a wide

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range of IAMs associated with global and regional institutions. Many have been involved as panel members, complainants, bank officers, civil society activists and/or in the coordinating activities of the IAMs Network. Each therefore brings his/her own unique and valuable perspective on the role and general utility of IAMs. The profile of contributors to the volume also highlights the notable fact that accountability mechanisms are increasingly the subject of leading-edge academic enquiry, surely an indication of their central relevance to and ever greater impact upon the continuing discourse on global environmental and social governance. Each chapter either presents a particular viewpoint on how IAMs have developed or on how their work might be characterised, outlines a particular role that accountability mechanisms play or may in time come to play, addresses a particular source of normative standards to be applied or the role of a particular type of actor in the development thereof, or sets out methodological approaches for studying and understanding the work of IAMs. On the basis of such a rich variety of contributions, the editors hope that this account of the work of IAMs, and related critical analysis of their evolving role and emerging practice, will be of interest to a broad audience of readers, and especially to those working, researching or studying in the broad field of global environmental and social governance. It is also our wish that this volume might in time prove to have made a worthwhile early contribution to the nascent scholarship surrounding accountability for environmental and social governance, at least in the specific context of MDBs and other international and national institutions involved in financing development.

chapter 2

Origin and Evolution of International Accountability Mechanisms Richard E. Bissell 1 Introduction Changes in the institutional cultures of international organisations can occur in the wake of major wars, through the incremental learning processes of evaluation and review internally, and only rarely from a grassroots-level uprising from civil society. The emergence of international accountability mechanisms (IAMs) in the international financial institution universe clearly falls in the improbable third category. The fact that the IAMs emerged in a banking sector noted for secrecy, opening windows on organisations where the public and beneficiaries had no seat at the table, was a highly improbable development in the 1990s. Why they were created, and have continued to proliferate for 25 years fits no standard textbook. The fact that the evolution of these mechanisms is continuing at a rapid pace underlines the presence of many factors – political, financial, economic, and socio-cultural – that exert influence on the shape and function of the mechanisms and their host institutions. 2

What Are the International Accountability Mechanisms?

In 2012, the institutions comprising the Independent Accountability Mechan­ isms Network carried out an exercise in self-evaluation of their role in International Financial Institutions (IFI) in the prior 20 years.1 They identified their basic purpose as providing ‘recourse for citizens and communities adversely affected by IFI-funded projects, particularly in instances when IFIs are alleged to have failed to follow their own social and environmental safeguard policies, guidelines, standards, or procedures’. 1  Kristen Lewis, Citizen-Driven Accountability for Sustainable Development: Giving Affected People a Greater Voice – 20 Years On (Independent Accountability Mechanisms Network, June 2012) accessed 12 August 2018.

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This institutional innovation was not created de novo, drawing upon aspects of various institutions (ombudsman, auditors, agency inspectors, and tribunals) that, when combined, caused significant change in global governance, international law, and development finance practices. What was required for such systemic change was the right combination of challenges to the system, people in leadership roles, central institutions, and a historic vulnerability to external policy pressure. Such were the reasons for the launch of this new approach at the World Bank in 1992–1993.2 Subsequently, similar mechanisms were established by the governing bodies of the Inter-American Development Bank, Asian Development Bank, African Development Bank, European Bank for Reconstruction and Development, United Nations Development Program, European Investment Bank, and more recently, in a host of global development funds and UN agencies. Today, the concept of ‘citizen-driven accountability’ for international institutions is increasingly incorporated into implementation platforms as a routine matter. For instance, any country or agency that applies to become an implementing agency for the Global Environmental Facility or the Adaptation Fund is required to establish an IAM. In that sense, the boundary of the IAM universe has lost its narrow delineation by becoming so broadly embraced. Nevertheless, there are some core elements that were equally present in the establishment of the Inspection Panel at the World Bank as in current translations of the concept into a more diverse universe of institutions. 3

Core Elements

Public access to the mechanism for reporting of complaints and concerns has been a universal standard. It should be noted just how revolutionary that concept was at the beginning. As Ibrahim Shihata, General Counsel at the World Bank, noted, ‘[n]o standing mechanisms independent from the governing organs of such organisations have hitherto existed to hear and investigate complaints by private entities and groups affected by their activities regarding deviation from their established policies and procedures’.3 He goes on to say that ‘the creation of an independent inspection panel to investigate the extent to which an international organisation complies with its rules will have a bearing on more general issues of international law and policy’.4 Intergovernmental 2  Chronicled in Ibrahim F. I. Shihata, The World Bank Inspection Panel (OUP 1994). 3  Ibid. 1. 4  Ibid. 2.

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organisations where the member governments held a monopoly of power essentially cede some portion of that control to the public space. The extent to which this public access to international institutions represents a turning point in organisational practice has been described elsewhere,5 but it should not be underestimated how much of a turning point in the institutional landscape it represented. Access to Information on the part of the public is a sine qua non for effective IAMs, in a number of aspects. First, the public must be able to determine which institutions are funding a particular project, and that is not always obvious. Second, the public must be able to access sufficiently detailed specifications about the project to be able to provide informed input to the institution. That includes in most cases the basic document used for institutional approval – either a ‘project document’ or a ‘project appraisal document’. Third, because many of the IAMs focus on compliance with social and environmental policies, the staff and consultant analyses of such risk factors are essential to informing the public, and are now routinely released. Thus, in all cases, each institution has put in place an Information Disclosure Policy that, in most cases, has a default option of public release of institutional documents other than specific exceptions. Transparency of the accountability mechanism is also essential – not just the process, but the products. The reports from the mechanism must be made public to not only ensure all stakeholders know the results of an investigation, but also to play its appropriate role of ‘shaming’ the Boards, Managements, and borrowers into doing the right thing. Each mechanism maintains a Registry of Cases on its website, so the public can track the status of each complaint that is registered, along with key documents relevant to the case. Independence from management of the institution turns out to be fundamental in providing confidence to the public with complaints that their concerns will be considered fairly. As a conceptual matter, social and environmental accountability is distinct from the management of programs and projects; it is much closer to the evaluation or external audit function that has a license to question the actions of management after the point when decisions are made. In most cases, the independent status of the compliance review part of an IAM is made manifest by reporting to the Board of Directors, and not to the President. The mediation function in an IAM, on the other hand, does generally report to the President. In most IFIs, because the President also serves as chair of the Board of Directors, the President has to be careful about which role 5  Richard E. Bissell, ‘Recent Practice of the Inspection Panel of the World Bank’ (1997) 91(4) American Journal of International Law 741.

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he is playing in order to avoid compromising the independence of the IAM. Several accountability mechanisms have obtained reputations as lacking adequate independence from management, and as a result, civil society has failed to submit cases. Banks are not culturally oriented to accept external substantive criticism of their work, making the task of IAMs even more challenging to drive remedial decision-making. Fairness of the compliance review process must be evident to the people who complain as well as to the staff and management of the IFI. While ‘fairness’ can be considered to be subjective, it need not be so in the case of these mechanisms. The investigation, analysis, and reporting must be seen as based on reliable, independently-verified evidence. The concept of ‘evidence’ is well-established in the world of science – that it is objective, based on clear standards, facts and research (which may be peer-reviewed), free from bias or conflict of interest, and respected as authoritative. That authoritativeness, as translated into decision-making, suggests a basis for driving decisions on course corrections and project remedies by the IFI unless overridden by other factors (often human, cultural, or political) that can trump the evidence. But the record needs to be clear from the fact-finding process of an accountability mechanism so any stakeholder in the project can distinguish between the facts and the judgment calls of the governing authorities. Much of a mechanism’s reputation for fairness and authoritativeness thus depends on both the personnel appointments to the accountability mechanisms as well as an evident understanding by the Board and President regarding the purposes of the IAM. Both expertise and integrity must be found simultaneously in the people to lead the accountability processes. Effectiveness of the mechanism is essential to its sustainability, whether in finding redress for the harm and specific concerns that are filed, or in changing systemic behavior in the IFI to achieve greater compliance with the policies and standards of the institution. More operationally, it means that the Board and President accept the findings of these independent experts and compel Management to work with the borrower and/or project implementer to provide a remedy. An underappreciated element of effectiveness is the timeliness of the report. Most people adversely affected by a project do not want to wait years for an outcome, and yet, in too many cases, the investigation of a complaint has taken anywhere between a year and two years. Since the project continues, in most cases, while the accountability mechanism is at work, complainants then consider the mechanism to be ‘ineffective’ in addressing the damage. Following the investigation report, effectiveness often requires monitoring of the remedies process to ensure that it happens. Unless management has embraced the need for corrections in the project, the IFI staff will devote

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little time and resources to ensuring changes are made in the project and the damage corrected. An increasing number of mechanisms have the independent authority to monitor the follow-up actions to their investigation reports, and this has made an appreciable difference in the outcomes – even though the mechanisms are carrying out a function which, if the institution worked properly, management would execute on its own in a timely manner. Keeping in mind these five fundamental elements of the accountability mechanisms, it is important to explain the evolution of this growing phenomenon over the last several decades, embracing all regions and types of development finance institutions. 4 Evolution International political and financial institutions at the intergovernmental level are of generally recent origin, even though early, more informal approaches to predictability had been established and periodically demolished for centuries. We have now had significant institutional stability now for over 60 years – a time worthy of study for examining the nature of decision making in both political and financial institutions. In the post-World War II period, states did come together to create international institutions. In a top down process, governments negotiated treaties as the establishing instruments, they put themselves in charge as a Security Council or as an Executive Board, stated the public-goods mandates, and devised what they thought of as streamlined systems to achieve their mutually-agreed goals. Decisions were made at the top, and transmitted down, largely without public input. Most important for our purposes, the new institutions were not just political and military, but were also financial, developmental, and technical. The most successful holdovers from the League era were specialised technical agencies, and the lesson learned from that was to expand that model into new areas traditionally left to the private sector: financial stability, mobilisation of budgetary and technical resources, education, and economic growth management. These organisations prospered as traditional powers became weaker, and the anti-colonial movement brought many new countries into the system. Staffs of international organisations grew rapidly. Different pressures then came to bear on decision-making. Instead of just reflecting the sovereign interests of the board member governments, the long-term staffs and management pursued their own individual and collective interests. This phenomenon became especially strong as governments, largely represented by senior civil servants on the boards, were giving less policy-level

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attention to the international institutions. The increasing focus on technical specialisation and arcane knowledge tended to exclude policymakers. In one organisation after another, such a model proved to be dangerous by ignoring political factors that sustained the broader legitimacy of the institutions. In 1994, this came to a head with the ‘50 Years is Enough’ campaign to close down the World Bank.6 This campaign was led by international civil society organisations that applauded many of the Bank’s goals, but believed it totally out of touch with the grassroots – the people intended to be the beneficiaries of the World Bank and other intergovernmental financial institutions. Within the World Bank, a crisis of confidence emerged among the technocrats; the Wapenhans Report in 1992 concluded that a third of the projects were ‘failures’.7 The Board of Governors and the Executive Board strengthened its policies – increasingly explicit and directive – to try to re-take control of the decision-making process. The real question became what kind of policies would be satisfactory to address these problems, and how would the Boards know they were being carried out. The matter of content for the policies became a matter of intensive debate. The greatest fuel for this debate came from three reform strands: the global political change embodied in the collapse of the Soviet Union and thus a shift towards more democratic political institutions, the emergence of the environmental movement (such as the 1987 Brundtland Report8 on sustainable development and the 1989 Pelosi Amendment in the US Congress), and the social movement to empower indigenous peoples worldwide along with other disenfranchised populations (the poster child being the disastrous resettlement programs of the Sardar Sarovar project in India9). In each of these areas, the capacity of the World Bank and other IFIs was inadequate in the project preparation process, and was virtually absent in supervising the implementation of commitments made in projects. With the strengthening of policies in the World Bank, particularly on social and environmental issues, there emerged the design capability to launch better projects. But there was no easy way to

6  E.g. Kevin Danaher, 50 Years is Enough: The Case Against the World Bank and the International Monetary Fund (South End Press 1994). 7  World Bank, ‘Effective Implementation: Key to Development Impact’ (Wapenhans Report) (World Bank, 1992). 8  World Commission on Environment and Development, ‘Report of the World Commission on Environment and Development: Our Common Future’ (1987) accessed 18 August 2018. 9  Bradford Morse and Thomas R. Berger, Sardar Sarovar – Report of the Independent Review (Resource Futures International 1992) accessed 12 August 2018.

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track the reality on the ground where such commitments would be challenged by the difficulties of complex project implementation. The question of implementation and confirmation inevitably leads to the role of the intended beneficiaries of the IFI projects. What accountability are they afforded locally and in the international system? What information do they have in the remote areas where many reside? What evidence can they assemble to give credibility to their complaints? As it turns out, they are the first to know when development projects are going downhill. They are, in effect, the proverbial canaries in the coal mine. They see when a highway contractor is carrying out unauthorised deforestation. They are the victims when governments do not carry out their commitments to resettled populations and can testify firsthand to the failures. In a moment of institutional insight, the World Bank realised this, and between the Board and the President (Lewis Preston), they created the independent Inspection Panel embodying the five elements identified above. Because the idea of the Inspection Panel was entirely new, there was initially general acceptance of this innovation. No one knew what role it would assume in practice. After the first few cases, resistance began to grow among borrowing governments to the role played by the Inspection Panel in empowering the grassroots as monitoring agents. Some lawyers objected to giving the public legal standing to complain to international institutions, but it was already done. Observers began to identify parallel (even if different in various dimensions) developments that reinforced this democratic trend. For example, international tribunals on human rights began to provide access for individuals (in Latin America, Europe and later in Africa). Ombudsmen were created for complainants to provide evidence of mismanagement, corruption and maladministration (particularly in Europe).10 Access through the international accountability mechanisms remained highly uneven. Each of the IFIs developed its own mechanism with different procedures and significant variations in institutional acceptance of this approach to accountability. One began to see a proliferation of the mechanisms, spreading from the World Bank group to the regional banks, such as the Inter-American Development Bank, Asian Development Bank, African Development Bank, and sub-regional financial institutions. Acceptance at the

10  The European Ombudsman assisted 15,797 citizens of European countries in 2016, and registered 1880 complaints for investigation: European Ombudsman, Annual Report 2016 (European Union 2017) 31 accessed 12 August 2018.

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political level was strong. At the Okinawa Summit in 2000, the G-7 Finance Ministers said the following: Finally, we call for greater accountability to shareholders and those affected by MDB actions. We therefore support the recent substantial progress that MDBs have made toward this goal. Nevertheless, there is a clear need for additional progress in such crucial areas as information disclosure, public participation and accountability to the shareholders: – A greater range of operational documents should be released to the public, particularly all country strategies and evaluation reports, while paying due attention to the influence on the market. – Independent inspection panels should be in place in an appropriate manner in all institutions. – Each institution should establish a compliance unit to certify full compliance of project proposals with its policies prior to submission to the Executive Boards. – Monitoring and ex-post evaluation function, internal financial controls, procurement policies and practices and auditing procedures of each MDB should be strengthened and all MDBs should have strong and independent evaluation units.11 With the diversity of experiences that ensued after 2000, the major difficulties faced by IAMs began to emerge. Because the issues varied in each IFI, it is difficult to generalise about the barriers that arose, but each mechanism did face these limitations to one degree or another. – Outreach to affected populations was difficult, even to make the intended beneficiaries of projects aware of the existence of an IAM appeal mechanism.12 The adverse impacts of large infrastructure projects are frequently in remote areas, where communities are dispersed and have little notion of appeals and remedies through modern channels. In many 11  G7 Finance Ministers, Strengthening the International Financial Architecture: Report from G7 Finance Ministers to the Heads of State and Government (Fukuoka, 8 July 2000) para 36: accessed 12 August 2018. 12  It is important to note that awareness of the existence of an IAM appeal mechanism first requires awareness of the identity of the institution funding a given development activity, e.g., a population affected by a World Bank project cannot know that the Inspection Panel exists to investigate their concerns until they know that the project is a World Bank project. As funds increasingly are channeled through alternative forms of lending, e.g., financial intermediary lending, that obscure the major MDBs as primary originators of loans and grants, affected populations are likely to have even more difficulty identifying the available appeal mechanism.

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countries, the governments were hostile to outreach efforts by the IAM secretariats as causing political unrest. Some IAMs worked through networked international NGOs to make populations aware of this recourse channel, but the number of such NGOs willing to invest in such outreach on behalf of the IAMs has been miniscule. Information about the IAMs is increasingly available not only in major international languages, but also in some major national languages to increase understanding of their existence. Some work has gone into standardising information about the IAMs in project documents that are made available to the public, such as the social and environmental assessment documents and the project appraisal documents. The progress has been highly uneven, and it has even been a struggle in some IFIs for the IAM to be listed on the institution’s home web page. – Relations with borrowing governments have influenced the review process more than anticipated. The institutional design of the policy compliance review process and some mediation processes has been to focus on the actions of the IFI, not the borrower or project implementer. The founding resolutions of the IAMs assume that it is the job of Management to ensure compliance, and not to relegate responsibility to the borrower, the government, or a project implementer. The reality in many cases, however, has been that the government is on the hot seat – for determining the political climate of acceptability of dissent by complainants to an IAM or a grievance mechanism, for ensuring that organisers of a project do consult with all stakeholders, and that the social and environmental policies are translated into national development norms. In some cases, the hostility of the government has derailed a field visit by the IAM team, has allowed intimidation or harassment of complainants, or has resulted in cancellation of an IFI project in light of availability of alternative financing without social and environmental accountability. – The process of responding to complainants in many IAMs has been attacked as taking too long. Any review or mediation process that takes too long denies effective swift justice to the complainants, puts the IFI staff directing a project in limbo while awaiting the outcome, and raises financial costs on all sides. IAMs have been experimenting with approaches to shorten the time taken to assemble the project files and evidence underlying the complaint, engaging Management and staff, mobilising the expert team for field work, and writing the report. Perhaps the most problematic area remains that over which the IAM has little influence – the deliberative process of the Board after receiving the IAM report. Months can be consumed by an internal bargaining process over how to respond to an investigation report, and that leads to disillusionment by the complainants.

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– Ensuring that the findings and recommendations of the IAM actually have impact is a major issue, since most Boards turned to Management to implement the plans of action resulting from an investigation. They assumed that the staff would, in good faith, expeditiously respond. In reality, the same conditions prevent such a response as existed before the investigation and caused the complaint – some malfunction in the project design and implementation chain. It may be, for instance, that the IFI management believes they lack leverage over the project implementer to achieve compliance with policies. The response to this dilemma over time, among new IAMs and as existing IAMs go through reform, is to introduce a ‘monitoring’ function in the IAM to track implementation of the remedies. The downside to this solution has been that IAMs then become deeply imbedded in the project implementation itself, and in some cases, Management is pleased to be able to offload that onerous work onto a separate entity. The IAMs are still experimenting with monitoring, attempting to find the operational approach to tracking the resolution of their findings and implementation of its recommendations without spending undue time on hands-on direction of a project. – Establishing and maintaining the independence of an IAM has proven more difficult than anticipated. The nature of financial institutions is to encourage internal debate on technical issues, but not to share that openness with the world outside the bank. The initial signals from the first IAMs were ambiguous on this issue. Offices for IAMs were established within the walls of the IFI, both to obtain logistical support and to ease the sharing of information about projects. Some Board members, the overseers of the IAMs, are also not clear about their relationship with Management, being dependent upon Management to obtain the benefits of membership for the countries they represent. Finally, it has been an uphill battle to find people to serve on IAMs who are independent and free of any potential conflicting loyalty. Some have worked at the IFIs in the past, some consult with other IFIs, and some believe their job is primarily to improve the project in question rather than to ensure the affected public has a place at the table equal to that of Management. These realities about implementation of the mandates of IAMs have been fed into reform processes unique in each IFI or development institution. After the experience of the World Bank Inspection Panel had been observed and digested, subsequent mechanisms in other institutions included a provision for regular review and change to adjust to new realities. In most cases, this periodic review occurs every three to five years, chosen to allow experience to accumulate, for stakeholders to draw their own conclusions about successes

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and failures, and to have a formal review and deliberation with public participation to improve the IAM procedures. While the nominal purpose is to amend the way in which an IAM does its work, it is of equal importance to educate and bring up to speed the board directors and senior management, which suffer from frequent turnover, to understand the history and purpose of the IAM.13 5

The Record

What is the scale of this development? To be specific, how many complaints have become IAM cases? Globally, a census taken in 2012 of the major IAMs (not a fixed universe) identified 262 complaints that had been registered and found eligible as valid cases for mediation or investigation since the Inspection Panel was created in 1993.14 These cases were scattered across 72 countries, with no one region having more than 30% of the cases (Asia 30%, Latin America 25%, etc.). At a regional level, the African Development Bank produced in 2014 a paper15 with the results of a survey of four institutions (WB, EIB, AFDB, IFC) over the prior 10-year period to see the collective scale of activity by the associated accountability mechanisms in the African region. Out of 242 registered cases globally for just the four banks, 24% (59) were in Africa. Of those 59 cases, the World Bank had 16, the European Investment Bank had 13, the IFC had 16, and the AFDB handled 14. Nevertheless, the cases were not distributed equally by sub-region: 18 in East Africa, 12 in Southern Africa, 6 in Central Africa, 7 in North Africa, and 5 in West Africa. In terms of the number of international financial development institutions with independent compliance review and/or dispute resolution mechanisms, the current count is in the range of 17–25. One element of uncertainty in this total number is the requirement in recent years established by the large global environmental funds that the implementing agencies (including not only the 13  See, for instance, Asian Development Bank, 2016 Learning Report on the Implementation of the Accountability Mechanism Policy (Asian Development Bank 2016) accessed 12 August 2018; European Bank for Reconstruction and Development, Stakeholder Engagement Plan: Review of PCM Rules of Procedure 2013–2014 (European Bank for Reconstruction and Development 2013) accessed 12 August 2018. 14  Lewis (n 1) 17. 15  African Development Bank, The Independent Review Mechanism Annual Report 2013 (2014) accessed 12 August 2018.

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traditional IFIs, but also NGOs, national governments, and UN agencies) have an operational grievance mechanism. For instance, the Adaptation Fund has the following policy in place: 5.1 Grievance Mechanism The fully-developed project/programme document will include a description of a grievance mechanism, which is accessible by employees and affected communities. The mechanism will be designed to receive and facilitate grievances in a transparent manner and will be commensurate to the complexity of the risks. This mechanism is particularly important in projects with involuntary resettlement or indigenous peoples.16 This requirement, similar to those in the Green Climate Fund and the Global Environmental Facility, has spawned a cascade of accountability mechanisms – of varying quality and complexity – across most of major UN agencies as well as a smattering of governments and non-governmental entities. The variant in the GCF is that it not only requires this capacity in its implementing agencies, but it also has its own in-house IAM, which could lead to simultaneous compliance reviews by both the GCF and its implementing agency. 6

Challenges for the Future

In addition to the perennial challenges noted above, there are numerous emerging topics needing attention by the international institutions themselves as well as by researchers and commentators, with regard to strengthening the future of such accountability mechanisms. Some of those might include the following: 1. As noted above, the spread of such innovative mechanisms from the dominance of the multilateral banks over the last 20 years to a new universe of development organisations (FAO, UNEP, UNDP etc.) could easily change the underlying expectations and challenges. The IFIs have lived in a largely-separate universe under the Bretton Woods umbrella, and 16   Adaption Fund, ‘Guidance document for Implementing Entities on compliance with the Adaptation Fund Environmental and Social Policy’ (2016) 21 accessed 18 August 2018.

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3.

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challenges are emerging on many fronts – from the UN system, from regional entities designed to compete with the IFIs, or from shifting balances of power within particular IFIs. It has already altered the international dialogue on ensuring compliance with human rights standards, which were always more strongly imbedded in the norms of the UN organisations than in the IFIs. At the same time, the rise to prominence of the human rights sector causes significant conflict with nationalistic and non-democratic governments. Those governments have sought alternative sources of finance without the need to adhere to international standards. As social and environmental standards broaden to include human rights and become more prevalent in both public international organisations and the private sector, global political leaders will have to decide whether they have the will to maintain their policy commitments across a wide variety of financial and political international organisations. Operationally, the next challenge in the human rights sector will be to create an agreed-upon screening process, i.e., a Human Rights Impact Assessment for projects under development.17 The rise of the vertical funds (GEF, FCPF, GCF, etc.) as mobilisers of sustainable development finance will create tensions with their implementing agencies and the ultimate beneficiaries of the funds. The language to define eligible implementers is being given greater clarity and the requirements functionally defined. For instance, the July 2015 GCF guidelines for applicants as implementers describe the requirements for a grievance mechanism: – Have publicly available terms of reference that outline the purpose, authority and accountability for the investigation function (basic fiduciary criteria for the purpose of transparency and accountability and scope of investigation) – Ensure functional independence by having the investigations function headed by an officer who reports to a level of the organisation that allows the investigation function to fulfil its responsibilities objectively (basic fiduciary criteria for the purpose of transparency and accountability and scope of investigation)

17  See a first approach to the HRIA at the IFC in Désirée Abrahams and Yann Wyss, Guide to Human Rights Impact Assessment and Management (The International Business Leaders Forum and the International Finance Corporation 2010) accessed 12 August 2018.

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– Publish guidelines for processing cases, including standardised procedures for handling complaints received by the function and managing cases before, during and after the investigation process (basic fiduciary criteria for the purpose of transparency and accountability and scope of investigation).18 The significance of these requirements in global vertical funds has yet to be tested with concrete cases. Attempts to define the relationship between IAMs in the funds and the IAMs in implementing agencies have not yet been successful, although attention is being paid to drafting of principles so overlapping jurisdiction can be addressed efficiently and with common standards. The rise of private sector accountability mechanisms along with scoring systems for corporate behavior driven by NGOs will further diversify the voices in the policy compliance landscape. Oxfam’s scorecard campaign has a particular power to ‘name and shame’19 – far more than any of the traditional accountability mechanisms. The coalition of private sector banks adhering to the Equator Principles has long resisted the idea of an independent accountability mechanism, but some of the banks are now splitting from the rest to experiment with just such a process. For instance, the Dutch bank FMO with the German bank DEG has launched such a mechanism and undertaken the investigation of at least one case, where the Barro Blanco dam in Panama was found to be out of compliance.20 Hybrid cases are also coming forth as complaints about public-private partnerships test the potential reach of social and environmental policies.21 Evidence gathering for either compliance reviews or for dispute resolution is embracing new technology. The proliferation of social media, well into rural areas, allows dispersed communities to gather information and provide ground-truth in real time. The federation of indigenous peoples

18  Green Climate Fund, ‘Green Climate Fund Accreditation Application Form’ (Green Climate Fund, July 2015) 33 accessed 12 August 2018. 19   ‘Company Scorecard’ (Behind the Brand) accessed 12 August 2018. 20  ‘FMO did not follow its own rules in financing Barro Blanco dam’ (Both ENDS, 1 June 2015) accessed 12 August 2018. 21  See the UNDP case regarding its Business Call to Action Alliance at .

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in Panama (COONAPIP), for instance, uses both Facebook and Twitter to stay in touch with its dispersed membership. Crowdsourcing the ongoing gathering of evidence about a project is accelerating, including monitoring of implementation steps required in management action plans to bring a project into compliance. Now that developing countries have more than two decades experience with international accountability mechanisms, some of the largest economies (e.g., China, Brazil, India) have sought to opt out of such standards or to interpret them in their own way. At the same time, they have sought greater voting power in the traditional IFIs, such as the World Bank, with the potential to change the definitions in safeguard policies at the root of social and environmental progress. It can thus be understood why the attempts of the World Bank to rewrite its safeguard policies take much longer with each iteration – several years – and shows growing disagreement between borrowing shareholders and civil society. Since the work of a compliance review mechanism depends on agreed underlying policies of the institution, the ability of the IAMs to be effective could change substantially if standards erode. There is also increasing consultation among the IFIs on a continuing basis about these issues, with the potential for harmonisation in policies and procedures; whether that results in stronger or weaker policies is not a foregone conclusion. The prospect for harmonisation is also being driven by the multi-party co-financing of large infrastructure projects. The Bujagali hydroelectric project in Uganda was supported by four IFIs, two bilateral agencies, three private financiers, and the government of Uganda, each with different policies. As the cost of large infrastructure projects rises, so will the number of co-financiers. The future of international accountability processes will be a spectrum of options, rather than a binary choice of dispute resolution versus compliance review. Increasingly, the existing mechanisms are being redesigned to provide a range of services, such as IAM-initiated proactive investigations without an external complainant, advisory notes to the Board or senior management on systemic issues, intake services on all external complaints, and mobilisation of technical advisers to save troubled projects. The range from ombudsman functions and mediation services to compliance reviews and compensation recommendations is a very broad one, and the grey areas along the spectrum could have significant impacts on the perceptions, efficiency, and effectiveness of the mechanisms. It will be important to recognise and deal with the costs and benefits of such spectrum approaches.

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25 Years Is Not Enough

As we approach the 25th anniversary of this movement for citizen-driven accountability in the IFIs, it would be tempting to think that we have seen and tested all the options for accountability mechanisms. The fact is that we have not. The institutional scenery is replete with experiments, some of which have great promise and others that will appropriately be cast aside. What is essential among all that change and experimentation is that the stakeholders remember the basic principles and assess with an analytical perspective the capacity of new approaches to re-shape institutions and to deliver better development for the intended beneficiaries of the billions invested each year.

chapter 3

Independent Accountability Mechanisms as Agents of “Global Administrative Law” Owen McIntyre 1 Introduction It is now well over 30 years since multilateral development banks (MDBs) began to introduce commitments, in the form of environmental and social safeguard policies, which would henceforth compel these lenders to ensure that all projects to which they provided financing would meet certain performance standards.1 While these policies initially focused on environmental impacts and standards, they soon came to incorporate social standards, concerning such impacts as economic displacement and labour and working conditions. In recent years, such policies are increasingly framed using the language of human rights obligations.2 The environmental and social policies and standards adopted by MDBs have continued to develop and evolve in terms of their sophistication and substantive coverage, largely as a result of structured 1  In May 1984 the World Bank consolidated and updated a range of sectoral environmental safeguard policies, including policies on Rural Development (1975), Forestry (1978), Agricultural Land Settlement (1978) and Fisheries (1982), which were collectively reissued as a formal (Operational Manual Statement) OMS No. 2.36, Environmental Aspects of Bank Work, later reissued in October 1989 as (Operational Directive) OD 4.00 on Environmental Issues, and revised and reissued in 1991 as OD 4.01 on Environmental Assessment. The World Bank had also begun to develop safeguard policies on social protection, adopting OD 4.30 on Involuntary Resettlement in June 1990. See further, Ibrahim F. I. Shihata, ‘The World Bank and the Environment: A Legal Perspective’ (1992) 16 Maryland Journal of International Law and Trade 1, 3–13; Owen McIntyre, ‘Development Banking ESG Policies and the Normativisation of Good Governance Standards: Development Banks as Agents of Global Administrative Law’ in Karen Wendt (ed), Responsible Investment Banking: Risk Management Frameworks, Sustainable Financial Innovation and Soft Law Standards (Springer International 2015) 144–145. 2  For example, EBRD’s 2014 Environmental and Social Policy (ESP) declares, at 2, para 9, that  “The EBRD recognises the responsibility of clients and their business activities to respect human rights and that this is an integral aspect of environmental and social sustainability. This responsibility involves respecting human rights, avoiding infringement on the human rights of others, and addressing adverse human rights impacts that their business activities may cause, or to which they may contribute.”

© Koninklijke Brill NV, Leiden, 2020 | doi:10.1163/9789004337787_004

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processes of periodic review of such policies, including benchmarking against the policies of peer institutions and, more generally, against the international commitments of a bank’s Member States.3 In time, each MDB has also established an independent accountability mechanism (IAM) charged with investigating complaints received from individuals or communities adversely affected by bank-funded projects4 and with reviewing the bank’s compliance with its own safeguard policies, amongst other functions.5 More recently, similar standards of environmental and social protection applicable to the financing of developmental projects, along with supporting accountability mechanisms, have been adopted by a wide range of other actors and agencies active in funding development activities, including export credit agencies,6 United Nations agencies7 and major private-sector providers of development project finance. That this trend towards establishing environmental and social governance standards has spread to private-sector lenders 3  Consider, for example, the case of the European Bank for Reconstruction and Development (EBRD), which adopted its first Environmental Policy in 1991 (EP 1992), but is now subject to the 2014 Environmental and Social Policy (ESP 2014), the fifth iteration which, at the time of writing, is once again undergoing a routine periodic review. Modelled on the format of the safeguard policies adopted by the International Finance Corporation (IFC), the private-sector lender of the World Bank Group, the 2014 ESP contains detailed procedural and substantive requirements for the avoidance or mitigation of harm liable to be caused by projects set out under 10 Performance Requirements (PRs), each relating to a particular type of environmental or social impact, a type of lending or good governance practice. 4  Commencing with the establishment in 1993 of the World Bank Inspection Panel by the Executive Board of the World Bank Group. See further, The World Bank: accessed 12 August 2018. 5  I AMs will have one or more of three functions: (i) a compliance review function, examining the bank’s compliance with the applicable requirements of its own environmental and social policy; (ii) a problem-solving or conciliation function, involving efforts to restore a dialogue between the parties to a complaint and to facilitate an agreement that can be reached between the parties; and (iii) an advisory function, under which the mechanism advises bank management on the nature and application of requirements of the environmental and social policy. 6  For example, the Office of Accountability established in 2005 by the Board of Directors of the U.S. Overseas Private Investment Corporation (OPIC). See further, ‘Office of Accountability’ (Overseas Private Investment Corporation) accessed 12 August 2018. 7  For example, in June 2014 the United Nations Development Programme (UNDP) adopted mandatory Social and Environmental Standards (SES) applicable to all UNDP projects, which are underpinned by an Accountability Mechanism comprising two key components, the Social and Environmental Compliance Unit (SECU) and the Stakeholder Response Mechanism (SRM). See further, ‘Social and Environmental Compliance Review and Stakeholder Response Mechanism’ (United Nations Development Programme) accessed 15 August 2018.

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is reflected in the ‘Equator Principles’ (EPs), a voluntary risk management framework creating minimum standards for due diligence in determining, assessing and managing environmental and social risk in projects.8 The EPs have now been adopted by 92 private-sector lenders in 37 countries, thereby covering the vast majority of international project finance debt within developing and emerging markets.9 As regards the safeguard standards applicable in ‘Non-Designated Countries’, where there must be ‘compliance with the then applicable IFC Performance Standards on Environmental and Social Sustainability … and the World Bank Group Environmental, Health and Safety Guidelines’, the EPs recognise growing ‘convergence around common environmental and social standards’ and acknowledge the seminal importance of the IFC’s Performance Standards in such convergence, noting that ‘[m]ultilateral development banks, including the European Bank for Recons­ truction and Development, and export credit agencies, through the OECD Common Approaches, are increasingly drawing on the same standards as the EPs’.10 It is increasingly apparent that the environmental and social safeguard policies and standards adopted by MDBs, and overseen by IAMs, both reflect and contribute to the steady accretion of a broad range of universally accepted standards of administrative good governance, which are increasingly held forth by a diverse collection of global regulatory actors as representing formal or informal legal or quasi-legal requirements. Such policies and standards promote a number of core ‘good governance’ values, which are prevalent in almost all national systems of administrative law and are also increasingly commonly applied, mandatorily or voluntarily, to a broad range of transnational or global actors. Such values notably include transparency of decision-making processes, broad public participation in decision-making, delivery of reasoned decisions, reviewability of decisions, accountability of decision-makers, respect for proportionality in decision-making, and respect for human rights. This inexorable, yet non-directed movement towards recognition of a set of 8  See further, Karen Wendt, ‘Innovating Conflict Resolution Mechanisms for International Finance’ in Owen McIntyre, Suresh Nanwani and Anoush Begoyan (eds), The Practice of Independent Accountability Mechanisms (IAMs): Towards Good Governance in Development Financing (Brill 2018). 9  See Equator Principles: accessed 12 August 2018. See further, Nigel Clayton, ‘The Equator Principles and Social Rights: Incomplete Protection in a Self-Regulatory World’ (2009) 11(3) Environmental Law Review 173–195; Steven Herz, Kristen Genovese, Kirk Herbertson, and Anne Perrault, The International Finance Corporation’s Performance Standards and the Equator Principles: Respecting Human Rights and Remedying Violations? (CIEL et al., August 2008). 10  Equator Principles, ibid.

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universally-accepted good governance standards, applying to both public and private actors at the global, regional, national and local levels of administration, is part of the ‘global administrative law’ phenomenon. Thus, the trend in international development banking practice towards the adoption and implementation of environmental and social safeguard policies and standards can be explained in terms of global administrative law while, at the same time, the international development banking sector might be regarded as one among many drivers of this gradual, broad-based shift towards the evolution of global standards of good governance practice. Illustrating the complex interrelationship between informal and formal rules and standards that is characteristic of the global administrative law phenomenon, MDB environmental and social safeguard policies inevitably tend to be based upon international best practice, which is often exemplified in international conventions and established legal practice.11 Thus, MDBs will often assume the role of an informal enforcement agent, as regards their clients, for international or national environmental and social norms which might not otherwise be directly applicable to their clients’ operations or effectively enforced by the relevant regulatory agencies. IAMs often play a critical role in identifying and assessing compliance with formal legal requirements where complainants allege non-compliance with related MDB safeguard standards. There is obvious utility in such indirect enforcement of formal international environmental, social and human rights norms, especially against private-sector borrowers, against whom such norms might not otherwise apply. While this indirect enforcement function is particularly significant in the case of MDBs which lend exclusively or principally to the private-sector, such as the IFC or EBRD, it must be remembered that private-sector borrowings make up an ever-greater proportion of their overall international development lending. This chapter aims to outline the emergence and continuing evolution of MDB environmental and social safeguard standards, and the critical role of IAMs in ensuring compliance with such standards, as an exemplar of the 11  For example, EBRD’s 2014 ESP explains, at 2, para 8, that:  “The EBRD recognises the ratification of international environmental and social agreements, treaties and conventions by its countries of operations. Within its mandate, the EBRD will seek to structure the projects it finances so that they are guided by the relevant principles and substantive requirements of international law. The EBRD will not knowingly finance projects that would contravene country obligations under relevant international treaties and agreements, as identified during project appraisal.”  Para 7 further explains that the EBRD ‘is committed to promoting the adoption of EU environmental principles, practices and substantive standards’, the latter of which ‘are contained in EU secondary legislation, for example, regulations, directives and decisions’.

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current trend towards the creeping ‘normativisation’ of global good governance standards. 2

The Diverse Landscape of Global Governance

Commentators generally agree that the phenomenon of economic ‘globalisation’12 represents an unprecedented challenge to traditional legal frameworks for effective environmental and social regulation of many significant economic sectors.13 While traditional, State-centred mechanisms for elaborating and enforcing such legal protections are ever more frequently proving inadequate due to the transnational character of economic activity, as well as to their own inherent lack of responsiveness, flexibility and accessibility, a wide range of novel, often informal, rules and standards, which function to normativise a broad and progressive understanding of environmental and social governance, are playing an increasingly important role. Leading legal theorists have considered such developments and sought to provide a novel conception of legal order, which responds to the challenges raised by the phenomenon of globalisation, based on ‘the processes, practices, institutions, doctrines, values and aspirations through which law becomes less centred upon the jurisdiction and less dependent on the organs of the modern state, and instead gradually comes to assume a “global” significance’.14 Walker describes Twining’s point of departure in his examination of this new conception of legal order as ‘the inadequacy of the received model of modern law – the state-centred law-world – to our circumstances of intensifying “global” interdependence’,15 and ‘the increasing inappropriateness of the high modern view of legal statehood as a largely 12  Walker describes the phenomenon of ‘globalisation’ in terms of ‘a strong trend away from ‘the local’ and the territorially confined, and in particular the state-confined, as the main point of reference for many areas of human organisation’ and ‘the gradual deterritorialisation and disembedding of the basic setting of social organisation’. See Neil Walker, Intimations of Global Law (CUP 2014) 3, 6. 13  See, for example, Elena Blanco and Jona Razzaque, Globalisation and Natural Resources Law: Challenges, Key Issues and Perspectives (Edward Elgar 2011) 33; the authors outline the challenge of ‘global governance’ presented by ‘[t]he process of globalisation’. 14  See Walker (n 12) 2, summarising the relevant writings of William Twining, specifically William Twining, Globalisation and Legal Theory (CUP 2000); William Twining, Globalisation and Legal Scholarship: Montesquieu Lecture 2009 (Wolf Legal Publishers 2011); William Twining, General Jurisprudence: Understanding Law from a Global Perspective (CUP 2009). 15  Walker, ibid. 9, referring to Twining, General Jurisprudence: Understanding Law from a Global Perspective, ibid., Ch 1.

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self-contained and so largely globally insulated “black box” of doctrine, institutions, culture and education’.16 More generally, such exploration requires scholars ‘to re-situate the state on a multipolar densely connected legal map in a complex relationship with other economic, political and cultural globalising forces’.17 This vison of a rapidly evolving, de-territorialised global legal order neatly captures and helps to explain the normative governance structures established by MDB safeguard policies and accountability mechanisms, situating them among the emergence of myriad requirements to apply governance standards, often informal, to a wide range of economic activities, including to the provision of development project finance. The concept of ‘governance’ has been defined as ‘the formation and stewardship of the [formal and informal] rules that regulate the public realm – the space where the state as well as economic and societal actors interact to make decisions’.18 The system of global or transnational environmental and social governance that continues to emerge is quite unlike any previous regulatory framework. It is a hybrid field comprising an intricate mix of public and private (as well as quasi-public and quasi-private) normative mechanisms, which interact in a complex manner in a dynamic regulatory setting. In addition to formal legal instruments adopted under national, regional or global normative systems of a public and official nature, it also consists of a wide range of private transnational instruments or mechanisms including, inter alia, voluntary corporate codes,19 environmental management systems,20 sustainability labelling and certification schemes,21 sustainability reporting 16  Walker, ibid., referring to Twining, Globalisation and Legal Theory (n 14) 8. 17  Walker, ibid. 18  Goran Hyden, Julius Court and Kenneth Mease, Making Sense of Governance: The Need for Involving Local Stakeholders, (Overseas Development Institute 2004) 5. Available at: accessed 12 August 2018. 19  See, for example, standards of ‘corporate social responsibility’ (CSR) which the United Nations Industrial Development Organisation (UNIDO) defines at: ‘What is CSR?’ (United Nations Industrial Development Organisation) accessed 12 August 2018. 20  See, for example, the ISO 26000 Social Responsibility Guidance Standard: accessed 13 August 2018. See further, Naomi Roht-Arriaza, ‘Shifting the Point of Regulation: The International Organization for Standardization and Global Lawmaking on Trade and the Environment’ (1995) 22 Ecology Law Quarterly 479. 21  See, for example, the various sustainability standards adopted under the auspices of the International Social and Environmental Accreditation and Labelling (ISEAL)

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systems,22 and of course safeguard policies of multilateral project lenders.23 While there exists an almost endless variety of forms of novel transnational regulatory activity,24 it is significant that many corporate actors, and particularly multinational corporations which may be difficult to regulate under formal national legislative frameworks, voluntarily agree to abide by various codes of conduct which expressly require compliance with environmental and sustainability norms. Most notably, the UN Global Compact involves voluntary corporate commitment to a set of ten sustainability principles25 while the OECD Guidelines for Multinational Enterprises26 apply voluntary environmental and social requirements to multinational corporations operating in or from States which adhere to the 1976 OECD Declaration on International Investment and Multinational Enterprises,27 and provide for National Contact Points to handle enquiries and help resolve issues arising in relation to their effective implementation. In the case of certain multilateral lenders, such as the EBRD or IFC which focus on lending to private-sector clients, MDB standards of environmental and social governance are imposed, albeit indirectly, upon private Alliance: ‘Sustainability Requirements’ (ISEAL Alliance) accessed 13 August 2018. 22  See, for example, the various sectoral sustainability reporting standards adopted under the auspices of the Global Reporting Initiative: ‘GRI Standards’ (GRI) accessed 13 August 2018. 23  See, for example, the IFC Environmental and Social Sustainability Policy and Performance Requirements: ‘Performance Standards’ (International Finance Corporation) accessed 13 August 2018. 24   See, for example, the environmental health policy-making of the World Health Organisation (WHO) and the testing protocols and risk assessment methodologies developed by the Organisation for Economic Cooperation and Development (OECD) Chemicals Group, cited in Daniel C. Esty, ‘Good Governance at the Supranational Scale: Globalizing Administrative Law’ (2005–2006) 115 The Yale Law Journal 1490, 1499 or the certification procedure established under the Clean Development Mechanism of the Kyoto Protocol, cited in Georgios Dimitropoulos, ‘Private Implementation of Global and EU Administrative Law: The Case of Certification in the Climate Change Regime’ in Edoardo Chiti and Bernardo Giorgio Mattarella (eds), Global Administrative Law and EU Administrative Law: Relationships, Legal Issues and Comparison (Springer 2011) 383, 386. 25  See ‘The Ten Principles of the UN Global Compact’ (UN Global Compact) accessed 13 August 2018. 26  See ‘About the OECD Guidelines for Multinational Enterprises’ (OECD) accessed 13 August 2018. 27  All 34 OECD States, along with 12 non-OECD States have subscribed to the Declaration: ‘Text of the OECD Declaration on International Investment and Multinational Enterprises’ (OECD, 25 May 2011) accessed 13 August 2018.

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corporate entities, against which many formal legal requirements could never be applied effectively. For example, in May 2016 the Office of the Compliance Advisor Ombudsman (CAO), the IFC independent accountability mechanism, published the results of a compliance investigation into IFC’s investments in Delta Wilmar Ltd, a palm oil refinery in Ukraine owned by the multinational Wilmar Group, finding non-compliance in respect of IFC’s obligation to supervise the environmental and social risks associated with the refinery’s palm oil supply chain.28 This investigation focused on the improper use of customary lands in Indonesia, activity which might not have been effectively regulated otherwise, and clearly illustrates the potential impact of MDB safeguard policies and related IAM enforcement in curtailing the worst excesses of multinational actors in certain sectors, such as the palm oil industry, with a notoriously poor environmental and social record. This complex mix of rules and standards, adopted formally and informally, and the interaction between such rules and standards, may be explained by the phenomenon of ‘global administrative law’, an analytical approach employed to address the rapidly changing realities of transnational regulation, which increasingly involves, inter alia, various forms of industry self-regulation, hybrid forms of private-private and public-private regulation, network governance by State officials, and governance by inter-governmental organizations with direct or indirect regulatory powers.29 Leading commentators on the topic suggest that these disparate regulatory regimes, some voluntary and some mandatory, and operating at various administrative levels (sector-specific, national, regional and global) together form a variegated ‘global administrative space’ that includes international institutions and transnational networks involving both governmental and non-governmental actors, as well as domestic administrative bodies that operate within international regimes or cause transboundary regulatory effects.30 28  I ndonesia / Wilmar Group-03/Jambi (9 November 2011) accessed 13 August 2018; a summary of this complaint is available at CAO Update (Issue 4, August 2016) 1. 29  See Benedict Kingsbury, ‘Global Environmental Governance as Administration’ in Daniel Bodansky, Jutta Brunnée, and Ellen Hey (eds), The Oxford Handbook of International Environmental Law (OUP 2007). 30  Benedict Kingsbury et al., ‘Foreword: Global Governance as Administration – National and Transnational Approaches to Global Administrative Law’ (2005) 68 Law and Contemporary Problems 1, 3. See also Carol Harlow, ‘Global Administrative Law: The Quest for Principles and Values’ (2006) 17(1) European Journal of International Law 187.

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The same authors provide a broad definition of the ‘global administrative bodies’, which generate global administrative law norms and to which such norms might apply, to include: intergovernmental institutions, informal inter-governmental networks, national governmental agencies acting pursuant to global norms, hybrid public-private bodies engaged in transnational administration, and purely private bodies performing public roles in transnational administration.31 It is immediately clear that MDBs can be included among intergovernmental institutions involved in transnational regulatory activity. Indeed, the broad and inclusive characterisation of ‘global administrative bodies’ provided above resonates with the increased recourse to ‘informalism’ evident in international decision-making. For example, addressing the fact that much recent regulatory action in the field of climate change regulation ‘has been channelled through informal processes, eventually leading to “soft” norms’, Steinbach notes ‘[t]he emergence and characteristics of informal institutions and law-making in global governance, as well as the pressure they exert on the traditional modes of cooperation’.32 Such novel forms of normative activity can fill lacunae where formal law-making institutions, at either the national or international levels, have failed to elaborate, adopt or enforce binding rules.33 Alternatively, such informal rules and standards can function to enhance the effectiveness, formation, and scope of application of formal rules, which can take considerable time to emerge, especially at the transnational level. However, concerns have inevitably arisen in respect of these regimes regarding their lack of democratic foundations and reduced policy control at the national and local levels, regarding the distance of supranational decision-makers from the public or regulated 31  Kingsbury et al., ibid. 5. 32  See Armin Steinbach, ‘The Trend towards Non-Consensualism in Public International Law: A (Behavioural) Law and Economics Perspective’ (2016) 27(3) European Journal of International Law 643, 661–662. See further, Joost Pauwelyn, ‘Is It International Law or Not and Does It Even Matter?’ in Joost Pauwelyn, Ramses A. Wessel and Jan Wouters (eds), Informal International Lawmaking (OUP 2012) 125–161. 33  In the specific context of MDB IAMs, see, for example, the IFC-CAO Delta-Wilmar Complaint (n 28). More generally, ‘Voluntary Guidelines for Sustainable Soil Management’ (Food and Agriculture Organisation) accessed 15 August 2018, which aim to facilitate implementation of the World Soil Charter and to promote sustainable soil management globally. This contrasts markedly with the EU’s two failed attempts to adopt a Soil Framework Directive (see OJ C 153 of 21 May 2014 and corrigendum in OJ C 163 of 28 May 2014).

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community, and regarding their lack of effective accountability.34 In order to address such concerns about the legitimacy of their norm-creating activities, the agencies involved appear, almost universally, to have adopted the principles inherent to national systems of administrative law. Esty argues that just as domestic policymakers and administrative law scholars have devised rules and procedures to bolster the legitimacy of administrative agencies, global policymakers might look to the first principles of administrative law to remedy the democratic deficit and legitimacy concerns at the transnational level.35 Focusing more specifically on the strict procedural legacy of national administrative law systems, he concludes that ‘the procedural rigour of administrative law is a critical tool for refining international governance and legitimizing the exercise of supranational authority’.36 This participatory approach is now everywhere evident in processes for legal and non-legal regulatory decision-making, as exemplified by the ubiquitous corresponding requirements found in MDB safeguard policies.37 3

Transnational Regulation and Global Administrative Law

Taking the rapidly changing realities of transnational regulation as their starting point, proponents of the global administrative law perspective argue that it ‘begins from the twin ideas that much global governance can be understood as administration, and that such administration is often organized and shaped by principles of an administrative law character’.38 These authors expressly include World Bank and other MDB standards for the conduct of environmental assessments among examples of the regulatory regimes and networks which typify global administrative law, alongside such regimes as OECD environmental policies followed by national export credit agencies, regulation of ozone depleting substances under the Montreal Protocol, sustainable forest use 34  Esty (n 24) 1503. See further, Steinbach (n 32) 645; Nico Krisch, ‘The Decay of Consent: International Law in an Age of Global Public Goods’ (2014) 108 American Journal of International Law 1. 35  Esty, ibid. 1494. 36  Ibid. 1495. 37  Consider, for example, Performance Requirement 10 on Information Disclosure and Stakeholder Engagement contained in the 2014 EBRD Environmental and Social Policy. 38  Kingsbury et al. (n 30) 2.

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criteria for certification of forest products developed by the Forest Stewardship Council, and the Clean Development Mechanism under the Kyoto Protocol. Indeed, in remarking on the ‘highly decentralized and not very systematic’ nature of much of the administration of global governance, Kingsbury elsewhere observes that ‘[s]ome entities are given roles in global regulatory governance which they may not wish for or be particularly designed or prepared for’,39 bringing to mind the reluctant adoption of environmental and social policies by MDBs in the wake of controversial lending decisions in the 1990s.40 As noted above, similar safeguard policies are now widely adopted by private sector project lenders which have signed up to the Equator Principles.41 As regards the sources of GAL rules and principles, Kingsbury, while emphasising that ‘there is no single unifying rule of recognition covering all of GAL’, includes traditional legal rules, but also certain principles associated with ‘publicness’ in law.42 He suggests that ‘[p]rinciples relevant to publicness include the entity’s adherence to legality, rationality, proportionality, rule of law, and some human rights’, which are manifested in ‘practices of judicial-type review of the acts of global governance entities, in requirements of reason-giving, and in practices concerning publicity and transparency’43 Such review practices bring to mind the compliance review function with which all MDB IAMs are charged, while MDB safeguard policies and IAM rules of procedure are imbued with the governance principles identified above. Kingsbury also includes among the sources of GAL the rules, standards and safeguards developed as a result of processes of ‘private ordering’, such as the various technical guidelines adopted by bodies like the International Standards Organisation (ISO), though he cautions that such ‘“[p]rivate ordering” comes within this concept of law only through engagement with public institutions’.44 Highlighting the difficulty of identifying a universal set of administrative law principles, 39  Benedict Kingsbury, ‘The Concept of “Law” in Global Administrative Law’ (2009) 20(1) European Journal of International Law 23, 25. 40  See further, Suresh Nanwani, ‘Holding Multilateral Development Banks to Account: Gateways and Barriers’, (2008) 10 International Community Law Review 199–226. In relation to the harsh criticism of the World Bank over the Sardar Sarovar Dam Project in India and calls for greater accountability contained in the 1992 Wapenhams Report, see Rekha Oleschak-Pillai, ‘Accountability of International Organisations: An Analysis of the World Bank’s Inspection Panel’ in Jan Wouters, Eva Brems, Stefaan Smis and Pierre Schmitt (eds), Accountability for Human Rights Violations by International Organisations (Intersentia 2010) 401, 409. 41  Equator Principles (n 9). 42  Kingsbury (n 39) 23. 43  Ibid. 44  Ibid.

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Harlow systematically identifies and describes four potential sources as a foundation for global administrative law: first, the largely procedural principles that have emerged in national administrative law systems, notably the principle of legality and due process principles; second, the set of rule of law values, promoted by proponents of free trade and economic liberalism; third, the good governance values, and more particularly transparency, participation and accountability, promoted by the World Bank and International Monetary Fund; and finally, human rights values.45 Harlow concludes from her examination of all these sources that ‘there is considerable overlap between principles found in these different sources’.46 While Harlow includes human rights values as a source of GAL norms, she does so ‘only to the extent that these are procedural in character’.47 She highlights the fact that ‘many international human rights texts contain due process rights of a type traditionally developed in and protected by classical administrative law systems’.48 However, Kingsbury appears to suggest that the substantive normative content of human rights regimes might in some instances be relevant by suggesting that ‘some human rights (perhaps of bodily integrity, privacy, personality) are likely to be protected by public law as an intrinsic matter (without textual authority)’.49 The human right to bodily integrity is often closely linked to, and may under many human rights texts be derived from, the right to health, and thus connected to related standards of environmental and social protection. For example, the requirements associated with realisation of the human right(s) to water and sanitation are inferred from, inter alia, the right to health,50 and it is interesting to note in this regard that the 2014 EBRD ESP provides that [t]he EBRD will assess to what extent tariff changes caused by projects may create problems of affordability of basic levels of services for disadvantaged and/or vulnerable groups of the population, and satisfy itself 45  Harlow (n 30) 187. 46  Ibid. 188. 47  Ibid. 48  Ibid. 49  Kingsbury (n 39) 33 (emphasis added). 50  See CESCR, General Comment No. 15: The Right to Water (Articles 11 and 12 of the Inter­ national Covenant on Economic, Social and Cultural Rights) (U.N. DOC. E/C.12/2002/11, 26 November 2002).

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that effective schemes to address this issue are developed and put in place. The affordability to disadvantaged and vulnerable groups of water and sanitation services is one of the primary concerns of the global discourse on the human right to water and sanitation, and certain MDBs have developed elaborate safeguard guidelines in this regard.51 Therefore, Kingsbury’s express reference to bodily integrity implies that substantive human rights values must be relevant to the identification of GAL norms, and vice versa. Indeed, while many economic, social and cultural rights are largely concerned with informational, participative and other procedural elements, it is clear that substantive human rights values, and of course environmental and social values, would be relevant to, and captured by, the general public law principle of proportionality.52 4

MDB Environmental and Social Governance as Global Administrative Law

One may regard the environmental and social policies and standards adopted by MDBs, along with the arrangements for their adoption, for their implementation, and for review of their application, as a classic example of the global administrative law phenomenon. The European Bank for Reconstruction and Development (EBRD), for example, adopted its first Environmental Policy in 1991, but currently applies its 2014 Environmental and Social Policy (ESP).53 The scope of the ESP has evolved and expanded considerably over time, largely due to a regular periodic review, which in 2014 resulted in greater emphasis

51  See, for example, African Development Bank, ‘Guidelines for User Fees and Cost Recovery for Urban Water and Sanitation’ (AfDB, 2010) accessed 15 August 2018; African Development Bank, ‘Guidelines for User Fees and Cost Recovery for Rural, Non-Networked, Water and Sanitation Delivery’ (AfDB, 2010) accessed 15 August 2018. 52  See, for example, Alec Stone Sweet and Jud Mathews, ‘Proportionality Balancing and Global Constitutionalism’ (2008) 47 Columbia Journal of Transnational Law 73. 53   ‘Approval of New Governance Policies’ (European Bank for Reconstruction and Development) accessed 15 August 2018. On the development and evolution of the EBRD’s Environmental and Social Policy, see McIntyre (n 1).

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on compliance with international human rights values and requirements.54 Modelled on the format of the safeguard policies adopted by the IFC, the EBRD’s 2014 ESP contains detailed procedural and substantive requirements for the avoidance or mitigation of project-related harm set out under 10 detailed Performance Requirements (PRs), each relating to a particular type of environmental or social impact, a type of lending, or good governance practice.55 In promoting environmental and social governance standards, the ESP relies heavily upon, and operates to ensure compliance with, formal environmental and social standards set out under applicable national, EU or international law. For example, it expressly provides that ‘stakeholder engagement should be carried out bearing in mind the spirit and principles’ of the Aarhus Convention.56 It also places clear emphasis on general good governance values and practices, reaffirming that the Bank ‘is committed to the principles of transparency, accountability and stakeholder engagement’ and that it ‘will promote similar good practices amongst its clients’.57 As is now the case with all MDBs, compliance with these commitments is reviewed by an independent accountability mechanism, the Project Complaint Mechanism (PCM), established by the Bank’s Board to investigate complaints from project-affected persons and civil society concerning EBRD-funded projects.58 The lion’s share of the PCM’s work involves the conduct of such ‘Compliance Review’ proceedings.59 54  See, for example, EBRD ESP 2014, paras 1, 9, 11 and 15, as well as particular requirements under Performance Requirements (PRs) 1, 2, 5, 7, 8 and 10. 55  These include Environmental and Social Appraisal and Management (PR1); Labour and Working Conditions (PR2); Pollution Prevention and Abatement (PR3); Community Health, Safety and Security (PR4); Land Acquisition, Involuntary Resettlement and Economic Displacement (PR5); Biodiversity Conservation and Sustainable Management of Living Natural Resources (PR6); Indigenous Peoples (PR7); Cultural Heritage (PR8); Financial Intermediaries (PR9); Information Disclosure and Stakeholder Engagement (PR10). 56   United Nations Economic Commission for Europe, 1998 (Aarhus) Convention on Access to Information, Public Participation in Decision-making and Access to Justice in Environmental Matters (1999) 38 ILM 517. See EBRD, 2014 ESP, para 34. In addition, para 7 sets out the EBRD’s clear commitment ‘to promoting the adoption of EU environmental principles, practices and substantive standards by EBRD-financed projects’, while para 6 commits the Bank to ensuring that ‘projects are designed, implemented and operated in compliance with applicable regulatory requirements and good international practice (GIP).’ 57   E BRD, 2014 ESP, para 15. 58  See ‘Project Complaint Mechanism’ (European Bank for Reconstruction and Development) accessed 15 August 2018. 59  See ‘PCM Register’ (European Bank for Reconstruction and Development) accessed 15 August 2018.

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Crucially, for the purpose of understanding the normative character of MDB safeguard policies, and of the IAMs which review their institutions’ performance against such policies, the proponents of the GAL phenomenon observe that [t]hese evolving regulatory structures are each confronted with demands for transparency, consultation, participation, reasoned decisions, and review mechanisms to promote accountability. These demands, and responses to them, are increasingly framed in terms that have an administrative law character. The growing commonality of these administrative law-type principles and practices is building a unity between otherwise disparate areas of governance.60 Of course, the overarching function of administrative law is to protect the rights of individuals by checking the unauthorised, excessive, arbitrary or unfair exercise of public power and, by so doing, to give legitimacy and direction to the practices of administrative bodies, particularly in terms of their responsiveness to broader public interests. Proponents of GAL argue that administrative law principles can perform a similar function for new global administrative structures and point out that many of the types of regulatory measures cited above have resulted from the efforts of global administrative bodies, often stimulated by external criticism, to improve internal accountability and bolster external legitimacy.61 One needs only to consider the establishment by all MDBs of environmental and social policies, and of IAMs to ensure compliance with such policies, or the widespread inclusion of mechanisms for NGO representation and participation in MDB decision-making structures and complaints processes. In attempting to define the concept of GAL, the same leading proponents explain that it encompasses the legal mechanisms, principles and practices, along with supporting social understandings, that promote or otherwise affect the accountability of global administrative bodies, in particular by ensuring these bodies meet adequate standards of transparency, consultation, participation, rationality, and legality, and by providing effective review of the rules and decisions these bodies make.62

60  Kingsbury et al. (n 30) 2. 61  Ibid. 4. 62  Ibid. 5 (original emphasis).

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They accompany this inclusive definition with a broad understanding of the ‘global administrative bodies’ which generate GAL norms and to which such norms might apply.63 Thus, few could credibly argue that the environmental and social governance standards adopted by MDBs, along with the institutional structures established to ensure compliance therewith, cannot be understood as illustrations of the GAL phenomenon. Indeed, much of the normative content of the key modern concepts of environmental and social good governance, and in particular the procedural rights of individuals and communities commonly set out therein, along with the policies, procedures and decisions of the disparate entities which seek to give effect to the environmental and social values contained therein, can be viewed through the prism of GAL. As regards the specific normative content of GAL, Kingsbury identifies certain ‘[g]eneral principles of public law [which] combine formal qualities with normative commitments in the enterprise of channelling, managing, shaping and constraining political power’.64 In addition to certain ‘more detailed elements, or requirements … particularly review, reason-giving, and publicity/transparency’, his indicative list of such general principles of public law includes the principles of legality, rationality, proportionality, rule of law, and human rights.65 Esty identifies a similar set of principles and values, noting that administrative law can provide ‘a refined system of procedures [which] can promote decision-making based on the rule of law, participation, rationality, clarity, stability, neutrality, fairness, efficacy, deliberation, efficiency, and accountability’.66 Having regard to these core values, he argues that ‘[i]f properly developed and implemented, administrative procedures promote careful rulemaking, efficient delivery of public goods, and fair treatment of both individuals and economic entities’.67 These values reflect those enshrined in MDB safeguard policies and in the rules of procedure (RPs) governing IAMs.68 63  Ibid. 64  Kingsbury (n 39) 32. 65  Ibid. 32–33. 66  Esty (n 34) 1496. 67  Ibid. 68  Of course, they also correspond very closely with other environmental and social governance frameworks, such as the Credibility Principles adopted by the ISEAL Alliance, a non-governmental organisation providing a global membership association for a range of diverse sustainability standards including, for example, those run by the Forestry Stewardship Council, the Aquaculture Stewardship Council, the Alliance for Water Stewardship, the Centre for Responsible Business, the Global Ecolabelling Network, the Marine Stewardship Council, and the Responsible Mining Foundation. For a complete list

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In terms of the scope of application of GAL, Kingsbury identifies three broad categories of activity to which GAL rules and principles might apply, and which in turn generate practices which serve to elaborate such rules and principles. These include: (i) The institutional design, and legal constitution, of the global administrative body; (ii) The norms and decisions produced by that entity, including norms and decisions that have as their addressees, or otherwise materially affect: a. other such public entities b. states and agencies of a particular state c. individuals and other private actors (iii) Procedural norms for the conduct of those public entities in relation to their rules and decisions, including arrangements for review, transparency, reason-giving, participation requirements, legal accountability and liability.69 In the case of MDBs, it is quite clear that rules and principles of GAL are relevant to the institutional design, and thus to the legitimate functioning of MDBs in their environmental and social protection role, including in particular the IAMs which are so centrally involved in ensuring compliance with environmental and social safeguard policies. However, it is the second and third categories of administrative activity listed above which particularly highlight how GAL principles impact the evolving normative character and content of MDBs’ environmental and social standards. The safeguard policies adopted by MDBs, and increasingly by private sector lenders, as well as the interpretative statements and quasi-judicial compliance decisions issued by IAMs, support and inform the emergence of GAL values, whilst also illustrating the practical utility of the GAL concept as a means of understanding common normative approaches which converge from complex pluralistic origins. Some commentators have expressed misgivings about the GAL phenomenon, particularly regarding the legitimacy of its rules and principles, as it often arises outside of traditional democratic processes, and lacks, due to its chaotic origins, the coherence and predictability normally expected of legal standards.70 However, in the case of MDBs the inexorable trend towards convergence of MDB environmental and social policies, which continue to evolve systematically through regular review processes involving consultation with of ISEAL organisations and standards, see ‘Organisations’ (ISEAL Alliance) accessed 15 August 2018. 69  Kingsbury (n 39) 34. 70  See, for example, Harlow, (n 30) 207–214; Steinbach (n 32); Kingsbury (n 39) 29.

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shareholders and international civil society and institutionalised cooperation with the wider MDB community,71 as well as the carefully structured incorporation of accountability mechanisms within the Banks’ governance structures, does much to address such concerns about legitimacy and normative clarity.72 This would appear, once again, to mark out MDB safeguard policies and accountability mechanisms as exemplars of the GAL phenomenon. Of course, such concerns are not anyway central to such an understanding of the environmental and social safeguards of MDBs and IAMs, as it must be remembered that, rather than attempting to provide a comprehensive and coherent unifying theory of global governance arrangements, the GAL concept is merely an observed phenomenon which seeks to explain the growing commonality apparent among the administrative principles and practices which increasingly apply across otherwise disparate areas of governance. As Kinsgbury explains, the GAL concept is simply ‘[e]ndeavouring to take account of these phenomena’.73 5

MDBs, IAMs and Formal Legal Frameworks

The GAL phenomenon helps to explain the complex relationship between MDB safeguard requirements and formal legal frameworks, as the former often promote the values enshrined in the latter frameworks by addressing structural deficiencies in the effective application of the latter. As regards international law, Kingsbury explains that the identification of a global administrative space ‘marks a departure from those orthodox understandings of international law in which the international is largely inter-governmental, and there is a reasonably sharp separation of the domestic and the international’, and that it reflects the practice of global governance, whereby ‘transnational networks of rule-generators, interpreters and appliers cause such strict barriers to break down’.74 In relation to international environmental and natural resources law, Blanco and Razzaque note that ‘transnational social and economic actors (e.g. multinational corporations, non-governmental organisations) have become 71  Notably, the coordination and mutual learning activities carried out under the auspices of the Independent Accountability Mechanisms Network, see accessed 15 August 2018. 72   See further, Benedict Kingsbury, Megan Donaldson and Rodrigo Vallejo, ‘Global Administrative Law and Deliberative Democracy’ in Anne Orford and Florian Hoffmann (eds), Oxford Handbook of the Theory of International Law (OUP 2016). 73  Kingsbury (n 39) 25. 74  Ibid.

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forceful in the global context and play a crucial role in natural resource management’, concluding that ‘[w]eak regulation or exclusion from relevant governance institutions of non-state actors needs to be superseded by an inclusive system of participation and responsibility’.75 Similarly, in pointing out that international environmental law ‘must principally regulate the conduct of private individuals, conduct that classic international law only impacted indirectly’, Maljean-Dubois suggests that [t]his explains the current search for new tools (development of standards, normalization and certification, social responsibility of companies, Global Compact, public private partnerships, type II commitments of the World Summit on Sustainable Development, etc.).76 The environmental and social safeguards of MDBs, and the IAMs by means of which such standards may be enforced, even against non-State actors, and to which non-State actors might have recourse, can be regarded as providing just such an inclusive system of novel tools. GAL rules and standards, and thus MDB safeguard standards, do not only impact on the formation of rules of international law, but can also inform the ‘principle of legality’ by influencing the rule of law as applied to national administrative acts.77 In his analysis of the work of Twining on the subject, Walker points out that ‘the intense contemporary flow of legal phenomena beyond the confines of the state’, need not only occur or be felt at the global level. He notes that ‘[i]nstead, much of that movement actually takes place at more limited levels, whether international, private transnational, regional or sub-state’ and that ‘the resulting dense layering and interweaving of regulatory

75  Blanco and Razzaque (n 13) 3–4. See further, Elisa Morgera, ‘Multinational Corporations and International Environmental Law’ in Shawkat Alam, Jahid Hossain Bhuiyan, Tareq M. R. Chowdhury, Erika J. Techera (eds), Routledge Handbook of International Environmental Law (Routledge 2012); Peter Spiro, ‘NGOs and Civil Society’ in Daniel Bodansky, Jutta Brunnée, and Ellen Hey (eds), The Oxford Handbook of International Environmental Law (OUP 2007) 770–790. 76  Sandrine Maljean-Dubois, ‘The Making of International Law Challenging Environmental Protection’ in Yann Kerbrat and Sandrine Maljean-Dubois (eds), The Transformation of International Environmental Law (A. Pedone & Hart 2011) 25, 35. 77  See Bernardo Giorgio Mattarella, ‘The Influence of European and Global Administrative Law on National Administrative Acts’ in Edoardo Chiti and Bernardo Giorgio Mattarella (eds), Global Administrative Law and EU Administrative Law: Relationships, Legal Issues and Comparison (Springer 2011) 61, 64.

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activity is far from being “nested in a single vertical hierarchy”’.78 Outlining the potential benefits of the novel modes of norm-creation characterised by GAL, Esty explains that [m]ulti-tier governance may also promote welfare-enhancing regulatory competition … By generating competing policy perspectives, assumptions, analyses, options, and assessments, global governance institutions provide a supplemental set of policymaking laboratories.79 6 Conclusion Like any regime of GAL rules and standards, one of the principal contributions of MDB safeguard policies and IAMs practice is that of supplementing the effective functioning of formal environmental and social protection law, especially in the light of the immense challenges posed for traditional, State-led regulatory frameworks by globalisation and transnational patterns of investment and trade.80 GAL regimes will often work alongside established legal frameworks, such as where IAMs augment the limited monitoring and enforcement capacity of formal State or international actors while pursuing similar public regulatory purposes. Regarding the myriad formal and informal environmental standards applying at the transnational level, which often ‘cannot find their place in the classical structure of the sources of international law’, Boisson de Chazournes concludes that, in pursuing the imperative objectives of environmental protection, ‘[a]ll normative means are useful to this end’.81 At a more immediately practical level, however, locating the environmental and social safeguard functions of MDBs and IAMs within a broader ‘community of practice’ bound by the precepts of global administrative law has several advantages. Quite apart from the desirability of having MDBs and IAMs subject to standards of administrative governance, this perspective makes available 78  Walker (n 12) 3 citing Twining, Globalisation and Legal Scholarship: Montesquieu Lecture 2009 (n 14) 24–25. 79  Esty (n 34) 1501–1502. 80  See generally, Owen McIntyre, ‘Environmental Regulation and the Normativisation of Environmental Good Governance Standards: The Promise of Order from Chaos?’ (2018) 10(2) Journal of Property, Planning and Environmental Law 92–112. 81  Laurence Boisson de Chazournes, ‘Features and Trends in International Environmental Law’ in Yann Kerbrat and Sandrine Maljean-Dubois (eds), The Transformation of International Environmental Law (A. Pedone & Hart 2011) 10.

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to the actors involved the wealth of practices and principles established by the broad range of global administrative bodies involved in environmental and social governance, which can help to inform the elaboration and interpretation of MDBs’ rules and standards of environmental and social governance through a process of cross-fertilisation of ideas and approaches. Such ‘mutual learning’ can only function to reinforce the legitimacy of informal governance rules and standards and to enhance their increasingly significant role in promoting compliance with related environmental and social requirements under formal legal frameworks.

chapter 4

Addressing and Resolving Problem Projects through Independent Accountability Mechanisms and Other Avenues Suresh Nanwani 1 Introduction Since 1993, international financial institutions (IFIs) including the World Bank and the major regional development banks1 have established accountability mechanisms to handle problem projects. The term ‘accountability mechanisms’ refers to avenues for private individuals and groups to file claims against the institution to redress their grievances on poorly designed and/or implemented projects, excluding other mechanisms which accept complaints on corruption or procurement irregularities. The term ‘problem projects’ means projects which, by inadequate design or implementation, result in people affected by projects in various ways, such as non-consultation or harm through displacement and inadequate resettlement. This chapter focuses on two case studies where problem projects have been addressed and resolved under the Asian Development Bank (ADB)’s Accountability Mechanism and the World Bank Inspection Panel (WBIP). It also considers how problem projects can be resolved through other avenues to address affected peoples’ concerns. It concludes by exploring how IFIs address investment retention for the benefit of the borrowing country, the people, and the economy, while at the same time applying their policies in carrying out projects to ensure better governance and development effectiveness. 2

Accountability Mechanisms and Problem Projects

IFIs have been, in pursuit of their development mandates, designing and implementing projects in their borrowing countries for economic development and 1  The four major regional development banks cover Africa, Asia and the Pacific, Europe, and Latin America: the African Development Bank (AfDB); the Asian Development Bank (ADB); the European Bank for Reconstruction and Development (EBRD); and the Inter-American Development Bank (IADB). © Koninklijke Brill NV, Leiden, 2020 | doi:10.1163/9789004337787_005

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to reduce poverty. The WBIP has been the yardstick for any international organisation to consider in introducing an institutional accountability mechanism. From 1993 (when the WBIP was established) to the present, there have been many other institutions establishing accountability mechanisms – the four major regional development banks;2 other IFIs such as IFC and MIGA, Japan Bank for International Cooperation, and European Investment Bank; national agencies such as Overseas Private Investment Corporation, USA;3 and international agencies such as the United Nations Development Program (UNDP).4 These accountability mechanisms do not award damages or give judicial remedies; they serve as internal governance tools as non-judicial bodies and to enhance the institutional development effectiveness.5 The WBIP’s mandate is to investigate projects filed by claimants on violations of bank operational policies and procedures after the Board of Executive Directors has authorised the panel to carry out an investigation. The WBIP is limited as its jurisdiction covers public sector projects financed only by the World Bank which comprises the International Bank for Reconstruction and Development (IBRD) and the International Development Association (IDA). IBRD and IDA lend to governments of middle income and creditworthy countries, and of the world’s poorest countries, respectively. The other two major World Bank Group6 members are International Finance Corporation (IFC) and Multilateral Investment Guarantee Agency (MIGA). IFC focuses on private sector investment, and MIGA provides political risk insurance (guarantees) to investors and lenders in promoting foreign direct investment in developing countries; both have an accountability mechanism, the Compliance Advisor Ombudsman Office (CAO Office). The WBIP did not have a specific role to address problem-solving, and this function was first adopted by the CAO Office. The term ‘problem-solving’ 2  These are the World Bank Inspection Panel; AfDB’s Independent Review Mechanism; ADB’s Accountability Mechanism; EBRD’s Project Complaint Mechanism; and IADB’s Independent Consultation and Investigation Mechanism. 3  Office of Accountability of the Overseas Private Investment Corporation, USA. 4  U NDP’s Social Environmental Compliance Unit and Stakeholder Response Mechanism was established in 2014. 5  Richard E. Bissell and Suresh Nanwani, ‘Multilateral Development Bank Accountability Mechanisms: Developments and Challenges’ (2009) 3(2) Central European Bank of Inter­ national and Security Studies 154, 160. 6  The World Bank Group consists of the following five entities: IBRD, IDA, International Finance Corporation (IFC), Multilateral Investment Guarantee Agency (MIGA), and the International Centre for Settlement of International Disputes (ICSID). ICSID provides international facilities for conciliation and arbitration of investment disputes and is different from the other four entities which support economic growth, reducing poverty, and people’s lives.

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means resolution of complaints on the project raised by the project affected people through a range of informal and flexible methods without attribution of fault or blame. As the institution has financed or supported the project, it is in the institution’s interest to see if it can help problem-solve the complaint without guaranteeing to do so as there may be situations where the problem is beyond the institution’s control such as when the project has already been completed. In contradistinction, compliance review of a project is an investigation to determine whether there has been non-compliance of the institution’s operational policies and procedures; and if there has been a violation, the institution should take corrective measures to ensure project compliance with its operational policies and procedures. Of all these institutions, the CAO Office is unique with its problem-solving setup though lessons have been learnt through cases handled for the CAO Office to create a more predictable and fair process for handling complaints and to transfer cases to compliance when negotiation at the ombudsman assessment process was not successful.7 In 2003, ADB was the first IFI to replace its Inspection Function (similar to the WBIP and to IADB’s Independent Investigation Mechanism) with a combined problem-solving and compliance review modality. Presently all of these institutions, except the WBIP, have a dual function accountability mechanism, that is, problem-solving and compliance review, with nuanced approaches on the application of the mechanism. For example, the African Development Bank’s Independent Review Mechanism has a combined office to handle both functions, and the ADB’s Accountability Mechanism as separate offices, one for problem-solving and one for compliance review. After 20 years from its establishment, the WBIP in 2014 revised its Operational Procedures and introduced a pilot approach to support early solutions in the Inspection Panel process (Pilot approach), with an assessment of the results and the effectiveness by December 2015.8 The Pilot approach aims to make the WBIP ‘more accessible, user-friendly, and effective in responding to grievances and concerns raised by project affected people, while staying within the ambit of the Panel’s governing framework.’9 We now proceed to consider two specific case studies where problem projects have been solved at two accountability mechanisms (ADB and the World Bank). 7  Compliance Advisor Ombudsman, The CAO at 10: Annual Report FY2010 and Review FY2000– 2010 (2010) 22–23. 8  ‘The Inspection Panel at the World Bank: Operating Procedures’ (World Bank, April 2014) annex 1, para 9. 9  See ‘Update of the Panel Operating Procedures’ (World Bank) accessed 15 August 2018.

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Case Study: Community Empowerment for Rural Development Project, Indonesia Claim before the ADB Accountability Mechanism

The complaint under the Community Empowerment for Rural Development Project (CERDP) in Indonesia was filed with the ADB Accountability Mechanism in February 2005. The CERDP had 4 components: (i) Component A on capacity building for community development; (ii) Component B on establishment of community-based savings and loan organisations; (iii) Component C on construction of rural infrastructure for the targeted communities; and (iv) Component D on project management and monitoring. The project area covered 6 provinces including South Kalimantan, Borneo, and the project executing agency was the Directorate General of Rural Community empowerment (DGRCE) of the Ministry of Home Affairs. The project cost US$170.2 million with 2 loans from ADB totaling US$115 million and with government counterpart funding of US$55.2 million.10 The project was planned with a 6-year implementation from 2000 to 2006, and the complaint was received in the 5th year of project implementation. The complainants consisted of communities from 5 villages11 in South Kalimantan and the 3 NGOs12 associated with the communities. The complainants raised major issues including (i) infrastructure under Component C of the project was constructed without following the sequence of project components and without villagers’ participation in design and planning; some of the infrastructure was faulty and the improvements were unsatisfactory; and (ii) the 5 villages had not received any activities under components A, B and D. They claimed that the harm suffered from the poor implementation of the project included decrease in agricultural productivity and non-participation in the project which was designed to empower the local communities in rural development. The complainants specifically requested in their complaint the implementation of the project by ADB according to the project design, and did not ask for a halt or suspension of the project. 10   ‘Review and Assessment Report of the Special Project Facilitator on Community Em­powerment for Rural Development Project, Indonesia’ (Asian Development Bank, April 2005) 5. 11  These are the village communities of Kiram, Mandiangin Barat, Handil Baru, Handil Negara, and Kali Besar. 12  These are Yayasan Cakrawala Hijau Indonesia (YCHI), Lembaga Kajian Keislaman & Kesmasyarakatan (LK3), and Yayasan Duta Awam (YDA).

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The Special Project Facilitator (SPF), handling the problem-solving function (‘consultation phase’) of the Accountability Mechanism, accepted the complaint and found it eligible. The complaint went through the full 8 steps of the consultation process and took about 220 days to achieve a solution. The most significant step in the consultation process was the review and assessment (step 4, after eligibility in step 3) which included a desk-based review of documents, interviews with ADB staff, discussions with different parties (including government, complainants, and other stakeholders), and a field-based assessment. The review and assessment report identified the following stakeholders in the project: the 5 village communities; the 3 NGOs; the government of Indonesia including DGRCE and local governments; consultants from the central and regional levels; and ADB staff including ADB’s Indonesia Resident Mission [IRM] responsible for project administration as the project had been delegated from Headquarters to the field office. The course of action in the review and assessment report (RAR)13 noted 4 main issues underlying the complaint (infrastructure; sequencing of project components; participation in decision-making; and information) and that the 5 villages had different expectations and priorities relating to these issues. After identifying the stakeholders, the SPF recommended a course of action with a village-by-village approach consisting of joint fact findings (JFFs) and multi-stakeholder consultations (MSCs), including proposing ground rules and the participation of a cross-section of villagers representing the different unit below the village level, as well as the village heads and staff supporting the village head, and members of the village council.14 Under this course of action, a JFF at each village would clarify the infrastructure under discussion, assess the problems related to the infrastructure and propose sustainable solutions within the scope of the project, and a MSC at village level would agree on the issues and actions to be taken, and a timeframe for implementing the course of action.15 In September 2005, the results of the JFFs were presented at plenary MSCs in each of the 5 villages, resulting in 5 village agreements signed by the local government, ADB’s IRM, and the complainants. The MSCs detailed the requirements and issues relating to both the existing and planned versions of 13   Review and Assessment Report of the Special Project Facilitator on Community Empowerment for Rural Development Project, Indonesia (n 10). 14  ‘Final Report of the Special Project Facilitator on Community Empowerment for Rural Development Project in Indonesia: ADB Loan 1765(SF)/1766-INO (19 October 2000)’ (Asian Development Bank, December 2005) 4. 15   Review and Assessment Report of the Special Project Facilitator on Community Empowerment for Rural Development Project, Indonesia (n 10) 11.

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the infrastructure financed under the project. The MSCs emphasised shared responsibilities and the setting of priorities and also highlighted ADB’s justification for including the investments to be financed under the project. The Bahasa Indonesia language was used in the settlement agreements as the local communities were conversant in that language, and the English language translation was used for ADB’s purpose as it is the institution’s working language. The SPF organised feedback session in February 2006 with the 3 NGOs, complainants, government officials, and IRM staff. The 5 village agreements were monitored by the SPF in January 2006 and the monitoring activities were concluded in May 2006.16 The complaint had successful outcomes, as acknowledged by many stakeholders. The SPF highlighted the complaint resolution mechanism established under the project which allowed all parties to continue reporting issues relating to implementation of the agreements reached, and for these to be successfully resolved including the ‘critical’17 intervention by the 3 NGOs acting as intermediaries in bridging cultural gaps and overcoming language barriers. The Indonesian government noted that the consultation process was ‘appropriate enough and according to the conditions in the community’; it ‘met many times with the NGOs, but there was no action followed’; it ‘learned a lot from the process’; and that the process was considered useful.18 One villager’s view, which was echoed by many other villagers, was that ‘[i]n general all of the community’s demands have been fulfilled.’19 The ADB project staff considered that the negotiation process had ‘delivered a win-win solution to both sides, the EA [executing agency], as owner of the Project, and the complainants as beneficiaries’.20 The 3 NGOs stated that ‘the consultation process was a remarkable learning experience for the villagers and for [them]’ and that ‘the villagers were quite satisfied with the agreements that were reached.’21 16  ‘Complaints Registry by Year’ (Asian Development Bank) accessed 15 August 2018. 17  ‘10 Years of Accountability Mechanism’ (Asian Development Bank, 2014) 21 accessed 15 August 2018. 18  ‘Consultation Phase of the ADB Accountability Mechanism: Listening to Communities Affected by ADB-Assisted Projects: Annual Report 2005’ (Asian Development Bank, January 2006) 12 accessed 15 August 2018. 19  Yayasan Duta Awam, ‘Press Release’ accessed 20 August 2019. 20  Consultation Phase of the ADB Accountability Mechanism (n 18) 13. 21  Ibid. 12.

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The role of the 3 NGOs was crucial in this successful outcome of the problem-solving. The 3 NGOs had worked with the local communities for more than 2 years before the complaint was formally filed. They also actively contributed to the SPF’s draft Review and Assessment Report highlighting extensive comments in their 11-page letter before the SPF’s Review and Assessment Report was issued in April 2005. One of their main concerns was that the identities of the villagers be kept confidential to ‘avoid any untoward consequences’,22 and this was respected by the SPF as is required under ADB policy. The loan accounts for the project was closed in August 2007 and the Project Completion Report (PCR) was issued in February 2009. The PCR rated the project as ‘successful’ in accordance the ADB’s Guidelines for Preparing Evaluation Reports for Public Sector Operations (2006), and noted that the complaint filed under this project was ‘successfully resolved’ through the SPF in 2005 by ‘restarting the implementation of all planned project activities in proper sequence and correcting the few infrastructures built.’23 4

Case Study: Sustainable Agriculture and Rural Development Project, Paraguay Claim before the WBIP

This case study provides a different way of resolving a problem project from the approach taken in the above case study. The claim under the Sustainable Agriculture and Rural Development Project (PRODERS) was filed with the WBIP in July 2014 by the leaders of two indigenous peoples’ organisations, the Asociación de Comunidades Indígenas de San Pedro (ACISPE) and the Mesa Coordinadora Joaju Ha’e Paveime Guara. These leaders represented indigenous communities (ICs) in the departments of San Pedro and Caaguazú, Paraguay. They claimed that there was a gap in the consultation and participation of indigenous people under the project and stated that there was harm from their inability to participate and monitor ongoing project activities and potential harm if new activities were carried out without their consultation and participation. They requested an investigation and specifically requested a suspension of the project until their right to consultation and participation was reinstated. 22  ‘Comments of the Complainants on the SPF’s Review and Assessment Report’ 11 accessed 15 August 2018. 23  ‘Completion Report. Indonesia: Community Empowerment for Rural Development Project’ (Asian Development Bank, February 2009) 9.

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Under the project, approved by the World Bank in January 2008, and supported by two World Bank (IBRD) loans totaling US$137.5 million, there were five components: (i) community organisation development and capacity building; (ii) rural extension and adaptive research; (iii) sustainable rural development fund; (iv) animal health improvement; and (v) project management and monitoring and evaluation. The Ministry of Agriculture and Livestock was responsible for project management and implementation, in partnership with, among others, the Indigenous People’s Institute of Paraguay (INDI). The project area covered the departments of San Pedro and Caaguazú. The objective of PRODERS was to improve the quality of life of small-scale farmers and ICs in the project area in a sustainable manner through actions to strengthen community organisation and self-governance, improve natural resources management, enhance the socio-economic condition of these farmers and communities.24 With regard to ICs, the project was designed to address indigenous peoples’ concerns focusing on food security, the protection of their environment and lands, and the strengthening of their community organisations. Under the project, consultations were carried out through representatives of ICs in each department supported by a service provider to facilitate meetings of ICs to prepare Indigenous Community Development Plans (ICDPs) and one annual assembly for each indigenous organisation. The service provider was expected to deliver training events on matters including communications, planning, community organisation, and evaluation of community development plans. The requesters claimed that Alter Vida, an NGO, which was the project’s service provider, had its contract discontinued in 2014 with the result that they no longer could participate in the project. The WBIP established that the request (i) met the admissibility criteria for registration (such as a request submitted by two or more persons in relation to a project supported by the World Bank and that the World Bank’s financing had not yet reached 95% disbursement), and (ii) could also be processed under the Pilot approach. The WBIP met with the World Bank management in July 2014 to ‘better understand background and context of the Project and of the issues raised in the Request’.25 The World 24  Project Appraisal Document (PAD) for the Sustainable Agriculture and Rural Development Project, Report No.: 41419-PY (World Bank, 21 December 2007) ii. 25  Notice of Receipt of Request and Initiation of the Pilot Approach to Support Early Solutions – Request for Inspection – Paraguay: Sustainable Agriculture and Rural Development Project (WBIP, 18 December 2014) 4: accessed 20 August 2019.

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Bank’s management explained to the WBIP that it acknowledged the requesters’ concerns, that actions would be taken to resume consultations, and that it agreed to move forward with the Pilot approach.26 The WBIP informed the requesters about its procedures and the regular process involving registration of the request as well as the Pilot approach, and the result was that in August 2014, the requesters informed the WBIP that they were seeking ‘a quick and simple solution to [their] just demands and in the shortest time possible’.27 In December 2014, the WBIP informed the World Bank Board of Executive Directors of the Pilot approach taken by the panel in this request. The WBIP decided not to register the request to provide an opportunity for an early resolution to the requesters’ concerns after taking into consideration the lessons learnt from the first Pilot (which included assuring itself that the process in the Pilot approach can be completed to the satisfaction of all claimants, and within a reasonable timeframe) and that the criteria to process the request under the Pilot approach were satisfied. These criteria included that (i) the issues of alleged harm presented in the request are clearly-defined, focused, limited in scope, and appear to be amenable to early resolution in the interests of the requesters; and (ii) the requesters, having reviewed the World Bank management’s suggested actions, and having confirmed their full understanding of the Pilot process, formally informed the WBIP that they preferred the option of a postponement of the decision on registration to explore the opportunity for an early solution to their concerns.28 The World Bank management informed the WBIP that an action plan had been successfully implemented and that the NGO Alter Vida was hired as the long-term service provider. The WBIP enquired from the requesters if they were satisfied with the implementation of the action plan and were informed by them that their concerns in the request had been satisfactorily addressed by the World Bank management. Subsequently, the WBIP made a site visit in March 2015 to meet with the requesters and about 50 IC leaders, and separately met the project’s task team leader and the World Bank Paraguay country office. In March 2015, the WBIP issued to the Board of Executive Directors a notice of non-registration of this request after determining from the panel’s site visit 26  Memorandum to the Executive Directors International Bank for Reconstruction and Development – Request for Inspection. Paraguay: Sustainable Agriculture and Rural Development Project – Notice of Non-Registration and Panel’s Observations of the Second Pilot to Support Early Solutions (WBIP, 11 March 2015) [12]: accessed 20 August 2019. 27  Ibid. [13]–[14]. 28  Ibid. [15].

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that the Pilot approach was ‘an appropriate instrument to handle this case, as it led to a rapid and effective resolution of the issues, as explicitly expressed by the [requesters]’.29 This Pilot approach is not the same as problem-solving in other IFI accountability mechanisms like the ADB Accountability Mechanism, the CAO Office, and IADB’s Independent Consultation and Investigation (ICIM) Office where there are distinct offices established with problem-solving function as WBIP members are investigators in compliance review. The WBIP in the Pilot approach states that it wishes to ‘enhance opportunities for people and communities who request an inspection by the Panel to obtain early solutions to address their specific concerns about harm which they believe resulted from Bank financed projects’.30 In implementing the Pilot approach, the WBIP confirmed, in response to concerns raised by 21 civil society groups including Accountability Counsel, that the approach is not a mediation process but a ‘facilitated opportunity to implement an agreed upon Action Plan between Bank Management and the Requesters’ and ‘enables an immediate and concerted focus on dealing with the problems on the ground’.31 The WBIP is not involved in ‘mediation’ but ascertains, through this Pilot approach, on whether it can support early solutions in the panel process. The Pilot approach is for ‘certain types of cases that may be amenable to early resolution in the interest of the affected community’.32 If the WBIP supports this approach, the WBIP postpones its decision on registration and the requesters have the right to ask for investigation if it is dissatisfied with the steps taken under the Pilot approach by the World Bank management. The World Bank management is in effect given ‘a second bite at the cherry’ as the requester has already informed management of its dissatisfaction prior to filing a claim with the WBIP. It is the WBIP that supports the implementation of the Pilot approach after considering the matter including the claimants’ wish, unlike in the previous case study where the claimants filed a request for problem-solving and if they were dissatisfied with the consultation process, they could request for compliance review. There are good reasons for requiring a problem-solving approach upfront as claimants could be more interested in having their complaints 29  Ibid. [23]. 30  ‘The Inspection Panel at the World Bank: Operating Procedures’ (n 8) para 1. 31  Letter from Eimi Watanabe to the Accountability Counsel (5 September 2014) 2–3: accessed 20 August 2019. 32  ‘The Inspection Panel at the World Bank: Operating Procedures’ (n 8) para 26.

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addressed rather than complaining of the institution’s non-compliance with its operational policies and procedures. It is sometimes more urgent to deal with problem solving than compliance review, which will remain regardless of the resolution of the problem. 5

Other Avenues to Address Affected Peoples’ Concerns

This section deals with other avenues to address affected peoples’ concerns on projects. For concerns related to poorly designed projects that cause harm to claimants, these concerns can be coursed through the IFI accountability mechanism as a last resort after exhausting initial steps such as raising the problem with the operations department concerned. For other concerns such as those relating to corruption allegations or procurement irregularities, these matters are outside the IFI accountability mechanism’s jurisdiction as there are already existing avenues within IFIs such as anticorruption office handling allegations of corruption and other related integrity matters, and procurement offices handling procurement matters. Under the present ADB Accountability Mechanism policy, the Complaint Receiving Officer (CRO) maintains a registry of complaints received and forwards complaints to the appropriate offices such as operations department, Office of Anticorruption and Integrity (OAI), and the Operations Services and Finance Management Department (OSFMD) when the matters are outside the remit of the accountability mechanism. In 2014, 10 complaints were received by the CRO – 3 were endorsed to the SPF, and of the remaining 7, one was forwarded to the operations department, 4 to OSFMD (on procurement matters) and 2 to OAI (on anticorruption).33 The mandate of the World Bank Group Integrity Vice Presidency (INT) is to investigate allegations of fraud and corruption related to World Bank Group-supported activities and allegations of fraud or corruption involving staff. While the WB Group staff remain the largest source of allegations that are related to sanctionable practices in WB Group operations (38% of the total allegations received), non-Bank staff, including contractors, government officials and employees of NGOs accounted for 33% of the allegations received, while 28% of the allegations were reported to INT anonymously.34 The figure of 33  ‘Strengthening Partnerships: Accountability Mechanism Annual Report 2014’ (Asian Development Bank, April 2015) 2:  accessed 15 August 2018. 34  ‘Frequently Asked Questions: About INT’ (World Bank) accessed 15 August 2018. 35  See ‘Grievance Redress Service’ (World Bank) accessed 15 August 2018; and the applicable World Bank Procedures (BP):11.00 accessed 9 December 2015. 36  Compliance Review Panel Final Report to the Board of Directors on CRP Request No. 2004/1 on the Southern Transport Development Project in Sri Lanka (ADB Loan No. 1711-SRI[SF]) (ADB, 22 June 2005) 7. At that time, the anticorruption unit was located in the Office of the Auditor General, and the Central Operations Services Office was the former name of the Operations Services and Finance Management Department. 37  Accountability Mechanism Policy (ADB, February 2012) [140].

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furthered a constructive consultative process’.38 Similarly, in the request under the PRODERS before the WBIP, the panel did not proceed with the suspension request. While requests for project suspension or halting disbursements have generally not been upheld, there have been instances where this resulted such as the Mumbai Urban Transport Project (MUTP) claim before the WBIP. The project had 3 components: rail transport, road-based transport, and resettlement and rehabilitation. The project cost was US$945 million, with financing from IBRD and IDA (about US$542 million) with US$403 million financing from India. This project was designed to expand and improve the rail and road infrastructure in Mumbai, India and the claims related to noncompliance and harm from the large-scale displacement (about 120,000 people) and resettlement impacts of the project. The WBIP noted that this project ‘is the largest urban resettlement Project that the Bank has undertaken in India or elsewhere (except in China)’.39 The WBIP, in its investigation highlighted (i) instances of noncompliance with WB policies in the handling of the resettlement needs of the displaced peoples, and that the needs of the middle-income shopkeepers were overlooked; and (ii) that the environmental assessment of resettlement sites, consideration of alternative sites, conditions at the selected sites were poor and the resettlement approach did not meet the core policy requirements of income restoration.40 In response to these problems, the World Bank management in March 2006 suspended financing of Component 2 (road-based transport financed by IBRD) and Component 3 (resettlement and Rehabilitation financed by IDA) with Component 1 (rail transport) unaffected, and stated in its response to the panel’s investigation report41 that the Mumbai Metropolitan Regional Development Authority (on behalf of the government of Maharashtra state) agreed to implement a 10-condition strategy for lifting the suspension of disbursement. The World Bank management carried out regular reporting of additional steps and progress.42 The Indian government substantially met the 38  Final Report of the Special Project Facilitator on the Southern Transport Development Project Sri Lanka ADB Loan 1711-SRI(SF) (ADB, March 2005) iv. 39  World Bank Inspection Panel Investigation Report (Report No. 34725) India: Mumbai Urban Transport Project (IBRD Loan No. 4665-IN; IDA Credit No. 3662-IN) (21 December 2005) xvii. 40  ‘Accountability at the World Bank: The Inspection Panel at 15 Years’ (World Bank, 2009) 60. 41   Management Report and Recommendation in response to the Inspection Panel Investigation Report on India Mumbai Urban Transport Project (Loan No. 4664-IN; Credit No. 3662-IN) (World Bank, 27 February 2006) 28–29. 42  The World Bank management issued six progress reports from 2007 to 2013 documenting the progress in implementing Management’s Action Plan for the MUTP concluding with

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World Bank’s conditions to address the outstanding issues, and the suspension was lifted in June 2006.43 It is important to note that the suspension was not made by the WBIP but by World Bank management after its consideration of the panel’s findings and in accordance with the applicable legal agreements between the World Bank and the Indian government authorities. The World Bank published on its website to emphasise that the ‘suspension of a loan or a component of a loan is a remedial measure available under all World Bank loan agreements, taken when the Bank sees that the objective for which funds were earmarked is not being met or the borrower is not fulfilling its obligations under the loan agreement’.44 The reassurance was given that suspension was project retention and not withdrawing from a project as it was a ‘temporary freeze on the Bank’s financing of implementation’45 with the bank stepping up its dialogue, activities and supervision in a bid to help meet the conditions for revoking that suspension. This section also considers the unexpected outcome resulting from a claim filed on a project before an accountability mechanism such as the claim filed by the requesters in the proposed Arun III Hydroelectric Project in Nepal which resulted in the cancellation of World Bank participation in the project – this is the ‘greatest impact of the claim’46 stated by Richard Bissell, a WBIP member investigating this claim. The proposed project was a 402-megawatt design, while the largest hydro project prior to this project (in 1994) was less than 70-megawatt. The claim was filed by a local NGO relating to the proposed Arun III Hydroelectric Project and restructuring of the Arun III Access Road Project: Credit 2029-NEP financed by IDA, alleging that their rights were affected in the design and appraisal of the Arun III project and claiming violation of policies including economic evaluation of investment operations, disclosure of information policy, environmental assessment, involuntary resettlement, and indigenous peoples. The World Bank Executive Board of Directors authorised the WBIP to investigate in the project with respect to issues on environmental the substantial completion of the Action Plan; these reports are available at accessed 9 December 2015. 43  Implementation Completion and Results Report (Report No: ICR2015) (World Bank, 8 December 2011) 9. 44  See  accessed 9 December 2015. 45  Ibid. 46  Richard E. Bissell, ‘The Arun III Hydroelectric Project, Nepal’ in Dana Clark, Jonathan Fox and Kay Treakle (eds), Demanding Accountability: Civil Society Claims and the World Bank Inspection Panel (Rowman & Littlefield 2003).

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assessment, involuntary resettlement, and indigenous peoples. In June 1995, the WBIP issued an investigation report summarising its findings as follows: ‘[g]iven the complexity, scale and scope of proposed developmental interventions in relation to the existing institutional capacity in Nepal, the Panel is doubtful that the project’s mitigatory environmental and social measures can be implemented within the time frame proposed by IDA’.47 When the WBIP’s investigation report was issued, the Board of Executive Directors looked to the then President James Wolfensohn to find a solution. The outcome was the review by Maurice Strong, an advisor appointed by the president, citing the ‘potential of significantly higher cost overruns, the uncertainty of co-financing [by other lenders] as well as implementation and management aspects of the project relevant to its size and risk’.48 In August 1995, President Wolfensohn decided to terminate the World Bank’s involvement in the project. It is significant that the requesters had not asked for suspension in project processing or termination of project, but rather an investigation of the matters ‘be carried out in order to resolve the issues and problems prior to any final decision’.49 For the claimants, the outcome of the World Bank’s non-involvement of the project was a victory, but the claim had far reaching impacts resulting in the establishment of the World Commission on Dams with the World Bank as a co-initiator.50 Finally, this section considers the World Bank’s recent introduction of its Grievance Redress Service (GRS) to address complaints related to World Bank-financed projects in its press release in June 2015 on ‘World Bank Group Statement on Policies, Accountability Mechanisms and Stakeholder Participation in WBG Projects’.51 The objective of the GRS is ‘to support the 47  The Inspection Panel Proposed Arun III Hydroelectric Project and Credit 2029-NEP Investigation Report (21 June 1995) 36. 48  Ibrahim F. I. Shihata, The World Bank Inspection Panel: In Practice (2nd edn, OUP 2000) 104–105. 49  Request for Inspection dated 24 October 1994: accessed 20 August 2019. 50  Bissell (n 46) 40. 51  ‘World Bank Group Statement on Policies, Accountability Mechanisms and Stakeholder Participation in WBG Projects’ (World Bank, 22 June 2015) accessed 18 August 2018. The terms ‘World Bank-financed projects’, ‘World Bank projects’ and ‘World Bank-funded project’ are used interchangeably in this press release whereas the Grievance Redress Service (GRS) brochure uses the term ‘World Bank-financed project’ and ‘World Bank-supported project’ interchangeably: ‘Grievance Redress Service’ (World Bank, 2015)

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identification and resolution of legitimate project related concerns’52 as resolving issues upstream will result in faster and better resolution of complaints. Under the GRS, individuals and communities directly and adversely affected by a World Bank-financed project can bring their concerns directly to the attention of World Bank management so that complaints are being promptly reviewed and addressed by the responsible units in the World Bank. The GRS is part of the far broader work carried out by the WB to ensure stakeholder engagement and ensure that its clients (borrowers) achieve the best possible outcomes including incorporating beneficiary feedback in 100% of World Bank-financed projects by 2018. The GRS will consider complaints if they relate to a World Bank-supported project that has not closed. Any project-affected individual or community can submit a complaint if they believe that they are or are likely to be adversely affected by the project.53 The GRS is substantially patterned on the WBIP’s remit in that it specifically states that it cannot address the following matters: (i) award damages or provide compensation; and (ii) issues not related to World Bank-supported projects. The GRS makes it clear that use of the GRS does not restrict access to the WBIP and clarifies that it has no formal relationship with the WBIP as the latter reports to the World Bank Board of Executive Directors while the GRS is an internal mechanism within the World Bank management. Under the GRS’s process for handling complaints, the project team will propose to the complainant how the complaint will be handled, including a time frame, within 30 business days after registration. If the complainant accepts the proposal, the project team implements, monitors and communicates the results of the process in a timely manner to the complainant and the GRS. If the proposed process is rejected by the complainant and/or the issue cannot be resolved, the complainant will be informed that the complaint is closed without resolution and the complainant will be referred to other options for remedy. The GRS has a complaint register and as of 30 November 2015, 19 complaints have been received (the first was received in April 2015).54 Of the 19 complaints, accessed 9 December 2015. 52  ‘Grievance Redress Service: FAQ’ (World Bank) accessed 9 December 2015. 53  Ibid. 54   ‘World Bank Grievance Redress Service (GRS) Complaints Register’ (World Bank, December 2015) accessed 9 December 2015.

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four were closed for ineligibility such as the project was not financed by the World Bank; 8 are under review by WB procurement; and seven are ‘in progress’ by the GRS. The World Bank finances hundreds of projects a year (for example, in 2004 the World Bank provided US$20.1 billion for 245 projects in developing countries worldwide),55 and has thousands of projects under implementation a year assuming an implementation period of about five years for a project. The WBIP was established in 1993 and about 104 projects are listed as Panel cases on its website.56 There is a GRS brochure, and given GRS’s introduction in early 2015, it will take more time for the GRS to be made better known to project affected people and for the service to be used. The GRS option is posted on individual World Bank project sites,57 which is useful as a communication tool. Increased awareness of this service needs to be addressed in other ways which could include communications in appraisal missions of new projects and in project reviews of existing projects, as well as active dissemination in country offices. Even though IFI accountability mechanisms have existed for many years, outreach and better communication remain a constant issue. For example, awareness and learning could be carried out at 3 different levels: internally within the institution; at the national level (field offices); and at the project level (through the early stages of the project cycle when projects are designed and appraised). The GRS is an innovative feature demonstrating the World Bank’s responsiveness in receiving complaints on active projects for possible resolution, and more can be done to actively promote this avenue. 6

Addressing Investment Retention for the Benefit of the Borrowing Country, the People and the Economy

This chapter concludes that generally IFIs have taken proactive measures to address peoples’ concerns through various means, such as establishing formal mechanisms (accountability mechanisms) where peoples’ voices over poorly designed and/or implemented projects can be heard at the international level 55  See generally,  accessed 9 December 2015. 56  See  (accessed 9 December 2015). 57  See, for example, PY PRODERS Sustainable Agriculture & Rural Development (P088799) accessed 9 December 2015.

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with problem-solving approaches. Two case studies with problem-solving approaches at the ADB and World Bank accountability mechanisms have been analysed, and the peoples’ concerns were effectively addressed including application of IFI policies in carrying out projects to ensure better governance and development effectiveness. Other mechanisms are also provided to address peoples’ concerns and these can be improved in delivery such as the GRS. Generally, IFIs are bound by the legal agreements entered into with the governments and implementing authorities concerned notwithstanding requests for halts in disbursements or project suspension brought forward in claims by project-affected peoples. Requests for project suspension can be made in a claim before the accountability mechanism but any project suspension is a matter between the parties to the legal agreements. Project suspension or halt in loan disbursement can happen but that is rare. In the MUTP claim, the result was the World Bank management decision taken in response to the WBIP’s findings, to suspend parts of the project till the government took steps to implement a plan before the suspension was lifted. The withdrawal of the World Bank participation in the proposed Arun III Hydroelectric Project case was greeted with victory by the claimants.

chapter 5

Innovating Conflict Resolution Mechanisms for International Finance Karen Wendt 1 Introduction The focus of Equator Principles1 is on environmental and social due diligence based on the World Bank Standards, implementation of ISO aligned environmental and social risk management systems at the level of the borrower, adherence to human rights (through human rights due diligence), and integration of an environmental and social action plan – the Equator Principles Action Plan – into the loan agreement with covenants, representations and warranties, conditions precedent to draw down of the credit, and linking environmental and social default events and the non-fulfilment of the Equator Principles Action Plan.2 Progressive institutions use financial mediation and Dispute Resolution Boards which they implement in Public-Private Partnership Finance.3 This chapter undertakes a SWOT analysis of the Conflict Resolution Mechanism applied in finance by Equator Principles Financial Institutions,4 identifies gaps, risks and inconsistencies, and provides suggestions for a more integrated and consistent conflict resolution approach based on the Harvard Negotiation Model. It proposes using dispute and conflict resolution mechanisms for financial institutions in foreign direct investment which are inspired by the CDRM London 2012 Olympic Games Complaint and Dispute Resolution Mechanism. The process that leads to decreased risk and better governance is based on using a multi-stakeholder approach and on integrating direct process-oriented 1  See Equator Principles: accessed 12 August 2018. 2  See ‘Documents & Resources’ (Equator Principles) accessed 10 September 2018. 3  ‘DB Project Database’ (Dispute Resolution Boards Foundation) accessed 10 September 2018. 4  See The Equator Principles Financial Institutions Associations-Members List: Equator Principles Financial Institutions are those financial institutions that have adopted the Equator Principles: ‘EP Association Members & Reporting’ (Equator Principles) accessed 10 September 2018.

© Koninklijke Brill NV, Leiden, 2020 | doi:10.1163/9789004337787_006

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conflict resolution mechanisms into the life cycle of a financed project or structured export finance transaction in accordance with the Basel III definition.5 The integration of a conflict resolution and multi-stakeholder process entails all project lifecycle phases from financial decision-making through implementation to monitoring process, and is a nascent field both in academia and among practitioners. A conflict resolution mechanism to which financial institutions, as defined by Basel III,6 may buy in needs: (1) a constructive climate between the stakeholders; (2) a certain degree of trust between the affected parties and their stakeholders; and (3) a multi-disciplinary approach combined with the courage to address cultural diversity in conflict patterns and overcoming country systems issues. Creating a conflict resolution mechanism that is globally applicable, fair and accessible, allowing for conflict resolution along the lifecycle of a project, a foreign direct investment or a public private partnership scheme is highly desirable, as it creates a palatable solution to conflicts that can stop foreign direct investments nowadays, and also creates considerable stranded costs alongside hardship and social costs for the communities and affected population in locations in which sensitive investments take place. This chapter discusses whether or not financial institutions can be kept away from conflict resolution or whether their participation would have various benefits in relation to conflict avoidance, de-risking assets to avoid reputational risks and real costs, and creating better relationships with stakeholders and communities. In evaluating various existing dispute and conflict resolution mechanisms (DCRM) in the financial and international industry, the London 2012 Olympic Games Complaint and Dispute Resolution Mechanism (CDRM) is used as a workable private sector DCRM. Stretching from conflict management to conflict resolution in investment and finance. In so doing, this chapter proposes a DCRM scheme for private banks and Equator Principles Financial Institutions Association (EPFIA) which is inspired by the CDRM London 2012 Olympic Games Complaint and Dispute Resolution Mechanism (CDRM) and develops and adjusts it to fit the industry setting. This chapter will also explore some of the potential benefits and opportunities for the Equator Principles Financial Institutions (EPFI) when looking into dispute and conflict resolution 5  Ashley Lee, ‘How Basel III Impacts ECA Backed Project Finance’ (International Financial Law Review, 4 July 2014) accessed 10 September 2018. 6  Basel Committee on Banking Supervision, Basel III: A global regulatory framework for more resilient banks and banking systems (Bank for International Settlements 2010) accessed 10 September 2018.

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mechanism with cooperative methods using mediation, and analyses the potential risks and downsides. The Equator Principles (EP) are considered the ‘gold standard’ in managing environmental and social risks in Project Finance (PF), Foreign Direct Investment, (FDI) Public Private Partnerships (PPP) structures, and Structured Export Finance (SEF); in short whenever the use of proceeds is known to the financier.7 The Principles were designed to serve as a risk management framework for environmental and social risk and governance issues that occur in foreign direct investment and in project finance in particular. In addition, they integrate profound environmental and social due diligence, review of management systems and governance, stakeholder engagement procedures and project level grievance mechanisms as a tool to mitigate and decrease social and environmental conflicts and make finance more resilient.8 Governance is another important aspect that has attracted increased interest over the past decade. This focuses on the process which leads to decreased risk and better governance using a multi-stakeholder approach or even integrating direct process-oriented conflict resolution mechanisms into the lifecycle of financing – from financial decision-making through implementation to monitoring process. One of the reasons for this focus is that a conflict resolution mechanism to which financial institutions may subscribe needs a constructive climate between the stakeholders, a certain degree of trust between the affected parties and their stakeholders, and a multi-disciplinary approach combined with the courage to address cultural diversity in conflict patterns and overcoming country systems issues. Creating a conflict resolution mechanism that is globally applicable, fair and accessible, allowing for conflict resolution along the lifecycle of a project, a foreign direct investment or a public private partnership scheme is highly desirable as it creates a palatable solution to conflicts that can stop foreign direct investments nowadays, creating considerable stranded costs alongside hardship and social costs for the communities and affected population in locations in which sensitive investments take place. The potential for avoiding costs and risks and changing patterns of conflict and tension that have developed over decades is huge. A 2008 Goldman 7  For the purposes of this chapter, proceeds means capital flow to a specified project or group of assets. 8  Significant research has been undertaken to ponder what practitioners in the finance industry are doing to integrate environmental and social considerations into financial decision-making and how practitioners evaluate the risks and impacts – positive and negative – of financial decision-making on foreign direct investment and structured finance; see Karen Wendt (ed), Responsible Investment Banking: Risk Management Frameworks, Sustainable Financial Innovation and Softlaw Standards (Springer 2015).

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Sachs Investment Research Study which examined the Bank’s top 190 oil and gas projects suffering delays of more than 180 days (meaning no cash flow) demonstrates that 73% of these were delayed due to non-technical risks stemming from environmental conflicts with society, non-governmental organizations (NGOs), regulators and other stakeholders.9 The financial sector has made considerable progress in addressing Environmental and Social Governance (ESG), and so have the EP. The third iteration of the Principles (EP III) was adopted on 4 June 2013 and was the culmination of almost three years of work beginning with the strategic review process that started in October 2010.10 EP III reflects several breakthroughs, including the expansion of the scope of the EP to include project-related corporate loans and strengthened reporting requirements. However, despite all the good governance processes and risk management in place, there would appear to be an element missing. As this form of conflict resolution uses a mediation approach and includes co-creation elements, it fails to rectify the old pattern of conflict between communities, stakeholders and projects. Moreover, financiers try to stay neutral insofar as possible and avoid getting involved in solving conflicts or supporting collaborative conflict resolution schemes and co-created decision-making. Many financiers view EP III as the only option for financial institutions as it ensures implementation of ESG procedures, robust environmental, social and human rights due diligence, stakeholder engagement, and grievance procedures at project level, into the financial structuring and documentation mechanisms. Applying robust procedures, such as EP III and stakeholder engagement, together with human rights assessments, has been demonstrated to be very helpful in de-risking assets as well as ensuring that financial institutions abide by their fiduciary duties and avoid complicity in human rights abuses. However, procedures alone have not achieved the ultimate goal: bringing peace into the room and to the projects financed. Old disagreements with NGOs (representing nature and communities that are unable to represent themselves) continue, and conflict between communities, NGOs, policymakers, industry and investors persists.

9  Mindy Walls, ‘Managing Non-Technical Risks’ (Energy Land Management, West Virginia University, 18 March 2014) 3 accessed 10 September 2018. 10  Suellen Lambert Lazarus, ‘The Equator Principles: Retaining the Gold Standard – A Strategic Vision at 10 Years’ in Karen Wendt (ed), Responsible Investment Banking: Risk Management Frameworks, Sustainable Financial Innovation and Softlaw Standards (Springer 2015); ‘EP Association Members & Reporting’ (n 4).

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This has created costs of conflicts, project delays, cost overruns and significant hardship and irreversible impacts to the affected population.11 Peace has not arrived12 and both conflict and ‘dodgy’ deals involving the EPFIs continue.13 EPFIs have not found it possible to go beyond the achievements of EP III14 and are often criticised for becoming the sustainability regulators of emerging markets.15 This chapter will explore the potential benefits and opportunities the EPFI can achieve when looking into dispute and conflict resolution mechanisms with cooperative methods using mediation. 2

Existing Risk Management and Governance Initiatives and Their Contribution to Conflict Resolution

Presently, it is primarily practitioners that are driving the environmental and social impacts assessment process and who urge for ESG implementation through voluntary guidelines like the EP. Academia, on the other hand, has largely focussed on its effectiveness and whether or not they change the game16 or provide more ‘fun’ with lower risk through effective de-risking of investments.17 The creation of level-playing fields has strongly supported both the acceptance and quality of implementation schemes. Like the EP (which use the IFC Performance Standards as their benchmark) many ESG initiatives have been launched in collaboration with some of the world’s most prestigious organisations: including the United Nations 11  See BankTrack Dodgy Deal List: ‘What are Dodgy Deals?’ (BankTrack, 26 April 2018) accessed 10 August 2018. 12  ‘EPFI’ (BankTrack) accessed 10 August 2018. 13  ‘News’ (BankTrack) accessed 10 August 2018. 14  ‘Revising the Equator Principles: Why banks should not become the new sustainability regulators of Emerging Markets’ (World Growth, February 2013)  accessed 10 August 2018. 15  Ibid. 16  Ariel Meyerstein, ‘Are the Equator Principles Greenwash or Game Changers? Effectiveness, Transparency and Future Challenges’ in Karen Wendt (ed), Responsible Investment Banking: Risk Management Frameworks, Sustainable Financial Innovation and Softlaw Standards (Springer 2015). 17  Christian Hertrich et al., ‘More Fun at Lower Risk: New Opportunities for PRI-Related Asset Management of German Pension Insurance Funds’ in Karen Wendt (ed), Responsible Investment Banking: Risk Management Frameworks, Sustainable Financial Innovation and Softlaw Standards (Springer 2015).

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Environment Programme, the World Bank Group, the Financial Stability Board, and the University of Cambridge, in public/private sector initiatives. The process is most obvious on the lending side, where collaborations between the World Bank, International Finance Corporation, other multilaterals and the private banking sector have contributed to the development of relatively consistent ESG standards which are often referred to as ‘Global Administrative Law’.18 There is a clear rationale for doing so for the purposes of ‘managing risks effectively’, as well as for protecting reputation and addressing stakeholder requirements. It has become increasingly the norm for international development banking institutions, including multilateral development banks (MDBs), and many private sector lenders, to adopt comprehensive ESG safeguard policies and standards to circumscribe the projects and manage risks involved in the activities they finance. This is particularly the case in the financing of major infrastructure projects in developing countries or economies in transition.19 For lenders – such as the EBRD or IFC – that focus on private sector lending, the performance standards of environmental and social governance are imposed upon private corporate entities,20 against which most requirements of international law could never be formally applied.21 For project and structured finance, the EP offer a financial industry benchmark for determining, assessing and managing environmental and social risk in international finance activities.22 Moreover, the EPFIA recognises the growing ‘convergence around common environmental and social standards’, as well as the ‘development of other responsible environmental and social management practices in the financial sector and banking industry’, such as the Carbon Principles or the Cross-Sector Biodiversity Initiative.23 In addition, export credit agencies, through the 2012 OECD Common Approaches, are increasingly drawing on the same standards as the EP.24 18  Owen McIntyre, ‘Development Banking ESG Policies and the Normativisation of Good Governance Standards’ in Karen Wendt (ed), Responsible Investment Banking: Risk Management Frameworks, Sustainable Financial Innovation and Softlaw Standards (Springer 2015). 19  Ibid. 20  See respective websites of IFC and EBRD: ‘IFC’ (International Finance Corporation) accessed 10 August 2018; ‘EBRD’ (European Bank for Reconstruction and Development) accessed 10 August 2018. 21  McIntyre (n 18). 22  See ‘Equator Principles’ (n 1). 23  Ibid. 24  Ibid.

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While sustainable finance has received academic attention,25 there has been relatively little focus on the integration of conflict resolution mechanisms both at project level, for communities complementing the grievance procedures required under EP III, and at the level of the Financial Institution or even the EPFIA.26 Although Financiers are apt at ensuring that procedures are followed through monitoring, engaging directly with conflict resolution in finance or requiring conflict resolution mechanisms at least at project level is beyond the current process-oriented model. The EP may have arrived at an inflection point. When introducing the EP, the banking community did not have a good ESG implementation model, but agreed on procedural criteria aimed at making sure there were desired outcomes through a robust process, where required or advised by environmental and social consultants. Unfortunately, no conflict resolution mechanism was implemented. This allowed for flexibility while pursuing no-harm outcomes and through procedural implementation of ESG. However, conflict has not ceased and disputes are hampering lives and adversely affecting investment. While financial institutions may not have all the answers on DCRMs, they can now rely on procedural criteria aimed at making sure there are desired outcomes through a robust mediation process and, if required, backed up by independent investigation. As the peace negotiations of Camp David between Israel and Egypt have shown, a robust procedural model can be applied to create peace and to turn conflict into collaboration, even if the circumstances do not look rosy at first glance – as was the case in the Israeli-Egyptian conflict. As trust was low, the mediation between the conflicting parties took place in the form of a shuttle mediation as the parties did not want to meet or talk to each other. The negotiations were successful and a peace agreement was signed between the two countries. This gives rise to the following questions: (i) why in the EP framework a conflict resolution mechanism is missing, and whether it makes sense to integrate such a mechanism in EP III and (ii) if yes, how a conflict resolution mechanism could be integrated. This requires an understanding of what benefits a conflict resolution mechanism might produce, what risks are entailed and whether it is more convenient to stay with the existing model of controversies between financial institutions, NGOs, project owners and communities. In other words, it must be asked whether such a change in approach is worth the effort. To address these questions, it is helpful to examine DCRMs elsewhere than in international business or the financial industry. This could assist 25  Examples include the Journal for Sustainable Finance and Investment. 26  ‘EP Association Members & Reporting’ (Equator Principles) accessed 10 September 2018.

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with determining on what level the conflict resolution mechanism should be implemented – for example, should it be a project level conflict resolution scheme on the ground that is flexible and can be conducted in parallel with the progression of the project? Should there be an escalation mechanism that under certain conditions allows a conflict resolution procedure at the level of the Financial Institution or the EPFIA? 3

Studying Costs of Conflicts

One of the main drivers of integrating environmental, social and governance risk analysis into finance has been the financial risks that emerge from the spheres of environmental and society to the investment, project or finance.27 De Groot has asserted that: Nobody doubts that the world is suffering greatly as a result of violent conflict. The actual scale of this suffering, however, is difficult to determine and authors who have tried to do so have come up with a range of estimates. It is nonetheless important to determine the scale of the total global costs of conflict in order to acknowledge its significance. Additionally, it may contribute to a more focused discussion about attempts to reduce the terrible and costly consequences of conflict. After all, one needs to have a reasonable estimate about the actual size of these costs to be able to draw conclusions regarding the reduction thereof.28 Moreover, Davis and Franks have endeavoured to explain the types of costs ranging across lost reputation, remediation, compensation, and litigation, but fall short of accounting for project delays and cost overruns. This has given rise to Table 5.1.

27   Rachel Davis and Daniel Franks, ‘Costs of Company-Community Conflict in the Extractive Sector’ (CSR Initiative at the Harvard Kennedy School, 2014) accessed 12 September 2018; Daniel M. Franks et al., ‘Conflict translates environmental and social risk into business costs’ (2014) 111(21) Proceedings of the National Academy of Sciences of the United States of America 7576 accessed 15 September 2018. The Goldman Sachs study was cited in Walls (n 9). 28  Olaf de Groot, ‘A Methodology for the Calculation of the Global Economic Costs of Conflict’ (GECC Project Paper No 2, December 2009).

68 table 5.1

Wendt Types of costs of conflict

Types of costs to company Reputation

Redress

–  Higher expenditure on public relations: consultants, dissemination of information –  Competitive loss/disadvantage: impact on brand, investor confidence – Compensation (out of court payments); – Fines –  Increased social and environmental obligations: health care, education and training, provision of other services, clean-up and remediation costs –  Costs of administrative proceedings or litigation: costs of proceedings themselves, judgment/ settlement costs.

Source: Davis & Franks (2014) (https://sites.hks.harvard.edu/m-rcbg/CSRI/ research/Costs%20of%20Conflict_Davis%20%20Franks.pdf)

This study is particularly useful when read in conjunction with the Goldman Sachs study illustrated below. One can deduct that costs of conflict are huge, diverse in nature and unpredictable in quantity. The Goldman Sachs study focussed on financial volume, examining the largest 190 oil and gas projects suffering delays of more than 180 days.29 This revealed that 73% of the delays were due to non-technical risks including inter alia community conflicts, conflicts about nature, protest, projects halted due to being taken to court over missing or inadequate environmental impact studies, human rights violations, breaches of international labour laws and cultural heritage chance finds.30 Davis and Franks conclude that ‘the typology suggests that the range of costs experienced by companies may be significant in their scope and magnitude and that conflict is a means by which the social (and environmental) risks posed by projects can translate into serious business risks’,31 something which the Goldman Sachs study confirms. Findings showed that company-community conflict tends to escalate from campaigns and procedure-based actions through to physical protest. Strikingly, half of the cases analysed involved a project blockade. Around a third involved a fatality (21 of 50) or injuries, 29  This is referring to where there is no cash flow. 30  Walls (n 9) in relation to the Goldman Sachs study. 31  Davis and Franks (n 27).

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CHALLENGE: DELAY 73%

Non-Technical Commercial Technical

21%

63%

Study of Top 190 Oil & Gas Projects • N. America • S. America • Europe • Africa-Pacific • Asia-Middle East

figure 5.1 Costs of conflict: delay in 190 oil & gas projects for non-technical issues according to Goldman Sachs Source: Goldman Sachs Investment Research (2008)

damage to private property (17 of 50) or the suspension or abandonment of the project (15 of 50). A well-known area of conflict in finance is human rights. Human rights risks may arise in investment banking when products and services are offered to companies with a questionable human rights record or to companies which operate in countries with a problematic human rights situation. There is also a risk where services are provided to a fragile state or in conflict regions32 or where foreign direct investment triggers involuntary resettlement of communities or economic resettlement (communities losing access to their production assets). Regardless of a client’s behaviour (many industry associations, such as the International Council of Mining and Metals, have developed guidance for their members), services for projects in industries with a high human rights exposure or projects in particularly exposed areas may bear human rights risks. For financial institutions the following issues or a combination thereof raise red flags regarding human rights violations and costs of conflict. Those can be identified in a Know Your Customer Check (KYC) and include clients: (i) providing products and services to companies, governments, and stateowned enterprises with a challenging human rights track record, (ii) providing products and services to projects in sensitive industries, and 32  Christine Kaufmann, ‘Respecting Human Rights in Investment Banking: A Change in Paradigm’ in Karen Wendt (ed), Responsible Investment Banking: Risk Management Frameworks, Sustainable Financial Innovation and Softlaw Standards (Springer 2015).

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(iii) providing products and services to projects in sensitive locations may involve issues of human rights violations and consequent costs of conflict on the project level, on the Financial Institutions’ level and at the level of the EPFIA. The human rights violations and costs of conflicts usually depend on the business attitude of the client, the industry in which he is operating (tar sands, nuclear and mountain top removal mining are regarded as highly controversial industries and therefore require a lot of guidance), and the location of the project, because some are located in very sensitive areas (due to concerns relating to biodiversity, cultural heritage, resettlement, or the project is reducing access to water for local population). These three categories can be distilled to: (i) clients – both private bodies and states; (ii) industries; and (iii) location. The key question now turns to implementation. Putting the UN Guiding Principles for Human Rights into practice cannot be prescribed by a central corporate social responsibility unit, but requires a local presence at the site for undertaking due diligence, a deep stakeholder engagement process based on a clear stakeholder map and a transparent public consultation and disclosure plan, a functioning grievance procedure, and interviews with affected people and employees. The process requires cooperation between all project parties on the ground. Business units play a particularly important role in the identification of potential risks, their severity, and the probability of loss occurring. While risk identification and risk management are important steps, the current process does not foresee a conflict resolution system. Although grievance mechanisms at the project level exist, it is simply another form of conflict resolution that does not treat parties at eye level. Grievances can be put forward and there is normally an escalation mechanism. However, they are then rejected or approved or some adjustments in the project are made by the project sponsors. In contrast to grievance mechanisms, a project accompanying conflict resolution mechanism, which allows communities that are able to represent themselves in good faith negotiations to participate at the negotiation table and to find solutions that are accepted and agreed by all parties, can thus help to avoid human rights violations and create better decisions than grievance procedures normally do. According to Kaufmann it cannot be emphasised enough that identification and mapping of human rights risks and allegations are of a factual not of a normative nature.33 The only purpose of this process is to understand how business operations impact human rights, not to attribute responsibilities or complicity. Only after the human rights map 33  Ibid.

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has been established can a bank assess its options in terms of leverage to ameliorate or mitigate the situation.34 4

Are the EP Ready to Go from Conflict Management to Conflict Resolution?

When considering the costs of conflicts and the attempts thus far to remedy them by application of the EP through robust environmental and social due diligence, the reasons for bringing the EP into being must first be examined. When initial discussions began in October 2002, leading project finance banks had a large pipeline of major projects in the planning stages, many in developing countries and with vast impacts. This pipeline included projects in such industries as mining, oil and gas pipelines, petrochemicals facilities, hydropower generation and pulp and paper manufacturing. Some of these projects were in remote locations in frontier markets. They impacted indigenous peoples, endangered species, fragile ecosystems and protected habitats; others crossed international borders and involved governments with weak regulatory regimes or histories of human rights abuses. They all presented complex environmental and social challenges and, for the most part, the banks had little capacity to analyse or manage these risks. NGOs were actively campaigning against some of the most high-profile projects.35 Shareholder resolutions were introduced at annual shareholders’ meetings of some of the banks to block environmentally sensitive projects.36 It made a sense for financial institutions to agree on one universal framework to manage financial risks that emerged from conflicts in the spheres of politics, environment, society, technology, organisation and regulation, and thus create a level playing field for conflict mitigation. At the same time, the EP movement – which later became the more formal EPFIA – adopted a multi-stakeholder approach in order to bridge the different perspectives from clients in the various industries, NGOs and financiers and focus on mitigating financial and social risks in finance and create some form of collaboration between the various stakeholders. In order to not interfere directly in conflicts and to preserve neutrality, a clear process and criteria were needed. This led to the borrowing of the due diligence and risk management processes, as well as issue-specific standards and criteria for assessing impacts and risks (such as 34  Ibid. 35  Lazarus (n 10). 36  Ibid.

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human rights, international labour laws, biodiversity, resource efficiency, community and workers health and safety, rights of indigenous people, cultural heritage, etc.) from the IFC Performance Standards. By utilising these standards, which had been endorsed by all governments sitting in the World Bank Board, the banking industry was able to avoid conflicts, to keep their neutrality and even to counter arguments from some organisations and clients as to why companies in emerging market countries should apply standards they had no role in shaping.37 That said, some controversy arose during the IFC Performance Standards consultation process, in which the EPFIA was a key stakeholder. As a result, some language in the IFC Performance Standards had to remain vague so as to bridge different perspectives on human rights, other country systems and cultural issues.38 These areas of ambiguity have created challenges when applying best practice ESG management in accordance with the EP. They have also been regarded as a ‘threat to neutrality’, a paradigm that the financial industry takes very seriously.39 This gives rise to questions regarding whether the conflict management approach adopted by the EP has worked well. Have financial institutions and project companies managed, with the help of the EP, to overcome conflicts and to curb costs of conflict, or are the conflicts continuing? Unfortunately, evidence continues to suggest that for the most controversial projects the script and the narrative have not changed. From Belene to the Ilisu Dam, the Three Gorges Dam, motorways in Poland and France, various mining projects and, more recently, the Dakota Access Pipeline,40 the narrative remains the same: EPFIs claim to follow the EP due diligence framework, whereas a United Nations group is investigating allegations of human rights abuses by North Dakota law enforcement agencies against Native American protesters, with indigenous leaders testifying about ‘acts of war’ they observed during mass arrests at an oil pipeline site. Do EPFIs still struggle with the same conflicts as they did 10 years ago? If they do, the conflicts have not been 37  Debbie Cousins, ‘Implementing Environmental and Social Risk Management on the Ground: Interfaces Between Clients, Investment Banks, Multi-laterals, Consultants and Contractors: A Case Study from the EBRD’ in Karen Wendt (ed), Responsible Investment Banking: Risk Management Frameworks, Sustainable Financial Innovation and Softlaw Standards (Springer 2015). 38  Lazarus (n 10). 39  Ibid. 40  Sam Levin, ‘Dakota Access pipeline protests: UN group investigates human rights abuses’ The Guardian (London, 31 October 2016)  accessed 15 September 2018.

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resolved, but are continuing. Therefore, it is now necessary to consider how far the EPFIs have managed to succeed in their approach on conflict resolution. 5

Conflicts within the EPFIA

From the beginning, there were concerns that the EP regime did not go far enough in meeting the ideals expressed in the Collevecchio Declaration, a manifesto announced by 100 NGOs at the World Economic Forum in 2003, which called for financial institutions to recognise their role in and responsibility for financing unsustainable projects and other global social problems, ranging from global warming to armed conflicts.41 The complaints of NGOs about the EP have remained fairly constant and remain vocal despite all the associated ESG risk management activities. The perceived legitimacy of the regime has waxed and waned over time in the eyes of its main interlocutors42 which, if anything, can be traced to a clash of paradigms: the focus of the NGOs on the environmental and social outcomes of projects and their expectation that ‘dodgy deals’ (as they regard them) would not to be financed. The banks (and the language of the EP) emphasise their internal processes of project review and management of risks during the project planning phases.43 For example, one NGO made the following comments in relation to a draft version of EP III: The world does not need improved risk management as a goal in itself; it needs fewer supersized dams blocking life-supporting rivers, less mining projects scarring entire mountains and polluting community water sources with their tailings, no oil exploration projects destroying our seas and last remaining wilderness areas, no coal power plants belching out millions of tons of greenhouse gases into our already fatigued atmosphere.44 The last revision of EP III came out in draft form in August 2012 and, after a 60-day public comment and engagement period, the finalized EP III were released in May 2013 and became effective on 1 June 2013. The EP III represents a decade of maturation of the regime and arguably goes a considerable distance 41  (Collevecchio 2003). 42  (O’Sullivan and O’Dwyer 2009, 576). 43  Meyerstein (n 16). 44  (Banktrack 2012).

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in responding to the NGOs’ long-standing concerns regarding transparency, the limited scope of the EPs’ application only to project finance loans, and the EPs’ previous failure to address climate change. However, issues remain.45 The fundamental problem of conflicting paradigms is unsolved and there appears to be little willingness by financial institutions and NGOs to overcome this conflict. Nonetheless, it is expected that banks will argue that the role of financial institutions is to finance the economy and the only thing they can do is make the project better, but not decline the finance. The fundamental view of the NGOs however is that such projects should not go ahead at all and that banks should influence governments and clients to make sure those projects do not go ahead. So this conflict has little chance of being resolved within the longstanding paradigm that financial institutions will follow their clients and make projects less controversial by managing environmental and social risks. Even with EP III, the banks have been unwilling to categorically exclude the development of coal projects, mountain top removal mining or projects in sensitive ecosystems.46 With EP III, the EPFIs have imposed new requirements related to carbon emissions, but the NGOs have dismissed these as ineffective. In addition, with the July 2013 update to EP III, NGOs have come closer to enabling communities affected by projects to not only being ‘consulted’ but also to have the power to give or withhold ‘consent’ to project development, but this remains a matter of considerable controversy in the banking industry, as the status and specific requirements of the international legal norm of ‘free, prior and informed consent’ that undergirds the EPs ‘consultation’ requirement remain hotly contested.47 Although Equator Banks have moved closer to NGO suggestions, the difference in paradigm remains. The hotly-contested ‘free, prior and informed consent’ issue is handled by each institution differently as the Association does not want to take a stance on how well an institution is implementing the EP for fear that could be considered as antitrust behaviour. Another key element to the EP regime is the diversity of participants and possible levels of implementation.48 The EPFIA is an unincorporated membership organisation and governance structure complete with bylaws, voting mechanisms and membership fees led by the Steering Committee, whose decisions are binding on the members.49 This enhanced formalisation also responded in small 45  (Banktrack 2013). 46  (Wright 2012, 66). 47  (Meyerstein 2013a, b, 560–563). 48  (Lazarus 2012, 2015). 49  (EPFI Association 2010).

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part to another of the NGOs’ concerns, as it introduced a de-listing procedure for removing EPFIs not compliant with the annual reporting requirement which is laid out as a requirement under Equator Principle 10 (although that is substantially different to a fully-fledged accountability mechanism based on non-compliance with the EPs’ norms). Participation in the governance structure, general adoption levels across countries and reported levels of implementation by banks from different regions points to the tension that has accompanied the evolution of the regime and will continue to guide its future growth. The overall membership of the EPFIA is heavily tilted towards Western banks and those from advanced economies: more than 60% of members are from North America, Australia and Western Europe, with 11% from Africa and 6% from Asia. The Association is governed by a 14-bank Steering Committee, which has consistently comprised mostly of North American and Western European banks and, with the exception of the brief tenure of Brazil, has routinely been chaired by one of the founding four banks.50 Similarly, its various working groups focused on the substantive aspects of maintaining and enhancing the EP regime have historically also been Eurocentric. It is perhaps revealing that of the banks that recently formed the Thun Group to address the implementation of the United Nations Guiding Principles for Business and Human Rights, most were EP Steering Committee members, comprising roughly half of the Committee.51 Questions arise regarding governance of the regime and adoption of new standards, considering that the governance rules establish that the principles attempt to govern by consensus, striving for decisions to be adopted by a majority of the banks.52 The attempt to introduce a tiered membership structure failed, although it is particularly important when considering the rising tension between a broadening strategy (i.e. outreach to BRIC countries) and a deepening strategy (i.e. further enhancement and strengthening of the principles). The decision-making process is already slow and complicated given the conflicting views and differing priorities especially between EFPIs from high-income OECD countries and those from ‘non-designated countries’. The more financial institutions coming from heterogeneous cultural backgrounds and having (partially) conflicting interests that adopt the EP, the more difficult consensus building within 50   H VB, Barclays, Citi and now ING which subsumed ABN Amro in the wake of the 2008 global financial crisis. 51  These were Barclays, BBVA, HVB/UniCredit, Credit Suisse AG, ING Bank NV, RBS Group) plus UBS which is not an Equator Bank. 52  Meyerstein (n 16).

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the EPFIA becomes. On several occasions in the EP III review process, only the lowest common denominator could be found. This process of seeking consensus in all its negotiations and bargaining is not only time-consuming and slow, it also inhibits the further advancement of the EP in general.53 One important question arises regarding how the Association might be enabled to resolve its conflicts in order to establish an effective procedural mechanism for decision-making and regain its power to act. 6

Conflicts with Communities, Stakeholder and in Particular NGOs

To understand environmental and social conflict and the resulting clashes with finance, different perspectives must be considered. Dhayal and Emani look at conflicts in India through the lens of Indian communities.54 Industrial development in India has involved massive expansion of energy and resources. There has been intensive industrial activity and major developmental projects such as large dams, use of forest land, mining, power generation and energy-intensive agriculture.55 This has inevitably led to social conflicts with local communities. The Chipko movement in the Himalayas, where people protested against the contractors’ indiscriminate felling of trees in the hill district of Uttarakhand (formally United Uttar Pradesh), is perhaps the best-known community conflict over natural resources, and it marked the beginning of the era of public protest in India.56 Inspired by the success of the Chipko movement, the Appiko movement commenced campaigning in the south of India against the illegal felling of forests and challenging large dams, mining and other destructive development projects in the ecologically fragile Western Ghats of India. The ecological protests over bauxite mining in Odisha are reminiscent of the former movement in the Gandhamardhan Hills and the current movement in Niyamgiri Hills of Odisha (a state in eastern India). Narmada, Tehri, Koel-kara and Bodhghat saw similar public protests and conflicts over planned hydro projects and the related development agenda pursued by the government. Local communities in India are today much more aware of their rights and are willing to actively 53  Alok Dayal et al., ‘Adopting EP in India: Challenges and Recommendations for Future EP Outreach’ 2015 in Karen Wendt (ed), Responsible Investment Banking: Risk Management Frameworks, Sustainable Financial Innovation and Softlaw Standards (Springer 2015). 54  Ibid. 55  Ibid. 56  Ibid.

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take up issues related to developmental activities impacting on their lives.57 The existing legislation and communities are already familiar with engagement and able to represent themselves and their needs and interests. As Linsey Hall asserts, a more engaging stakeholder approach and conflict resolution mechanism is required in order to fix a ‘dodgy deal’ and present unique opportunities for identifying creative methods of providing such environmental and social protection and promoting sustainable development at the same time.58 7

The Role of Stakeholder Engagement in the EP Financial Institutions Association and Its Implications for Managing Conflict – Versus Resolving Conflict

Earlier themes of the literature on stakeholder engagement were focused on planner’s perspective evaluations of typologies on how to achieve desired outcomes, consultation or self-mobilisation as well as the appropriate logistical methods for successful decision-making processes.59 Other studies have been increasingly focused on understanding the characteristics of an effective engagement process (procedures and outcomes) from participants’ subjective feelings and beliefs.60 Most studies on stakeholder engagement have focused on the field of law, human health, and natural resources.61 However, few have examined models in the context of conflict resolution using cooperative models like mediation based on the Harvard Negotiation Approach. The EPFIA engages stakeholders, mainly industry, NGOs and export finance agencies organized through OECD. Grouping stakeholder engagement on a scale from communication, consultation, participation to representation, partnership and co-decision and co-production making, the EPFIA use a consultation process separately with each group where they collect comments concerns and suggestions and assemble them in a final paper on a high level. The consultation is restricted to the update of the EP and the adoption of new guiding principles. No specific conflicts are discussed in these stakeholder 57  Ibid. 58  Lindsay Hall, ‘Reconciling Enforcement Weaknesses and Lender Liabilities in the Equator Principles: How Further Revisions Can Help Ensure Adherence to the Private Sector’s Claims of Environmental Stewardship’ [2014] Journal of Energy and Environment Law 72. 59  These include citizens’ juries, workshops, focus groups, public hearings, or community planning: Irvin and Stansbury 2004; Pretty 1997; Pyhala 2002. 60  (Carnes et al. 1998; Walters et al. 2000; Webler and Tuler 2000, 2002; Webler et al. 2001; Tyler 2005). 61  (Renn et al. 1995; Roberts 2004; Rowe and Frewer 2004; Seaba 2006).

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meetings although they may be widely shared in various industries. The EPFIA views the resolution of such conflicts as the business of the project sponsors, not the business of the EPFIA or of the individual EPFI. Individual EPFIs have a duty to assess whether appropriate project grievance mechanisms are in place for communities and workers in the project and, if indigenous people are involved, whether their prior informed consent to the project can be assumed. Most of the cases assessing grievance procedures involve a desk top analysis, and site visits will only take place for projects which are on a critical path.62 This approach is reactive. 8

Can We Keep Investors and Financiers Out of Conflict Resolution?

EP III financial institutions have been unwilling to categorically exclude sensitive industries like mountain top removal mining, tar sands, or shale gas, and do not consider establishing an effective conflict resolution mechanism. Such conflict resolution schemes could use collaborative methods and mediation based on the Harvard negotiation model. It appears astonishing, given the external and internal conflicts of the Association, the hotly-disputed ‘community consent requirement’ for development finance institutions under the EP, and the duration of the conflicts, that there is no sign of activity in resolving the issues. This is even more surprising, as inaction does not guarantee that the Association and its members will maintain the status quo; there are a lot of outside factors that change faster than the Association is able to integrate and adjust. Market and regulatory factors are changing, there is increased awareness of climate change and rights of communities, the guiding principles for human rights have come into existence and international labour laws and biodiversity regulation are factors which are changing very quickly. Much of the resistance of EPFIs and the EPFIA to negotiating and resolving conflicts that continue under the surface, lies in another necessary part of democracy: NGOs campaigning for donations and sponsors which are unable to cease campaigning. Increasingly, campaigning is intruding into governing, where it is often counterproductive.63

62  Critical path refers to where communities and NGOs have addressed their concerns about the financing already directly by a letter to the CEO of the financial institution or have taken the project to court or to the OECD contact point. 63  Amy Gutmann and Dennis Thompson, The Spirit of Compromise Why Governing Demands It and Campaigning Undermines It (Princeton University Press 2013).

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Evaluation of Existing Conflict Resolution Mechanisms in the Financial Industry

9.1 Existing Conflict Resolution Mechanisms in the Financial Sector 9.1.1 The EBRD Project Complaint Mechanism (PCM) The PCM governs the independent review of complaints concerning EBRD-financed projects which allegedly have caused, or are likely to cause, harm. A roster of independent experts assists the PCM Officer in the review of complaints. The PCM Experts serve as Eligibility Assessors, Compliance Review Experts or Problem-solving Experts, and may be responsible, on delegation by the PCM Officer, for any follow-up monitoring and reporting. The mechanism has two functions: (i) the compliance review function for determining whether a particular EBRD-approved project has breached bank policies; and (ii) the problem-solving function for restoring dialogue and resolving issues between the parties involved.64 In addition, EBRD also advocates for alternative conflict resolution mechanisms. For instance in Serbia, EBRD, with funding from the UK Government’s Good Governance Fund, is launching a technical cooperation programme in Serbia to strengthen the use of commercial mediation in disputes through the use of alternative conflict resolution mechanisms. The programme will be directed at the legal and business community, trade organisations, the Serbian Chamber of Commerce and Industry and the Judicial Training Academy of Serbia. The project is part of EBRD’s Investment Climate and Governance Initiative which aims to support reform-minded governments and its corporate clients to increase transparency, good governance and healthy competition in the countries where the Bank invests. 9.1.2 The EIB Complaint Mechanism (CM) The EIB’s Complaints Mechanism (CM) governs the submission and handling of complaints concerning EIB activities. The mechanism consists of a two-tier procedure: first, an internal Complaints Mechanism Division (EIB-CM), which is independent from other EIB departments, seeks a solution, 64   E BRD Project Complaint Mechanism Rules of Procedure (7 May 2014) accessed 15 September 2018; Svitlana Pyrkalo, ‘EBRD and UK promote commercial mediation in Serbia’ (European Bank for Reconstruction and Development, 28 October 2016)  accessed 15 September 2018; ‘PCM Experts’ (European Bank for Reconstruction and Development) accessed 15 September 2018.

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and suggests corrective action where necessary; and second, in cases where EIB-CM fails to resolve the issue, the complainant can turn to the European Ombudsman.65 9.1.3 The FMO/DEG Independent Complaint Mechanism (ICM) The FMO/DEG’s Independent Complaint Mechanism (ICM) is a joint tool for handling disputes between FMO or DEG clients and external stakeholders who believe themselves to be harmed by projects planned or financed by FMO or DEG. The mechanism operates through the Complaints Offices of FMO and DEG and an Independent Expert Panel (IEP) that assesses and responds to complaints and coordinates the dispute resolution and compliance review process.66 9.1.4

The London 2012 Olympic Games Complaint and Dispute Resolution Mechanism (CDRM) In the context of the London 2012 Olympic Games, two steps were taken to prevent and address complaints regarding the business practices of the events’ suppliers, contractors, sponsors, and licensees. First, the London Organizing Committee of Olympic Games and Paralympic Games (LOCOG) pre-emptively audited, monitored and evaluated its commercial partners; and second, a Complaint and Dispute Resolution Mechanism (CDRM) was put in place, developed by a specialist partner commissioned by LOCOG. The rules and procedures of the CDRM were set out in the LOCOG Sustainable Sourcing Code, and the mechanism was supported by a Stakeholder Oversight Group responsible for providing advice and ensuring that complaints were being handled in a fair, timely, and efficient manner.67 9.2 SWOT Analysis on Existing Conflict Resolution Mechanisms The strengths, weaknesses, opportunities and threats associated with conflict resolution mechanisms are detailed in Table 5.2 below. Key benefits of 65   E IB Complaints Mechanism, ‘Principles, Terms of Reference and Rules of Procedures’ (adopted February 2010 with revisions in 30 April 2012 and 31 October 2012) accessed 15 September 2018. 66   ‘Independent Complaints Mechanism DEG’ (KFW DEG, 1 January 2017) accessed 15 September 2018. 67  Stuart Bell et al., ‘Learning legacy. Lessons learned from planning and staging the London 2012 Games’ (December 2012) accessed 15 September 2018.

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table 5.2 SWOT analysis of the complaint mechanisms of EBRD, EIB, FMO / DEG, and the London 2012 Olympic Games (LOCOG)

Internal factors Strengths (+)

Weaknesses (–)

– EBRD; EIB; FMO / DEG (hereafter referred to as “All”): Clear rules and procedures for submitting and handling complaints, including rules for ensuring the transparency and impartiality of the process. – All: Regular reporting on the status of complaints and the implementation of dispute resolution and compliance review mechanisms. – All: Complaints can be submitted in different languages. – All: Complainants have the option to request confidentiality. – EBRD; FMO / DEG: Experienced and knowledgeable panel of experts. – EIB; FMO / DEG: Flexibility in facilitating different forms of resolution processes, including mediation (applicable if agreed upon by all parties involved). – FMO / DEG: Client support mechanisms for handling complaints at the local and business activity level before the need to utilize the ICM. – FMO / DEG: Internal policies based on internationally recognized standards (IFC Performance Standards, Equator Principles, OECD Principles for MNEs, etc.). – EBRD: PCM Expert nomination committee has members both internal and external to EBRD.

– All: Rigid rules of procedure and reporting requirements may create inefficiencies and delays in processing and resolving issues. – All: Complaints suggesting corruption or fraud are forwarded to a separate department, although such cases do not necessarily exclude other forms of maladministration that may be relevant in the context of the complaint mechanism. – All: Complaints already filed with other institutions are omitted, although these may include allegations of institution-specific maladministration. – All: Limited window of time for submitting complaints. – All: Clients are not required to disclose the availability of the complaint mechanism. – EIB; FMO / DEG: Compliance report draft is not sent to all parties simultaneously. – FMO / DEG: Possible delays in processing complaints when necessary contractual arrangements between FMO / DEG and their clients regarding the ICM are missing. – FMO / DEG: No official appeals mechanism. – EIB: Close institutional and operational links with the EC and other EU

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table 5.2 SWOT analysis of the complaint mechanisms of EBRD, EIB, FMO / DEG (cont.)

Internal factors Strengths (+)

Weaknesses (–)

– EIB: In case of an unsatisfactory result, the complainant can submit a confirmatory complaint and has the option of turning to the European Ombudsman (EO). – EIB: Accountability to EU citizens and EIB’s stakeholders. – EIB: Programs are in place for raising awareness of the EIB-CM. – EIB: The EIB-CM is explicitly connected to EIB Staff Code of Conduct. – EIB: Explicit acknowledgement that that complainants must not be subject to any form of retaliation, abuse or discrimination based on their exercise of the right to complain. – FMO: Independent Complaints Office that reports directly to the CEO. – LOCOG: Clear rules and procedures for submitting and handling complaints, including rules for ensuring transparency and impartiality of the process, as well as pre-emptive auditing and evaluation of commercial partners. LOCOG: Effective use of mediation to quickly arrive at non-judicial solutions. – LOCOG: Commissioning the development of the CDRM from an organization specialized in human rights, labor standards, and supply chains, and including a broad base of stakeholders in the design phase of the CDRM.

institutions, as well as the central role of EU policy in driving EIB activities, create possible conflicts of interest, and may reduce agility and flexibility. – EIB: Complaints are dealt with confidentially, i.e., they are not made public on the EIB website (unless otherwise requested by the Complainant). – EIB: Past inability to process complaints in a timely manner, due to lack of adequate resources and structural problems with the functioning of the EIB-CM.a This weakness has been addressed with the introduction of new rules and procedures in 2012. – EIB: No rule for reviewing and updating the EIB-CM at regular intervals. – EIB: No external / independent expert panel to assess and process complaints. – FMO: Logical inconsistencies in conceptualizing sustainability (e.g. that sustainable development “may have a negative impact on local communities and the physical environment within which they live or upon which they depend for their livelihoods”). LOCOG: Avoiding independent audits and the external imposition of corrective action may lead to moral hazard as commercial partners learn to rely on the guaranteed option of a mediated and mutually agreed solution whenever malpractice attracts attention.

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table 5.2 SWOT analysis of the complaint mechanisms of EBRD, EIB, FMO / DEG (cont.)

Internal factors Strengths (+)

Weaknesses (–)

– LOCOG: Allowing for the appointment of an independent investigator, and requiring active monitoring and reporting on the implementation of corrective or preventative action. – LOCOG: Allowing for the appointment of an independent investigator, and requiring active monitoring and reporting on the implementation of corrective or preventative action. – LOCOG: Focus on mediation and mutually agreed solutions instead of forced imposition of corrective action based on an investigation by auditors. – LOCOG: Requiring partners to train and inform their employees about CDRM.

External factors Opportunities (+)

Threats (–)

– All: More effective use of alternative and possibly more efficient forms of dispute resolution, including commercial mediation and arbitration. – All: Supporting the development and enhancement of arbitration and mediation laws, standards and capabilities that, under certain circumstances, could provide an alternative form of dispute resolution acceptable to all stakeholders.

– All: Local enforcement of contracts, ESG standards, and commercial law is often inefficient and may thus result in complaints. – All: Clients may not adhere to local laws, international standards, or terms agreed upon in the financing agreement, or may otherwise engage in activities that increase the likelihood of substantiated complaints in relation to planned or financed projects.

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table 5.2 SWOT analysis of the complaint mechanisms of EBRD, EIB, FMO / DEG (cont.)

External factors Opportunities (+)

Threats (–)

– All: Establishing pre-emptive procedures and collaborations to reduce the likelihood of complaints in relation to planned or financed projects, including constructively engaging with the affected communities prior to the commencement of the project in question. – All: Membership in the Independent Accountability Mechanisms Network allows for learning about best practices of other IFIs and DFIs. – All: Active inclusion of stakeholders in reviewing and improving the existing mechanism to build internal capacity and increase the effectiveness of the complaint mechanism. – All: Effective implementation of the complaints mechanism may lead to collateral dialogue and agreements between different stakeholders. – All: Further outreach to improve access to complaint mechanisms. – FMO / DEG: Improving the robustness of project-level grievance mechanisms. – EBRD: Further capacity building of courts, tribunals, bailiffs to improve enforcement. – EBRD: Providing counsel and assistance in unburdening courts and judges of routine administrative matters. – EBRD: Providing assistance for further improving access to court decisions to improve case law uniformity.

– All: Increased use of commercial mediation and arbitration may attract criticism regarding conflicts of interest and impartiality, especially if financing institutions have been actively involved in setting up the necessary infrastructure and providing relevant training. – All: As a result of hypothetical cases where the use of existing complaint mechanisms has been ineffective in averting harm, affected communities and other external stakeholders may become increasingly organized, and as a result, financing institutions will become increasingly pressured to change their procedures and policies. This may also result in considerable financial and reputational damage. – All: Increased visibility of the complaints mechanisms, either through clients or other external stakeholders, may result in a sudden increase in the number of complaints. – EBRD: Inability of governments to introduce legislative reform suggested by EBRD and relevant in the context of the PCM. – EIB: Independent assessment of complaints by the EO, if found substantiated, may damage the reputation of the EIB-CM and the EIB in general. – EIB: Confidential processing of complaints may attract criticism form external stakeholders calling for a more transparent handling of complaints.

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table 5.2 SWOT analysis of the complaint mechanisms of EBRD, EIB, FMO / DEG (cont.)

External factors Opportunities (+)

Threats (–)

– LOCOG: Effective implementation of the complaints mechanism may lead to collateral dialogue and agreements between various stakeholders. – LOCOG: Sharing accumulated knowledge and experience, e.g., through a post-event publication, can provide similar initiatives with valuable lessons and guidelines, and thus benefit future events or projects.

– LOCOG: Excessive reliance on nonjudicial solutions may attract criticism of possible moral hazard issue as it may become economically reasonable for some wrongdoers to first continue malpractice, and once a complaint is made, seek a mutually agreed solution. – LOCOG: Departure of the time-limited event organizer may lead to continued malpractice, unless clear rules and procedures are in place for handling complaints after the event.

a See Muramuzi, F. (2011). ‘Complaint against the European Investment Bank for maladministration’. Retrieved from Counter Balance: http://www.counter-balance.org/complaint-against -the-european-investment-bank-for-maladministration/. Source: Muramuzi, F. (2011). ‘Complaint against the European Investment Bank for maladministration’. Retrieved from Counter Balance: http://www .counter-balance.org/complaint-against-the-european-investment-bankfor-maladministration/

the mechanisms include their clear rules and procedures, including the key elements transparency and impartiality, as well as the opportunity for lessons learned, which are transposed through policy adaptation and capacity-building for implementation of the EBRD Performance Requirements in each project on the ground. Most CRMs integrate a panel of experienced external experts to counteract any internal bias, while still resorting to the internal knowledge and staff. They all are an intermediate step to resolve conflicts through arbitration and institutional learning in lieu of taking projects to court or to the national Contact Point (NPC) of the OECD for alleged breaches of the OECD Guidelines for Multinational Enterprises.68

68  See the OECD Guidelines for Multinational Enterprises: accessed 15 September 2018.

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While CRMs can create inefficiencies and delays of their own in processing and resolving issues, they may still prove more effective compared to court procedures or NPC rulings, that may run for years, with the time horizon for a court ruling running beyond the leverage of the parties involved, not giving any autonomy for conflict resolution to involved parties, and may harm the relationship between the involved parties rather than improving them and setting them up for cooperation. CRMs therefore serve as a filter where conflicting issues can be examined, investigated and remedied in an effective manner, with lessons learned and learning effects on both sides, improved relationships, and in timeframes that may be more suitable to the project and the conflict at hand, whereas court rulings do not allow for improvement of relationships between involved parties, require an investigation of the subject just to the level to defend one’s own decision, and are a last resort to remedy for plaintiffs with no control over the process, outcome or timeframe. Despite the weaknesses CRM mechanisms may have, they allow for silent conflict resolution, lessons learned and improved relationships and provide the institutions with some limited autonomy, at least regarding setting the procedures, the timeframe and the outcome. Establishing pre-emptive procedures and collaborations reduces the likelihood of complaints in relation to planned or financed projects and increases the likelihood for constructively engaging with the affected communities prior to the commencement of the project in question. Sharing accumulated knowledge and experience, e.g. through a post-event publication, can provide similar initiatives with valuable lessons and guidelines, and thus benefit future events or projects. The active inclusion of stakeholders in reviewing and improving the existing mechanism provides the stakeholders with more autonomy than they would have in a court case and, at the same time, it builds internal capacity on all sides, and thus over time increase the effectiveness of the complaint mechanism. The biggest threat to the functioning of CRM mechanisms may be implementation of the corrective action or remedy plan which is the outcome of the CRM process. Clients may not adhere to local laws, international standards, or terms agreed upon in the financing agreement, or may otherwise engage in activities that increase the likelihood of substantiated complaints in relation to planned or financed projects. In these cases, the financial institution is left with a default situation, where it can cancel the credit and use its step-in rights, but this is a situation most banks will not welcome. Therefore, one of the big questions with most CRM available is whether the chosen model of arbitration will finally guarantee an outcome and a rigid implementation of the remedy plan, as the leverage of the financial institution for implementation is lower than in a court ruling. It has been argued that this lack of leverage

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in enforcing the corrective action/remedy plan may leave communities with harm and despair while human rights violations or nature destruction may continue despite the remedy plan a financial institution has submitted to the CRM procedure. This seems to be confirmed in the two notes below that accompany many CRM systems. Indeed, the EBRD stipulates that: In an EBRD study of problems affecting commercial justice in the region, implementation of decisions was identified as the most problematic area – worse even than the lack of impartiality in court decisions. […] … business respondents in all EBRD countries of operations considered the ability of the justice system to enforce court judgments to be very low.69 Whereas the EIB CM notes states that: Complaints against the EIB [to the EO] may concern alleged maladministration of the EIB in its actions and/or omissions. As the European Ombudsman practice has shown so far, the most common allegations are administrative irregularities, failure to reply, unnecessary delay, refusal of information, unfairness, discrimination and abuse of power.70 In other words, CRM schemes are not perfect, but can constitute a significant improvement over a court case where financial institutions do not have any leverage nor autonomy and lessons learned cannot be expected nor integrated. Further research should examine whether the non-implementation of the remedy/corrective action plan is due to lack of resources or unwillingness. In the case of unwillingness, the solutions provided in the remedy/corrective action plan may not be attractive enough for the counterparty to implement compared with the Best Alternative to a Negotiated Solution (BATNA), which is a court ruling. If the reason is lack of capacity, the financial industry could invoke initiatives to help build such capacity as this appears to be in the best interest of smooth project management.

69  ‘Dispute Resolution’ (European Bank for Reconstruction and Development)  accessed 15 September 2018. 70   E IB Complaints Mechanism, ‘Principles, Terms of Reference and Rules of Procedures’ (n 65).

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table 5.3 Comparing mediation, litigation and arbitration

Duration of process Costs

Legally binding

Publicity Autonomy

Flexibility

Arbitration

Court hearing

Mediation

1 or more session

Months to years

Medium, usually below court action yes

meduim to high

sessions at mutual agreement Medium, usually below court action

confidential partially, clients decide on proposal by arbitrator partially possible: timing/sequencing determined by arbitrator

public no, judge decides

yes

Not flexible, judge decides

No, but backed up by a SMART Remedy Plan, monitored for implementation confidential yes, mediator as catalyst, but clients decide Based on common good – instead of common ground – solutions need to be more attractive than continuing conflict

Source: Karen Wendt and Gabriele Schricker: http://werkstatt-mediation-22. de/wp-content/uploads/2017/03/Werkstatt-Mediation-22_en.pdf

10 The EP and DCRMs 10.1 The Potential Merits of an EPFI Conflict Resolution Mechanism In the first FMO / DEG ICM Notes, following the implementation of its conflict resolution mechanisms which it joins with DEG, FMO wrote: While this mechanism is not perfect, it presents an important step in ensuring that project-affected people can hold FMO accountable … As FMO has adopted the EP the establishment of FMO’s Mechanism also sets an important precedent for other Equator Principle Financial

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Institutions, which so far have categorically refused to establish an accountability mechanism as part of the EP governance system.71 As FMO notes, the EP Financial Institutions have – despite all good efforts in making the EP Framework more robust – shied away from DCRMs, and the same goes for the Thun Group of Banks.72 The focus remains on thorough due diligence as the main pillar for accountability. This approach follows the pre-existing narrative that banks exercise their leverage prior to the money flowing out of the door. Many banks view their main leverage over a client to be when the client needs funds and the banks try to get everything factored in their due diligence process, integrating then an EP Action Plan into the loan documentation and have satisfactory due diligence in all respects as a condition precedent to draw down of funds. This is the phase where they can exercise their leverage (which is posited by NGOs mainly) and this is where they accept accountability. When the money has been paid out there remains little leverage, as financial institutions can only declare a default when the client does not comply with the action plan agreed in the loan documentation. Declaring default is cumbersome, needs to be based on strong evidence (investigation) and triggers cure periods, leading to dividend stoppers when the cure period has lapsed and no conclusion with the client has been reached that remedies the situation. It appears that EPFIs do not want to extend their accountability beyond the current status. It is to be questioned though whether conflict resolution is to be framed under the accountability flag, as done so far, or whether it is just a faster, more effective way to create solutions for existing problems, nonconformities and breaches that require a remedy. In turn, this leads to questions as to whether it is an enabler for cooperative conflict resolution which provides each side with enough autonomy to allow for a future solution-oriented mind-set as well as providing the necessary rigour in case of failure.73 Using 71  Heleen Tiemersma, Johan Frijns, Anouk Franck and Kris Genovese, ‘NGO Briefing on Independent Complaints Mechanism of FMO and DEG’ (February 2014)  accessed 15 September 2018. 72  See ‘Paper on the Implications of UN Guiding Principles 13B & 17 in a Corporate and Investment Banking Context’ (Thun Group of Banks, December 2017) accessed 15 September 2018. 73  This means court cases, events of default, dividend stoppers and independent investigations as a fall-back position and means of last resort.

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the language of mediation, providing a process that allows for autonomy of the parties to create a solution which is mutually acceptable and more attractive than the Best Alternative to a Negotiated Agreement. An independent research study looking into the project enhancing potential of cooperative conflict resolution mechanisms through a refined system of mediation and investigation will be required to understand the motivations and the drawbacks in the case of the EPFIs and their Association collectively, as well as within the Thun Group. This chapter will take the conflict resolution scheme developed by the London 2012 Olympic Games as a blueprint and examine how this mechanism could be transferred to the EPFI and Thun Group context. The London 2012 Olympic Games CDRM as a Good Practice Example for Future-oriented Cooperative Problem-solving In the context of the London 2012 Olympic Games, two steps were taken to prevent and address complaints regarding the business practices of the events’ suppliers, contractors, sponsors, and licensees. First, the London Organizing Committee of Olympic Games and Paralympic Games (LOCOG) pre-emptively exercised due diligence and audited, monitored and evaluated its commercial partners in accordance with their Sustainable Sourcing Code. Second, a Complaint and Dispute Resolution Mechanism was put in place, developed by a specialist partner commissioned by LOCOG. The rules and procedures of the CDRM were set out in the LOCOG Sustainable Sourcing Code, and the mechanism was supported by a Stakeholder Oversight Group responsible for providing advice and ensuring that complaints were handled in a fair, timely and efficient manner.74 The way in which LOCOG handled the task of setting up and operating a complaints and grievance system had some innovative features. For example, both the development and subsequent management of the CDRM was semi-outsourced to a reputable legal firm, while an independent group of experts in labour standards, human rights, and international supply chains was installed as supervisor of the DCRM process, although LOCOG and its numerous stakeholders were kept closely involved throughout the process and LOCOG retained the right to have the final word on how specific complaints 10.2

74  This and the following paragraphs are based on Bell et al. (n 67); see also ‘UN Guiding Principles on Business and Human Rights Discussion Paper for Banks on Implications of Principles 16–21’ (Thun Group of Banks, October 2013) accessed 15 September 2018.

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were handled. The finalised mechanism took cues from the early version of the UN Guiding Principles on Business and Human Rights, and was centred on seeking a mutually agreed solution between relevant parties in a way that would address the root cause of the complaint. The CDRM was built on four distinct phases: 1. An Assessment Phase to establish whether the complaint was related to a good or service that was provided to LOCOG. This phase entailed initial information gathering in order to clarify whether the complaint was falling into the sphere of influence of LOCOG and to assess whether the complaint should be processed under the CDRM or instead be resolved through a different mechanism, either judicial or within the organization in question. 2. An Reporting/Information Phase to methodically gather full information relevant to the complaint and employ a mediator to bring the parties together and start a dialogue between them. At the end of this phase, depending on the nature of the complaint and the outcome of initial negotiations, the need for an independent investigation was established. The outcome of this phase including an assessment of the willingness of the parties to cooperate with the relevant procedures, followed either a mediation approach or, as a measure of last resort for unwilling or uncooperative parties, entailed an independent investigation by a LOCOG commissioned party (Ergon Associates) into the issue. As mediation is voluntary, LOCOG needed a best alternative to a negotiated solution (a socalled BATNA) in order to achieve its ultimate goal: sustainable sourcing. 3. If deemed necessary, an Independent Investigation Phase during which an external investigator, working under specified terms of reference, would assess the complaint and produce an investigation report – a new starting point for mediated negotiations or imposed implementation in cases where the parties were still unwilling to cooperate. 4. A Remediation/Monitoring Phase to reach an agreement on steps necessary to remedy the situation, the allocation of appropriate resources and timescales, and necessary monitoring, verification, and reporting requirements. With minor modifications, these steps applied not only in the context of third-party complaints, but also in cases of press allegations and disputes between LOCOG and its commercial partners. In all cases, however, the primary objective was the same – to use dialogue for reaching a mutually agreed solution and a mutually agreed plan, rather than utilising external auditors or impose corrective action plans. As an added benefit, the collaborative relationships established through the use of CDRM between employers, worker

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representatives and other stakeholders were sometimes sustained beyond the lifetime of LOCOG. 10.3 A Short Excursion about Mediation, Arbitration and Litigation As emphasised by both LOCOG and Ergon Associates, the example of the CDRM provides useful design, communication, operation and mediation lessons, not only for organisers of large sporting events, but to any institution dealing with human rights and sustainability issues. It mainly follows a mediation approach backed up with investigation and imposed action plans as its BATNA. Thus, in this context it is important to fully understand the differences and commonalities between mediation, arbitration and litigation and the importance of the existence of a Best Alternative to a Negotiated Solution, an alternative that can be imposed by the party to the dispute and the conflict resolution mechanism. Arbitration, from the viewpoint of the actors involved has advantages over litigation. One is the increased autonomy of participants as they choose the arbitrator in an international arbitration, as provided for under most loan agreements. This approach leads to cooperative conflict resolution through (i) arbitration or (ii) mediation with a BATNA backstop. Independent expert panels can be seen as a device borrowed from arbitration, like for instance the CRM expert panel.75 In contrast, mediation means there is no arbitrator making a decision on the case, but rather two or more conflict partners that are seen as the experts for the problem, and therefore problem-solving, whereas the mediator is the expert for the process of mediation (keeping the core principles of mediation intact and enabling resolution). The mediator has no role in making decisions. In short, the role of the mediator can be described as neutral, omni-partial, ensuring confidentiality, setting the scene for a voluntary self-determined solution creation process by the conflict parties. As illustrated, one key element in mediation is the capacity of a party to represent itself and its interests and needs, as well as enabling direct communication – as the parties themselves are seen as the conflict experts and solution experts. At the same time, it is important that parties are able to represent themselves, which may include the provision of support to indigenous people and groups that lack resources. Attention therefore should be given to how these plaintiffs or conflict parties shall be engaged adequately. This may include indigenous specialists and shuttle mediation to reduce the need for mediation meetings conducted with all parties. When comparing arbitration, litigation and mediation as illustrated in Figure 5.2 below, it follows that mediation is the 75  Examples would include the PCM Experts at EBRD or the LOCOG Stakeholder Oversight Group.

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Mediation ‒ Principles

Mediator • Neutral • Omnipartial • Managing process • Ensure shelter • Confidential

We

Me 22

Clients • Voluntary • Sole responsible • Self determining • Disclose relevant information • Open minded • Compliant • Future oriented • Confidential

figure 5.2 Cooperation model between mediator and client (Karen Wendt) Source: Based on German law, “Mediationsgesetz,” 26 July 2012 Third-party complaint submitted

Assessment

- Identification of disputed facts - Appointment of external investigator with focused Terms of Reference - Mediation based on investigation report

Expert Panel - If mutual agreement is not reached through mediation, an independent expert panel is appointed who will decide the remediation action plan

- All other avenues have been exhausted - Outstanding dispute exists - Necessity of ongoing commercial relationship - Severity of issue or risk

Information / Mediation - Methodical information gathering to enable informed discussions - Use of mediator to bring parties together - If mutual agreement is not reached, consider independent investigation

Press allegation published

Assessment

Assessment

- Scoping: complaint is relevant and legitimate - Scoping: complaint relates to EPFI or its partners - Ensuring the complainant provides sufficient information - Assessing if complaint can be resolved via an existing mechanism (e.g., company grievance or legal process)

Independent investigation

EPFI dispute with third party

Independent investigation

- Scoping: allegation relates to EPFI or its partners - Scoping: allegation is credible and poses serious risk

Communication strategy

Information / Mediation

Remediation / Monitoring - Agreement between parties on steps needed to remedy the issues - Action plan following the SMART criteria - Allocation of responsibilities and timescales - Agreement on monitoring and verification - Agreement on how outcomes of the dispute should be reported

figure 5.3 LOCOG / CDRM-inspired complaints handling process for the Equator Principles Financial Institutions (EPFI) Source: The Equator Principles

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most voluntary and the most flexible of all of the three schemes, but to make it robust, it has to be backed up with an investigation alternative where a resulting remedy action plan can be imposed on the parties. This should enhance the attractiveness of cooperation and the finding of a mutually beneficial solution. Combining voluntary mediation with having as a BATNA an investigation capable of imposing remedy action plans in order to ensure the desired outcomes has proven as an effective combination in the London Games. The approach is very similar to the EP which are based on due diligence, negotiation and action planning – which then materialises in the EP Action Plan transactions. The final litmus test for such a DCRM scheme using mediation/ investigation is an action plan/remedy plan developed through mediation following a SMART logic (the plan must be specific, measurable, attractive/attainable, realistic and time-bound). So the procedural requirements – a workable remedy action plan – whether achieved through investigation or mediation – would be a new, innovative and project enhancing component. The parties would be left with a concrete remedy action plan for implementation, setting out specific measures, measurable by key performance indicators and allotting clear roles and responsibilities to specified departments and persons, attractive (or attainable in case of investigation), realistic and time bound, including milestone dates and key performance indicators and budgets for monitoring the implementation. 11

Overcoming Resistance to Conflict Resolution between the EPFIA and Stakeholders

11.1 The Role of Single Stories and Campaigning Nigerian writer Chimamanda Ngozi Adichie has raised the danger of the single story in a Ted-talk with the New York Times in 2009.76 A single story reduces complex human beings and situations to a single narrative with no alternative and you get pressured to embrace the socially approved single story. If you differ from the established narrative (like all Africans are tribal) it is interpreted by the mainstream as a sign that you have false allegiances. You must embrace the mainstream narrative, the single story to show you are not complicit in

76  Chimamanda Ngozi Adichie, ‘The Danger of a Single Story’ (TEDGlobal, 2009) accessed 15 September 2018.

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a system of oppression.77 Maintaining that financial institutions are part of the problem when they do not step away from sensitive FDI transactions, and need to be disciplined by NGOs scrutiny (funded with donations), may run the danger of the single story narrative and create self-identification with the socially approved story, cutting off all leeway for a good faith negotiation and fruitful mediation between financial institutions and NGOs. Campaigning is a means of winning support, donations and money, and sometimes it subverts the objectives of governing. The effects of a continuous campaign, along with the distorting influence of the media and money that accompanies it, encourage a mind-set among conflict parties that rejects negotiation, compromise and, ultimately, conflict resolution. The resistance to democratic compromise is anchored in an uncompromising mind-set, a cluster of attitudes and arguments that encourages principled tenacity (standing on principle) and mutual mistrust (suspecting opponents). This mind-set is conducive to campaigning but inimical to governing.78 In other words, whereas it is the job of financial institutions to govern (and this is what NGOs expect them to do), the role of NGOs has most of the time been that of campaigning (to ensure their funding). The expectations developed in their respective roles create clashes in attitude, principles, values and mind-sets leading sometimes to apparently insurmountable disagreements. Resistance to democratic compromise can be kept in check by a contrary cluster of attitudes and arguments – a compromising mind-set – on both sides of the negotiation table that displays principled prudence (adapting one’s principles) and mutual respect (valuing opponents principals). It is a mind-set better suited to governing because it enables Financial Institutions to recognise and embrace opportunities for mutually desirable outcomes in a conflict resolution process. However, this means forgoing campaigning, at least as long a mediation procedure is taking place. Compromises are difficult for many reasons, including increased political polarization and future money flows in democratic politics. Finally, the uncompromising mind-set reinforces all the other obstacles to compromise.79 Sharp ideological differences, for example, would present less of an obstacle to compromise were they not compounded by the continual pressures of campaigning that the uncompromising mind-set supports.80 If a conflict resolution is to be achieved on major issues like 77  Ibid. See also David Brooks, ‘Opinion: The Danger of a Single Story’ The New York Times (New York, 16 April 2016). 78  Gutmann and Thompson (n 63). 79  Ibid. 80  Ibid.

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ombudsman systems, project conflict resolution mechanisms, involvement of EPFIs or the EPFIA in conflict resolution, we must value agreements that are less morally coherent and less politically appealing than those that rest on common ground or an overlapping consensus, and we must accept competing value frameworks which need to be mutually respected. It means concentration of attention to the common good – not common ground. While it is true that a lot is gained already when the negotiation is based on good faith and an open exchange on underlying interests, a shared basic interest in ‘security’ can mean very different things to a financial institution and to an NGO or a community. Therefore mutual respect for competing value frameworks and understanding the different needs behind the common interests (security), in the context of a good faith negotiation, is key to a successful conflict resolution mode. Also, different needs create a huge reservoir of potential conflict resolution, because it is often possible to fulfil the needs of both sides, without needing to agree on a common ground definition of what ‘security’ means. Excursion: Moving On from Conflict Management to Conflict Resolution: from of Common Ground to Common Good When looking into the Harvard conflict analysis tool and analysing conflict dynamic, needs and fears, as well as conflict patterns context and structure, it appears that one is dealing with a frozen conflict that nevertheless escalates over time.81 Are there feasible alternatives that represent an improvement over the current status quo? In some cases, the status quo may be preferable to any of the proposed alternatives. This however can be only found out when the alternatives have been explored. If an alternative is more attractive to all conflict parties than the status quo and the BATNA (investigation, imposed plan or consequently litigation in court), it will be implemented for its attractiveness and will allow conflicting parties to overcome the status quo. Privileging the status quo does not mean that nothing changes. It simply means that EPFI members allow outside forces – the market, expiring political agreements, social movements, NGOs, media, politics, regulation – to control the change. The status quo includes both the current state of affairs and the state that results from political inaction. So real leadership requires revisiting 11.2

81   Simon Mason and Sandra Rychard, ‘Conflict Analysis Tools’ (Swiss Agency for Development and Cooperation SDC, 2005) accessed 15 September 2018.

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positions and finding ways to negotiate even in difficult situations.82 This is not always easy, especially when the conflict has existed for a long time. Using the Glasl conflict escalation model, the conflict develops in 9 phases, moving from hardening of positions and first confrontation to polarisation of thinking, feeling and will followed by strategies of ‘fait accompli’, presenting the opponent with facts on the ground, physical action (NGOs taking financial institutions to court). The normal ritual between NGOs (often representing communities or nature, i.e. public goods and human rights representing those who cannot speak for themselves) acts out according to the following phases: (1) NGO letter to the CEO of the Financial Institution claiming a breach of the EP; (2) public naming and shaming the project, the project parties and the financial institution; (3) continuing campaigning against the project sometimes interrupted by meetings between institutions and NGOs; and (4) investigating whether and how the project can be taken to court, whether and how the project site can be sieged. This normally is counteracted by a letter from the financial institution telling the campaigners or plaintiffs the EP will be met through robust due diligence, stacking up internal resources for due diligence and finally publishing a letter to the NGOs on why and how the project complies with the EP while campaigning and besieging goes on. In phase 5, empathy is lost and there is a danger of false interpretation of the other side. The parties manoeuvre each other into negative roles and fight these roles. Parties seek support from people who have not been involved so far.83 Public and direct attack on the moral integrity of the opponent are accepted, aiming at the loss of face of the opponent. Glasl describes the next phases of conflict escalation – Phase 6 and 7 – as characterised by seeing the opponent no longer as a human being.84 As a consequence, limited destructive blows are legitimate. Values are shifted, one’s own ‘small’ loss is seen as a benefit. Destruction and fragmentation of the opponent’s system is one’s main aim.85 Many of the conflicts are due to competing value frameworks and the insistence on establishing common ground instead of common good. In turn, this reassures EPFIs that ‘doing nothing’ could provide a clever strategy. The EPFI has two alternatives: they could try to maintain the status quo with the risk of further escalation of the conflict or could work on a conflict resolution scheme that allows it to take projects beyond the due diligence stage 82  Camp David negotiations according to the Harvard model may provide a good example. 83  Like the OECD MNE – National Contact Points NCPs or the European Court. 84  Friedrich Glasl’s, Konfliktmanagement: Ein Handbuch für Führungskräfte, Beraterinnen und Berater (Paul Haupt Verlag 1997) 33. 85  Mason and Rychard (n 81).

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and allows both flexible conflict resolution and risk management. Resistance to negotiations undermines the mutual respect that is essential for a robust democratic process. Mutual respect expresses a constructive attitude toward one’s political opponents and a willingness to engage in good faith with them. It is based on a principle of reciprocity, which is at the core of many different conceptions of democracy. Reciprocity seeks mutually acceptable ways not only of resolving disagreements but also of living with the disagreements that inevitably remain.86 It is important to note, that common ground and common good are different concepts. Common good requires to achieve objectives that are better than the status quo whereas common ground requires commonly shared values. Important as the common good is, it is less frequently invoked than is the common ground. Faced with the challenge of bridging polarised partisan divides on pressing issues, such as free prior informed consent by communities to projects and abidance to the UN Guiding Principles for Human Rights, transparency and climate change to name but a few, conflict partners regularly claim to seek consensus on the common ground. Consensus on common ground is a lofty goal. Common ground agreements are morally and politically attractive because they have a principled coherence from all perspectives. They resemble what philosophers call an overlapping consensus. Citizens with fundamentally different moral views may agree on relevant principles, though for distinct reasons drawn from conflicting perspectives.87 Consensus on common ground is desirable if it can be found. To restrict political agreements to common ground, especially in a polarised environment, is to privilege the status quo even when all parties agree that reform is needed. It is satisfactory to respect competing value frames, accept and understand the needs and interests of the other party and to strive in a cooperative process to find a solution that is more attractive than the status quo. 11.3 The Fiduciary Duties Arguments against Conflict Resolution On the finance, investment, wealth management and asset management side, the process of integrating ESG standards has been fostered by a number of players, in particular the United Nations Environmental Programme. While it has often been argued that trustees may be acting unlawfully if they take any account of ‘non-financial’ factors in their decision-making, this may not hold true. Berry and Scanlan quote the following response from a pension fund to 86  Gutmann and Thompson (n 63). 87  John Rawls, A Theory of Justice (Belknap Press 1999); John Rawls, Political Liberalism (Columbia University Press 2005).

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an enquiry from a member about the fund’s management of an environmental risk: The Trustees have a legal duty to not only invest, but to actively seek the best possible financial return … even if it is contrary to the personal, moral, political or social views of the trustees or beneficiaries. This was demonstrated in … Cowan v Scargill … The first major challenge to the conventional interpretation of Cowan v Scargill came from the ‘Freshfields report’, commissioned by the United Nations Environment Programme Finance Initiative … This report argued that there was good evidence that environmental, social and governance (ESG) issues could have an impact on financial returns and therefore, that taking them into account clearly fell within the ambit of fiduciary obligations. Indeed, taking such issues into account was ‘clearly permitted, and arguably required’ in all jurisdictions analysed. Specifically, in relation to Cowan v Scargill, the report concluded that ‘no court today would treat Cowan v Scargill as good authority for a binding rule that trustees must seek the maximum rate of return possible with every individual investment and ignore other considerations that may be of relevance, such as ESG considerations.88 It appears that the fiduciary duties argument can go both ways and has, in combination with the UN Guiding Principles for Human Rights and the OECD MNE Guidelines, the potential to go against the Financial Institutions who owe more than just basic fiduciary duties to their clients (here they need to manage, if not resolve, conflict risk in the best interests of the client in order to de-risk the asset), but they do have broader fiduciary duties for society as a whole, as argued elsewhere.89 11.4 Factors Supporting Conflict Resolution Mechanisms Global administrative law can be described as a mixture of voluntary and regulatory initiatives that together create global norms. They normally include ‘intergovernmental institutions, informal intergovernmental networks, national governmental agencies acting pursuant to global norms, hybrid public-private bodies engaged in transnational administration, and purely 88  Berry and Scanlan (2004) [citations omitted] relying on Berry (2005) (UNEP-FI 2005). 89  See ‘New legal opinion and business roundtable on climate risks and directors’ duties’ (Centre for Policy Development, October 2016) accessed 26 February 2017; Sarah Barker et al., ‘Climate change and the fiduciary duties of pension fund trustees – lessons from the Australian law’ (2016) 6(3) Journal of Sustainable Finance & Investment 211.

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private bodies performing public roles in transnational administration’.90 An example is the OECD Guidelines for Multi-National Enterprises91 that require the financial sector to respect human rights, international labour law and other international conventions on environmental and social issues.92 ISO 26000 recognises the difference between, on the one hand, instruments adopted by authoritative global inter-governmental organisations (such as the UN Universal Declaration on Human Rights, international labour conventions and other instruments adopted by the ILO and relevant UN Conventions) and, on the other hand, private voluntary initiatives that may or may not reflect the universal principles contained in the above instruments and has begun to quantify the risks and benefits of climate change (avoidance) and human rights and social impacts. This appears to be a new ISO strategy in order to increase awareness of how costly unresolved impacts can become – with ISO 14007, which includes cost-benefit analysis. As Fertes asserts: The importance of the adoption of business continuity plans is now well recognized by organizations all over the world. Whatever the business model, organizations are operating in an increasingly global, complex and risky context. Economic, social, political, technical, environment related events can interrupt core business. Natural disasters, diseases, terrorist attacks, strikes, financial crises, unreliable systems, logistics, supply chain failures, as well as unexpected lack of essential production inputs can severely impact growth and performance. The development of well-established plans that consider the identification of business interruption risks, the definition of strategic and tactical plans, proactive management and preparedness to respond should be a goal.93 In order to provide smooth and quick solutions that allow for state of the art business continuity management the role for project-accompanying conflict resolution mechanisms has to be tried out and applied in order to guarantee business continuity.

90  Benedict Kingsbury et al., ‘Foreword: Global Governance as Administration – National and Transnational Approaches to Global Administrative Law’ (2005) 68 Law and Contemporary Problems 1, 5. 91  See the OECD MNE Guidelines. 92  ‘Responsible business conduct in the financial sector’ (OECD) accessed 16 September 2018. 93  Denis Fertes wrote in Computer Science 55 (2015).

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Benefits of Interest-based Good Faith Negotiations and the Harvard Model Used in Mediation Fisher and Ury have illustrated the importance of interest based negotiation by examining the 1978 Egyptian-Israeli negotiations at Camp David.94 When the negotiations started, the sides’ positions were completely opposed to each other. Egypt insisted on complete sovereignty over the Sinai Peninsula (which Israel had occupied in the 1967 six-day war), while Israel insisted on keeping control of at least some of the Sinai. Map after map was drawn, each with different dividing lines. None managed to meet the positions of both sides simultaneously. Indeed, they assert that: 11.5

Looking to their interests instead of their positions made it possible to develop a solution. Israel’s interest lay in security; they did not want Egyptian tanks poised on their border ready to roll across at any time. Egypt’s interest lay in sovereignty; the Sinai had been part of Egypt since the time of the Pharaohs.95 By reframing the conflict in this way, a solution was reached. Egypt was given full sovereignty over the Sinai, but large portions of the area were demilitarised, which assured Israel’s security at the same time. Carter also followed the concepts of principled negotiation (though he did not call it that) insofar as he focused the negotiations on the substantive issues in dispute, and used shuttle mediation to avoid the very severe ‘people problems’ (antagonism) between Sadat and Begin which prevented them from meeting each other face-to-face anytime except at the beginning and the ending of the negotiations.96 He also used interest-based framing to allow the two sides to invent options for mutual gain – a way that they could both get what they needed at the same time and therefore focused on the common good in a setting with competing value frameworks. Doing away with common ground and single stories in favour of interest-based good faith negotiation was a sustainable solution. Whereas the parties were the experts for the conflict and also the experts for the solution, Carter was the expert for the process, using neutrality, reframing, empathy and understanding for the needs of each side, and emphatic listening, reframing, structuring and shifting perspectives to

94  Roger Fisher and William Ury, Getting to Yes: Negotiating an agreement without giving in (Random House Business Books 1981). 95  Ibid. 41. 96  Carter.

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future-oriented potential solutions – all qualities that a professional mediator should demonstrate.97 The responsibility for finding a solution remained with the conflict parties, which constituted an important difference to arbitration, where the arbitrator proposes the solution. There is a lot of merit in leaving the solution creation to the conflict parties, while focusing on the role of structuring the process and understanding competing value frameworks to arrive at the needs that drive the interests and the positions (and the terminal values). As the conflict parties did not want to meet in person he was talking to both sides separately using a shuttle mediation approach. If such a mediation approach is backed up by an investigation and imposed remedy plan as a fall-back position, the framework allows for enough flexibility, and at the same time enough rigour, to be implemented by private financial institutions and by the EPFI. It goes without saying that in order to keep time management and time to market intact, the mediation process could be supervised by a stakeholder (see LOCOG) or expert panel (EBRD). It cannot be stressed enough that such a search for better alternatives over the status quo will require a third party mediator, structuring the process, and cannot be solved by the conflict partners alone. Nor can it be substituted with stakeholder engagement. Exploring the alternatives will require shuttle mediation, although good stakeholder engagement and stakeholder mapping are powerful tools to assist in understanding the interests and the potential win-win of high interest, high invest stakeholders. This requires from both conflict parties, however, a preparedness to find a better than status quo solution and a preparedness to abandon predetermined positions and single stories. Alternative conflict resolution mechanisms and their benefits and usefulness can be measured against the alternative – litigation or investigation. On a project level, the BATNA to mediation is investigation or litigation. At the level of the EPFIA the status quo can serve as a BATNA, so that any proposed solution regarding DCRMs can be compared with this BATNA to evaluate whether the alternative is more attractive than the status quo. Progress and conflict resolution will be achieved when parties can leave the Nash equilibrium they have created through non-cooperative game-theoretic strategic considerations (where neither party can ameliorate its position through a new move) and only cooperation between the parties can create the superior pareto optimum and exit the prisoner’s dilemma. In game theory, the Nash equilibrium is a solution concept of a non-cooperative game involving two or more players in which each player is assumed to know the equilibrium strategies of the 97  Carter.

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other players, and no player has anything to gain by changing only his or her own strategy.98 12

Recommendations for Successful Dispute and Conflict Resolution Mechanisms Used by Financiers

Many project communities are unaware of their grievance rights, whereas a coordinated and concerted escalation spiral – from unsuccessful project-level conflict resolution (to the EPFI level conflict resolution or Ombudsman system) – raises awareness for all parties and elevates the importance of conflict resolution. It also provides an alternative way for all project parties and project-affected communities to get to solutions quickly, avoiding costs of conflict. Such a conflict resolution mechanism might not only entail potential human rights violations, but may provide a structured conflict resolution scheme for all risk areas where accompanying conflict resolution mechanisms can provide help, such as between construction company and project sponsor, construction company and community or local authorities, or community and project sponsor, as a structured approach to timely and pro-actively fix conflicts when they arise (and are still small and therefore easier to fix). It cannot be emphasised enough that identification and mapping are of a factual, and not of a normative nature. The only purpose of this process is to understand how business operations impact upon human rights, nature, stakeholders and business partners, rather than to attribute responsibilities or complicity. Only after the mapping has been established can a bank assess its options in terms of leverage to ameliorate or mitigate the situation. Incorporation of participants’ subjective views of what makes for an effective process and what outcomes allow or prevent the successful implementation of management plans is a key component in mediation; it is also a tool to examine the relationship between those perceptions and participants’ collaborative actions that influence the implementation of managerial plans based on the final objectives identified in each plan.99 All conflict resolution mechanisms have to deal with complexity. Advanced models of stakeholder engagement are able to fill a gap in both academia and practice to help reduce complexity. The discussion on such characteristics boils down to four parameters characterising the design of a system: multiplicity, interdependency, diversity and dynamics:100 98  Martin J. Osborne and Ariel Rubinstein, A Course in Game Theory (MIT Press 1994). 99  De la Cruz-Novey et al. 2012. 100  (E.g. Sargut and McGarth 2011).

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– Multiplicity: How many elements describe the underlying system? Such system elements are either decision subjects (stakeholders) or decision objects (products that are subject to stakeholders’ interaction). – Interdependency: How far are system elements intertwined in a bundle of interrelating cause/effect schemes? This parameter stands for the magnitude of system elements’ interaction. – Diversity: To what extent are system elements and the nature of their interrelations similar or dissimilar? Diversity can be operationalised by looking at the way relevant characteristics of the system elements deviate from the average. – Dynamics: How far are both the set of relevant elements and their interrelations subject to change over time? How far, and by what magnitude, have stakeholders or relationship patterns changed within a given time period, and how far can they be expected to do so in the future? 13 Conclusion This chapter discussed whether or not financial institutions in the long run can stay away from conflict resolution or whether their participation would have various benefits for themselves as for communities, when mediation is used and the focus is on common good rather than common approach in a world where there are country systems issues as well as competing value frameworks. The benefits for financial institutions range from conflict avoidance, de-risking assets, avoiding reputational risks and real costs, and creating better relationships with stakeholders and communities, plus effective lessons learned and therefore an organizational development scheme. Evaluating various existing DCRMs in the financial and in the international project management industry, the London 2012 Olympic Games Complaint and Dispute Resolution Mechanism is used as a workable private sector DCRM. Stretching from conflict management to conflict resolution in investment and finance, this chapter proposes a DCRM scheme for private banks and the EPFIA which is inspired by the London 2012 Olympic Games Complaint and Dispute Resolution Mechanism, and develops and adjusts it to fit the industry setting. This chapter has explored some of the potential benefits and opportunities that EPFIs can materialize when looking into dispute and conflict resolution mechanism with cooperative methods using mediation.

chapter 6

Human Rights Standards in International Finance and Development: the Challenges Ahead Mara Tignino 1 Introduction Respect and protection of human rights can be guaranteed only by the availability of mechanisms open to individuals and communities before which they can claim the violation of their rights. While States are increasingly prone to the jurisdiction of regional human rights courts,1 international organisations structurally evade this human-rights based juridical oversight.2 International accountability mechanisms (IAMs), established first by the World Bank in 1993 and then by its sister organisations, aim to remedy this accountability gap by granting individuals and communities, which are adversely affected by investment projects, the right to bring complaints in an international forum.3 1  See Virginia Mantouvalou and Panayotis Voyatzis, ‘The Council of Europe and the Protection of Human Rights: a System in Need of Reform’ in Sarah Joseph and Adam McBeth (eds), Research Handbook on International Human Rights Law, (Edward Elgar 2010) 326–352; Diego Rodríguez-Pinzón and Claudia Martin, ‘The Inter-American Human Rights System: Selected Examples of Its Supervisory Work’ in Sarah Joseph and Adam McBeth (eds), Research Handbook on International Human Rights Law, (Edward Elgar 2010) 353–387; Magnus Killander, ‘African Human Rights Law in Theory and Practice’ in Sarah Joseph and Adam McBeth (eds), Research Handbook on International Human Rights Law, (Edward Elgar 2010) 388–413. 2   On the immunity of international organisations: August Reinisch, ‘The Immunity of International Organizations and the Jurisdiction of their Administrative Tribunals’ (2008) 7(2) Chinese Journal of International Law 285. The immunity of UN peace-keeping operations was criticised by the Special Rapporteur on Extreme Poverty and Human Rights. In his report, Alston criticised the position of the UN’s Office of Legal Affairs (OLA), which insisted that the UN should refrain from assuming responsibility for the cholera outbreak in Haiti in 2010 and rejected all claims for compensation by the victims. Alston affirmed that there was no official explanation for the responsibility of the UN operation and that ‘this goes directly against the principles of accountability, transparency and the rule of law that the UN instead promotes globally’: OHCHR, ‘Report of the Special Rapporteur on Extreme Poverty and Human Rights’ (26 August 2016) UN Doc A/71/367, 14–16. 3  The World Bank Inspection Panel (WBIP) was the first IAM established in 1993. The WBIP has jurisdiction over the operational activities of two key World Bank affiliates, i.e. the International Bank for Reconstruction and Development (IBRD) and the International

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The Inspection Panel of the World Bank and other IAMs, are not adjudicatory bodies and cannot determine the rights and obligations of the plaintiffs, nor do they interpret and apply international agreements.4 In a certain sense, IAMs are of a managerial, rather than a strictly judicial nature, since they can be considered as a tool by the Bank’s Board to control and monitor management rather than serving as a vehicle for international justice. Nonetheless, IAMs provide people directly and adversely affected by Multilateral Development Banks (MDBs) funded-projects with an independent forum through which they can request MDBs to act in accordance with their own policies and procedures.5 Without being judicial bodies, IAMs transpose the right to access to justice – affirmed in human rights instruments such as the 1948 Universal Declaration of Human Rights (UDHR)6 and the 1966 International Covenant on Civil and Political Rights7 – into the operations of MDBs. Although human rights instruments make reference to the access to national, regional or international venues of adjudication, access to justice – as a fundamental norm in human rights – has also been translated in international economic organisations such as MDBs.8 Consequently, questions arise Development Association (IDA). The Office of the Compliance Advisor/Ombudsman (CAO) was created in 1999 to provide oversight to the International Finance Corporation (IFC) and the Multilateral Investment Guarantee Agency (MIGA). Moreover, each regional development bank – the African Development Bank (AfDB), the Asian Development Bank (ADB), the European Bank for Reconstruction and Development (EBRD) and the Inter-American Development Bank (IDB) – have developed their own investigative mechanism. See Laurence Boisson de Chazournes, ‘Partnership, Emulation and Coordination. Toward the Emergence of a Droit Commun in the Field of Development Finance’ in Hassane Cisse, Daniel D. Bradlow and Benedict Kingsbury (eds), The World Bank Legal Review, Volume 3: International Financial Institutions and Global Legal Governance (World Bank 2011). 4  Adam McBeth, International Economic Actors and Human Rights (Routledge 2010) 222. 5  Ibid. 6  Universal Declaration of Human Rights (adopted 10 December 1948) UNGA Res 217 A(III) art 8. 7  International Covenant on Economic, Social and Cultural Rights (adopted 16 December 1996, entered into force 3 January 1976) 993 UNTS 3 (ICESCR) art 2. 8  As noted by Francioni, ‘[i]ndividuals access to international remedies has gained much recognition in the practice of the last quarter of a century. Leaving aside the human rights aspect of this phenomenon […] this is especially true in the field of international economic law. Here we can witness […] the establishment in the early 1990s of the World Bank Inspection Panel, which, although it is not an adjudicatory organ, is capable of providing a flexible sui generis mechanism to take into account private interests and the social impact of the Bank’s financing projects’: Francesco Francioni, ‘The Rights of Access to Justice under Customary International Law’ in Francesco Francioni (ed), Access to Justice as a Human Right (OUP 2007) xxvii.

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regarding the quality of this normative translation. Related to this question, one may ask: i. What is lost in the translation from the human right to access to justice in judicial proceedings, to the procedures before IAMs? ii. Does the creation of IAMs ensure the respect of human rights? iii. Do IAMs provide an access to remedy to the victims of human rights violations? Indicatively, in an amicus brief in the case Budha Ismail Jam et al. v International Finance Corporation, Bradlow argued that the access to justice requirement has not been satisfied by the existence of the IAM in the International Finance Corporation (IFC) since it did not provide any effective remedies to claimants and was cast aside by IFC’s management.9 The relationship between the World Bank and human rights pulls in two opposite directions. On the one hand, this relationship is countered and contested on the basis of the ‘political prohibition’ clause affirmed in the Articles of Agreement10 and their immunity from lawsuits.11 On the other hand, it has also been put forward that ‘it has become an almost mainstream belief that international organizations are in general bound by international law’.12 The cases in which the Inspection Panel has referred to human rights have been heavily criticised using the argument that this interpretation lies beyond 9  United States District Court for the District of Columbia, Budha Ismail Jam, et al. v International finance Corporation, Civil Action No. 15-612 (JDB), 24 March 2016. The Court ruled that IFC has absolute immunity and dismissed the case. See however the decision of the Supreme Court of the United States, 27 February 2019, 139 S. Ct. 10  Article IV, s 10 of the Articles of Agreement of the International Bank for Reconstruction and Development, as amended on 16 February 1989. The same clause is also affirmed in the Articles of Agreement of the International Development Association, effective since 24 September 1960 (Article 5, s 6) and the International Finance Corporation Articles of Agreement, as amended on 27 June 2012 (Article III, s 9). See McBeth (n 4); High Commissioner of Human Rights, ‘The World Bank is a human rights “free-zone”: UN expert on end poverty expresses deep concern’ (United Nations, 29 September 2015) accessed 26 January 2017; Letter from Anne-Marie Leroy and Makhtar Diop to the Special Rapporteur on the right to food and the Independent Expert on the effects of foreign debt and other international financial obligations of States on the full enjoyment of all human rights, particularly economic, social and cultural rights, 9 October 2012. 11  See Budha Ismail Jam (n 9). 12  Reinisch (n 2); Sigrun Skogly, The Human Rights Obligations of the World Bank and the International Monetary Fund (Cavendish 2001); Mac Darrow, Between Light and Shadow: The World Bank, The International Monetary Fund and International Human Rights Law (Hart Publishing 2003).

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their mandate.13 This has resulted in a much more modest position in more recent cases. The IFC has also been criticised for structurally ignoring the conclusions of the Office of the Compliance Advisor Ombudsman (CAO).14 Moreover, the Environmental Social Framework (ESF) of the World Bank is criticised for reducing the prescriptive nature of the safeguards and weakening the role of the Inspection Panel.15 Despite these critiques on the legal shortcomings of IAMs and their troubled relationship with human rights, their establishment marked an important shift in the governance of MDBs. Operating independently of institutional management, the IAMs opened a direct channel of communication between project-affected individuals and groups and the Bank’s highest levels of decision-making.16 They provided communities impacted by bank-financed projects a forum to address their concerns, provided critical feedback to the MDBs on their own practice and promoted compliance with the MDB goals.

13  As noted by Bradlow whenever the World Bank takes decisions on what appear to be human rights grounds, it seems to justify those decisions on an economic rationale ‘thereby implying that human rights are outside its mandate’: Daniel Bradlow, ‘The World Bank, the IMF, and Human Rights’ (1996) 6(1) Transnational Law and Contemporary Problems 79. 14  See Budha Ismail Jam (n 9) [25]: the plaintiffs affirmed that:  “[t]he CAO investigation into their complaint concluded that IFC had failed adequately to consider the environmental and social risks to which plaintiffs would be exposed as a result of the Plant’s development. In the CAO’s estimation, IFC then compounded that error by failing to perform an environmental and social impact assessment ‘commensurate with project risk,’ and by failing to ‘address [subsequent] compliance issues during [project] supervision’. IFC responded with a letter challenging some of the CAO’s conclusions, and with a statement laying out a ten-item action plan to address any compliance shortcomings. But the CAO was unimpressed. In a subsequent monitoring report, it explained that ‘a number of its findings suggest the need for a rapid, participatory and expressly remedial approach to assessing and addressing project impacts raised by [plaintiffs].’ In the eyes of the CAO, the action plan proposed by IFC and CGPL [Coastal Gujarat Power Limited (CGPL)] fell short of that mark. The matter remains open for continued monitoring. Seeking the relief they cannot obtain from the CAO, plaintiffs have filed a complaint in this Court.”  However, the Court concluded that ‘[b]ecause IFC has not waived its immunity from this suit, its motion to dismiss will be granted, and plaintiffs’ complaint will be dismissed in its entirety’. 15  See ‘NGOs: World Bank New “Safeguards” Weaken Protections’ (Environment News Service, 28 July 2016) accessed 20 January 2017. 16  ‘The Inspection Panel at 15 Years’ (World Bank, 2009) 5.

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Since their inception, they have also been the target of ongoing internal reform.17 The ESF of the Work Bank is the last example of these reforms.18 The creation of the IAMs was a part of significant reforms driven by an expansion in the underlying concept of development and the growing recognition of the importance of civil society participation in policy decisions.19 These changes are best understood within the context of the significant role played by the principle of sustainable development in international law since the 1990s.20 A year before the establishment of the World Bank Inspection Panel (WBIP), the 1992 Rio Conference on Environment and Development21 had charted a new, cooperative approach to development relying on three pillars, i.e. social inclusiveness, economic growth, and environment protection.22 Principle 10 of the Rio Declaration on Environment and Development strongly recommends the inclusion of those affected by public policy in decision-making and affirms that: ‘[e]ffective access to judicial and administrative proceedings, including redress and remedy, shall be provided’. This contribution will focus on IAMs in the light of the human right to access to justice. First, the chapter will examine the right to access to justice and the concept of accountability. In order to compare (and potentially contrast) IAMs with the orthodox blueprint of adjudicatory bodies in the field of human rights, this part of the paper inquires into their constitutive rationale and specific legal features. Although these mechanisms are not empowered to make final, binding decisions on questions of international law, they increase 17  Bradlow has identified three ‘generations’ of inspection mechanisms based on the timing of their creation and their approach to accountability: Daniel D. Bradlow, ‘Private Complainants and International Organizations: A Comparative Study of the Independent Inspection Mechanisms in International Financial Institutions’ (2004–2005) 36 Georgetown Journal of International Law 484. 18  World Bank, Environmental and Social Framework – Setting Environmental and Social Standards for Investment Project Financing (August 2016). 19  For an analysis of the motives for the establishment of the World Bank Inspection Panel, see Ibrahim F. I. Shihata, The World Bank Inspection Panel: In Practice (2nd edn, OUP 2000). 20   On the principle of sustainable development, see Gabcíkovo-Nagymaros Project (Hungary/Slovakia) (Judgment) [1997] ICJ Rep 7 [140]. See also the Separate Opinion of Vice-President Weeramantry in this case pointing out that sustainable development is a principle of international law; Gunther Handle, ‘The Legal Mandate of Multilateral Development Banks as Agents for Change Toward Sustainable Development’ (1998) 92(4) American Journal of International Law 642. 21  Rio Declaration on Environment and Development (1992) accessed 10 August 2018. 22  ‘The Inspection Panel at 15 Years’ (n 16) 4.

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accountability for compliance with operational policies within the respective institutions. By providing concerned individuals and communities with a channel to bring a complaint in an international forum, IAMs are a means to seek redress in cases of non-compliance. Through the convergence toward a shared collection of principles such as independence and impartiality which structure their procedures, IAMs are increasingly considered as ‘quasi-judicial bodies’ intended to aid individuals and communities adversely affected by non-compliance with operational policies. Secondly, after unpacking the structural features of the IAMs, I turn to the proliferation of environmental and social safeguards within MDBs and their importance in the process of internal accountability. Doing so, I will first shed light on the process of inter-institutional learning and emulation between MDBs in the creation and development of these endogenous accountability standards. Subsequently, I will turn to the recently adopted ESF of the World Bank, which provides the substantive benchmark for its review. I will argue that these safeguard standards import human rights values, e.g. the environmental and social risk assessments, the protection of indigenous peoples’ rights and the requirement to consult project-affected populations. In the third and final section of the chapter, I inquire into the concrete functioning of IAMs by examining several cases brought to the World Bank Inspection Panel and the CAO. I specifically focus on cases regarding the protection of indigenous peoples’ rights. 2

IAMs and the Demand for Accountability

Access to justice is a basic principle of the rule of law. In the absence of access to justice, people are unable to exercise their rights and to have their voice heard. As noted by Ebbesson, ‘access to justice is a means to having decisions and decision-making processes reviewed.’23 Access to justice finds expression not only in bringing claims to judicial bodies such as courts and tribunals but also to quasi-judicial bodies characterised by their independence and impartiality. Considering the fact that international organisations enjoy jurisdictional immunity before national courts,24 IAMs – as independent quasi-judicial 23  Jonas Ebbesson, ‘Principle 10: Public Participation’ in Jorge E. Viñuales (ed), The Rio Declaration on Environment and Development. A Commentary (OUP 2015) 291. 24  Articles of Agreement of the International Bank for Reconstruction and Development, Art 7, s 1 provides that: ‘[t]o enable the Bank to fulfill the functions with which it is entrusted, the status, immunities and privileges set forth in this Article shall be accorded to the Bank in the territories of each member’; Reinisch (n 2) 285–306.

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bodies25 – fill an important accountability gap in aiming to ensure access to justice for project-affected individuals and communities. While the mandates of IAMs are limited, and their determinations are in any case not legally enforceable, they have opened a door for accountability for social and environmental issues by MDBs. A comparison could be drawn between the IAMs and the grievance mechanisms established by private companies. The Guiding Principles on Business and Human Rights adopted by the Human Rights Council in 2011 underline the role of grievance mechanisms understood as ‘any routinized, […] non-State based, judicial or non-judicial process through which grievances concerning business-related human rights abuse can be raised and remedy can be sought.’26 Principle 29 of the Guidelines makes specific reference to the fact that ‘business enterprises should establish or participate in effective operational-level grievance mechanisms for individuals and communities who may be adversely impacted.’ Although the grievance mechanisms mentioned in the 2011 Guidelines are established by private companies, a parallel can be made with the IAMs. These mechanisms ensure a channel for individuals and communities directly impacted by the MDBs’ projects to raise concerns when they believe they are being or will be adversely impacted. As with the grievance mechanisms established by private companies, IAMs make it possible for grievances, once identified, to be addressed and for adverse impacts to be remediated early, thereby preventing harms from compounding and grievances from escalating. The call for access to justice – to which the proliferation of IAMs provide a specific answer – is heavily implicated in the demand for more accountability in international organisations. According to the International Law Association (ILA), ‘accountability is linked to the authority of international organizations’.27 25  Mara Tignino, ‘Quasi-Judicial Bodies’ in Catherine Brölmann and Yannick Radi (eds), Research Handbook on the Theory and Practice of International Lawmaking (Edward Elgar 2016) 242–261. 26   U NHCR ‘Guiding Principles on Business and Human Rights: Commentary to Principle 25’ (2011) UN Doc HR/PUB/11/04 27 accessed 20 January 2017. 27  International Committee on the Accountability of International Organisations, ‘Final Report on Accountability of International Organizations’ in International Law Association Report of the Seventy-First Conference (Berlin 2004) (International Law Association, Berlin Conference 2004) 5. For an analysis of the concept of accountability, see: Erika de Wet, ‘Holding International Institutions Accountable: The Complementary Role of Non-Judicial Oversight Mechanisms and Judicial Review’ in Armin Bogdandy, Rüdiger Wolfrum, Jochen Bernstorff, Philipp Dann and Matthias Goldmann (eds), The Exercise of Public Authority by International Institutions: Advancing International Institutional Law

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The calls for the accountability of international institutions have increased in recent years, as it is seen as essential for ensuring their credibility and for securing control over public power.28 As it has been put forward ‘since international organizations exercise public power, a range of different stakeholders might demand accountability from international organizations’.29 In other words, accountability refers to the obligation of MDBs to give a reasoned account of the manner in which they exercise public authority. Accountability is thus defined as ‘“the duty to account” for the exercise of public power.’ That is, the rise of IAMs simultaneously addresses two intertwined critiques on the functioning of international organisations:30 i. the need to provide ‘access to justice’ for project-affected individuals and communities; and ii. the call for enlarged ‘accountability’ in light of growing public powers.31 Below I will focus on two legal-institutional features that are of pivotal importance in safeguarding accountability and access to justice: independence and impartiality and due process. 2.1 Independence and Impartiality IAMs provide a forum for peoples to seek recourse for harm they believe to result from MDB-supported operations. To ensure their credibility, IAMs should be composed of independent Panel members who impartially assess claims about harm and non-compliance with MDB’s policies. Proper institutional design of IAMs should be based on the principles of independence and impartiality. (Springer 2010); Carol Harlow, ‘Global Administrative Law: The Quest for Principles and Values’ (2006) 17(1) European Journal of International Law 187. 28  Nico Krisch, ‘The Pluralism of Global Administrative Law’ (2006) 17(1) European Journal of International Law 278. 29  Andria Naude Fourie, The World Bank Inspection Panel and Quasi-Judicial Oversight. In Search of the ‘Judicial Spirit’ in Public International Law (Eleven International Publishing 2009) 13. 30  The two critiques originate in different legal sensibilities and doctrinal backgrounds – with the former rooted in the language of human rights, and the latter in the orthodoxies of public (constitutional and administrative) law: Armin von Bogdandy, ‘General Principles of International Public Authority: Sketching a Research Field’ in Armin Bogdandy, Rüdiger Wolfrum, Jochen Bernstorff, Philipp Dann and Matthias Goldmann (eds), The Exercise of Public Authority by International Institutions: Advancing International Institutional Law (Springer 2010); Benedict Kingsbury, ‘The Concept of “Law” in Global Administrative Law’ (2009) 20(1) European Journal of International Law 23. 31  See Philipp Dann, The Law of Development Cooperation. A Comparative Analysis of the World Bank, the EU and Germany (CUP 2013).

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Accountability mechanisms are designed to respond to issues raised by affected people and to provide technically sound, independent and impartial assessments of their concerns to Bank decision-makers. Equally however, such assessments require fair consideration of the responses from Bank management. Although accountability mechanisms must often interact with Bank management, independence requires their work to be conducted autonomously. Such autonomous operation has been the design principle which is essential to the description of such mechanisms as ‘independent.’ Several examples illustrate the recognition that independence and impartiality are part of the design of IAMs and are a vehicle for their effectiveness. In the case of the World Bank Inspection Panel members are chosen for their professional abilities, integrity and independence from the Bank management. They are appointed for five-year mandates by the Board, on the President’s nomination. They can only be relieved of their function by a reasoned decision of the Board. Lastly, in order to fulfil their functions, Panel members are independent of any hierarchy in their work despite being civil servants.32 Moreover, the Panel is ‘independent from Bank management and reports directly to the Board, and conducts its work impartially.’33 The 2015 Policy establishing the Independent Consultation and Investiga­ tion Mechanism (ICIM) of the Inter-American Development Bank (IDB) also ensures the independence of its members from the Banks’ management.34 Moreover, the Policy of the Accountability Mechanism of the Asian Development Bank (ADB) points out that the Compliance Review Panel (CRP) reports directly to the Board except in certain specific circumstances. The CRP members have non-renewable terms of 5 years, aiming at minimising the risks of external influence.35 The 2014 Rules of Procedures of the Project Complaint Mechanism (PCM) of the European Bank for Reconstruction and Development (EBRD) are the clearest illustration of the need to ensure impartiality and independence of the members of this mechanism. They state that: 32  See paragraphs 2–10 of the Resolution establishing the Panel in 22 September 1993. 33  ‘Operating Procedures April 2014 (with Annex 2 added in February 2016)’ (Inspection Panel at the World Bank) [5(b)] accessed 18 August 2019. 34  The Director of the ICIM, the coordinator of the consultation and compliance phases are candidates who must not be civil servants the of Bank, IDB, Política del Mecanismo Independiente de Consulta e Investigación, December 2015 [52 (a)]. 35  ‘Accountability Mechanism Policy 2012’ (Asian Development Bank, 24 May 2012) [15]  accessed 10 August 2018.

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When performing PCM functions, PCM Experts will serve in their individual, personal capacity and will be subject to the same privileges and immunities, relevant Code of Conduct provisions, conflict of interest rules and confidentiality provisions as experts performing missions for the Bank. PCM Experts will be required to act impartially and independently and will not participate in the assessment or review of any Complaint related to any matter in which they have or have had a personal interest or significant involvement in any capacity. PCM Experts will immediately disclose to the PCM Officer: a) any circumstances which might affect their impartiality or independence in the discharge of their PCM functions; b) any attempt to interfere with or improperly influence their performance of PCM functions.36 Finally, the 2015 Operating Rules and Procedures of the Independent Review Mechanism of the African Development Bank Group (AfDB) is based on the Rules of Procedures of the PCM of the EBRD, copying its rules.37 Preserving the independence and impartiality of the members of IAMs requires more than simply establishing an autonomous body. The independence and impartiality of experts working in accountability mechanisms must be beyond dispute. This requires experts to exercise discretion, and to maintain a low profile while making site visits or when operating in the borrowing country.38 Investigation methods should carefully avoid any impression that borrower performance is at issue. 2.2 Due Process Requirements A corollary of the principles of independence and impartiality – integral to the work of accountability mechanisms – is ensuring due process requirements. The participation of plaintiffs in the IAMs procedure, for example, may contribute to the effectiveness of IAMs. 36  ‘Project Complaint Mechanism: Rules of Procedure’ (European Bank for Reconstruction and Development, May 2014) [54] accessed 10 August 2018. 37   ‘Independent Review Mechanism: Operating Rules and Procedures’ (African Development Bank, January 2015) [86] accessed 10 August 2018. 38  See the 1996 conclusions of the Board’s second review of the Inspection Panel in ‘Clarification of Certain Aspects of the Resolution’ (World Bank Inspection Panel, 1996) [12]; ‘Review of the Accountability Mechanism Policy’ (Asian Development Bank, July 2011) 50.

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Although these requirements may vary from one body to other, due process requirements should ensure the protection of the rights of the parties, and must give them an opportunity to be heard. As has been recently argued ‘due process is intricately bound up with conceptions of community, values and the role of law in achieving these values’.39 The requirements of due process allow that the right to access to justice complies with the rule of law. However, there are important loopholes in the due process before IAMs. The lack of appeal and sanctions in the case of non-compliance with operational procedures of MDBs may undermine the effectiveness of IAMs. Some elements of due process are part of the institutional design of IAMs. In the new operating procedures of the WBIP, the analysis of the investigation team should include meetings with requesters, receiving information from them and affected people and non-governmental organisations (NGOs) and other experts.40 It should also be noted that after the Board decision, the Management will communicate to the Panel the nature and the outcomes of the consultations with the affected parties on the action plan agreed between the borrower and the bank.41 In addition, following the Board’s consideration of the Investigation Report and the Management Report and recommendation, the Panel contacts the requesters to convey and explain the results of the Panel process.42 The right to remedies is necessary to ensure the effectiveness of IAMs. In exercising their right to access to justice, individuals should be provided with effective remedies. The effectiveness of an accountability mechanism can be measured by the degree to which it corrects compliance failures, or addresses the concerns and provide remedies to persons potentially impacted by Bank projects. The criteria of effectiveness for affected parties is a question of benefits realised. To be effective, accountability mechanisms must not only make fair findings, but have those conclusions translated into practice. Remedial actions require hands-on monitoring by the investigation mechanisms themselves.43 39  Devika Howell, ‘Due Process in the United Nations’ (2016) 110(1) American Journal of International Law 9. 40  World Bank Inspection Panel, Operating Procedures, 2015 [54]. 41  Ibid. [70]. 42  Ibid. [75]. 43  The Special Project Facilitator (SPF) of the ADB has mandate on monitoring the implementation of remedial actions. Paragraph 174 of the ADB Accountability Mechanism Policy reads as follows:  “The relevant parties will implement the agreed upon remedial actions, and the SPF will monitor the implementation. The SPF will report annually to the President, with a copy to the Board, regarding the status of implementation. As part of the monitoring process, the SPF will consult with the complainants, the borrower, and the operations

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Moreover the WBIP consults with the requesters during the investigation process to ensure accuracy and completeness of available information.44 Indeed, in many cases it may be appropriate for affected people to have a role in the development and implementation of post-finding actions. On the other hand, the consultation and investigation reports prepared by IAMs can demonstrate to member States that a MDB is following its policies and procedures. Although the right to remedies is only partially implemented in the practice of IAMs, attention should be paid to the managerial functions of these mechanisms. In other words, this means that IAMs may contribute to a better functioning of an international organisation, for example by serving a ‘pre-emptive’ role. By following internal policies and procedures, management and staff hope to pre-empt future complaints.45 The analysis of resolved complaints can provide a rich resource during review and evaluation of internal practices: the content of complaints and of the solutions implemented in response to them can reveal patterns of noncompliance and identify those choices which likely lead to complaints in the first instance. As such, they can provide a foundation for precautions to be integrated into design and implementation procedures. Possible violations of the rights of affected communities may be prevented through investigations of IAMs. Although there are gaps in the translation of the right to justice, IAMs contribute to improve the quality of projects funded by MDBs and to reduce the risks of violations of human rights in borrowing countries. MDBs will try to avoid similar cases and hence invest more resources into avoiding non-compliance with their safeguards procedures and possible environmental and social damage. The concept of ‘effectiveness’ of IAMs can be indirectly measured with reference to the integration of IAMs’ findings into ongoing Bank practice. One way of increasing the chance of such integration is to put in place practices actively requiring Bank management to consider IAMs’ findings.46 The review of the department concerned. The monitoring time frame will be project specific depending on the implementation of the remedial actions, but will not generally exceed 2 years. All stakeholders, including the public, may submit information regarding the status of implementation to the SPF.” ‘Accountability Mechanism Policy 2012’ (n 35) [174]. 44   I PN Operating Procedures (n 33) [55]. 45  Or at least to ensure that most investigations result in Bank being found in compliance: Edith Brown Weiss, ‘On Being Accountable in a Kaleidoscopic World’ (2010) 104 American Society of International Law 481. 46  The Operating Rules and Procedures of the Compliance Review and Mediation Unit (CRMU) of the African Development Bank, stipulate that where compliance review concludes that policies have been violated, the Compliance Review Panel is expected

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accountability mechanism at the Asian Development Bank has clearly recommended that ‘lessons learned’ be distributed to staff and the establishment of a centralised complaints tracking system has been identified as the groundwork for a systematic analysis of the complaints received every year.47 The right to access to justice and remedies has particular features in the context of IAMs. It includes non-legal concepts such as ‘pre-emptive functions’, ‘managerial action plans’ and ‘lessons learned’. Despite these particularities, some of the essential features of this right are guaranteed, such as the independence and impartiality of IAMs. Due process requirements are only in part addressed in IAMs. The lack of the right to appeal and to adopt sanctions weaken the role of IAMs. These mechanisms are not empowered to make binding decisions. However, IAMs provide concerned individuals and communities with a means to seek redress in cases of non-compliance with safeguard policies of MDBs. 3

Environmental and Social Safeguards of MDBs

Accountability mechanisms review compliance with operational policies and procedures. They constitute the normative instruments against which the quality of the MDB’s activities is assessed by the accountability mechanisms when exercising their compliance – or ‘problem-solving’ functions. Safeguard policies are the normative and procedural benchmarks for assessing the MDBs’ activities. These instruments cover a number of social and environmental considerations, ranging from the protection of specific vulnerable groups of people to water resources management issues. Some of the instruments are of general application, others are more specific. All contain provisions which require respect for certain procedural steps and actions, while others add normative clauses, prescribing certain patterns of behavior. These policies and procedures not only provide guidelines for the MDBs’ staff, they also indicate what requirements the borrower must fulfill before that Bank will finance an operation.

to recommend not only ‘remedial changes in the scope or implementation’ of the project and ongoing monitoring as remedial changes are implemented, but also ‘remedial changes to systems or procedures within the Bank Group to avoid a recurrence of such or similar violations’: ‘Independent Review Mechanism: Operating Rules and Procedures’ (n 37) [59(a)] and [59(b)]. 47  Maartje van Putten and Ishrat Husain, ‘Independent Review of the ADB Accountability Mechanism’ (Asian Development Bank, 2010) [84].

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Inter-institutional Learning and the Development of a Droit Commun among MDBs While the organisation and particulars of safeguards and policies differs across the MDBs, each institution’s policies formalise a set of standards and expectations that have gradually gained substantive acceptance across the entire cohort.48 All of the MDBs have, for example, developed policies providing standard rules for the conduct, where appropriate, of an on-the-ground environmental impact assessment for all financed projects.49 While the scope will vary with the potential impact, the demand for an assessment is universal.50 Another common thread in reformed MDB policies is a concern for ‘public participation,’ expressed in requirements to consult potentially impacted populations, with communities likely to be resettled, and with indigenous populations who have an interest in a financed project. These policies reflect a belief that the quality, effectiveness and efficiency of development initiatives are increased when stakeholders can meaningfully participate.51 There is evidence that such a belief is well-founded.52 An interesting trend in the activities of MDBs regards the harmonisation of their activities. The 2005 Paris Declaration on Aid Effectiveness emphasises commitments to ensure that aid money is spent as effectively as possible.53 The 2005 Paris Declaration recognises that MDBs should join their efforts to develop harmonisation. These shared efforts reflect that MDBs have common stakeholders, and many of these stakeholders have made efforts to achieve 3.1

48  Boisson de Chazournes (n 3) 178; Jochan von Bernstorff and Philipp Dann, Reforming the World Bank’s Safeguards: A Comparative Legal Analysis (Deutsche Gesellschaft für Internationale Zusammenarbeit 2013) https://consultations.worldbank.org/content/ reforming-world-banks-safeguards-comparative-legal-analysis-federal-ministry -economic accessed 18 August 2019. 49  For example, the safeguard policy framework of the IDB includes: ‘Environmental and Safeguards Compliance Policy’ (Inter-American Development Bank, 2006); ‘Disaster Risk Management Policy’ (Inter-American Development Bank, 2007); ‘Operational Policy on Indigenous Peoples’ (Inter-American Development Bank, 2006); and ‘Operational Policy on Involuntary Resettlement’ (Inter-American Development Bank, 1998). 50  For instance, the IDB’s Policy requires all Bank-financed operations to be screened and classified according to their potential environmental impacts, so that ‘the appropriate environmental assessment or due diligence requirements’ can be carried out. See ‘Environment and Safeguards Compliance Policy’, ibid., [4.17] (part of Directive B.3 Screening and Classification). Directives B.5 and B.6 spell out in detail the requirements for environmental assessment, including public consultations. 51  Richard S. Ondrik, Participatory approaches to national development planning (World Bank 1999) 1. 52  Ibid. 53  Paris Declaration on Aid Effectiveness, ‘Accra Agenda for Action’ (2005) [3].

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policy harmonisation among MDBs.54 An example regarding harmonisation is related to the requirements on environmental impact assessment (EIA). The Paris Declaration on Aid Effectiveness contains the following provisions concerning harmonisation on EIA: 40. Donors have achieved considerable progress in harmonization around environmental impact assessment (EIA) including relevant health and social issues at the project level. This progress needs to be deepened, including on addressing implications of global environmental issues such as climate change, desertification and loss of biodiversity. 41. Donors and partner countries jointly commit to: [s]trengthen the application of EIAs and deepen common procedures for projects, including consultations with stakeholders; and develop and apply common approaches for ‘strategic environmental assessment’ at the sector and national levels … [and c]ontinue to develop the specialized technical and policy capacity necessary for environmental analysis and for enforcement of legislation.55 Indeed, even prior to this Declaration, MDBs collaborated in pursuing an environmental and social agenda through a Multilateral Financial Institution Working Group. This group began its collaboration in the early 1990s and operated prior to the Declaration to finalise a common set of principles for Environmental Impact Assessment.56 All MDBs undertake periodic review of their Environmental and Social Safeguard Policies as well as the Rules of Procedures for their IAMs. During the 2000s, several MDBs have undertaken a major process of review on their safeguards policies. In the last ten years, the IFC, IDB, ADB, AfDB and the EBRD have embarked on revision of their policies. The IFC updated its environmental and social standards in May 2011. The Sustainability Policy provides that when a project is proposed for financing, IFC conducts a social and environmental review of the project as part of its overall due diligence.57 The 54  Charles Di Leva, ‘International Environmental Law, the World Bank, and International Financial Institutions’ in Daniel D. Bradlow and David Hunter, International Financial Institutions and International Law (Wolters Kluwer 2010) 363. 55  Paris Declaration (n 53) [40]–[41]; see also Di Leva, ibid. 56   Multilateral Financial Institutions Working Group on Environment, ‘A Common Framework for Environmental Impact Assessment’ (28 February 2005). 57  Paragraph 21 of the Policy provides that IFC’s environmental and social due diligence is integrated into IFC’s overall due diligence of the business activity under consideration, including the review of financial and reputational risks. IFC weighs the costs and benefits

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EBRD approved a new Environmental and Social Policy in 2008 and 2014. The EBRD’s requirements for environmental assessment are similar to those of other MDBs, holding ‘the importance of integrated assessment to identify the environmental and social impacts and issues associated with projects and the client’s management of environmental and social performance throughout the life of the project’.58 For its part, the 2009 ADB Safeguard Policy Statement consists of three operational policies – on the environment, indigenous peoples, and involuntary resettlement. All three safeguard policies involve a structured process of impact assessment, planning and mitigation to address the adverse effects of projects along the entire project cycle.59 The AfDB adopted its Bank Group Policy on the Environment in 2004.60 Similarly to other policies, the AfDB recognises that ‘environmental management tools, like environmental assessments, shall be used to ensure that economic activities are environmentally sustainable, and to systematically monitor their environmental performance’. Moreover, ‘community involvement in natural resource management decisions that affect the most marginalized and vulnerable groups shall be provided for, and the value of traditional knowledge shall be recognized and preserved’.61 The IDB also updated in 2006 the Environmental and Safeguards Compliance Policy, originally approved in 1979. The 2006 policy has two overarching operational objectives: first, mainstreaming environmental concerns into overall economic and social development; and second, safeguarding the environment of proposed business activities and articulates its rationale and specific conditions for the proposed activity. These are provided to IFC’s Board of Directors when the investment activity is presented for approval. 58  ‘Performance Requirements and Guidance – Performance Requirement 1: Assessment and Management of Environmental and Social Impacts and Issues’ (European Bank for Reconstruction and Development, 2014) [1]. 59  Specifically, each of the safeguards requires that: i) impacts be identified and assessed early on in the project cycle; ii) plans to avoid, minimize, mitigate or compensate for the potential adverse impacts be developed and implemented; and  iii)  affected people be informed and consulted during project preparation and implementation. ‘Safeguard Policy Statement’ (Asian Development Bank, 2004) [15]. 60  The Policy states that for category 1 projects, which are ‘likely to induce important adverse environmental and/or social impacts that are irreversible, or to significantly affect environmental or social components considered sensitive by the Bank or the borrowing country’, the Bank requires a ‘full Environmental and Social Impact Assessment, including the preparation of an Environmental and Social management plan’: ‘Policy on the Environment’ (African Development Bank, 2004) [6.6]. 61  Ibid. [5.1.7].

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in all the activities of the bank in conformity with best practices.62 Moreover, the same year, the operational policy on indigenous peoples and the strategy for indigenous development was adopted by the IDB.63 The convergence between safeguard policies of different MDBs strengthens their role as guidance for identifying good practices to be followed. They create normative and procedural expectations for the staff and partners of the MDBs and contribute in many ways to forging and developing accepted practices under international law. In addition, their incorporation in loan agreements signed between such institutions and borrowing States can be a way to encourage or pressure a State to abide by its international commitments. The policy requirements thus become enforceable under international law like any other provision of a loan or credit agreement. The Environmental and Social Framework (ESF) of the World Bank and the Translation of Human Rights Law Safeguard policies play an important role in entrenching the values of human rights in the operational practice of MDBs. The ESF adopted by the World Bank’s Board of Executive Directors, in August 2016, is a significant example of pursuing harmonisation with other international financial institutions, especially the IFC – also part of the World Bank group. The ESF represents an attempt to integrate a human rights-based approach into the implementation of funded projects.64 Despite the progress made over the years, many criticisms have been made on the limited role of human rights in the activities of the World Bank. In September 2015, the UN Special Rapporteur on extreme poverty and human rights, Philip Alston, called on the World Bank and its 3.2

62  The policy also aims to ‘foster corporate environmental responsibility within the Bank’. The IDB’s 2006 Environment and Safeguards Compliance Policy provides that all Bank-financed operations are to be screened and classified according to their potential environmental impacts, so that ‘the appropriate environmental assessment or due diligence requirements’ can be carried out. As part of the environmental assessment process, transboundary issues associated with the operation are also to be considered: ‘Environment and Safeguards Compliance Policy’ (n 49) [4.17] (part of Directive B.3 Screening and Classification). 63  See ‘Operational Policy on Indigenous Peoples and Strategy for Indigenous Development’ (Inter-American Development Bank, 2006) 34–35. Under the policy, the IDB requires a project borrower to take into account the general principle of the free, informed and prior consent of indigenous peoples as a way to exercise their rights and decide their own priorities for the process of development as it affects their lives, beliefs, institutions and spiritual well-being and the lands they occupy or otherwise use, and to exercise control, to the extent possible, over their own economic, social and cultural development. 64  ‘Environmental and Social Framework – Setting Environmental and Social Standards for Investment Project Financing’ (World Bank, August 2016).

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Member States to adopt a consistent approach to human rights. He affirmed that: ‘[f]or most purposes, the World Bank is currently a human rights-free zone. In its operational policies, in particular, it treats human rights more like an infectious disease than universal values and obligations’.65 In his view, the Articles of Agreement, adopted more than 70 years ago, contains an anachronistic clause dealing with the no interference in States’ political affairs and prohibits the Bank from engaging with issues of human rights.66 This clause states that: The Bank and its officers shall not interfere in the political affairs of any member; nor shall they be influenced in their decisions by the political character of the member or members concerned. Only economic considerations shall be relevant to their decisions, and these considerations shall be weighed impartially in order to achieve the purposes stated in Article I.67 A strict interpretation of the ‘political prohibition’ clause of the Articles of Agreement prevented any consideration of how projects might support or influence rights-violating practices by funded governments.68 Although the obligation to take into account only economic considerations in the project funded appears outdated, this clause still maintains its importance today. In a letter from 2012, the current General Counsel, Anne-Marie Leroy and the Vice-President of the Africa region, Makhtar Diop, stated that ‘only economic considerations – meaning those that have a direct and obvious economic effect relevant to the Bank’s work – can be taken into account in decisions by the Bank and its officers’.69 In a subsequent letter, Leroy sought to distance the Bank from the controversial Dañino opinion70 by noting that 65  See High Commissioner of Human Rights (n 10). 66   U NGA ‘Report of the Special Rapporteur on extreme poverty and human rights’ (2005) UN Doc A/70/274 [68] and [76]. 67  Articles of Agreement of the International Bank for Reconstruction and Development, Art IV, s 10. 68  In this regard see Sabine Schlemmer-Schulte, ‘The World Bank Inspection Panel: A First Record of the First International Mechanism and its Role for Human Rights’ (1999) 6(2) Human Rights Brief 1; Laurence Boisson de Chazournes, ‘The Bretton Woods Institutions and Human Rights: Converging Tendencies’ in Wolfgang Benedek, Koen De Feyter and Fabrizio Marella (eds), Economic Globalization and Human Rights (OUP 2007). 69  Letter from Anne-Marie Leroy to Olivier De Schutter, the Special Rapporteur on the Right to Food (9 October 2012). 70  In 2006, the then General Counsel, Roberto Dañino, circulated a legal opinion on the Bank and human rights. Without explicitly claiming that the Bank had human rights

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it ‘was neither presented to nor endorsed by the Bank’s Board of Executive Directors and therefore at this stage should not be represented as Bank policy’.71 Although criticised for its limited aspirational nature, a specific provision in the 2016 ESF recognises that the World Bank’s operations should take into consideration ‘the realization of human rights expressed in the Universal Declaration of Human Rights’ and help member States to achieve their human rights commitments.72 The aspirational character of these statements is also confirmed by the fact that these objectives must be achieved in a manner consistent with the political clause stated in its Articles of Agreement. This reference reduces and limits the impact of these goals related to the respect of human rights. Human rights values are only explicitly mentioned in the overarching framework of the ESF and in Standard 7 regarding indigenous peoples.73 At the same time, however, the overall objective of the ESF places emphasis on the Bank’s support to borrowers to fulfil ‘their national and international environmental and social obligations.’74 This statement reflects the consideration that the World Bank does not operate in isolation. Its environmental and social safeguards reflect the concerns related to the issues of human rights expressed in many other fora. The ESF is in fact a vehicle to translate human rights concerns, although this instrument is not exhaustive in covering the issues. The relationship between the ESF and human rights values highlights their mutually reinforcing contribution to the promotion of human rights and the rule of law. The Bank should exercise due diligence and good faith in assessing the legal situation prevailing in a borrowing country, including the international obligations, the opinion indicated a new approach of the Bank. A first point made was the Bank had to take into account any type of human rights, provided that there was economic impact or relevance. A second point was that where violations or non-fulfilment of human rights obligations had an economic impact, the Bank should take them into account. A third point of Dañino was that Bank should assist member States to meet their legal obligations on human rights, in particular when they have an economic impact or relevance: Roberto Dañino, ‘The Legal Aspects of the World Bank’s Work on Human Rights: Some Preliminary Thoughts in Philip Alston and Mary Robinson (eds), Human Rights and Development: Mutual Reinforcement (OUP 2005) 519–520. 71  Letter from Anne-Marie Leroy (n 10). 72  ‘A Vision for Sustainable Development’ (Environmental and Social Framework, 2016) 5. 73  In this context it is affirmed that one of the objectives of the standards is ‘to ensure that the development process fosters full respect for the human rights, dignity, aspirations, identity, culture, and natural resource-based livelihoods of Indigenous Peoples/Sub-Saharan African Historically Underserved Traditional Local Communities’: ‘Environmental and Social Standards’ (World Bank, 2017) 76. 74  ‘Overview of the World Bank Environmental and Social Framework’ (Environmental and Social Framework) 1.

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commitments the country has undertaken when ratifying human rights instruments. The ten standards included in the ESF are wide in their scope and include: 1. Assessment and management of environmental and social risks and impacts; 2. Labor and working conditions; 3. Resource efficiency and pollution prevention and management; 4. Community health and safety; 5. Land acquisition, restrictions on land use and involuntary resettlement; 6. Biodiversity conservation and sustainable management of living natural resources; 7. Indigenous Peoples/Sub-Saharan historically underserved traditional local communities; 8. Cultural heritage; 9. Financial intermediaries; 10. Stakeholder engagement and information disclosure. All ten standards will be part of the legal framework examined by the World Bank Inspection Panel in future complaints related to Bank’s projects. A number of these standards may be viewed as translating human rights values and concerns. For example, some of their provisions are directly related to issues dealing with the right to access to justice which takes the form of grievance redress mechanisms. The provision of project-based grievance mechanisms plays a central role in the ESF. Project-affected parties have the right to have access to project and local grievance mechanisms, the Bank’s Corporate Grievance Redress Service75 and the World Bank Inspection Panel.76 All these mechanisms have the aim to address concerns and grievances arising in connection with a project funded by the Bank. In addition, Standard 5 on ‘Land acquisition, restrictions on land use and involuntary resettlement’ gives a special weight to redress mechanisms for displaced or resettled people. According to this standard, special care must be given to meaningful consultations with affected individuals, groups or communities that have to be informed of their rights. In particular, the ESS 5 provides that ‘appropriate compensation, benefit-sharing and grievance redress mechanisms are put in place’.77 These mechanisms must be established by the borrower State, as early as possible in project development, in order to address specific concerns about compensation, relocation or livelihood restoration measures raised by displaced or resettled people in a timely fashion. Where possible, such grievance mechanisms must utilise existing formal or informal 75  In contrast to the World Bank Inspection Panel, this new mechanism also receives complaints regarding procurement. If the complaint is eligible, the service proposes a solution to complaints within 30 days. If the complainants agree, the project team implements the decision and the Grievance Redress Mechanism monitors it. Complainants are referred to other complaint mechanisms if not resolved. 76  ‘Overview of the World Bank Environmental and Social Framework’ (n 74) 3. 77  ‘Environmental and Social Standards’ 5, fn 11.

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grievance mechanisms suitable for project purposes, supplemented as needed with project-specific arrangements designed to resolve disputes in an impartial manner.78 Grievance mechanisms must also be ‘affordable’ and ‘accessible’ for the settlement of disputes arising from displacement or resettlement. Such grievance mechanisms must take into account the availability of judicial recourse and community and traditional dispute settlement mechanisms.79 The 2016 ESF introduces protection of labour and working conditions, the principle of non-discrimination, community health and the responsibility to include stakeholder participation throughout the project cycle. The non-discrimination principle is strengthened by a new mandatory World Bank directive that lists examples of vulnerable and disadvantaged groups and explicitly requires staff to assist borrowers to consider, mitigate, and manage issues related to non-discrimination. The ESF also moves from ‘free, prior, and informed consultation’ to ‘free, prior, and informed consent’.80 The ESF gives greater clarity on the responsibilities of the World Bank and the borrower. Moreover, it also brings the World Bank’s environmental and social protections into closer harmony with those of other development institutions and makes advances in areas such as transparency, non-discrimination, public participation, accountability, and grievance redress mechanisms. The interactions between values of international law and operational policies underline the pragmatic nature of these policies, which aim to identify and implement the best practices to promote compliance with international law requirements. International instruments to which a barrowing country has committed itself should be taken into consideration, or should be considered as reflecting agreed international good and best practice. This shows a convergence between the values and aims pursued by operational standards and human rights.81 It also demonstrates the virtues of operational policies 78  Ibid. 5, [19]. 79  Ibid. 5, Annex 1; Involuntary Resettlement Instruments [14]. 80   ‘World Bank Environmental and Social Policy for Investment Project Financing’ (Environmental and Social Framework’) 21. 81  The relationship between operational policies and human rights was highlighted in the context of the request brought before the World Bank Inspection Panel in the Chad-Cameroon Petroleum Development and Pipeline Project. The Inspection Panel considered whether the situation of human rights in Chad was such ‘to impede the implementation of the Project in a manner compatible with the Bank’s policies’ and it concluded ‘[t]he Panel observes that the situation is far from ideal. It raises questions about compliance with Bank policies, in particular those that relate to informed and open consultation’. The report of the World Bank Inspection Panel illustrates the links between compliance with operational policies and the protection of human rights, and it also confirms the importance of the involvement of public participation in the design and

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and procedures in promoting the implementation of international law instruments. Operational policies constitute a means by which new patterns of behaviour are encouraged in borrowing countries and, as such, they favour the emergence or consolidation of international practices which may acquire the status of customary norms. 4

The Practice of Accountability Mechanisms: the Case of Indigenous Peoples’ Rights

The creation of the first Independent Accountability Mechanism – the World Bank Inspection Panel – in 1993 came at an important moment for international cooperation, simultaneously with the adoption of the 1992 Rio Declaration on Environment and Development. In 1994, the Inter-American Development Bank was the first regional development bank to establish an IAM – the Independent Investigation Mechanism, replaced in 2010 by the Independent Consultation and Investigation Mechanism (ICIM). This section draws together lessons learned from case studies selected from across accountability mechanism experiences. The case studies are organised to compare and contrast approaches to common topics of concern, such as the protection of indigenous peoples’ rights. Special reference is made to recurrent areas of noncompliance, including the lack of prior consultation with local communities, the need to integrate long-term dialogue with indigenous peoples, and the need for ex post follow-up. 4.1 The Need for ex post Follow-up Ombudsman and investigation processes have frequently addressed issues related to the rights of indigenous peoples. The findings of these mechanisms go beyond the issue of consultation with indigenous communities and include the protection of their rights. A significant example is the case DRC – Recovery and Reunification brought to the World Bank Inspection Panel by indigenous Pygmy communities. The analysis of this case shows that the role of the Inspection Panel continues after the investigation process. The function of IAMs to follow-up an investigation differs from a judicial review in which the implementation of projects. Human rights give body to the interpretation of this principle. See ‘Investigation Report: Chad-Cameroun Petroleum and Pipeline Project (Loan No. 4558-CD); Petroleum Sector Management Capacity Building Project (Credit No. 3373-CD); and Management of the Petroleum Economy (Credit No. 3316-CD)’ (Inspection Panel) [37] accessed 19 August 2019.

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role of a tribunal or a court ends once the judgment is issued. It is clear that this feature of IAMs is particularly important in order to ensure that safeguard policies are complied with in the long-term by MDBs’ management. The complaint on DRC – Recovery and Reunification is related to two projects: the EESRSP which is a multi-sector project that aims to help Congo implement its economic and social reunification programs, and the TSERO which supports the government’s economic program to fight poverty and includes funds to assist the restructuring of governance in the natural resources sector. Of particular interest in the case brought to the Inspection Panel is the impact of the project on forest management, given that the survival, existence and cultural identity of Pygmy peoples are intimately linked to the forests. In its investigation report, the Panel argued that Bank Management had paid insufficient attention during project design to the potential social consequences of the project on the management and use of DRC forests. It noted that the Bank began paying particular attention to the plight of the Pygmy People and the livelihood and culture of those living depending on the forest only after the request for inspection was filed.82 The Inspection Panel wrote: … if access to these non-timber resources were considerably restricted by the timber operations, there would be no way of compensating for the loss. The Panel’s expert notes that for the forest-living peoples who find difficulties in satisfying their subsistence needs, the promotion of logging industry, or commercialisation for export products, is by no means the only way, nor the best way, to solve the problem of poverty. Instead, it is of vital importance in the first place to secure ample subsistence-oriented life. They need by all means healthy life with nutritionally adequate food supply, which is obtained in culturally appropriate ways. What they want first is an ample subsistence base that can also afford means of fulfilling their social and cultural needs, rather than short-term economic benefits from industrial logging and related activities, which may risk their subsistence base in the longer term.83 The Bank Management Action Plan included no specific plans to protect the particular interests of Pygmy communities.84 During the Board meeting on 82  World Bank Inspection Panel, Transitional Support for Economic Recovery Grant (TSERO) (IDA Grant No. H 1920-DRC) and Emergency Economic and Social Reunification Support Project (EESRSP) (Credit No. 3824-DRC and Grant No. 064-DRC) (Investigation Report, 31 August 2007) [168]. 83  Ibid. xix. 84  ‘The Inspection Panel at 15 Years’ (n 16) 85.

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the investigation, the Board emphasised the need ‘to take and further develop specific steps to correct shortcomings and apply lessons learned’.85 The Panel Chair noted that the proposed Action Plan: contains important elements but requires specificity, particularly on actions called for under Bank policy to fully address the land tenure and other rights of the Pygmy peoples in DRC forests, and to deal with problems in the logging concession review process, including major reported breaches of the Moratorium on new concessions.86 The Board decided to establish a mechanism to evaluate progress in implementing the Action Plan proposed by Management. Two reports were presented in 2009 and 2011 and submitted to the Inspection Panel and the Executive Directors. The World Bank staff, local government, development partners and other stakeholders developed a Framework for a National Development Strategy for Pygmy Communities in DRC in 2009, analysing those factors which either contribute to the impoverishment of Pygmy populations or threaten their cultural identity, and developing a set of proposed actions to mitigate the effect of these factors.87 The Framework provided an informed basis on which a national and longer-term strategy is being developed by the Government. The preparation of the Framework was an important opportunity to discuss the status of and issues connected to indigenous people communities in DRC at various levels. In addition, following the request for inspection, Bank management staff participated in the publication of Forests in Post-Conflict Democratic Republic of Congo: Analysis of a Priority Agenda. This publication highlighted the need for a stronger focus on the rights and interests of the Pygmy peoples and set forth approaches to understand the multiple and high value of non-timber forest products.88 The World Bank Inspection Panel played a role in monitoring the implementation of Bank’s Management Action Plan and to report on progress in response to the Panel’s investigation. This role of the Inspection Panel follows the practice developed by other IAMs. It echoes, for example, the procedural provision that the IFC/MIGA CAO will keep an audit open until the CAO is assured that actions taken by 85  ‘World Bank Discusses Inspection Panel Investigation of Forest Sector Operations in the Democratic Republic of Congo’ (World Bank, 15 January 2008). 86  Ibid. 87  ‘Democratic Republic of Congo – Strategic Framework for the Preparation of a Pygmy Development Program. World Bank’ (World Bank 2009) i. 88  ‘The Inspection Panel at 15 Years’ (n 16) 85.

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IFC address the shortcomings identified in an audit. During the return visit to Kinshasa, the Panel met the individuals who originally submitted the requests on behalf of the broader community of Pygmy peoples. Beyond simply reporting its findings, the Panel reviewed and discussed the Management response and Action Plan. Another effect of the visit was the reorganisation of the requesters as a group and the development of a written statement by the requesters, who demanded to be an integral part of the consultation process to ensure proper implementation of the Management Action Plan. The Panel passed this statement on to the highest levels of Bank Management.89 4.2 Long-term Dialogue and Information Gathering In another case several years earlier, the CAO’s work with an indigenous community living in the vicinity of Chile’s Biobio River provides an early and good example of the integrated approach the CAO has taken to addressing the social, cultural, economic, and environmental rights particular to the Pehuenche indigenous communities who have been affected by the Pangue Hydroelectric Project. Completed in September 1996, IFC held a 2.5% equity investment in Pangue following an investment agreement in October 1993, until divestment in July 2002. The Inspection Panel received a complaint in 1995, but, as the Panel mandate did not include the activities of the IFC, it rejected the complaint. The President of the Bank, in response to a petition for action, asked Jay Hair to investigate the complaints against the IFC and to produce a report to be publicly disclosed.90 The report became the focus of activism around the transparency and accountability of IFC and was one of the drivers for the creation of the CAO mechanism at the IFC in 1999.91 In August 2000, the CAO received a complaint from a Pehuenche individual who had been resettled as a result of the Pangue hydroelectric project and alleged that he had not received due compensation. The CAO ombudsman visited the region in June 2001 and helped negotiate an agreement between the complainant and the company, which was signed in 2001. In 2002, a group of indigenous Pehuenche women filed a complaint with the CAO, alleging that the Pangue hydroelectric project was adversely impacting the rights of communities and the watershed of the Biobio River, and that

89  Ibid. 59. 90  ‘Assessment by the Office of the Compliance Advisor/Ombudsman in relation to a complaint filed against IFC’s investment in ENDESA Pangue SA’ (Office of the Compliance Advisor/Ombudsman, May 2003) 9. 91  Ibid.

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people affected by the project had not been adequately compensated. The CAO assessment report, completed in May 2003, noted that: it would be an important part of other ongoing continual improvement processes within IFC for the Pangue project […] to be used as learning tools in order to examine carefully what should be strengthened for future dam, hydroelectric projects and projects where IFC must engage effectively with indigenous peoples.92 The Pangue case illustrates the long-term impacts of economic projects and the importance of ongoing information gathering. In particular, the CAO noted in this regard that while the Pangue project may be considered ancient history by some at the IFC, the institution remained an equity investor until 2002 and chose not to update its requirements of Pangue SA over the period of its partnership.93 In February 2006, a settlement agreement concerning local development capacity building was finalised and CAO continued to monitor implementation of this agreement until 2010.94 4.3 Consultation The Yanacocha/Cajamarca and Pangue cases represent notable examples of long-term CAO intervention. In particular, in the Yanacocha/Cajamarca case, CAO played a crucial role in generating information needed by affected people regarding water issues. Concerns about impacts on water are central to many of the cases submitted to accountability mechanisms. Conflict over water is especially noticeable when projects are large in scale, such as infrastructure, extractive industries, and agribusiness.95 As an example, in 2016, the CAO handled disputes related to the deterioration of water quality (32%), half of which occur in extractive sector projects. Other areas include health impacts of worsening quality and/or access to water resources (22%), the effect of contamination on subsistence-based livelihoods (18%) and integrity of aquatic life (28%).96 Following a complaint filed on July 1, 2000 regarding a mercury spill, the CAO began a dialogue with the Yanacocha gold mining company and the local community to understand the major concerns and reach agreement on a path 92  Ibid. 5. 93  Ibid. 94  See ‘Final Report, Indigenous Community Center We Monguen’ (Office of the Compliance Advisor/Ombudsman, May 2010). 95  ‘The CAO at 10: Annual Report FY2010 and Review FY2000–2010’ (Compliance Advisor/ Ombudsman, 2010) 53. 96  ‘Annual Report 2016’ (Compliance Advisor/Ombudsman, 2016) 78.

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forward. Given the demand expressed locally for a durable dialogue forum on water quality monitoring issues, the CAO supported the formation of what would become the Mesa de Dialogo y Consenso-CAO Cajamarca. The Mesa began functioning in September 2001. Over the next four and a half years, the Mesa sought to create an open forum for dialogue to help prevent and resolve conflicts between Cajamarcan communities and Yanacocha. As part of its mandate, the Mesa led a participatory water monitoring program and presented the results to local groups throughout 2005 and the first quarter of 2006, thereby contributing to dialogue and public understanding of water issues in the region. At the same time, however, the CAO noted that the Mesa has never been able to gain the legitimacy and broad community acceptance that would enable it to play a decisive role in ameliorating the tensions and distrust that pervade the relationship between the community of Cajamarca and Minera Yanacocha.97 The CAO used the experience of the Mesa on water quality monitoring to prepare an Advisory Note, Participatory Water Monitoring: A Guide for Preventing and Managing Conflict in 2008, which presents practical advice for including community members in technical studies. This Advisory Note was also used to design a health study of the cause of chronic kidney diseases in Nicaragua. The Yanacocha case provides a useful example to share with other IAMs as it provides an illustration of participatory monitoring and long-term dialogue. The CAO facilitated the training of community members to conduct water monitoring jointly with the mining company. From the perspective of integrating sustainable development and human rights concerns into development, these cases illustrate the importance of preventing possible conflicts dealing with human rights issues before a case is brought before an IAM. It is necessary to further early problem-solving at the level of the project grievance mechanism. Under the ADB Safeguard Policy Statement of 2009, the Asian Development Bank, for example, requires the client to establish a grievance redress mechanism to receive and facilitate resolution of affected peoples’ complaints. The Special Project Facilitator (SPF) helps to identify best practices for setting up and running grievance redress mechanisms in sensitive projects, which has resulted in a guide for designing and implementing grievance mechanisms for road projects.98

97  ‘Evaluation of the Mesa de Dialogo y consenso CAO-Cajamarca, Evaluation Report’ (Compliance Advisor/Ombudsman, May 2005). 98   ‘Further Strengthening the Accountability Mechanism’ (Asian Development Bank, 2011) [74].

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Another significant element which emerges from the cases studied is that consultations with affected people help ensure that their voices are not silenced, nor their concerns forgotten, once a problem-solving or compliance process has ended. The monitoring of follow-up actions further strengthens the credibility of accountability mechanisms. These additional consultations between the requesters and Management solidify the Bank’s responsiveness to the people it serves.99 Return visits to discuss IAMs activities with stakeholders is also a useful aspect of enhancing engagement with requesters after a request has been resolved. 5 Conclusion In establishing the World Bank Inspection Panel in 1993, the Bank created a new path for the principle of public participation and access to justice. It allowed individuals and communities to bring complaints before an organ against the failure of an international organisation if they believed that their rights have been impaired. In promoting access to justice, the IAMs demonstrate that individuals and communities are rights holders in the context of MDBs’ projects. The integration and translation of human rights in the operations of MDBs raises challenges. The political clause included in the Articles of Agreement of the World Bank continues to be an obstacle for a full recognition of human rights issues. This has not, however, impeded human rights values from becoming part of the 2011 IFC Performance Standards and the 2016 ESF of the World Bank. Importantly, human rights have entered the practice of IAMs by serving as interpretative tools to clarify and supplement the safeguard standards. Harmonisation between the practices of MDBs in respect of human rights, especially between the World Bank and the IFC, strengthens the importance of taking into account the human rights commitments of borrowing countries in the operations of the Banks. This increases the awareness of recipient countries of the significance of international law standards and the importance of implementing them in the projects funded. Common rules shared by various MDBs strengthen their legitimacy vis-à-vis the recipient countries. Despite these positive trends, it is important to stress that the investigations of IAMs should carefully avoid any impression that borrower performance is at

99  ‘The Inspection Panel at 15 Years’ (n 16) 56.

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issue.100 Nonetheless, the increasingly detailed safeguard policies, emerging as a droit commun between MDBs, strengthens the role of IAMs as ‘custodian’ of this set of rules. The ‘application’ of these rules by IAMs provides a vehicle by means of which these rules are developed and specified. IAMs also give expression to the calls for accountability by third parties – private individuals, local communities and NGOs – that thereby gain a voice in the implementation of MDBs’ operations.

100  ‘Clarification of the Board’s Second Review of the Inspection Panel’ (World Bank Inspection Panel, 1999) [12]. The ADB’s Accountability Mechanism Policy also states that ‘[a] compliance review will not investigate the borrowing country, the executing agency, or the private sector client’: ‘Accountability Mechanism Policy 2012’ (n 35) [130].

chapter 7

Evaluating the Access to Information Policies of the Multilateral Development Banks Maeve McDonagh This chapter examines the access to information policies of the main multilateral development banks (MDBs). The policies will be explored against the backdrop of the move towards greater transparency of international financial institutions. Key aspects of the access policies will be compared and reviewed in terms of their adherence to international best practice in access to information law, in particular Article 19’s nine principles for modelling Freedom of Information (FOI) legislation (Article 19 principles)1 and national access to information laws. The primary focus of the chapter will be on reviewing the content of the policies rather than on evaluating their operation in practice. Reliance has been placed on the websites of the respective MDBs as the primary source of MDB material relating to these policies. 1 Background Multilateral development banks have traditionally been secretive in their operations.2 Nelson attributes the lack of transparency of MDBs to two main causes: the confidentiality of banker-client relationships and governments’ sovereign authority over national development policy.3 Martinez ascribes the traditional lack of transparency of international financial institutions to the treatment of economic decisions as technical rather than political. He argues that the ‘apparent impartiality of economic technocracy’ and the idea that 1  Article 19, Toby Mendel, The Public’s Right to Know: Principles of Freedom of Information Legislation (Article 19 International Standards Series 1999). 2  Ann Florini, ‘Does the Invisible Hand Need a Transparent Glove? The Politics of Transparency’ (World Bank Conference on Development Economics, Washington DC, April 1999); Paul J. Nelson, ‘Transparency Mechanisms at the Multilateral Development Banks’ (2001) 29(11) World Development, 1836. 3  Paul J. Nelson, ‘Transparency Mechanisms at the Multilateral Development Banks’ (2001) 29(11) World Development, 1836.

© Koninklijke Brill NV, Leiden, 2020 | doi:10.1163/9789004337787_008

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central bank functions should be exercised independently of the government and subject only to technocratic rule ‘has not provided the most appropriate environment for transparency and has fostered the opaqueness of international financial institutions during the second half of the twentieth century’.4 At a more general level, Roberts suggests that resistance to transparency by MDBs is attributable to long established norms of international relations, in particular the expectation that foreign relations be conducted in secret.5 Lack of universal acceptance of the norm of access to information may also be cited as a reason for the tendency towards secrecy of MDBs: while access to information laws have existed at domestic level as far back as 1766,6 it is only in relatively recent years that such laws have come to be viewed as essential to the proper functioning of democracy. In 1990, for example, only 14 countries around the globe had introduced access to information laws7 while today more than 100 countries have such laws in place.8 Transparency is essential to the effective operation of MDBs. It brings benefits to the range of players involved. It enables the intended beneficiaries of MDB funding to participate in both the design and implementation of projects. This, in turn, facilitates engagement by beneficiaries with projects and ultimately promotes their sustainability. Transparency also aids those who may be negatively impacted by projects in asserting their rights and interests. This is especially important in the case of those disproportionally affected by lending operations. Transparency can also bring advantages for borrowers, for example, through shedding light on the operations of MDBs. Transparency improves the general accountability of MDBs by facilitating the monitoring of development programs and budgets, by promoting more informed debate at national level around economic policy-making, and by facilitating citizens to monitor the positions taken by their countries’ representatives at MDBs. Transparency can also benefit member countries as it allows them to more carefully monitor the effectiveness of MDBs. Finally, transparency can benefit

4  Luis Miguel Hinojosa Martinez, ‘Transparency in International Financial Institutions’, in Andrea Bianchi and Anne Peters (eds), Transparency in International Law (Cambridge University Press, 2013) 77. 5   Alasdair Roberts, ‘A Partial Revolution: The Diplomatic Ethos and Transparency in Intergovernmental Organizations’ 64(4) Public Administration Review 410, 411. 6  The Swedish Freedom of the Press Act. 7  Roger Vluegels, ‘Overview of all FOI Laws’ (2012) accessed 20 June 2016. 8  See .

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MDBs themselves through highlighting inefficiencies in operations or uncovering corruption within MDBs. The tradition of secrecy at the MDBs has been significantly diluted since the mid-1990s. Drivers for change have included moves towards transparency of intergovernmental organisations generally in response to ‘crisis of legitimacy’ claims,9 the growing acceptance by national governments of access to information laws as a norm, the developing recognition of access to information as a human right in international human rights law,10 and pressure from civil society including pressure on MDBs to adhere to the standards of transparency they demand from their borrowers. Gartner identifies the role played by civil society actors as being of great significance in promoting transparency within the World Bank in particular. US civil society influenced Congress to impose transparency conditions on the World Bank, a process made possible by the dependence of the Bank on donor countries, such as the US, to replenish its funds.11 The World Bank (WB) adopted its first formal access to information policy in 199412 as did the Asian Development Bank (ADB).13 The Inter-American Development Bank (IADB)14 adopted a policy on disclosure of information in 1995, the African Development Bank (AFDB) in 1997,15 the European Bank of Reconstruction and Development (EBRD) in 199916 and the European Investment Bank (EIB) in 2010.17 Each of these policies has been the subject of revision since their introduction with many such revisions resulting in significant change. Table 7.1 shows the date of entry into force of the most up to date version of the ATI policies of each MDB.

9  Alasdair Roberts, ‘A Partial Revolution: The Diplomatic Ethos and Transparency in Intergovernmental Organizations’ 64(4) Public Administration Review 410, 411. 10  See Maeve McDonagh, ‘The Right to Information in International Human Rights Law’ (2013) 13 (1) Human Rights Law Review, 25. 11  David Gartner, ‘Uncovering Bretton Woods: Conditional Transparency, The World Bank, and the International Monetary Fund’ (2103) 45 The George Washington International Law Review 121, 128. 12  Though the Bank issued its first directive on the disclosure of information as far back as 1985. 13   Policy on Confidentiality and Disclosure of Information (Asian Development Bank 1994). 14   Disclosure of Information Policy (Inter-American Development Bank 1995). 15   Policy on Disclosure of Information (African Development Bank 1997). 16   Public Access and Disclosure of Information Policy (European Bank for Reconstruction and Development 1999). 17   Transparency Policy (European Investment Bank 2010).

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Dates of entry into force of the latest version of the current policies

Name of Bank Date of entry into force a b c d e f

WBa July 1, 2015

ADBb AfDBc IADBd April 2, February 3, January 1, 2012 2013 2011

EBRDe May 7, 2014

EIBf March 6, 2015

World Bank, ‘The World Bank Policy on Access to Information’ (2015). Asian Development Bank, ‘Public Communications Policy’ (2011).18 African Development Bank, ‘Disclosure and Access to Information Policy’ (2012). Inter-American Development Bank, ‘Access to Information Policy’ (2010). European Bank for Reconstruction and Development, ‘Public Information Policy’ (2014). European Investment Bank Group, ‘Transparency Policy’ (2015).

The recent impetus for the updating and improvement of the ATI policies of the MDBs has derived to a large extent from criticisms emanating from civil society of the previous policies and practices. Organisations such as Publish What You Fund,19 Aid Transparency Index,20 Global Transparency Initiative,21 and International Financial and Trade Institutions (IFTI) Watch,22 have been influential in promoting the upgrading of the transparency policies of the MDBs. Perhaps the most important substantive change to the ATI policies of the MDBs introduced post 2010 has been the move away from an approach to disclosure based on a ‘positive list’ whereby ATI policies listed a finite list of documents to be disclosed towards a ‘negative list’ approach which is based on the premise that all documents will be disclosed in the absence of a compelling reason for confidentiality.23 The updated ATI policies of the MDBs have also significantly expanded the proactive disclosure of information, including board documentation. The new policies favour the active dissemination of large numbers of documents which had previously not been made public. In a further significant development, there has been a move towards simultaneous disclosure to the public,

18  Note that an updated Asian Development Bank policy (the Access to Information Policy) entered into force on January 1, 2019 after this book went to press. 19  . 20  . 21  . 22  . 23  This change in approach is noted in the AfDB policy, for example, at [2.2.2].

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including civil society, of some information circulated to the boards of MDBs.24 Such disclosure had been sought by civil society organisations, in particular, to enable them to determine the impact of their input to consultation processes prior to the finalisation of decisions by the boards of the MDBs. The fact that all of the MDBs are currently operating under updated ATI policies makes this an opportune time to study the current state of those policies, to compare them and to measure them against each other and against best practice in national ATI laws. It should be noted that the ATI policy of EIB must be considered against the backdrop of EU policies and legislation relating to access to information generally. As an EU body, the EIB is subject to the principle of openness of EU institutions, bodies, offices and agencies laid down in the Treaty on European Union (TEU)25 and the Treaty on the functioning of the European Union (TFEU).26 In addition, the EIB has to comply with specific EU regulations relating to access to information such as Regulation (EC) No 1367/2006.27 Moreover, pursuant to Article 15(3) of the TFEU, the EIB is also required to ensure, when exercising administrative tasks, that its rules on access to documents are in accordance with applicable EU regulations setting out the general principles and limits on access to documents, notably Regulation (EC) No 1049/2001.28 The EIB has acknowledged that Regulation 1049/2001 applies to it29 thus paving the way for applicants for EIB information to use either the access mechanism provided for in the ATI policy or to submit an access request under Regulation 1049/2001. However this chapter will focus on the EIB’s ATI policy rather than on the application to it of Regulation 1049/2001.

24  A DB policy, [72]; See also WB policy, [III.B.4); AfDB policy, [5.1], IADB policy, [5]; EBRD policy [1.1]; EIB policy, [4.5]. 25  Art. 1 TEU. 26  Art.15(1) (3) TFEU. 27  Regulation (EC) No 1367/2006 on the application of the provisions of the Aarhus Convention on Access to Information, Public Participation in Decision-making and Access to Justice in Environmental Matters to Community institutions and bodies [2006] OJ L 264/13 (Regulation (EC) No 1367/2006). 28  Regulation (EC) No 1049/2001 on public access to European Parliament, Council and Commission documents [2001] OJ L145/43 (Regulation 1049/2001). 29  European Investment Bank, Guidance note for promoters and partners on the EIB Group’s Transparency Policy, 2015.

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Key Aspects of the Access Regimes

2.1 Presumptions In keeping with the Article 19 principles30 and many national access to information laws, the ATI policies of a number of the MDBs contain presumptions that are designed to weigh in favour of the disclosure of information; indeed the ATI policies of the ADB,31 the AfDB32 and the EIB33 make express provision for a presumption in favour of disclosure. While the predecessor to the current WB ATI policy, The Word Bank Policy on Disclosure of Information, adopted in 1994, expressly referred to a presumption in favour of disclosure, there is no reference to any such presumption in the current version of the WB ATI policy, though it does refers to the need to grant the public maximum access to information.34 Although the EBRD’s policy does not make express provision for a presumption in favour of disclosure of information as such, it references a presumption that information will be made available in the ‘absence of a compelling reason for confidentiality’ in the context of setting out the principles on which the policy is founded.35 The IADB policy similarly does not expressly reference a presumption favouring disclosure but it includes a less far-reaching commitment to maximize access to any documents and information that it produces and to information in its possession that is not on the list of exceptions.36 2.2 Guiding Principles The Article 19 principles list nine guiding principles for the giving of effect to the right to information. These include the principles of maximum disclosure, promotion of open government, limited scope of exceptions, processes to facilitate access and ensuring that excessive cost does not deter the making of access request. Many national ATI Laws contain provisions which resemble these guiding principles. For example, the objects of the South African Promotion of Access to Information Act include ‘to promote transparency,

30   Article 19, Toby Mendel, The Public’s Right to Know: Principles of Freedom of Information Legislation (Article 19 International Standards Series 1999), Principle 1. 31  A DB policy, [29]. 32  AfDB policy, [3.1]. 33  E IB policy, [5.1]. 34  W B policy, [III.A.1]. 35  E BRD policy, [C.1]. 36  I ADB policy, [2.1].

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accountability and effective governance of all public and private bodies’.37 The inclusion of a set of guiding principles helps to ensure that those implementing an ATI law do so in a manner that is true to the aims of the drafters of that law. Each of the MDB ATI policies lists a set of principles designed to guide the implementation of the policy. The ATI policy of the IADB for example, sets out the following principles upon which the policy is said to be based: maximize access to information, narrow and clear exceptions, simple and broad access to information and explanations of decisions and right to review.38 Similar principles are to be found in ATI polices of the WB, ADB, and AfDB,39 in particular those relating to the use of limited exceptions, the provision of a right of appeal or review and the adoption of a policy of maximum disclosure. The principles set out in policies of the EBRD and the EIB are expressed in less concrete terms than are their counterparts in the other policies. Both reference the following principles: transparency/openness; and willingness to listen and engage while the EBRD policy also refers to the principles of accountability and governance. In contrast to the Article 19 Principles and most national ATI laws, the policies of some of the MDBs also reference principles that favour the withholding of information viz ‘the need to safeguard the business approach to implementing the mandate’ (EBRD) and ‘ensuring trust and safeguarding sensitive information’ (EIB), each of which is linked in the respective policy to maintaining the confidence and trust of the bank’s clients, co-financiers and investors while the WB policy lists as one of guiding principles ‘safeguarding the deliberative process’. The emphasis placed by the policies of the latter MDBs on guiding principles that favouring the withholding of information does not conform to international best practice and suggests a less than wholehearted commitment to openness on the part of those organisations. 2.3 Content of the Policies The ATI policies of each of the MDBs, in common with the Article 19 principles and most national ATI laws, seek to address information deficits in two main ways: – By providing for the proactive disclosure of information by the MDBs; and – By establishing a mechanism for requesting access to information on request; 37  Promotion of Access to Information Act 2000, s.9(e). See also express objects clauses in the ATI laws of jurisdictions such as New Zealand (Official Information Act 1982, s.4) Australia (Freedom of Information Act 1982, s.3), and +Jamaica (Access to Information Act 2002, s.2). 38  I ADB policy, [2.1]. 39  W B policy [III.A.1]; ADB policy [26–34]; and AfDB policy [3.2].

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The issue of the classification of information by the MDBs and its interaction with their ATI policies will be briefly explored before these twin core elements of the ATI policies are discussed. 2.4 Classification of Documents Rules on the classification of documents often enjoy an uneasy relationship with national ATI regimes.40 The significance of classification rules for the operation of ATI regimes lies primarily in the fact that laws classifying official information as secret may have the effect of ‘trumping’ access rights. In such circumstances, the classified material remains beyond the reach of the ATI regime in question. The Article 19 principles recommend that ATI legislation should apply to records that have been classified thus subjecting them to the same rules on access as all other records.41 More detailed standards regarding the classification and declassification of records are found in the Tshwane Principles drafted by 22 NGOs.42 The Tshwane Principles state that the fact that information has been classified should not be decisive in determining how to respond to a request for that information.43 Classification of documents is practised at the majority of the MDBs. For example, documents of the World Bank are assigned one of the following four classifications: ‘Public,’ ‘Official Use Only,’ ‘Confidential,’ or ‘Strictly Confidential’.44 The EBRD uses a similar set of four classifications viz ‘Public,’ ‘Official Use Only,’ ‘Restricted,’ or ‘Highly Restricted’.45 The AfDB policy similarly classifies documents as either ‘public’ or ‘restricted’ with restricted documents being further sub-divided into ‘confidential’ or ‘strictly confidential’46 and the IADB classifies documents as ‘public’, ‘confidential’ or ‘disclosed over time’.47 The ADB policy has in place a classification system for Board documents.48 The EIB policy does not refer to the classification of documents. 40  O SCE Representative on Freedom of the Media, Miklos Haraszti, ‘Access to Information by the media in the OSCE region, Trends and Recommendations’ available at , 4–8, accessed 20 June 2016. 41   Article 19, Toby Mendel, The Public’s Right to Know: Principles of Freedom of Information Legislation (Article 19, International Standards Series 1999), 3. 42  Global Principles on National Security and the Right to Information (the Tshwane Principles) (2013), Part IIIA. 43  Principle 18. 44  W B Bank Directive/Procedure: Access to Information, [III.B.6.a]. 45  E BRD, Information Classification Scheme available at accessed on June 20, 2016. 46  AfDB, Disclosure and Access to Information Policy, Staff Handbook, 2013, 13–15. 47  I ADB, Access to Information Policy Implementation Guidelines, 2012, 6–7. 48  A DB policy, Appendix 3.

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The classification of documents as ‘confidential’ or ‘restricted’ means that they are generally excluded by MDBs from proactive publication measures and, depending on the nature of the interaction between the ATI and classification regimes, they may also be excluded from the scope of access to information mechanisms. The IADB and the AfDB explicitly link their classification systems to their ATI policies or procedures. The IADB Policy provides that ‘The application of any classification other than “public” may only occur as a consequence of the information in question being subject to non-disclosure according to one of the policy’s exceptions’49 while the AfDB ATI policy staff handbook states that documents that do not fall under the policy’s list of exceptions must be classified as public.50 These policies/procedures appear to meet the requirements of both the Article 19 Principles and the Tshwane Principles in that they rely on the right of access to information provided for in the ATI policies (and the exceptions thereto) in determining whether access should be granted. The WB policy does not explicitly link its classification system to its ATI policy. However there would appear to be implicit acceptance that the ATI exceptions take precedence over the system of classification in so far as the WB ATI policy states that ‘the Bank allows access to any information in its possession that is not on a list of exceptions’.51 The remaining ATI policies do not directly link their information classification systems to their ATI policies. The linking of classification systems with ATI exceptions can be useful in terms of making clear what types of documents are likely to be withheld and in terms of ensuring consistency between ATI policies and classification procedures. The fact that the remaining MDBs do not make clear the link between their classification systems and ATI policies renders uncertain which should prevail in decision-making on access to information. The classification of information as ‘confidential’ or ‘restricted’ may not need to endure indefinitely as the need for secrecy can reduce or be eliminated by the passage of time. A policy of proactive declassification of information helps to ensure that information does not inappropriately retain its confidential or restricted classification. The Tshwane Principles require that procedures be put in place for the declassification of information.52 Proactive declassification of information is addressed in the policies of the WB, the AfDB, and the IADB. 49  I ADB policy, [6.1]. 50  African Development Bank, Disclosure and Access to Information Policy, Staff Handbook, (February 2013), [1.6]. 51  W B policy, [III.B.1]. 52  Principle 17.

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In the case of the AfDB for example, the originator of documents classified as confidential are required to assign to that document an ‘appropriate disclosure time period’ of either five, ten or 20 years. Specific guidelines are provided in the AfDB ATI policy staff handbook for particular categories of confidential information. For example, it is recommended that ‘deliberative drafts and documents of the Board and other deliberative information’ be subject to a declassification period of 10 years.53 The WB and IADB policies establish similar time limits for the declassification of documents. The WB policy contains lists of documents to be declassified and made publicly available five, ten or 20 years after the date on the document.54 For example, verbatim transcripts of regular sessions of board meetings and board committee meetings are subject to declassification after 10 years. The IADB policy states that its implementation will include a system for declassification of records under a three tiered timeline after five, ten or 20 years.55 Overall, the approach of the WB, IADB, and AfDB to the interaction of access to information and the declassification of documents appears to meet the standards set by the Article 19 and Tshwane Principles. The ADB policy does not refer to a proactive declassification scheme for Board documents (the only category of documents classified by the ADB)56 and there is no information on the website of the EBRD regarding the declassification of information. 2.5 Proactive Disclosure Proactive disclosure provisions arguably have the potential to impact upon the accessibility of information in a more profound and sustainable manner than the provision of a right of access to information. Securing access to information through the exercise of an access right demands action on the part of a requester and factors such as education, resources, and language issues may impede the exercise of such a right. Where the publication of information is mandated by proactive publication measures it must be made automatically available. The Article 19 Principles require that public bodies publish and widely disseminate documents of significant public interest and that they should, at a minimum, be required to publish inter alia operational information and the content of any decision or policy affecting the public.57 While the proactive 53  African Development Bank, Disclosure and Access to Information Policy, Staff Handbook, (February 2013), [2.3]. 54  W B policy, [III.B.6]. 55  I ADB policy, [7]. 56  A DB policy, Appendix 3. 57  Toby Mendel, The Public’s Right to Know: Principles of Freedom of Information Legislation (Article 19 International Standards Series 1999), Principle 2.

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disclosure of information is generally provided for in national ATI laws, it is an aspect of such laws that has tended to be neglected in favour of its more glamorous sibling, the right of access to information. While early proactive disclosure provisions in national ATI laws were at best tentative, Darbishire points out however that the inclusion of stronger proactive disclosure provisions has been part of the expansion of the right to information since the 1990s.58 As already noted, the ATI policies of the MDBs have moved in recent years from the identification of a positive list of information that will be made available towards the identification of a negative list of the documents that will not be disclosed. The latter approach is generally viewed as more favourable to transparency in that, rather than confining access to an identified list of records, it applies in respect of all of the documents of an institution, save where there is a compelling reason for maintaining the confidentiality of the requested document. This change in approach should not however be viewed as rendering proactive publication requirements redundant. The ‘negative list’ approach is relevant only to the operation of the access right and it does not impact upon proactive publication mechanisms. The adoption of a ‘negative list’ approach to the access right can readily co-exist with the inclusion in an ATI policy of proactive publication provisions. The presence in ATI policies of comprehensive lists of information required to be proactively published thus remains critical in terms of furthering the disclosure agenda. The ATI policies of the MDBs vary in terms of their approach to the proactive publication of information. While the text of the WB policy does not contain a clear commitment to proactive disclosure, it refers to certain categories of documents as being ‘routinely available’ on its website, namely certain board papers, board of governors’ documents and emails.59 For example, the policy refers to minutes of board meetings and summaries of discussions relating to board meetings prepared on or after July 1, 2010 being posted on the website at the end of the board’s deliberative process. The WB’s Bank Directive/Procedure on Access to Information, which is not part of the ATI policy, contains a detailed list of the type of information routinely made available by the Bank on its website. It includes project appraisal documents, legal documents, audited financial statements, implementation reports etc.60 Some of the documents listed are restricted in terms of the conditions under which they may be proactively made available. For example, in the case of implementation completion 58  Helen Darbishire, Proactive Transparency: The Future of the Right to Information, World Bank Institute Governance Working Paper Series (2010), [3.1]. 59  W B Policy, [III.B.3–5]. 60  W B Bank Access to Information Bank Directive/Procedure (2015), Annex 2.

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and results reports, the borrower concerned is requested to identify any text or data in the report that is confidential and the task team will, as it considers appropriate, ‘make adjustments to the document to address the matters of concern’ before making it available to the public.61 The EBRD policy’s commitment to proactive disclosure appears somewhat lukewarm in so far as it states that the bank ‘will post’ information that falls into four broad categories namely institutional information; information on strategies and policies; project-related information; and accountability and governance related information. Examples provided in the policy of information falling within each of these 4 categories respectively include minutes of Board meetings, country strategies, project summary documents and anti-corruption reports.62 The approach of the IADB policy to the proactive disclosure of information appears to be limited in so far as it does not contain any express provision relating to proactive disclosure. Proactive publication of information may nonetheless follow in a roundabout manner from the operation of the exception from the right of access for information relating to non-sovereign guaranteed operations. This exception expressly excludes from its scope a list of information set out in an annex to the policy.63 The annex in turn refers to the listed information as information ‘to be disclosed’. The list includes initial project abstracts, environmental and social strategies, and environmental and social management reports. The EIB policy appears similarly tentative in its approach to the proactive publication of information in so far as it does not mandate the proactive publication of any information. Instead it states that it ‘routinely publishes’ a broad set of documents including institutional information, policies and strategies, project related information, procurement information, tender notices for the EIB’s own account, and accountability and governance related information.64 The policy then directs readers to the bank’s website. In contrast to the somewhat tentative approach to proactive disclosure of information apparent in the ATI policies of the WB, EBRD, IADB and EIB, the ATI policy of the ADB contains a detailed list of documents that ‘shall be posted on the ADB website’, although this too is subject to consultation with borrowers or clients and to the exceptions to disclosure contained in the

61  W B Bank Access to Information Bank Directive/Procedure (2015), Annex 2, [A-4.a.6]. 62  E BRD policy, [D.1- D.4]. 63  I ADB policy, [4.1.j] which refers to Annex II. 64  E IB policy, [4.1].

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policy.65 The list includes the following: country partnership strategies; information relating to projects and programs such as project data sheets, environmental and social safeguard documents, technical assistance reports, legal agreements, audited project accounts, independent evaluations and anti-corruption reports; policies and strategies; operational rules and procedures; and a wide variety of other information including information relating to procurement, country performance assessments, financial information and employment information.66 The AfDB also adopts a reasonably robust approach to the proactive publication of information. Its policy acknowledges that ‘the effectiveness and sustainability of its projects and programs in member countries will be strengthened to the extent that it proactively disclosures information to the population affected by its operations’ and states that the bank ‘will proactively disclose documents’.67 It provides in an annex to its ATI policy a sample list of information to be proactively disclosed which includes country strategy papers and updates; country governance profiles; country performance assessment; prospective project briefs; project appraisal reports; and a range of other information organised into the following categories: environmental and social assessments; summary of progress and status of project implementation; documents of the operations evaluation department; information on procurement of goods and services; bank financial information; economics and research; and legal information.68 It is clear that a wide variety of standards for proactive disclosure of information exist in the ATI policies of the various MDBs ranging from relatively weak in the case of the IADB and EIB to quite robust in the case of the ADB and the AfDB, with the remaining institutions scoring somewhere between these two extremes. It is clear that the majority of MDBs fall short of the standards required by the Article 19 principles in their approach to proactive publication of information. National ATI laws, and in particular those that have been introduced or revised in recent years, are in general likely to favour a more far-reaching approach to proactive disclosure than the most ambitious of the MDB ATI policies,69 even if few of them have reached what Darbishire describes as the ‘emerging standard for the classes of information that should 65  A DB policy, [35]. 66  A DB policy, [35–93]. 67  AfDB policy, [3.2.5]. 68  AfDB policy, Annex I. 69  See, for example, the proactive publication provisions of the Indian Right to Information Act 2005, the Mexican Federal Law on Transparency and Access to Public Information 2002, the Australian FOI Amendment (Reform) Act 2010 and the Irish FOI Act 2014.

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be disclosed as part of the proactive dimension of the right of access to information’.70 The latter requires publication of the following categories of information: institutional information; organizational information; operational information; decisions and acts; public services information; budget information; open meetings information; decision-making and public participation; subsidies information; public procurement information, lists, registers and databases; information about information held; publications information; and information about the right to information. While the primary focus of this chapter is on evaluating the content of the MDBs ATI polices as opposed to their implementation, it is interesting to note that the variation in the level of commitment to proactive disclosure evident from a perusal of the policies may not be borne out in practice in all cases. The Aid Transparency Index, which measures aid transparency of major aid donors including all of the MDBs, ranks donors primarily in terms of their proactive publication of aid information.71 The MDBs were ranked in the following order in the 2016 Aid Transparency Index: WB: 6th, IADB: 7th, ADB: 8th, AfDB: 10th, EIB: 24th and EBRD: 26th. In the case of the ADB, the AfDB, the EIB and the EBRD there appears to be a link between the commitment to proactive disclosure in their policies and how they perform in practice with the latter doing well on both measures and the former doing badly. On the other hand, the WB and IADB, whose policies on proactive disclosure seem rather limited on paper, nonetheless appears to do well in practice. 2.6 The Right of Access As is the case with national ATI Laws, the right of access to information is at the heart of MDB ATI policies. 2.6.1 Exceptions In common with national ATI Laws, the right of access to information provided for in the ATI policies of each of the MDBs is subject to a range of exceptions. The wording of the exceptions varies between the policies thus rendering their comparison somewhat hazardous. It is clear however, as evidenced by Table 7.2 below, that there is a degree of consistency with respect to the subject 70  Helen Darbishire, Proactive Transparency: The Future of the Right to Information, World Bank Institute Governance Working Paper Series (2010), [4.3]. 71  The ATI uses 39 indicators, divided into those that measure commitment to aid transparency (three indicators) and those that measure publication of aid information (36 indicators). The commitment indicators collectively account for 10% of the overall weight while publication accounts for 90%: Aid Transparency Index 2016 Methodology available at .

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matter of many of the exceptions provided for. In particular, the first five exceptions referred to: attorney-client privilege; financial information; information re investigations, corruption etc; personal information of staff members; and confidential information are common to all of the policies considered. Three further exceptions – those relating to deliberative information; corporate/internal information; and security and safety – are common to five of the six policies with the EBRD being the odd one out in terms of the first of these exceptions, the ADb in respect of the second, and the EIB in respect of the third. The policies of both the EBRD and the EIB contain some exceptions that appear to be unique to them but it is possible that at least some of the interests covered by these exceptions may be accommodated within the exceptions provided for in the other policies e.g. the EBRD policy contains an exception relating to information about policy dialogue with members which could potentially fall within the scope of the exceptions for confidential information or deliberative information provided for in the other policies. Table 7.2 Exceptions provided for in the ATI policies of MDBs

Exceptions

WB

ADB

AfDB

IADB

EBRD

EIB

Attorney Client privilege Financial information Information re investigations, corruption etc Personal information of staff members, consultants etc Confidential information Deliberative information Corporate/internal information Security and safety Commercially sensitive information Directors’ Communications Information restricted under other disclosure regimes

X X X

X X X

X X X

X X X

X X X

X X X

X

X

X

X

X

X

X X X

X X

X X X

X X X

X

X X X

X

X X

X X

X X

X

X

X

X X

X

X

149

Evaluating the Access to Information Policies table 7.2 Exceptions provided for in the ATI policies of MDBs (cont.)

Exceptions

WB

Proceedings of Ethics committee for officials Board documents Information re policy dialogue with members Information the disclosure of which could violate the law Information re procurement Internal audit reports Country-specific information identified as damaging Information re nonsovereign guaranteed operations

X

Intellectual Property International Relations Environment

ADB

AfDB

IADB

EBRD

EIB

X X X

X X

X – apart from legal agreements for nonsovereign projects

X

X

X X X

The exceptions that are common to the ATI policies of the MDBs generally correspond to the exceptions most commonly provided for in national ATI laws. However the personal information exception/privacy found in the MDB ATI policies, unlike its counterparts in national ATI laws, is (with the exception of the EIB policy) narrowly focused in that it is confined to personal information about staff members, consultants etc. International best practice favours the inclusion in national ATI laws of broadly based personal information/privacy exceptions.72 72  Toby Mendel, The Public’s Right to Know: Principles of Freedom of Information Legislation (Article 19 International Standards Series 1999), Principle 4.

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While the subject matter of the exceptions provided for in the MDB ATI policies accords generally with those of national ATI laws, the breadth of the MDB ATI exceptions is notable when compared with their counterparts in national ATI laws.73 For example, while most national ATI laws contain exception for information the disclosure of which could harm the deliberative process, such exceptions are often framed in terms which preserve access to the raw material used as the basis of such deliberations. This is achieved, for example, through the exclusion of factual information from the reach of the deliberative processes exception.74 No such limitations on the scope of the exceptions are to be found in the equivalent exceptions in the ATI policies of the MDBs. Indeed far from providing for an exception in the case of factual material, the deliberative exception of the WB policy expressly extends to include ‘statistics prepared, or analyses carried out, solely to inform the Bank’s internal decision-making processes’.75 Two issues of crucial importance in the design of ATI exceptions are: whether the exception depends for its application on the occurrence of damage to the identified interest (‘the harm test’) and whether provision is made for the overriding of the exception in the public interest (‘the public interest override’). The Article 19 Principles require that exceptions be ‘subject to strict harm and public interest tests’76 and such features are also recommended for inclusion by various model ATI laws77 and are commonly found in the exceptions provided for in national ATI laws. 2.6.2 The Harm Test The rationale for including a harm test in an ATI exception is that the focus of any exception to the right of access to information should be on protecting information from disclosure only in circumstances where its release would be damaging to the interest concerned. The ADB exceptions rely on harm tests which are mainly expressed in terms of ‘comprising the integrity of’ or 73  For a review of the exceptions provided for in the ATI policies of international financial institutions see Michael Karanicolas and Toby Mendel, Openness Policies of the International Financial Institutions: Failing to Make the Grade with Exceptions (Center for Law and Democracy 2012). 74  See, for example, Australia: Freedom of Information Act 1982, s.47C(2), Ireland: Freedom of Information Act 2014, s. 29(2)(b). 75  W B Policy, [III.B.2.i.iii]. 76  Toby Mendel, The Public’s Right to Know: Principles of Freedom of Information Legislation (Article 19 International Standards Series 1999), Principle 4. 77  Commonwealth Human Rights Initiative, Commonwealth Model Freedom of Information Act (2002); Organization of American States, Model Inter-American Law On Access To Information OEA/Ser.G, CP/CAJP-2840/10 Corr.1 (2010).

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‘prejudicing’ certain interests while the application of the EIB exceptions is contingent on disclosure undermining the protection of certain listed interests. Few of the other MDB ATI policies contain exceptions that operate on the basis of a harm test. Instead the majority provide that access to information will be refused where the requested information falls into a particular class of information. The significance of this difference in approach can be illustrated by comparing the financial information exception in the WB ATI policy to that in the ADB policy. The WB exception provides that: The Bank does not provide access to the following list of financial information: (a) estimates of future borrowings by the IBRD, contributions by individual donors to IDA, financial forecasts and credit assessments, and data on investment, hedging, borrowing, and cash management transactions generated by or for the Bank’s treasury operations for the World Bank Group entities and other parties. (b) … (d) The ADB exception, on the other hand provides: … ADB shall not disclose the following information: … Financial Information (viii) Financial information that, if disclosed, would or would be likely to prejudice the legitimate financial or commercial interests of ADB and its activities … Thus it is clear that that the scope of the ADB exception, linked as it is to the occurrence of harm, is more limited than the WB exception and is more supportive of transparency. Aside from the EIB and the ADB therefore, the remaining MDBs fall short of international standards in terms of their approach to the harm test. 2.6.3 The Public Interest Override A public interest test in an ATI law (also known as a positive override or public interest override) is a provision which overrides, either generally by reference to the public interest generally or on specified public interest grounds, the operation of one of more exemption provisions set out in that law, so as to allow for the disclosure of otherwise exempt information. The Article 19 principles state that requests for access to information should only be refused where the

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harm that may be caused by disclosure is greater than the public interest in the requester having the information.78 Exceptions to the access rights provided for in national ATI laws commonly incorporate public interests tests. The ATI policies of each the MDBs also contain such provisions. In all cases (apart from the EBRD) the public interest test is framed in terms of allowing for the overriding of exceptions where the benefits of disclosure would outweigh the potential harm that it might cause. Such tests are open-ended in terms of the benefits of disclosure of which account may be taken. The scope of the public interest test in the EBRD policy is the most restrictive of all in that it is confined to situations where disclosure would result in specified benefits viz that it ‘would be likely to avert imminent and serious harm to public health or safety, and/or imminent and significant adverse impacts on the environment’.79 The operation of the public interest tests in a number of the MDB ATI policies is subject to limitations, some of which are significant. In the case of the WB, the IADB, and the AfDB the public interest override only applies in respect of the exceptions relating to corporate/internal information, deliberative information and financial information.80 The IADB override is moreover available only where the Bank ‘is not legally or otherwise obligated to non-disclosure and has not been provided information on the understanding that it will not be disclosed’.81 Decisions to override the IADB with respect to records of the board require the express written authorisation of the board.82 In the case of the ADB, any recommendation to disclose information in the public interest requires the approval of the Board for Board records, and of the President for other documents.83 The EIB policy contains the most far reaching public interest test. It provides that none of the exceptions provided for in the policy shall apply ‘unless there is an overriding public interest in disclosure’ and it further states that in the case of certain exceptions (those relating to information the disclosure of which would undermine commercial interests of a natural or legal person, intellectual property or the purpose of inspections and audits, an overriding public interest in disclosure will be deemed to exist where the requested information relates to emissions into the environment.84 The limitations placed on the operation of the public interest tests of the 78  Toby Mendel, The Public’s Right to Know: Principles of Freedom of Information Legislation (Article 19, International Standards Series 1999), Principle 4. 79  E BRD policy, [E.3]. 80  W B policy: [IV.1], IADB: [8.1, fn.2]; AfDB policy, [3.4.3]. 81  I ADB policy, [8.1]. 82  I ADB policy, [8.1] 83  A DB policy, [99]. 84  E IB policy, [5.7].

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ATI policies of the MDBs prevents them attaining the standards referred to in the Article 19 principles. 2.6.4 Negative Override Negative overrides feature in the ATI policies of the WB, ADB and IADB. Such mechanisms allow the institutions concerned to withhold documents that they would normally disclose, including documents to which none of the exceptions apply. These mechanisms are triggered in the case of the WB85 and ADB86 ‘under exceptional circumstances’ where disclosure would be likely to ‘cause harm that outweighs the benefits of disclosure’. The threshold for use of the IADB negative override87 is lower. It does not require exceptional circumstances and is available simply where the Bank decides that ‘access would occasion more harm than benefit’. The negative override mechanism does not have a counterpart in national ATI laws and its inclusion in the MDB ATI policies is clearly incompatible with the standards set by the Article 19 Principles. 2.6.5 Consultation and Veto National ATI Laws commonly contain provisions requiring entities that receive access to information requests to consult affected third parties prior to deciding whether to disclose the information in question. The aim of such consultation provisions is to give third parties an input into the decision-making process concerning the disclosure of records which relate to them, or which were supplied by them to public bodies. The EIB is the only MDB whose ATI policy contains such a consultation mechanism. It requires the bank to consult with third parties (including EU Member States and EU institutions and bodies) on the question of whether the information is confidential ‘unless it is clear that the document shall or shall not be disclosed’.88 Consultation mechanisms generally confer on affected persons the right to be consulted, but not to veto, the disclosure of requested information. The ATI policies of each of the MDBs nonetheless effectively confer on third parties, including member countries, the power to veto the disclosure of information received in confidence from them (or in some cases, relating to them) through the use of provisions requiring that consent to disclosure of such third parties be obtained. Such vetoes echo ‘originator control’ provisions (which makes the disclosure of information provided in confidence by governments contingent 85  W B policy, [IV.2]. 86  A DB policy, [101]. 87  I ADB policy, [8.1]. 88  E IB policy, [5.9].

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on obtaining the consent of the originating government) found in some national FOI laws.89 The inclusion in FOI laws of provisions of this nature is not recommended by model FOI regimes such as the Article 19 principles. Most of the vetoes provided for in the MDB ATI policies concern information provided to or received by an MDB from a third party in confidence. The confidentiality exception in the WB policy, for example, provides that information received in confidence by the WB from a member country or a third party cannot be disclosed without express permission of that member country or third party.90 The WB policy further provides that the application of the public interest override in the context of information provided in confidence to the Bank by a member country or a third party requires the written consent of the member country or the third party concerned.91 The AfDB policy states that if it receives information in confidence from a member country or a third party ‘the Bank Group will not make public such information without the written consent of the concerned party’,92 while the IADB policy states that information provided to it in confidence by member countries, private-sector entities, or other parties or with restrictions on disclosure, will not be disclosed without their explicit authorisation.93 The veto provided for in the ADB policy applies in the context of the public interest test. It provides that the public interest override will not apply where the ADB has given an express legal commitment to a party to keep information confidential and not to disclose such information, unless such party consents.94 While the EBRD policy does not contain an express veto, one of its exceptions is framed in a manner that may have the same effect. It provides for an exception in the case of: ‘Information in the Bank’s possession which was not created by the Bank and is identified by its originator as being sensitive and confidential, or when the originator legitimately has requested that its release be restricted’.95 At first glance, the EIB policy would appear to fall short of conferring a veto on disclosure. Paragraph 5.10 provides that:

89  For example: Canada: Access to Information Act 1985, s.13; UK: Freedom of Information Act 2000, s.27. See Alasdair Roberts, ‘A Partial Revolution: The Diplomatic Ethos and Transparency in Intergovernmental Organizations’ 64(4) Public Administration Review 410, 411. 90  W B policy, [III.B.2.g]. 91  W B policy, [IV.1.b]. 92  AfDB policy, [4.7.2]. 93  I ADB policy [4.1.e]. 94  A DB policy, [100]. 95  E BRD policy, [1.6].

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A Member State may request the Bank not to disclose a document originating from a Member State without its prior agreement, setting out the reasons for its objection by reference to the exceptions referred to in the present Policy A similar provision is to be found in Regulation 1049/2001, which provides that: ‘A Member State may request the institution not to disclose a document originating from that Member State without its prior agreement’.96 The latter provision has been interpreted by the European Court of Justice as making the prior agreement of the Member State a necessary condition for disclosure of a document originating from it, provided that the State in question has based its objection on the substantive exceptions in Regulation No 1049/2001 and has given proper reasons for its position.97 Thus it would appear that a Member State’s ‘request’ to the EIB not to disclose a document originating from that Member State must be acceded to by the Bank provided that the requirements of para 5.10 are met. This provision has the potential to go further than its counterparts in the policies of the WB, AfDB, IADB and ADB in that its scope is not confined to information provided in confidence by a Member State. While the vetoing of access to information by third parties does not generally feature in ATI laws at national level, some jurisdictions confer on Ministers the power to veto the disclosure of information in certain limited circumstances. The UK Freedom of Information Act 2000, for example,98 provides that a certificate signed by a Minister certifying that the information to which it applies is covered by certain exceptions amounts to conclusive evidence of that fact, thus effectively conferring on the Minister the power to veto disclosure of the requested information. Similar provisions are to be found in the New Zealand Official Information Act99 and the Irish FOI Act.100 The ministerial veto originally provided for in the Australian FOI Act was abolished in 2010.101 The operation of ministerial vetoes has been controversial in a number of jurisdictions. Snell referred to the veto formerly provided for in Australian FOI legislation,

96  Regulation (EC) No 1049/2001 on public access to European Parliament, Council and Commission documents, Reg.4(5). 97  C-135/11 IFAW Internationaler Tierschutz-Fonds gGmbH v European Commission (GC, 21 June 2012), [50–54]. 98  Freedom of Information Act 2000, ss.23(2) and 24(3). 99  Official Information Act 1991, s.32 100  Freedom of Information Act 2014, s.34. 101  Freedom of Information Amendment (Removal of Conclusive Certificates and Other Measures) Act 2009.

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for example, as ‘an almost invisible blight in FOI practice’102 while Worthy has noted the characterisation by the Campaign for Freedom of Information of the UK veto as ‘by far the most serious threat to the Act we have seen’.103 The inclusion of a third party veto on disclosure in the ATI policies of the MDBs is similarly problematic from a transparency perspective. Permitting third parties to veto the disclosure of information can be viewed as fundamentally undermining access to information laws and policies. In particular, allowing third parties to veto disclosure provides an opportunity for opacity in the dealings between MDBs and third parties, something which may not be in the public interest. This difficulty was recognised in a 2012 report on the operation of the IADB ATI policy. Attention was drawn to the fact that since the IADB policy does not indicate the extent or scope of the confidentiality applicable to the information that is not to be disclosed, a country can attribute a confidential nature to all the information contained in a document and consequently request nondisclosure of the entire document.104 2.6.6 Appeals Framework The availability of a robust and independent appeals mechanism for reviewing decisions to deny access to information is recognised as a fundamental requirement of an effective access to information law.105 By far the most important characteristic of any appeals mechanism is that it include provision for independent review of access to information disputes. Another desirable feature of an ATI appeals mechanism is that those who are making decisions on appeals should ideally be ATI specialists.106 The Article 19 Principles stipulate that a process of appeals should be specified at three different levels: within the public body; through an independent administrative body; and appeals to the courts.107

102  Rick Snell, ‘Conclusive or ministerial certificates: An almost invisible blight in FOI practice’ (2004) 109 Freedom of Information Review, 11. 103  Benjamin Worthy, ‘Freedom of Information in Britain: Lessons from Australia’ (2007) 32 Alternative Law Journal 229, 230. 104  Inter-American Development Bank, Access to Information Policy Implementation Report 2012: Enhancing transparency through greater access and disclosure of information, [4.10]. 105  Laura Neuman, Enforcement Models, Content and Context (2009) World Bank Access to Information Working Paper Series, 1–2. 106  Laura Neuman, Enforcement Models, Content and Context (2009) World Bank Access to Information Working Paper Series, 7. 107  Toby Mendel, The Public’s Right to Know: Principles of Freedom of Information Legislation (London: Article 19, International Standards Series, 1999), Principle 5.

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The provision of a three stage appeals mechanism consisting of internal review of the initial decision to refuse access to the requested information followed by external review by an independent administrative entity and ultimately by appeal to the courts is common in access to information laws internationally.108 The ATI policies of the WB,109 ADB,110 and IADB111 make provision for a two stage system of review involving a specific ATI appeals regime which delivers both independence and specialisation at the level of the second tier of review. In the case of all three of these institutions, allegations of violations of the ATI policy are considered by a policy committee consisting of staff members of the bank in the first instance while provision is made for the hearing of appeals against such first instance decisions by external appeals bodies comprising independent experts on access to information.112 The operation of each of these appeals mechanisms is however subject to a number of constraints. In the first place, the hearing of public interest override appeals under the WB, ADB and IADB policies is confined to the first stage of the review mechanism. Thus appeals against first instance decisions regarding the application of the public interest override cannot be entertained by the independent appeals bodies. In the case of the AfDB, the second stage of the appeals process is not available in the case of ‘Restricted’ documents i.e. documents that have been classified as ‘Restricted’ under the Bank’s system of classification of documents.113 In the case of the WB, the ATI policy provides that because the first tier of review, the Access to Information Committee, has no authority over decisions by the Board, appeals of Board decisions are automatically dismissed.114 Neither the EIB nor the EBRD ATI policies establish specialist ATI appeal mechanisms: they rely primarily on their respective general complaints mechanisms to handle ATI appeals. The ATI policy of the EBRD provides, as the first 108  Laura Neuman, Enforcement Models, Content and Context (2009) World Bank Access to Information Working Paper Series, 5. 109  The first stage is handled by the Access to Information Committee with the second stage being dealt with by the Access to Information Appeals Board, a body made up of three independent access to information experts. 110  The first stage is handled by the Public Disclosure Advisory Committee with the second stage being dealt with by the Independent Appeals Panel, Public Communications Policy, a body made up of three independent access to information experts. 111  The first stage is handled by the Access to Information Committee with the second stage being dealt with by the Access to Information Policy External Review Panel, a body made up of three independent access to information experts. 112  It appears that the independent appeals 113  AfDB policy, [4.5.1]. 114  W B policy, [III.B.8.b.1], fn.24.

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tier of review, for the bringing of an internal appeal to the Secretary General of the EBRD. The decision of the Secretary General on the matter is stated to be final115 but it may be followed by a complaint regarding non-compliance with the ATI policy which can be brought under the general project complaint mechanism of the EBRD. The grounds for such a complaint are that the appellant believes that the Bank has failed to disclose project specific information in accordance with the ATI policy and the project has caused or is likely to cause harm.116 In the case of the EIB, appeals against refusal of access to information are dealt with in the first instance through the EIB’s general Complaints Mechanism. If the applicant is dissatisfied with the outcome of that complaint, he or she can make a complaint to the European Ombudsman. As an EU institution, the EIB’s decision is also subject to judicial appeal before the Court of Justice of the European Union.117 The appeals mechanisms of the MDB ATI policies generally fall short of international standards as articulated by the Article 19 Principles and of the standards in place at national level. While the use by the WB, ADB, IADB and AfDB of external panels of access to information experts for the handling of the second stage of the appeals process brings a welcome degree of independence and specialisation to the process, the powers of such panels are limited. The appeals systems of the EBRD and EIB, relying as they do on the general complaints mechanisms of both bodies, are devoid of specialist input from access to information experts. 3 Conclusion There is, in general, a high degree of homogeneity in the ATI policies of the MDBs notwithstanding the fact that the ATI polices of the EBRD and the EIB appear to be weaker than the others in some significant respects. It is clear that recent revisions of all six policies have resulted in improvements, but the ATI

115  E BRD policy, Annex [3.v]. 116  See . It should be noted that the IADB, as well as providing for a two stage appeals mechanism specifically for access to information matters, also permits alleged violations of ATI policy to be addressed under the bank’s general accountability mechanism where a complainant reasonably asserts that harm has occurred or can be expected to occur as a consequence of the Bank not having complied with the policy: [9.3]. 117  In accordance with the relevant provisions of the Treaty on the Functioning of the European Union, in particular Articles 263 and 271.

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policies of the MDBs still fall short of international standards and of many of their national ATI law counterparts. Particular problem areas identified in the revised ATI policies of the MDBs include: the breadth of exceptions provided for in the ATI policies (this is particularly noteworthy in the case of the EBRD and EIB); the absence of a harm test from most of the exceptions provided for in the MDB ATI policies; the limitations placed on the operation of public interest tests provided for in the MDB ATI policies, with the EBRD’s policy being most restrictive in this respect; the inclusion of negative overrides in the ATI policies of the WB, IADB and ADB; the extensive provision made in the MDB ATI policies for the vetoing of access by third parties; the relative weakness of the proactive disclosure provisions of the policies, in particular those of the EIB and EBRD; the lack of a specialist and independent appeals mechanism in the ATI policies of the EIB and the EBRD; and the limitations placed on the operation of the appeals mechanisms of the MDBs generally. Addressing these deficiencies would be broadly beneficial. In the first place, and as outlined at the beginning of this chapter, transparency brings many advantages. These advantages accrue not only to those who are affected by projects funded by the MDB and to civil society but also to the MDB itself, to member countries, to borrowers, to third parties who have dealings with the MDBs, and to the general public. Secondly, the MDBs run the risk of being viewed as being hypocritical in demanding the introduction of transparency measures at national level118 while at the same time themselves operating weak ATI regimes. While the content of ATI rules comprises a critical success factor for the operation of access to information regimes, it is important to acknowledge that experience at the level of national ATI laws has demonstrated that the manner in which the rules are implemented in practice is also crucial. Two issues are of critical importance in this regard: the need for transparency in the operation of the MDB ATI policies themselves and the importance of measuring the effectiveness of the various policies. In terms of transparency in the operation of the MDB ATI policies, it is somewhat surprising that there has, to date at least, been a degree of opacity about the operation of some of the MDB ATI policies. In the case of the 118  The World Bank, for example, has introduced initiatives aimed at building capacity in respect of transparency in a number of jurisdictions: see Stefano Migliorisi and Clay Westcott, A Review of World Bank Support for Accountability Institutions in the Context of Governance and Anticorruption, World Bank Independent Evaluation Group, Working Paper 2011/5. The WB also ranks countries in terms of their transparency: http://data .worldbank.org/indicator/IQ.CPA.TRAN.XQ.

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WB, for example, it took a 2014 decision of the external Access to Information Appeals Board to force the WB to disclose copies of access to information requests submitted to the Bank under its ATI policy.119 The WB has begun to proactively publish summaries of some of the information requests it receives. This policy is however subject to restrictions: a summary of a request is only disclosed if the requester agrees, no names are provided, and the full request letter is not made available. Whether the request was granted or not is not disclosed. The ADB publishes a list of requests received and reviewed by ADB as well as a list of denied requests and the reasons for denial. Again no names are provided and the full request letter is not made available. The EIB includes in its annual report some information regarding information requests including very brief summaries of appeal cases as well as information concerning requests such as the category of information requested, the geographic origin of the request and statistics on the outcome of requests.120 The annual reports of the IADB and EBRD ATI mechanisms include similar generic information about requests121 while more limited information has been published regarding the implementation of the AfDB policy.122 More comprehensive disclosure of information regarding the operation of ATI policies would promote greater public confidence in the policies. It could also help to publicise the type of information previously made available under the policies thus potentially reducing the number of formal ATI requests as well as assisting MDBs in making decisions around allocation of resources to their ATI programmes. With regard to measuring the effectiveness of the MDB ATI policies, one approach involves using indicators such as measures of the extension of proactive publication of documents; the timeliness of such proactive publication; the availability of translations of proactively published documents; the length of time it takes to respond to requests for access to information; the proportion of requests resulting in disclosure, partial disclosure or refusal of access to the requested information and the length of time taken to process appeals at both stages of the appeals process as well as many others. The ADB has pioneered the development of ATI policy indicators. These indicators which measure matters such as the % of requests for information answered within 20 days, 119  World Bank Access to Information Appeals Board Decision, Public Access Requests Received by the World Bank in October 2013 and Related Information, Case No. AI 3127, June 11, 2014. 120  E IB, Report on the Implementation of the EIB Group Transparency Policy in 2018, 2019. 121  See IADB, Access to Information Policy Implementation Report, 2015 and EBRD, Public Information Policy Implementation Report, 2017. 122  See AfDB, Disclosure and Access to Information Policy – Three year Implementation Retrospective 2013–2016, 2016.

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the annual increase in documents published on the ADB website, and improvements in the quality of translations of the institution’s promotional materials and documents, among others. It is understood that other MDBs, such as the WB, the AfDB, and the IADB are also considering the development of indicators.123 Research into the operation of such indicators, once adopted, should help to shed useful light on the effectiveness of the MDB ATI policies. Other methodologies such as the conduct of independent research into the experiences of ATI requesters and of those responsible for implementing the policies as well as evaluations of the availability under the various ATI policies of specific types of information can also help to paint a picture of the state of implementation of the MDB ATI policies. Such research can play an important role in informing the shaping of future revisions of the MDB ATI policies. 123  I ADB, Access to Information Policy Implementation Annual Report, 2012, [5.9].

chapter 8

The Independent Accountability Mechanisms and International Standards of Accountability Susan Park 1 Introduction As instruments of global governance, the Multilateral Development Banks (MDBs or Banks) were created to lend developing states capital for economic growth and development that they could not access from private capital markets. The Banks provide both project based lending and more recently, and increasingly, program lending. Over the last three decades harsh and often valid criticism has been directed at the Banks for their lending practices on economic, political, environmental, and human rights grounds. In particular, the Banks have been the focus of attention for being unaccountable for their actions. In response, the Banks have undertaken significant reform both in terms of what they do but also how they engage with their critics (including scholars, other intergovernmental organisations (IOs), nongovernment organisations (NGOs) and donor and borrower states). This chapter examines the extent to which the traditional MDBs have created independent accountability mechanisms (IAMs) to demonstrate how and to whom they are answerable and responsible. These MDBs includes the World Bank, the African Development Bank (AfDB), the Asian Development Bank (ADB), the Inter-American Development Bank, and the European Bank for Reconstruction and Development.1 The chapter first reviews demands for MDB accountability before locating such demands within the conceptual discussions of accountability. It then maps how actors have attempted to measure MDB accountability and what the MDBs have done in response to such demands. More specifically the chapter then investigates the creation of the Banks’ independent accountability mechanisms for holding the Banks to account for their actions when undertaking primarily project based lending. The IAMs constitute a far reaching 1  On the sub-regional multilateral development banks see Tina M. Zappile, ‘Sub-Regional Development Banks: Development as Usual?’ in Susan Park and Jonathan R. Strand (eds), Global Economic Governance and the Development Practices of the Multilateral Development Banks (Routledge 2016).

© Koninklijke Brill NV, Leiden, 2020 | doi:10.1163/9789004337787_009

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accountability practice, undertaking investigations as to whether the Banks have followed their own guidelines in undertaking their operations, and assessing whether non-compliance has led to harm. However, little has been done to assess the extent to which the IAMs themselves are accountable, and if so, to whom. The chapter argues that the IAMs meet bureaucratic stan­ dards of accountability and they have themselves established normative standards of accountability rather than necessarily meeting international normative and legal standards. While some of the IAMs are attempting to meet international legal and normative standards, the IAMs in general are limited in their actions by being tied to member state determined legal agreements establishing their remit. 2

MDB Accountability and the Creations of the IAMs

2.1 Demands for MDB Accountability The 1990s was an era of profound change for the MDBs. Until that time, the MDBs had operated on the basis of their positive mandate and attendant reputation for spurring economic growth and development in their developing member countries. Yet they would increasingly come under scrutiny by their member states, particularly donors, and by non-state actors such as other IOs, civil society groups, and academics. This scrutiny was based on three different factors. First, the end of the Cold War meant that Western donor states were no longer using the MDBs carte blanche but were increasingly questioning whether the Banks were efficient and effective in undertaking their activities.2 Second, the Banks were increasingly under attack for the shift towards program-based lending, namely structural adjustment lending, which critics including United Nations agencies argued effectively limited resource provision to the poorest segments of societies in developing states through macro-economic restructuring and austerity measures.3 Finally, campaigns would emerge from local-global networks of activists around evidence of wide scale environmental degradation and harm to communities through funding

2  Roy Culpeper, The multilateral development banks, Volume 5: Titans or behemoths? (Inter­ mediate Technology Publications 1997). 3  Antje Vetterlein, ‘Change in International Organisations: Innovation or Adaptation? A Comparison of the World Bank and the International Monetary Fund’ in Diane L. Stone and Christopher Wright (eds), The World Bank and Governance: A Decade of Reform and Reaction (Routledge 2007); Ngaire Woods, The Globalizers: The IMF, the World Bank and their Borrowers (Cornell University Press 2006).

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development projects forcing project affected people to relocate.4 Increasingly therefore the MDBs were being forced to respond to their critics for their actions. Responses to these three very different demands for accountability took different forms. In the case of donor member states seeking to establish whether or not the MDBs were efficient and effective in meeting their mandate, this took the form of ‘quasi-external’ investigative probes requested by member states and established by MDB management.5 The results would lead Bank management to make changes to improve Bank activities and to establish metrics for evaluating whether such changes were improving Bank outcomes. In relation to criticisms of the Bank’s role in structural adjustment, the World Bank foremost defended its position and argued for the benefits of reforming developing state economies. Only after a decade of protracted debates did the World Bank and the other MDBs move from what is often called the ‘Washington Consensus’ policy prescriptions to the ‘Post-Washington Consensus’.6 This provided more safety nets for the most marginalised within developing states and advanced the poverty alleviation agenda of all of the MDBs. Finally, in response to campaigns by civil society uncovering widespread social dislocation and environmental degradation, the World Bank at first refused to acknowledge the claims as valid, before rejecting them, then finally accepting them, and then engaging with their critics.7 Recognising the World Bank’s role in environmental degradation and social dislocation took well over a decade. The other Banks did not receive the same degree of criticism but they too undertook reforms to protect communities and the environment throughout the project lending process through the institution of environmental and social safeguard policies.8 Below we conceptualise the changes made by the MDBs in light of sustained criticism over their practices.

4  Susan Park, The World Bank Group and Environmentalists: Changing International Organisa­ tion Identities (Manchester University Press 2010). 5  For example, see World Bank, ‘Effective Implementation: Key to Development Impact’ (Wapenhans Report) (World Bank, 1992). 6  John Williamson, ‘From Reform Agenda to Damaged Brand Name: A Short History of the Washington Consensus and Suggestions for What to do Next’ (2003) 40(3) Finance and Development 10. 7  Park, The World Bank Group and Environmentalists: Changing International Organisation Identities (n 4). 8  Ibid.; Zappile (n 1); Chris Humphreys, ‘The “hassle factor” of MDB lending and borrower demand in Latin America’ in Susan Park and Jonathan R. Strand (eds), Global Economic Governance and the Development Practices of the Multilateral Development Banks (Routledge 2016).

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2.2 What Is Accountability? The MDB’s responses to critics can be understood as enacting different processes of accountability. Before unpacking these processes, it is useful to understand what we mean by accountability. Accountability has multiple definitions but most reflect that of Goetz and Jenkins who argue that accountability denotes a power relationship with the ‘capacity to demand someone engage in reason giving to justify her behaviour, and/or the capacity to impose a penalty for poor performance’.9 Here actors are being held responsible and answerable for ‘decisions and actions (or inactions) which affect others and which are usually undertaken on their behalf’.10 Grant and Keohane go even further to argue that accountability is where ‘some actors have the right to hold other actors to a set of standards, to judge whether they have filled their responsibilities in light of those standards, and to impose sanctions if they determine that those responsibilities have not been met’.11 While Schedler states that ‘A is accountable to B when A is obliged to inform B about A’s (past or future) actions and decisions, to justify them, and to suffer punishment in the case of eventual misconduct’.12 Each of these definitions highlights how accountability is a relational concept, where those being held to account must respond to another who asserts ‘rights of superior authority over those who are accountable, including the rights to demand answers and to impose sanctions’.13 While power is evident in such a relationship – determining that an actor should be held accountable – this too has been examined in light of what actors are held to account for: legal, financial, economic, or reputational reasons. For this reason, even actors that do not seem to hold power over another may still demand and have accepted the right to hold that actor to account for their actions. Thus, even non-traditionally powerful actors like NGOs can demand the MDBs be responsible and answerable for their actions on the basis of how this affects 9  Anne Marie Goetz and Rob Jenkins, Voice, Accountability and Human Development: The Emergence of a New Agenda (UNDP 2002) 5; see also Edward Rubin, ‘The Myth of Non-Bureaucratic Accountability and the Anti-Administrative Impulse’ in Michael W. Dowdle (ed), Public Accountability: Designs, Dilemmas and Experiences (CUP 2006) 74. 10  Byrne, 1990: xi cited in George Jones, ‘The Search for Local Accountability’ in Steve Leach (ed), Strengthening Local Government in the 1990s (Longman 1992) 73. 11  Ruth W. Grant and Robert Keohane, ‘Accountability and Abuses of Power in World Politics’ (2005) 99(1) American Political Science Review’ 29, 29. 12  Andreas Schedler, ‘Conceptualising Accountability’ in Andreas Schedler, Larry Diamond and Marc F. Plattner (eds), The Self-Restraining State: Power and Accountability in New Democracies (Lynne Rienner 1999) 17. 13   Richard Mulgan, ‘Accountability: an Ever-expanding Concept?’ (2000) 78(3) Public Administration 555, 555.

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the reputation of the Banks. In other circumstances, the Banks have legal, financial, or economic contracts and agreements with member states and other entities like private corporations that hold them to account for specific components or interpretations of their lending operations. Of course there is a distinct difference between the MDBs being held to account by their member states and being held answerable and responsible for their actions by groups within civil society. We can unpack these different processes of accountability. Claims in the 1990s that the MDBs were, like any other IOs, unaccountable, were based on increasing demands for a greater say in global governance by non-state actors such as individuals and civil society.14 Scholars argued that IOs suffered a democratic deficit.15 Thus, IOs were considered unaccountable because they were not answerable to the people in developing states that they were having an immediate and tangible effect on, nor to civil society in developed states that were increasingly demanding a say. Yet IOs are accountable in terms of being held responsible for their actions and in being answerable to their member states. This is considered a ‘traditional’ or representative form of accountability. Thus, the member states of the MDBs created the Banks, designing their Articles of Agreements or constitutions to which they would be held.16 Member states representatives sit on the Board of Governors (usually a states’ Treasurer or Finance Minister), who meet several times a year to direct the policy approach of the Banks and the Governors delegate overseeing the Banks to their representatives that sit on the Banks’ Board of Executive Directors. The Board oversees the direction of the Banks’ operations. The Banks’ operations are managed by the Bank President who runs the daily affairs of the Bank and oversees its staff, and who reports to the Board of Executive Directors. This process therefore is one of representative accountability, where the Banks are answerable to representatives of their member states. However this has been criticised as the Banks are financial institutions where the value of a states’ vote depends on the capital contribution that it has committed to the Bank. All of the Banks have weighted voting systems which means that the amount of capital subscribed to the Bank determines the amount of vote the member state has. As a result, the states with the largest vote, such 14  David Held and Mathias Koenig-Archibugi (eds), Global Governance and Public Account­ ability (Blackwell 2005). 15  Andrew Moravcsik, ‘Is there a “Democratic Deficit” in World Politics? A Framework for Analysis’ (2004) 39(2) Government and Opposition 336. 16  Ngaire Woods and Amrita Narlikar, ‘Governance and the Limits of Accountability: The WTO, the IMF and the World Bank’ (2001) 53(170) International Social Science Journal 569.

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as the United States and the rest of the G7 have the greatest influence in the direction of the Banks.17 Moreover, the representative nature of the Banks is dependent on a delegation chain of representation – that the Banks are answerable to the member states and the member states are answerable to their people. Yet despite the increasing democratisation of the international system, there are still many states that are not answerable to their people. Moreover, even in democratic states, the process of accountability remained somewhat subscribed as established by IO decision-making processes in the post-World War Two period, where IOs were accountable to their member states absent transparent decision-making processes. This has been described as ‘executive multilateralism’.18 Representative accountability is vertical, meaning that the delegation chain of responsibility flows from member states, to the Board of the Banks, to Bank management to Bank staff. Within this hierarchy a superior imposes substantive or procedural standards that the subordinate must meet. These are bureaucratic or administrative forms of accountability.19 Attempts to assess whether the Banks are indeed doing as they are proscribed by their member states has led to internal monitoring, reporting, and evaluation efforts to assess compliance with Bank policies and member state directives.20 For example all of the Banks now have post-hoc evaluation departments, such as the Independent Evaluation Group of the World Bank (Group), that examine whether the Banks met their intended goals in their operations. In addition, the Banks also have internal auditing and evaluation departments to assess the extent to which the Banks meet their fiduciary, social, and environmental standards. These are horizontal accountability mechanisms that operate across the organisation as opposed to from the top down.21 For 17  Ibid.; Culpeper (n 2). 18   Michael Zürn, ‘Global Governance and Legitimacy Problems’ in David Held and Mathias Koenig-Archibugi (eds), Global Governance and Public Accountability (Blackwell 2005) 140. 19  Rubin (n 9) 75–76. 20  On the World Bank see: Daniel L. Nielson and Michael J. Tierney, ‘Delegation to International Organizations: Agency Theory and World Bank Environmental Reform’ (2003) 57(2) International Organization 241; Daniel L. Nielson, Michael J. Tierney, Catherine E. Weaver, ‘Bridging the Rationalist-Constructivist Divide: Re-engineering the Culture at the World Bank’ (2006) 9 Journal of International Relations and Development 107; Catherine Weaver, The Hypocrisy Trap: The World Bank and the Poverty of Reform (Princeton University Press 2008); Park, The World Bank Group and Environmentalists: Changing International Organisation Identities (n 4). 21  Alexandru Grigorescu, ‘Horizontal Accountability in Intergovernmental Organisations’ (2008) 22(3) Ethics and International Affairs 285, 286.

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the Banks and other IOs more generally, this includes the creation of ombudsman, ethical conduct and integrity departments, as well as anti-fraud and corruption units that examine allegations of corruption, fraud, and misconduct.22 Many of these units report directly to the Bank President. To this we can add the creation of ‘independent’ accountability mechanisms (IAMs). These are also horizontal mechanisms that seek to assess whether the Banks have met their own social and environmental ‘safeguard’ policies when undertaking their operations in developing states, and to assess claims from project affected people that this has led to harm (although many of them are also vertically accountable in terms of being held to account by their member states on the Banks’ Boards). Efforts to hold actors accountable include ensuring their actions are transparent, as well as devising the means to monitor and evaluate their efforts, and designing sanctions for non-compliance.23 The Banks, like other IOs, have therefore responded to claims that they are unaccountable. While debates continue over the degree to which they are representative (in terms of the weighting of member state shares), the Banks have nonetheless instituted a number of measures to ensure greater accountability. One of the principle means of doing so has been the dramatic increase in transparency, particularly by the World Bank. The World Bank has become significantly more transparent after its first information disclosure policy in 1994. Over time the Bank has shifted from a position of identifying a limited number of documents to be made publicly available to determining that all documents should be publically available. Although the other MDBs are not as transparent as the World Bank, they too have adopted information disclosure policies making it easier to access information on their activities. With increased transparency, including the ability of all actors to access the internal monitoring and evaluation efforts of the Banks, there is greater evidence of the Banks attempts to be responsible and answerable to their critics. In terms of greater monitoring and evaluation, the Banks have all created post-hoc independent evaluation offices that assess the extent to which the Banks are meeting their objectives (again, independent of the operations 22  Ibid.; Daniel D. Bradlow, ‘Private Complainants and International Organizations: A Comparative Study of the Independent Inspection Mechanisms in International Financial Institutions’ (2004–2005) 36 Georgetown Journal of International Law 484; Chris de Cooker (ed), Accountability, Investigation and Due Process in International Organisations’ (Martinus Nijhoff 2005); Florian Hoffmann and Frédéric Mégret, ‘Fostering Human Rights Accountability: An Ombudsman for the United Nations’ (2005) 11 Global Governance 43. 23  Alnoor Ebrahim and Edward Weisband (eds), Global Accountabilities: Participation, Pluralism and Public Ethics (CUP 2007).

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departments that undertake the project lending, but still answerable to the Bank President and the Banks’ Boards). Internal evaluation units and staff are also employed to assess whether loans are meeting their targets during the project cycle. For example in 2000 the World Bank established its Quality Assurance and Compliance Unit (QACU), although this was given a sunset clause and former staff are critical of its ability to ensure that environmental and social safeguards have been met.24 For the other Banks the extent to which internal evaluation and monitoring is possible varies, particularly where resources are limited as has been the case for the AfDB. One area that remains difficult to enact for the MDBs are sanctions where the Banks have been found to be non-compliant. This debate has been particularly pronounced in human rights, where critics argue that the MDBs are legal personalities that must meet international human rights law.25 The Banks in turn have expressed some support for human rights that support economic growth and development but there is little means of sanctioning the Banks for not upholding human rights.26 For environmental protection measures some of the Banks recognise international environmental agreements to which their states are party (IFC and the World Bank). One of the means of addressing this gap was again the creation of the IAMs to hold the Banks to account for meeting their own environmental and social safeguard policies, which some scholars accord the status of international or global administrative law.27 Overall this means that the process for holding the Banks accountable remains within the delegated representative model, rather than being held accountable to the broader public or global civil society. While non-state actors 24   Inder Sud and Jane Olmstead-Rumsey, ‘Development Outcomes of World Bank Projects: Real or Illusory Improvements?’ (IGIS Working Paper, Institute for Global and International Studies, George Washington University 2012) accessed 15 October 2013; Weaver (n 20). 25  Sigrun Skogly, The Human Rights Obligations of the World Bank and the International Monetary Fund (Routledge-Cavendish 2001); Mac Darrow, Between Light and Shadow, The World Bank, The International Monetary Fund and International Human Rights Law (Hart Publishing 2003); Sanae Fujita, The World Bank, Asian Development Bank and Human Rights (Edward Elgar 2013). 26   Daniel Braaten, ‘Ambivalent Engagement: Human Rights and the Multilateral Development Banks’ in Susan Park and Jonathan R. Strand (eds), Global Economic Governance and the Development Practices of the Multilateral Development Banks (Routledge 2016). 27   Benedict Kingsbury, Nico Krisch and Richard B. Stewart, ‘Emergence of Global Administrative Law’ (2005) 68(15) Law and Contemporary Problems 15.

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have been critical to the creation of many of these mechanisms as discussed below, the Banks are still answerable to their member states. It has therefore been member states that ultimately determine the grounds for MDB accountability as well as the metrics for assessing whether the Banks are accountable.28 The establishment of the independent accountability mechanisms however created a new process of accountability, opening the Banks up to being exter­ nally accountable, where the Banks are ‘held accountable to those affected by its [their] actions’.29 While these mechanisms report to their Banks’ Boards or Presidents, they have created a means for the Banks to be answerable to people for any harm they have inflicted during their lending operations. This was innovative in international law for creating a non-contractual relationship between the Banks and individuals.30 Of import here is the extent to which the MDB’s are accountable both to their member states and to people affected by the Banks actions through the IAMs, which are outlined next. 3

Creating the IAMs

The IAMs of the large MDBs were created between 1994 and 2004, with an increasing number of multilateral, bilateral, and private lenders adopting the model of independent accountability mechanisms.31 The first MDB to do so was the World Bank which was reacting to an internal report (the Wapenhans report) outlining the Bank’s high level of project failures, as well as a wave of environmental and social campaigns against large scale Bank projects in the late 1980s and early 1990s, which culminated with the Narmada dam project in India. The Narmada dam was in part funded by two World Bank loans, and activists demanded the Bank address the environmental 28  Park, The World Bank Group and Environmentalists: Changing International Organisation Identities (n 4); Susan Park, ‘Assessing Accountability in Practice: The Asian Development Bank’s Accountability Mechanism’ (2015) 6(4) Global Policy 455; Susan Park, ‘Institutional Isomorphism and the Asian Development Bank’s Accountability Mechanism: Some­ thing Old, Something New; Something Borrowed, Something Blue?’ (2014) 27(2) Pacific Review 217. 29  Mathias Koenig-Archibugi, ‘Transnational corporations and public accountability,’ (2004) Government and Opposition, 39(2) 236. 30  Daniel Bradlow, ‘International Organizations and Private Complainants: The Case of the World Bank Inspection Panel’ (1994) 34 Virginia Journal of International Law 553. 31  David B. Hunter, ‘Civil Society Networks and the Development of Environmental Standards at International Financial Institutions’ (2008) 8(2) Chicago Journal of International Law 437; Zappile (n 1).

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and social fall-out of the project. This lead the Bank to establish an independent investigation into the effects of the dam which upheld many of the activists’ claims.32 Member states on the Board, particularly the Dutch became increasingly determined that some form of redress mechanism be established by the Bank to ensure such damage be prevented in the future. The US put forward a proposal for an independent accountability mechanism for the World Bank, opening it up to hear project affected peoples (PAP) claims, even though the focus for the Board of Executive Directors was how to improve Bank compliance with its own policies. The US then threatened the World Bank with with-holding funding to the International Development Association – 10 (the tenth round of replenishing the Bank’s soft loan window for the poorest borrowing states) until the Bank created such a mechanism. This was crucial to the creation of what would become known as the Inspection Panel rather than the creation of an in-house compliance mechanism to improve the Bank’s project performance.33 After the World Bank created its Inspection Panel the other Banks followed suit. All MDBs were perceived to be non-transparent, ineffective and unaccountable and donors, including the G7, made it clear that greater MDB accountability was needed.34 The World Bank’s Inspection Panel created a ‘ripple effect on the global decision-making process’ because the MDBs had the same major shareholders.35 To that end, the IDB created its mechanism in 1994, the ADB 1995 and the rest of the World Bank Group in 1999. After a gap the EBRD and the AfDB would then create theirs in 2003 and 2004 respectively.

32  Bradford Morse and Thomas R. Berger, Sardar Sarovar – Report of the Independent Review (Resource Futures International 1992) accessed 12 August 2018. 33   Susan Park, ‘Designing Accountability, International Economic Organisations, and the World Bank’s Inspection Panel’ (2010) 64(1) Australian Journal of International Affairs 13. 34  Richard E. Bissell and Suresh Nanwani, ‘Multilateral Development Bank Accountability Mechanisms: Developments and Challenges’ (2009) 3(2) Central European Bank of International and Security Studies 154; Eisuke Suzuki, and Suresh Nanwani, ‘Responsibility of International Organisations: The Accountability Mechanisms of Multilateral Development Banks’ (2006) 27 Michigan Journal of International Law 177, 187. 35  Suzuki and Nanwani, ibid., 177.

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Table 8.1 The IAMs of the MDBs

Multilateral Development Bank

IAM

Year established

World Bank Inter-American Development Bank

Inspection Panel Independent Consultation and Investigation Mechanism (known by its Spanish acronym MICI) – formerly the Independent Investigation Mechanism (1994–2008) Accountability Mechanism (formerly the Inspection Function 1995–2002) Compliance Advisor/ Ombudsman

1993 1994

Asian Development Bank

1995

1999 World Bank Group (comprised of the International Finance Corporation and the Multilateral Investment Guarantee Agency) 2003 European Bank for Project Complaint Mechanism Reconstruction and Development (formerly the Independent Recourse Mechanism) African Development Bank Independent Review Mechanism 2004

4

The Function of the IAMs

It is useful to look at the activities of the IAMs within the context of six standard questions of accountability:36 1) Who is being held to account? 2) To whom is accountability owed? 3) For what are they accountable? 4) What process demonstrates accountability? 5) What standards does an agent use to demonstrate accountability? 6) What happens when the agent fails to meet these standards?

36  J erry L. Mashaw, ‘Accountability in Institutional Design: Some Thoughts on the Grammar of Governance’ in Michael W. Dowdle (ed), Public Accountability: Designs, Dilemmas and Experiences (CUP 2006) 118.

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Table 8.2 Unpacking the IAM-MDB accountability relationship

Foundational Questions of Accountability (Mashaw 2006: 118)

The Relationship between the IAMs and the MDBs

What is the purpose of the IAM? Who does the IAM hold to account? To Whom is accountability owed?

To provide recourse to people that claim they have been harmed by MDB financed projects. The MDBs

For what is accountability owed? What process demonstrates accountability? What standards are used to demonstrate accountability?

What happens when the agent fails to meet these standards?

People harmed or likely to be harmed as a result of an MDB-financed project in borrower member states. Whether MDB actions or omissions led to harm as a result of noncompliance with the Banks own environmental and social ‘safeguard’ policies An independent investigation conducted by social and environmental experts into the cause of harm, with full access to all mdb documents The IAM produces reports detailing the investigation where they outline the harm and how this was or was not caused by Bank actions or omissions in meeting their environmental and social safeguard policies. The reports are based on reconstructing the Banks’ practices through Bank documents and staff interviews, expert assessments of environmental and social conditions and interviews with claimants and local stakeholders. Where the Banks have been found to be noncompliant with their own policies the IAMs make recommendations to the Board or President on how the Banks can rectify their behaviour to make them compliant. In some instances such as the ADB’s Accountability Mechanism the IAM may then continue to report to the Board on whether the Bank has met those recommendations.

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The purpose of the mechanisms is to provide recourse for people harmed or likely to be harmed as a result of a development project financed by the MDB in borrower member states. As the IAMs point out, the concept of harm is ‘defined broadly to include a range of adverse effects on people, communities, and the environment’.37 The IAMs examine whether harm has occurred and whether this has been the result of an action or omission of the Banks in meeting their own policies that seek to protect communities and the environment throughout the development project process (in other words, whether the Banks have undertaken due diligence in meeting their operational policies, procedures, and guidelines with regard to environmental and social matters). Up to April 2012, the IAMs have investigated 260 cases in 72 borrowing member states. These cover a range of concerns most notably the following: inadequate compensation for forced resettlement; destruction of culturally significant or ecologically unique landscapes; loss of traditional user-rights to forest or other natural resources; loss of access to resources or livelihoods; environmental degradation; threats to community health or safety resulting from increased levels of air pollution or poor road design; loss of livelihood resulting from regulatory or policy reforms; and poor project implementation stemming from inadequate consultation, participation, or information-sharing.38 The IAMs are often considered a last resort for people affected by development projects funded by the MDBs. The Banks have a number of processes built into the project cycle to ensure community awareness of the development project including stakeholder engagement and participation and information disclosure procedures. Should communities have concerns about the project they have the right to speak with the operations departments of the Banks undertaking the project at any time during the project cycle (from the initial loan proposal through to the loan’s final disbursement). Nonetheless, there remain instances where communities remain unaware of whom is financing the project or where their concerns are not adequately addressed in discussions with the operations departments. When this occurs, people and communities then have the right to seek recourse through making a complaint to the IAMs. 37  Kristen Lewis, Citizen-Driven Accountability for Sustainable Development: Giving Affected People a Greater Voice – 20 Years On (Independent Accountability Mechanisms Network, June 2012) 1 accessed 12 August 2018. 38  Ibid.

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In making a complaint to the IAMs, project complainants are seeking recourse for being harmed or the potential for harm to occur. It is important for the IAMs to therefore identify whether harm has occurred as a result of Bank non-compliance with its own environmental and social policies. The IAM mandate is therefore limited to linking these two factors. If the IAM is aware of non-compliance with Bank policies but no harm has occurred, then there are no grounds for an investigation. Similarly, harm may have occurred but this may not be a result of non-compliance of the Banks with their policies, thus limiting the recommendations the IAMs can make requiring Bank actions. The IAMs investigations are ‘citizen-driven’ in the sense that a claim must come from an affected person. The IAMs establish the rights of individuals and communities in relation to how MDB operations affect them and to have their grievances addressed.39 The IAMs differ slightly in their requirements for a claim to be made regarding the number of people (most of the Banks require two or more claimants that are affected by the project), the location of the claimants, how the claim is made (such as the language and method of delivery, via email or by post). The EBRD’s IAM for example changed its provisions to allow NGOs as well as affected people to submit claims before their IAM, thus extending the scope for claims to be made. Once a claim has been submitted the IAMs determine whether the claim is valid (i.e. that it is not frivolous and fits within the mandate of the IAM) in order to determine whether an investigation should be undertaken.40 Once a claim has been accepted as valid an investigation begins. The IAM conducts its investigation through reviewing all of the project documents, interviewing all staff involved in the project and hiring social and environmental experts to assess conditions at the project site. The IAM also interviews the claimants and local stakeholders. The IAM sifts through the evidence and produces a report detailing the investigation where they outline the harm and how this was or was not caused by Bank actions or omissions in meeting their environmental and social safeguard policies. It is important to note that loan disbursements would not be stopped or the project interrupted by a request to investigate claims that people have been or are likely to be affected by a project. This necessarily limits the ability of the IAM to provide remedies to PAP. For example, it may preclude options that 39  Dana Clark, Jonathan Fox, and Kay Treakle (eds), Demanding Accountability: Civil-Society Claims and the World Bank Inspection Panel (Rowman and Littlefield 2003). 40  Identifying the similarities and differences of each of the mechanism is beyond the scope of this chapter but see Maartje van Putten, Policing the Banks: Accountability Mechanisms for the Financial Sector (McGill-Queen’s University Press 2008).

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requestors may want including stopping the project altogether or substantially changing the project such as its location or design. Furthermore, a request may be submitted at any time throughout the project design or implementation stages; the later the request for investigation the less recourse may be available as environmental damage may not be rectifiable or a return to previous livelihoods may be impossible. In short, the IAMs may only be able to ameliorate the damage resulting from the project rather than stopping it. What this means however is that the IAMs do not guarantee redress.41 Nonetheless in terms of outcomes of investigations the IAMs have: Helped broker solutions to safeguard people’s health, livelihoods, rights, cultural heritage, and ways of life; Catalyzed actions necessary for IFIs to bring their projects into compliance with their own published policies and standards; Protected unique environments from damage, at times potentially irreversible; Provided people and communities adversely affected by IFI-funded projects redress to rebuild their lives and livelihoods; and Improved the social and environmental sustainability of development projects.42 While there are cases where it is clear that the IAMs have not been able to improve the plight of PAP there is also evidence that they do provide redress for people negatively affected by MDB financed projects. 5

Bureaucratic and Normative Standards of IAM Accountability

Having outlined the actions of the IAMs within an accountability framework it is now critical to assess whether they themselves comprise or meet international standards of accountability. Recall that the IAMs hold the MDBs to account because they have the ‘capacity to demand someone [the Banks] engage in reason giving to justify her [their] behaviour, and/or the capacity to impose a penalty for poor performance’.43 The IAMs seek explanations for MDB decisions and actions that have negatively affected people. The IAMs can provide recommendations on how the Banks should rectify their behaviour, this 41  Andria Naude Fourie, The World Bank Inspection Panel and Quasi-Judicial Oversight: In Search of the ‘Judicial Spirit’ in Public International Law (Utrecht: Eleven International Publishing 2009). 42  Lewis (n 38) 3. 43  Goetz and Jenkins (n 9) 5.

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comprises both a reputational and costly ‘penalty’ for the Banks to be found non-compliant with their own policies. Additionally, the IAMs can be understood as meeting bureaucratic accountability as well as comprising normative accountability standards for international development lending. While these are two metrics for assessing the IAMs, how they meet broader international standards remains circumscribed by their being part of IOs that are dependent on member states. 5.1 Meeting Bureaucratic Standards of Accountability The IAMs are bureaucratically accountable.44 This means they adhere to substantive and procedural standards as outlined by the legal documents establishing them and follow bureaucratic procedures for demonstrating that to their superior (through submitting annual reports and other documents to their Bank President or Board). The IAMs have distilled five substantive indicators for how they attempt to undertake their mandate: that they are independent, transparent, impartial, accessible, and responsive.45 The IAMs are independent in the sense that they are not part of the Bank’s ordinary operations and do not report to line management. Some report directly to the Bank’s President, as is the case for the Compliance Advisor Ombudsman of the World Bank Group, others directly to the Bank’s Board of Executive Directors as is the case of the World Bank’s Inspection Panel. Some have shifted over time with less Presidential involvement as with the IAM for the EBRD, and others have split their responsibilities with some aspects of the mechanism reporting to management and other components reporting to the Board as is the case with the Accountability Mechanism for the ADB. At the outset there were attempts by Bank management to interfere with the claims process and to deny the validity of claims coming before the IAMs. Attempts to curtail the investigations of the World Bank Inspection Panel by Bank management and the Board led to two ‘clarifications’ of the panel process concluding with an agreement by Bank management not to veer from the process allowing a Panel investigation and for the Board to approve investigations on a ‘no-objection basis.’ The first iteration of the ADB’s Inspection Function also had difficulty with Bank management rejecting the recommendations made by its Experts to the Board, undermining the process and contributing to the restructure of the IAM in 2003.46 The IDB’s first IAM, its Independent Investigation Mechanism was 44  Rubin (n 9) 75–76. 45  Lewis (n 38) 10–11. 46  Park, ‘Assessing Accountability in Practice: The Asian Development Bank’s Accountability Mechanism’ (n 29); Park, ‘Institutional Isomorphism and the Asian Development Bank’s

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independent in name only with the Bank president and management intimately involved in responding to claims by affected people leading initial claims to be rejected by the IDB’s Board.47 This led to its restructure in 2010. Concerns over having the IAM as integral to the management structure of the EBRD led the Board to make the IAM more independent during its revision in 2009. As the IAM Network states, the IAMs have become more independent over time.48 All of the IAMs are increasingly transparent in documenting the process for a claim, often providing a flow chart for affected peoples as to how the process will proceed. They all maintain their own websites, indicate which claims have been accepted, and where in the process each investigation is at. All of the IAMs provide a claims history and access to the registry of claims submitted to the IAMs and their outcomes, which is freely available. The IAMs produce annual reports of their activities and undertake information sessions to identify their activities to people in project areas. Trust is the basis for the work the IAMs undertake. The IAMs must be considered impartial in reviewing and investigating a claim made by people against the Banks, particularly where this could lead to further harm for speaking out. Therefore, Parties to a dispute must feel confident that investigators and mediators are not predisposed to favoring one position or another, beholden to a particular institution, sector, or movement, imbued with the institutional culture and values of the IFI in question, or likely to face a conflict of interest.49 The mechanisms are part of the Banks in the sense that they are located in the Banks, the Bank pays the salaries of the staff as Bank employees. However, most of the mechanisms preclude IAM staff from resuming work within a specified timeframe with the Banks after their term has ended thus providing a buffer between staff of the Banks and the IAMs. Some of the IAMs also hire experts to undertake investigations on their behalf and many of these may have built in provisions for not being able to renew contracts to ensure complete impartiality. Accountability Mechanism: Something Old, Something New; Something Borrowed, Something Blue?’ (n 29). 47  Walter Filho and Rene Rios, Accountability Issues in International Development Projects, (Frankfurt am Main, Peter Lang 2007). 48  Lewis (n 38). 49  Ibid. 9.

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In terms of access and responsiveness, all of the IAMs have had difficulty in being known by project affected people. As small units within the MDBs, the IAMs are dependent on being accessed via the internet and through meetings in borrower member states. However, the IAMs have exerted effort in reaching out to civil society groups to spread word of their existence. Additionally the IAMs have frequently budgeted for public relations exercises to make their work better known. At the outset there were difficulties in providing information to claimants as to the time of the investigation as well as the potential outcomes. All of the IAMs have improved the transparency of their processes as well as having aimed to reduce the time taken for each investigation while still conducting thorough enquiries. Thus, the ‘IAMs generally have guidelines that require decisions about whether or not to register a case to be made within a very short period of time, and some even try to impose a timeline for dispute resolution or investigation, though this is not always possible’.50 5.2 The IAMs and Normative Standards of Accountability As can be identified, the bureaucratic standards are also normative in terms of establishing substantive criteria for outlining how the IAMs meet their mandate. Elsewhere the IAMs have also identified two further indicators for how they meet their mandate: efficiency and effectiveness.51 What is important is how these standards have developed over time by the IAMs themselves. They are in effect, the result of the IAMs coming together to create a network52 or a ‘community of practice’ where the investigators have established their own standards for how to assess themselves in meeting their mandates.53 Although the legal documents creating the IAMs are quite specific in some regards (such as to whom they report), in others there is considerable leeway for understanding how they would work in practice, including how they would divide up their work load and conduct an investigation.54 This is because many of the IAMs were the products of heated debates within and outside the Banks. The World Bank Inspection Panel was the most vitriolic arising out of high profile ‘problem projects’ but there was also intense debate over the need for the IAMs in the other Banks. This often left the design and procedural issues to the IAMs themselves to determine how best to undertake their operations while being responsive to PAP and answerable to the Board or President. Despite 50  Ibid. 10. 51  World Bank, The Inspection Panel at 15 Years (World Bank, 2009) 111. 52  Lewis (n 38). 53  Etienne Wenger, Communities of Practice: Learning, Meaning and Identity (CUP 2012). 54  World Bank, The Inspection Panel at 15 Years (n 53).

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this, or perhaps because of it, the IAMs have distilled their own normative standards for how they meet their mandates as outlined above. As a result of their origin and location within the MDBs the IAMs do not have the independence to determine when and how they meet international legal standards. While the EBRD’s Project Complaint Mechanism does address EU legal and normative standards, this is only because the EBRD’s Environmental and Social Policy incorporates it. The other IAMs are not guided in how they interpret harm to have occurred in MDB financed projects and what the ongoing effects are. As a result, the IAMs tend to fit within the interpretation of the relationship between the MDB and international law as determined by the MDB.55 To date, it is only the Compliance Advisor/Ombudsman of the World Bank Group that makes clear where they sit in relation to other international normative standards, stating that they adhere to the United Nations Guiding Principles on Business and Human Rights, which outline criteria for recourse and redress.56 As a result, while the IAMs have established international normative standards for their work in holding the MDBs to account, there is more work to be done to link what the IAMs and the MDBs do to international normative and legal standards. Some, such as the World Bank Inspection Panel have attempted to do just that.57 However, the IAMs remain circumscribed by their dependence on Bank member states willingness to allow or ignore innovations in how the IAMs conduct their operations. 6

Conclusion: the IAMs and International Standards of Accountability

The MDBs have undertaken significant reform in terms of accountability: in terms of what they do and how they engage with their critics. This chapter examined how the Banks responded to claims that they were unaccountable through the creation of both vertical and horizontal accountability procedures. Of primary interest here was the creation in the 1990s and early 2000s of the Independent Accountability Mechanisms. The IAMs constitute a far reaching accountability practice, undertaking investigations as to whether the Banks have followed their own guidelines in undertaking their operations and assessing whether non-compliance has led to harm. However, little has 55  Braaten (n 26). 56  ‘The CAO at 10: Annual Report FY2010 and Review FY2000–2010’ (Compliance Advisor/ Ombudsman, 2010). 57  World Bank, The Inspection Panel at 15 Years (n 53) 50.

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been done to assess the extent to which the IAMs themselves are accountable and if so to whom. The chapter locates the IAMs within definitions and six standard framework questions of accountability. It then unpacks the indicators of IAM accountability, arguing that these fit both bureaucratic forms of being accountable (to the IAMs superior, the Bank President or Board) as well as substantive normative accountability. Such normative criteria were derived by the IAMs themselves, emerging out of contestation between member states for the creation of the mechanisms but also as a result of the formation of a community of practice of the IAMs. The chapter concludes by arguing that the IAMs meet bureaucratic standards of accountability and they have themselves established normative standards of accountability rather than meet international normative and legal standards. While some of the other IAMs are attempting to meet international legal and normative standards the IAMs in general are limited in their actions by being tied to member state determined legal agreements establishing their remit.

chapter 9

Comprehensive Methodologies to Facilitate Learning within the IAM Community of Practice Andria Naudé Fourie 1 Introduction The contributions in this volume share different perspectives on the independent accountability mechanisms (IAMs) established by prominent development financing institutions, and the contributions these IAMs make towards promoting good governance principles within the broader development context. Such perspectives, in turn, are typically based on the experiences of practitioners, analyses of the IAMs’ institutional mandates and operating procedures, and – of particular importance for this chapter – the cases filed at the IAMs. What had started in 1994 as a modest number of cases filed at the World Bank’s Inspection Panel (Panel) had since grown into a body of practice of increasing scale and complexity – as reflected, for instance, in the growing number of new IAMs created since the Panel’s establishment; the growing number of cases filed at individual IAMs; the diversifying range of functions fulfilled by IAMs; and in the fact that development projects, the subjects of IAM scrutiny, are increasingly co-financed by development finance institutions that are likely to involve more than one IAM. As this body of practice continues to evolve, moreover, the need for developing comprehensive methodologies for studying it becomes all the more important. For it is through the development and deployment of comprehensive methodologies that we can realise the opportunities, while addressing the challenges, presented by IAM practice. Importantly, this includes the opportunity to study the application and normative development of good governance principles, and to share this learning throughout the IAM ‘community of practice’ – a community consisting of a wide range of practitioners, researchers and tertiary-level students from various disciplines.1 Such interaction within 1  An embodiment of this community of practice is the (growing) IAMs Network, a ‘network of members and staff of the IAMs, who seek to identify and foster means for cooperation within their respective mandates, contribute to the regular exchange of ideas and best practices, and assist with institutional capacity-building in accountability as

© Koninklijke Brill NV, Leiden, 2020 | doi:10.1163/9789004337787_010

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the community of IAM practice can serve to promote the quality of IAM practice, which, in turn, can contribute to strengthening the credibility of IAMs as generators of good governance practice – both within their respective institutions and with respect to their external stakeholders – while also highlighting the normativity and enforceability of good governance principles. This chapter presents such a methodology with the aim of furthering these objectives. The perspectives offered here are based on the author’s experiences with designing and deploying a research methodology to study the entire body of practice of prominent IAMs at multilateral development banks (MDBs) – an ongoing research project that had first started in 2005.2 The insights derived from this long-term research project had facilitated the generation of research output, as well as graduate-level teaching of students in public international law and public administration. Taking a step back, section 2 of this chapter reviews key opportunities and challenges that studying IAM practice presents to practitioners, researchers and students. Section 3 provides an overview of the IAM practice research project (project) and its underlying methodology. The discussion focuses on the linchpin of the methodology: the design and development (construction) of a multipurpose database of IAM practice material (IAM practice database or database). Section 4 concludes the chapter by reflecting on some of the lessons learnt from developing and deploying the research methodology. Section 5 contains an appendix with supplementing illustrative material.

components of corporate governance.’: Kristen Lewis, Citizen-Driven Accountability for Sustainable Development: Giving Affected People a Greater Voice – 20 Years On (Independent Accountability Mechanisms Network, June 2012) 2 accessed 12 August 2018. On the notion of ‘communities of practice’, see e.g., Emanuel Adler, Communitarian International Relations: The Epistemic Foundations of International Relations (Routledge 2005) 13; and Jutta Brunnée and Stephen J. Toope, Legitimacy and Legality in International Law: An Interactional Account (CUP 2010) 86. 2  As of August 2017, the project’s scope included: the World Bank’s Inspection Panel, accessed 18 August 2018; the IFC and MIGA’s Compliance Advisory Ombudsman accessed 18 August 2018; the AfDB’s Independent Review Mechanism: (African Development Bank Group) accessed 18 August 2018; the ADB’s Accountability Mechanism: ‘Accountability Mechanism’ (Asian Development Bank) accessed 18 August 2018; the IADB’s Independent Consultation and Investigation Mechanism accessed 18 August 2018; the EBRD’s Project Complaint Mechanism: ‘Project Complaint Mechanism’ (European Bank for Reconstruction and Development) accessed 18 August 2018.

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Opportunities and Challenges Presented by Studying IAM Practice

2.1 Revisiting Opportunities Given the amount of criticism about the adequacy of IAM mandates and the effectiveness of their operations (particularly in providing project-affected people with effective remedies),3 it is perhaps necessary to start this discussion by emphasising the following point: important as the issue of IAM effectiveness remains, and valid as the criticisms leveled at IAMs may be, IAM practice offers significant opportunities for various types of inquiry and learning. In other words, criticisms concerning IAM effectiveness should not be taken as conclusive evidence that IAM practice does not hold much value. What can be argued, however, is that some of the initial expectations about specific opportunities presented by IAM practice remain to be met – or, perhaps, are being met in unexpected ways. For instance, questions remain about whether MDBs truly view IAM reports as credible sources of institutional learning;4 whereas some international legal scholars have expressed disappointment with the IAMs’ lack of applying (or even directly referencing) public international law or have questioned their contribution towards the normative development of public international law.5 3  See e.g., Richard E. Bissell & Suresh Nanwani, ‘Multilateral Development Bank Accountability Mechanisms: Developments and Challenges’ (2009) 6 Manchester Journal of International Economic Law 1, 2; Enrique R. Carrasco and Alison K. Guernsey, ‘The World Bank’s Inspection Panel: Promoting True Accountability Through Arbitration’, (2008) 41(3) Cornell International Law Journal 577; Mariarita Circi, ‘The World Bank Inspection Panel: Is It Really Effective?’ (2006) 6 Global Jurist Advances 3, 1; Dana L. Clark, ‘The World Bank and Human Rights: The Need for Greater Accountability’ (2002) 15 Harvard Human Rights Journal 206; Eisuke Suzuki and Suresh Nanwani, ‘Responsibility of International Organizations: The Accountability Mechanisms of Multilateral Development Bank’ (2005–2006) Michigan Journal of International Law 177, 219. 4  See e.g., Daniel D. Bradlow, ‘A Test Case for the World Bank’ (1996) 11(2) American University Journal of International Law & Policy 247, 286; and Maartje van Putten, Policing the Banks: Accountability Mechanisms for the Financial Sector (McGill-Queen’s University Press 2008) 235; but see Edith Brown Weiss, ‘On Being Accountable in a Kaleidoscopic World’ (2010) 104 American Society of International Law 477, 486–487. See World Bank Management’s remarks in South Africa: Eskom Investment Support (Project ID P116410) xxxii. 5  See e.g., Benedict Kingsbury, ‘Operational Policies of International Institutions as Part of the Law-Making Process: The World Bank and Indigenous Peoples’ in Guy S. Goodwin-Gill and Stefan Talmon (eds), The Reality of International Law: Essays in Honour of Ian Brownlie (OUP 1999) 323; but see Celine Tan, quoted by B. S. Chimni, ‘International Financial Institutions and International Law: A Third World Perspective’ in Daniel D. Bradlow and David Hunter (eds), International Financial Institutions and International Law (Kluwer Law International 2010) 50. See also Andria Naudé Fourie, ‘The World Bank Inspection Panel’s Normative Potential: A Critical Assessment, and a Restatement’ (2012) LIX Netherlands International

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On the other hand, the opportunities represented by IAM practice are inherent to the nature of the IAMs’ mandates and the way in which they have come to operate in practice. For instance, IAMs have generally been at the forefront of promoting transparency at development institutions. They have ensured that the material generated in the course of their procedures is placed in the public domain – sometimes in the face of intense institutional pressure – and have, on occasion, publically shared information beyond what their formal mandates dictated.6 Moreover, IAM practice is, at its very heart, a citizen-driven process. While IAM mechanisms can typically be triggered from within the particular institution,7 the overwhelming majority of IAM cases originate from the outside – in other words, from project-affected people and/or their authorised (civil society) representatives.8 To be sure, IAMs can affect the process by employing ‘strict’ or ‘narrow’ interpretations of admissibility and/or eligibility criteria, whereas the institutional bodies ultimately authorising IAM investigations (such as an MDB’s President or Board of Executive Directors) can decide to exclude certain claims from the IAM’s investigative scope. However, such decisions will typically be a matter of public record and can, therefore, also be of significance. As for which aspects of IAM practice holds the most opportunities for learning, that would, naturally, depend on the specific objectives of an inquiry. For the research project discussed in this chapter, the practice material generated over the course of IAM fact-finding and compliance audit or review, as well as the formal and informal policy advice that IAMs provide to their affiliated institutions, have proven to hold the most value – especially for analysing normative development.9 Law Review 199, arguing that the Inspection Panel’s ‘potential for normative development has to be qualified or, perhaps, restated given its institutional reality within the World Bank’. 6  See e.g., Daniel D. Bradlow and Andria Naudé Fourie, ‘The Operational Policies of the World Bank and the International Finance Corporation: Creating Law-Making and Law-Governed Institutions?’ (2013) 10 International Organizations Law Review 3, 57–59; and see Andria Naudé Fourie, World Bank Accountability – In Theory and in Practice (Eleven International Publishing 2016) ch 11. 7  E.g., by member of the MDB’s Board of Executive Directors; by the MDB’s President – and in case of IFC/MIGA CAO, the head of the IAM. 8  For statistics, see e.g., Andria Naudé Fourie, The World Bank Inspection Panel Casebook (Eleven International Publishing 2014) 581. 9  The formal functions that IAMs have been mandated to fulfill are set out in their respective ‘founding’ documents. In practice, IAMs have also adopted informal functions – the World Bank’s Inspection Panel being a prime example. See e.g., Bradlow and Naudé Fourie, ‘The Operational Policies of the World Bank and the International Finance Corporation:

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That is not to say, of course, that material generated as part of the IAMs’ problem-solving function cannot make similar contributions. However, problem-solving is a remedy-oriented process that often requires higher degrees of informality and confidentiality in order for the parties to reach agreement. Subsequently, not all of the material generated as part of this process might be publically available; whereas the material that is placed in the public domain tends to set out specific information related to the facts, the process and the outcomes that have been reached – what the substance of opposing arguments had been, or the reasoning behind certain outcomes. For this research project, the opportunities presented by IAM practice have proven to be manifold. Four of these opportunities will be highlighted here. 2.1.1 IAM Practice as a Window onto the Development Context IAM practice has provided a window onto the development-lending operations of multilateral development banks. This window allows for the descriptive analyses of different categories of actors involved in development-lending operations, for instance, and the various functions they fulfil; of the governance, management and other decision-making structures and processes involved; of the development project cycle and the operational activities and processes involved therein; and, finally, of the intersecting legal and social normative systems underlying MDB development-lending operations.10 The significance of this opportunity alone should be emphasised in light of the fact that ‘the developmental work of international organizations’ such as the ‘[International Monetary Fund], the World Bank Group,’ and, as Bradlow and Hunter remark, ‘the regional development banks’ has traditionally ‘received relatively less attention from international legal scholars’.11 Similar remarks can probably be made about the focus of tertiary (legal) education. 2.1.2 Studying Intersecting Normative Systems IAM practice offered significant opportunities to study the interaction between the normative systems underlying MDB development-lending operations, as well as the normative development of a critical component, namely: the Creating Law-Making and Law-Governed Institutions?’ (n 6) and see Naudé Fourie, World Bank Accountability – In Theory and in Practice (n 6) ch 7. Recent reforms to the Inspection Panel’s Operating Procedures also reflect these new functions, developed through practice. 10  See e.g., Naudé Fourie, World Bank Accountability – In Theory and in Practice (n 6) chs 3, 4 and 5. 11  Daniel D. Bradlow and David Hunter (eds), International Financial Institutions and International Law (Kluwer Law International 2010) xxix.

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operational policies and procedures (OP&Ps) adopted by MDBs over the past few decades and applied throughout their development-lending portfolios.12 These operational policy frameworks include policies and procedures specifically aimed at ‘safeguarding’ specific economic, social and environmental interests and ensuring the realisation of ‘good governance’ in development practice. The normative development of these OP&Ps, therefore, is of significance for the broader development context and, because of their linkages to existing public international law, also for the international legal system.13 2.1.3 Understanding the Place of Law This project has a specific interest in understanding the place of legal normativity (law) in what has been called the ‘transnational’,14 ‘postnational’15 or ‘global administrative space’.16 IAM practice has provided the opportunity to analyse the ‘differences law makes in [transnational or global regulatory governance] regimes’.17 Included in this analysis has been the development of new conceptions of ‘law and its roles’, which have been ‘emerging’, as Kingsbury argues, in part because multilateral institutions ‘have increasingly sought to shore up their legitimacy, and to enhance the effectiveness of their regulatory activities, by applying to (and between) themselves procedural norms’ – including ‘transparency, participation, reasoned decision making, … legality’ – and by establishing ‘mechanisms of review and accountability’, such as the IAMs.18

12  Note, the World Bank’s OP&Ps have recently been revised significantly; however, updated versions of the policies (operational since October 2018) do not apply retroactively. World Bank Inspection Panel practice referred to in this chapter has been based on previous versions of the World Bank’s OP&Ps. 13  Bradlow and Hunter (n 11). On examples of the linkages between World Bank operational policies and other normative systems (including the international legal system), see Naudé Fourie, World Bank Accountability – In Theory and in Practice (n 6) ch 5. 14  See e.g., Armin von Bogdandy, Rudiger Wolfrum, Jochen von Bernstorff, Philipp Dann, and Matthias Goldmann (eds), The Exercise of Public Authority by International Institutions: Advancing International Institutional Law (Springer 2010) 7. 15  Thomas N. Hale and David Held, ‘Editors’ Introduction: Mapping Changes in Transnational Governance’ in Thomas N. Hale and David Held (eds), Handbook of Transitional Governance: New Institutions and Innovations (Polity Press 2011) 5. 16  Benedict Kingsbury, ‘Global Administrative Law in the Institutional Practice of Global Regulatory Governance’ in Hassane Cisse, Daniel D. Bradlow and Benedict Kingsbury (eds), The World Bank Legal Review, Volume 3: International Financial Institutions and Global Legal Governance (World Bank 2011). 17  Ibid. 18  Ibid.

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2.1.4 Facilitating an Interdisciplinary Inquiry Finally, transnational or global regulatory governance regimes – of which the development context represents a prominent example – are marked by high degrees of pluralism and ‘dynamic complexity’ that benefits from employing interdisciplinary approaches. In fact, many concepts that feature prominently throughout MDB development-lending operations – such as ‘good governance’, ‘accountability’ and ‘legitimacy’ – are interdisciplinary in nature. As these concepts are ‘used in many different ways in political discourse and academic writing’ they are often ‘underspecified for any operational purpose.’19 IAM practice provides the opportunity for devising and deploying an interdisciplinary inquiry into the operationalisation of abstract concepts such as ‘accountability’, ‘good governance,’ ‘human rights mainstreaming’, ‘due diligence’ and ‘managerial discretion’. 2.2 Challenges To realise these opportunities, however, a number of challenges have to be overcome, some of which are related to substance and will therefore not be discussed in great detail. One example concerns the theoretical question perpetually faced by international legal scholars: what is meant by law in the particular context of a study? The challenge lies in the fact that the dominant – state-centric – jurisprudential approach continues to fall short in many respects. For example, it fails in explaining why ‘certain institutions exist in the global administrative space with particular memberships and structures, why these have the mandates and decision rules they do, and why other institutions, mandates, or rules do not exist’.20 In the context of IAM practice, these issues are reflected in the longstanding debates about the ‘legal’ versus ‘non-legal’ nature of MDB operational policy frameworks21 and about the ‘quasi-judicial’ versus ‘non-judicial’ 19  Ibid. 20  Ibid. 21  See e.g., David Freestone, ‘The Environmental and Social Safeguard Policies of the World Bank and the Evolving Role of the Inspection Panel’ in Alexandre Kiss, Dinah L. Shelton and Kanami Ishibashi (eds), Economic Globalization and Compliance with International Environmental Agreements (Kluwer Law International 2003) 144, 144; Bradlow and Naudé Fourie, ‘The Operational Policies of the World Bank and the International Finance Corporation: Creating Law-Making and Law-Governed Institutions?’ (n 6) 25–27; David B. Hunter, ‘International Law and Public Participation in Policy-Making at the International Financial Institutions’ in Daniel D. Bradlow and David Hunter (eds), International Financial Institutions and International Law (Kluwer Law International 2010) 223–232; Ibrahim F. I. Shihata, The World Bank Inspection Panel: In Practice (2nd edn, OUP 2000) 234; Eisuke Suzuki, ‘Responsibility of International Financial Institutions under

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nature of the IAMs’ mandates and their respective ways of operating.22 This research project has chosen to address this particular theoretical challenge by employing a conception of legal and social normativity based in constructivist and interactional thinking.23 Another challenge relates to the characteristics of transnational or global regulatory governance regimes, such as pluralism (including a broader ‘normative pluralization’, meaning: ‘it is no longer immediately evident (presuming it ever was) that legal authority is the sort of authority to strive for’)24 and what has been called a ‘disorder of orders’ (referring to the situation where existing systems of categorisation (such as ‘private/public’) lose their functional value International Law’ in Daniel D. Bradlow and David Hunter (eds), International Financial Institutions and International Law (Kluwer Law International 2010) 82; and Laurence Boisson de Chazournes, ‘The World Bank Inspection Panel: About Public Participation and Dispute Settlement’ in Tullio Treves, Marco Frigessi di Rattalma, Attila Tanzi, Alessandro Fodella, Cesare Pitea and Chiara Ragni (eds), Civil Society, International Courts and Compliance Bodies (Asser Press 2005) 191. Also see Laurence Boisson de Chazournes, ‘The World Bank Operational Standards’ in Dinah Shelton, Commitment and Compliance: The Role of Non-binding Norms in the International Legal System (OUP 2000) (ed) 289. And see Naudé Fourie, World Bank Accountability – In Theory and in Practice (n 6) ch 5. 22  See e.g., van Putten (n 4) 85; see Laurence Boisson de Chazournes, ‘Compliance with Operational Standards – The Contribution of the World Bank Inspection Panel’ in Gudmundur Alfredsson and Rolf Ring (eds), The Inspection Panel of the World Bank: A Different Complaints Procedure (Martinus Nijhoff Publishers 2001) 83–84; Kathigamar V. S. K. Nathan, ‘The World Bank Inspection Panel: Court or Quango?’ (1995) 12 Journal of International Arbitration 135, 137–138; M. Hansungule, ‘Access to Panel – The Notion of Affected Party, Issues of Collective and Material Interest’ in Gunmundur Alfredsson and Rolf Ring (eds), The Inspection Panel of the World Bank: A Different Complaints Procedure (Martinus Nijhoff Publishers 2001) 150; Andria Naudé Fourie, The World Bank Inspection Panel and Quasi-Judicial Oversight: In Search of the ‘Judicial Spirit’ in Public International Law (Eleven International Publishing 2009); also see Naudé Fourie, World Bank Accountability – In Theory and in Practice (n 6) ch 6. 23  See in general Brunnée and Toope (n 1); and see Naudé Fourie, World Bank Accountability – In Theory and in Practice (n 6) ch 2. 24  Jan Klabbers, International Law (1st edn, CUP 2013) 139:  ‘[…] it is arguably no coincidence that issues of responsibility and accountability have recently come to occupy a prominent place in international legal discussions. While the law on responsibility is as old as international law itself, discussions on responsibility and accountability have tended to be few and far between. This is no longer the case, and it may well be that accountability has become such a hot topic because there is such a great uncertainty concerning both the sources and subjects of international law and global governance. Where no one can be certain any longer whether norms are ‘legal’ and whether those from whom the norms emanate have law-making authority, it stands to reason that attention focuses on the output side; at least there may be merit in trying to hold actors to account if their behaviour is questionable.’

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to describe practice),25 including that relating to the pluralism and dynamic complexity of the broader development context. When it comes to studying IAM practice, these characteristics might make it difficult, for example, to delineate the specific obligations of the wide range of actors involved in development-lending operations;26 or, to classify the wide array of ‘concoctions’ of ‘formal and informal [normative] instruments’27 created in the ‘contested terrain in the no-man’s land between international law and politics’28 that are applicable in the development context. Other challenges, however, are methodological in nature and are therefore of particular interest for this discussion. Three of these are highlighted here. 2.2.1 Abbreviations, Acronyms and Jargon in IAM Practice Material For practitioners and scholars that are ‘old hands’ when it comes to understanding IAM practice materials, the extensive abbreviations, acronyms and other jargon contained in these documents might not appear as significant obstacles to inquiry. For students or researchers looking to enter this area of study, this can be a significant obstacle (if not a deterrent) – especially when this challenge (as well as the next one) is combined with a lack of general knowledge and/or familiarity with MDBs and their development-lending operations. Clearly, this challenge can be overcome through exposure to and persistent study of IAM practice material, but this involves no small amount of effort, especially for non-native English speakers. 2.2.2 Structure and Format of IAM Practice Material As new mechanisms with (what were at the time) unique mandates, the IAMs had to establish their own way of working, often through trial and error. Most of the IAMs have also undergone extensive institutional reforms, some IAMs more than once, and in a relatively short period. Consequently, IAM practice material reflects a significant degree of variation in terms of structure and format. This variation can present all sorts of challenges for experienced researchers – making comparative analyses more complicated, for instance – and would

25  Nico Krisch, Beyond Constitutionalism: The Pluralist Structure of Postnational Law (OUP 2010) 4, quoting Neil Walker, ‘Beyond Boundary Disputes and Basic Grids: Mapping the Global Disorder of Normative Orders’ (2008) 6 International Journal of Constitutional Law 373–396. 26  See e.g., Naudé Fourie, World Bank Accountability – In Theory and in Practice (n 6) ch 8. 27  Kingsbury, ‘Global Administrative Law in the Institutional Practice of Global Regulatory Governance’ (n 16). 28  Ibid.

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further add to the difficulties experienced by students and researchers new to this field of study. For legal students and scholars used to the structure and format of material generated by judicial institutions, IAM practice material can be especially daunting and confusing. This is often exacerbated by the fact that IAM practice material contains legal terminology (such ‘rights’, ‘interests’, ‘legalistic’, ‘juridical’, ‘judgment’, ‘discretion’, ‘recourse’, ‘redress’, ‘remedy’, ‘jurisdiction’) without necessarily explaining what those terms mean. Indeed, subsequent analysis may reveal that different parties hold conflicting opinions as to the meaning of specific terms.29 2.2.3 Scale and Complexity of IAM Practice Material The term, IAM ‘body of practice’, has long been a contentious issue: whether, for instance, we can indeed talk about a ‘body of practice’; whether size can and should be a factor in such a consideration; how the size of the IAM body of practice should be determined (e.g., number of cases filed and processed versus number of claimants and/or claims); whether the number of IAM cases filed and/or processed could be indicative of the (comparative) effectiveness of a particular IAM, whether it simply reflects the general level of awareness about the IAM’s existence – or, whether it is rather an indication of how effective the particular MDB is in realising its development goals. Consequently, the number of IAM cases tends to be a highly subjective notion.30 Moreover, since the establishment of the World Bank’s Inspection Panel, these bodies have not been ‘flooded’ with cases as had been predicted in the early years of the Panel’s existence.31 In addition, some IAMs have been involved in only a small percentage of the total body of practice – and often not beyond the initial admissibility/eligibility stages. While the scale of the IAM body of practice may not have been significant in the past, this situation is changing. Furthermore, a single IAM case can entail considerable complexity, as reflected, for instance, in the number of claimants, the diversity of (and conflict between) interests among claimants, the number of claims, the conflicting claims, and the number of operational policies and procedures to which those claims pertain. The complexity of a particular IAM case might also be a result of the development project that forms the subject of 29  Naudé Fourie, The World Bank Inspection Panel Casebook (n 8) 1–2. Also see Naudé Fourie, World Bank Accountability – In Theory and in Practice (n 6) ch 5. 30  Ibid. 31  See e.g., Robert Wade, ‘A Defeat for Development and Multilateralism: The World Bank has been Unfairly Criticised over the Qinghai Resettlement Project’, Financial Times (London 4 July 2000).

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the case. Complex projects – that become complex IAM cases – might involve multiple development objectives, for instance, and/or complex designs; multiple co-financiers often involve multiple project implementing agencies – and, indeed, could mean the involvement of additional IAMs.32 When dealing with such complexity, even studying a small number of cases could involve considerable effort. 3

A Methodology to Facilitate a Long-term, Interdisciplinary Inquiry into the Entire Body of IAM Practice

3.1 Requirements The specific aims of this research project – in particular, the analysis of normative development, which includes the evolution of good governance principles in development practice – required a methodology that could address such complexity by incorporating a sufficient level of detail, while simultaneously working with the entire dataset – that is, the entire body of IAM practice – so that patterns in the data and relationships among data elements could be identified. This meant, in turn, that the methodology had to be devised so that it could facilitate a long-term study that could also manage a periodically expanding scope – referring both to the growing number of cases filed at IAMs already included in scope and to additional IAMs included to the study.33 In other words, the methodology had to reflect a systematic approach which would 32  See e.g., van Putten (n 4) 105–162; and see Danny Bradlow and Andria Naude Fourie, ‘Independent Accountability Mechanisms at Regional Development Banks’ in Thomas N. Hale and David Held (eds), Handbook of Transitional Governance: New Institutions and Innovations (Polity Press 2011) 122–137. See Naudé Fourie, World Bank Accountability – In Theory and in Practice (n 6) ch 3. ‘Operating Procedures April 2014 (with Annex 2 added in February 2016)’ (Inspection Panel at the World Bank) [62] accessed 19 August 2018:  ‘If the Panel receives a complaint that is also submitted to the independent accountability mechanism(s) of other international financial institutions, relating to a co-financed project, the Panel will make its best efforts to cooperate with the other accountability mechanism(s) as relevant. At all times, the cooperation must remain within the requirements and constraints of the mechanisms’ respective mandates, rules and procedures including requirements of confidentiality and disclosure of information. Building on past practice, and sharing of experience across the Independent Accountability Mechanisms Network, the elements of such cooperation will be set forth in a Memorandum of Understanding agreed between the Panel and the other mechanism(s).’ 33  For this project, ‘long-term’ means 10 years or longer.

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allow for task-repetition or iteration that delivered consistent results, and which would facilitate collaboration within the research team. Given the inclusion of multiple IAMs in the study, the methodology would have to define a consistent approach to deal with the differences among these IAMs, as reflected in their respective mandates and in the varying structure, format and content of their practice material. This approach, in turn, could facilitate a functional comparative analysis.34 As noted earlier, the methodology had to facilitate an interdisciplinary inquiry. The inquiry, using Siem’s taxonomy, might be categorised as ‘advanced legal-interdisciplinary’ because the project addressed both ‘legal and non-legal questions’ by employing theories and analytical methods from law as well as from other disciplinary areas, and by ‘integrate[ing]’ ‘scientific methods’ and non-legal theory ‘into legal thinking’.35 Or, the research project might be categorised in terms of a legal-interdisciplinary continuum – where ‘[a]t one end is research that attempts to answer what are essentially doctrinal questions about legal rules or proposed law reforms by using, in part, information gained from other disciplines’ and ‘[a]t the opposite end […] would be research that merges the questions asked and assumptions made by different disciplines so completely that potentially an entirely new discipline could emerge’.36 Initially, the research project had probably been positioned in the middle of this spectrum, reflecting what Van Klink and Taekema call an ‘intermediate approach’ that ‘appl[ies] the method or theoretical constructs of a different discipline to legal materials or aspects of a legal system in order to study social phenomena related to or affected by the law’.37 As the project progressed, however, it has likely moved towards the opposite end of the spectrum, reflecting an integrated approach that is ‘categorized by the fact that the research process itself contains elements from [law and non-legal] disciplines and the

34  On functional comparative analysis, see section 3.3. 35  See Mathias Siems, ‘The Taxonomy of Interdisciplinary Legal Research: Finding a Way Out of the Desert’ (2009) 7 Journal of Commonwealth Law and Legal Education 5. Legal-interdisciplinarity is defined here as a range of different approaches that obtain ‘input’ from disciplines other than law, but where such ‘input’ ‘serves’, in essence, ‘as a necessary contribution to … legal arguments’. See Bart van Klink and Sanne Taekema (eds), Law and Method: Interdisciplinary Research Into Law (Politika 2011) 10–13. 36  Douglas W. Vick, ‘Interdisciplinarity and the Discipline of Law’ (2004) 31 Journal of Law and Society 163, 184–185; ibid. 37  van Klink and Taekema, ibid. The authors present a ‘dynamic model of interdisciplinarity’ that can be described in terms of a continuum – at one end, ‘heuristic’ approaches, followed by ‘auxiliary’ and ‘comparative’ approaches, ‘perspectivist’ and, finally ‘integrated’ approaches (ibid.).

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researcher welds together the concepts and methods from each or applies a more general methodological approach to both’.38 Interdisciplinary research, of course, holds its own particular challenges which is outside the scope of this chapter.39 Nevertheless, one of these challenges is of particular relevance for this discussion, namely: the integration of various (potentially disparate) research components – such as research questions, hypotheses, as well as analytical methods and theories from different disciplines. As Boix Mansilla argues, ‘[i]nterdisciplinary learners integrate information, data, techniques, tools, perspectives, concepts, and/or theories from’ various disciplinary areas in order to ‘craft products, explain phenomena, or solve problems, in ways that would have been unlikely through single-disciplinary means’.40 However, integration remains both a ‘core feature and major challenge of transdisciplinary’ research approaches.41 The challenge, in other words, lies in determining how to “weld, craft or integrate” these components. The development of various (interrelated) conceptual models has proven to be an important mechanism through which this project addressed the challenge of integration, as will be illustrated later in this section.42 3.2 The Methodology in Iterative Stages In practice, research methodologies are far more non-linear than how we describe them on paper – and can therefore be rather messy.43 Bearing this in mind, the iterative stages of the methodology underlying the IAM practice research project have been set out in Figure 9.1 (below). 38  Ibid. 39  See Garry D. Brewer, ‘The Challenges of Interdisciplinarity’ (1999) 32 Policy Sciences 327, 328. 40  Veronica Boix Mansilla, ‘Learning to Synthesize: The Development of Interdisciplinary Understanding’ in Robert Frodeman, Julie Thompson Klein, and Carl Mitcham (eds), The Oxford Handbook of Interdisciplinarity (OUP 2010) 289 (emphasis in original). 41  Gertude Hirsch Hadorn, C. Pohl and Gabriele Bammer, ‘Solving Problems through Transdisciplinary Research’ in Robert Frodeman, Julie Thompson Klein, and Carl Mitcham (eds), The Oxford Handbook of Interdisciplinarity (OUP 2010). 42  For a discussion on the place of ‘law’ – that is, legal theory and legal methods (notably: doctrinal legal analysis) – in this methodology, also see Andria Naudé Fourie, ‘Expounding the Place of Legal Doctrinal Methods in Legal-Interdisciplinary Research: Experiences with Studying the Practice of Independent Accountability Mechanisms at Multilateral Development Banks’ (2015) 8(3) Erasmus Law Review 95. 43  As Halliday and Schmidt observed:  ‘[a] common experience among those of us who talk to [legal practitioners] about their work is to hear the lawyers recite their war stories. In contrast, when you talk to an experienced social scientist about his or her work, you tend to get something of a

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Comprehensive Methodologies to Facilitate Learning timeline Project Definition

Define project aims, scope. Develop research questions & initial hypotheses, research methodology.

Project Initialisation

Initiate project set-up. Identify, source and study primary research sources. Conduct preliminary analysis.

Improvements, Corrections

Contextualisation

Improvements, Corrections

Describe & analyze broader research context (e.g.: actors, processes, structures, systems, dynamics). Continue preliminary analysis.

Conceptualisation

Improvements, Corrections

Develop dynamic hypotheses & conceptual models  input for database design. Test against extending dataset.

Database Design

Identify data components, sources, relationships & links with specific analyses.

Improvements, Corrections

IAM Practice Database Construction Data collection & configuration. Data testing, with progressively larger subsets of data.

Improvements, Corrections

IAM Practice Database Deployment Data analysis: interpretation, synthesis of findings, outcome and results.

Research output Improvements, Corrections

figure 9.1 The research methodology Source: The author

Teaching output

Knowledge sharing & collaboration, within larger community of practice

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Most of the activities of the project definition, project initialisation, project contextualisation, conceptualisation, database deployment and output generation stages are project-specific and will therefore not be discussed here. Instead, the discussion focuses on the IAM practice database design and construction stages. Before proceeding with that discussion, however, two matters should be highlighted here. First, the activities of the contextualisation stage play an important role in addressing the challenges presented by IAM practice, discussed earlier. Contextualisation activities also serve as critical input for the comparative analyses occurring during the database deployment stage. Second, the activities of the conceptualisation stage are aimed at the development of conceptual models which, as noted earlier, serve to integrate various methodological components.44 With a ‘dynamic hypothesis’45 as the point of departure and the preliminary analysis of a small data subset conducted during the project initialisation and contextualisation stages as important input, conceptual models are developed by employing a range of ‘conceptual thinking’ or ‘modelling’ techniques that typically involve visualisation, iteration and collaborative efforts.46 These models play an integral role during the IAM practice database design and construction stages, as will be discussed shortly, and also support the analytical activities of the database deployment stage.

sanitized version of the research process, much like the ‘methods’ section of a research article. However, if you start to dig … you often start to see a much messier business …’  Simon Halliday and Patrick Schmidt, Conducting Law and Society Research, Reflections on Methods and Practices, (CUP 2009) 264. 44  “Conceptual models” are defined here as ‘system[s] of concepts, assumptions, expectations, beliefs, and theories that suppor[t] and informs your research’ or, very simply, as ‘the way ideas are organized to achieve a research project’s purpose’: Patricia M. Shields and Nandhini Rangarajan, A Playbook for Research Methods: Integrating Conceptual Frameworks and Project Management (New Forums Press 2013) 24, citing Maxwell. See also Shields and Rangarajan, 1–11. In legal research, conceptual models have been described as ‘neutral reference system[s] in the form of concepts’ or ‘abstract models derived in an inductive process from specific instances of real-existing law’: Oliver Brand, ‘Conceptual Comparisons: Towards a Coherent Methodology of Comparative Legal Studies’ (2007) 32 Brooklyn Journal of International Law 405, 436. 45  Shields and Rangarajan, ibid., 1–11. On the role of ‘dynamic hypotheses’ in guiding conceptual modelling efforts in the area of systems dynamics, see John D. Sterman, Business Dynamics: Systems Thinking and Modeling for a Complex World (McGraw-Hill Higher Education 2000) 95. 46  For examples of modeling techniques derived from systems thinking and systems dynamics – such as ‘systems archetypes’, ‘behaviour over time graphs’ and ‘causal-loop diagrams’ – see Sterman, ibid., 137–229.

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3.3 The IAM Practice Database 3.3.1 Database Components The IAM practice database consists of five components, as illustrated by Figure 9.2 below.47 Each component contains different types of data that facilitate different types of analyses.48 The comparative overview supports comparative analyses of various institutional aspects of the IAMs in scope, such as their formal mandates set out in the IAMs’ respective constitutive documents, their operating procedures and (often, informal) operating practices.49 The data of the comparative overview – component are extracted by means of a functional comparative method – as employed, for instance, in comparative legal studies, which emphasises ‘a concrete social problem’ instead of the formal aspects of laws or institutions and therefore analyses the ‘social function of the legal concepts that are being compared’.50 A functional (as opposed to a strictly textual) approach typically allows for more data to be included. The comparative analysis of IAM functions serves as a prominent example. A textual comparative approach would conclude that the World Bank’s Inspection Panel had, until recently, no problem-solving functionality; whereas a functional comparative analysis of the Panel’s operating practice would conclude that the Panel had been developing an informal problem-solving function over a number of years (albeit a relatively limited one) that had recently been formalised in its updated operating procedures.51

47  For extracts from the various components of the IAM practice database, see the Appendix in section 5. 48  The project defines ‘database’ as a repository of various types of information (‘data’) that is organized in a systematic and consistent manner in order to ensure ‘ease and speed of search and retrieval’: ‘Database’ (The Free Dictionary) accessed 20 September 2018. ‘Data’ is defined as different types of ‘[f]acts that can be analyzed or used in an effort to gain knowledge or make decisions’: ‘Data’ (The Free Dictionary) accessed 20 September 2018. 49  For an extract from the database of the comparative-overview, see Appendix Table 9.1. For an additional example of how this type of information has been used in research output, see e.g., Bradlow and Naudé Fourie, ‘Independent Accountability Mechanisms at Regional Development Banks’ (n 32) 131–136. 50  Aleksandar Momirov and Andria Naudé Fourie, ‘Vertical Comparative Law Methods: Tools for Conceptualizing the International Rule of Law’ (2009) 2(3) Erasmus Law Review 291, 297. See also Anne Peters and Heiner Schwenke, ‘Comparative Law beyond Post-Modernism’ (2000) 49 International and Comparative Law Quarterly 800, 801–802. 51  See Bradlow and Naudé Fourie, ‘The Operational Policies of the World Bank and the International Finance Corporation: Creating Law-Making and Law-Governed Institutions?’ (n 6) 58; and Naudé Fourie, The World Bank Inspection Panel and Quasi-Judicial Oversight:

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figure 9.2 Components of the IAM practice database Source: The author

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The statistical overview contains descriptive (as opposed to predictive or inferential) statistics52 of various quantifiable data elements concerning, for instance, MDB development-lending operations and detail about the cases filed at individual IAMs. The statistical overview-component also contains comparative statistics, such as comparing IAMs in terms of the total number of cases received, registered (‘admissible’) and found to be eligible for further processing.53 The IAM case overview provides a summary of all the claims (cases) filed at the IAMs currently included in the project’s scope. Each summary is structured so as to include data from: (1) all stages of the IAM procedure (thus, from the moment an IAM acknowledges receipt of the claim, to the formal closure of the case, as well as any relevant information related to the aftermath of the case); and (2) all key aspects of a particular case (such those concerning the project, the claimants and their claims, MDB management responses, as well as IAM findings and recommendations and follow-up (‘monitoring’) activities).54 The index overview contains recurring words and phrases in IAM practice material (such as ‘environmental impact assessment’, ‘indigenous peoples’, ‘poverty reduction’, ‘hydro-electric power facility’, ‘environmental and social risk categorization’, ‘consultation’ and ‘involuntary resettlement’). While this data has the potential to be collected through automated processes, the project had mostly employed ‘human indexing techniques’ for this purpose due to differences in terminology – stemming from the fact that the MDBs use different terminology to describe functionally equivalent aspects or activities.55

In Search of the ‘Judicial Spirit’ in Public International Law (n 22) 222–225. See also Operating Procedures April 2014 (n 32) [at 4]. 52  Descriptive statistics ‘summarize the information in a collection of data’, whereas inferential statistics ‘provide predictions about a population, based on data from a sample of that population’: Alan Agresti and Barbara Finlay, Statistical Methods for the Social Sciences (4th edn, Prentice Hall 2009) 4. 53  For an extract from the statistical overview, see Appendix Table 9.2. For examples of how this data has been employed in research output, see Naudé Fourie, The World Bank Inspection Panel Casebook (n 8) 566–604. 54  For an extract from the IAM case overview, see Appendix Table 9.3. For examples of how this data has been employed in research output, see in general Naudé Fourie, The World Bank Inspection Panel Casebook (n 8). 55  On the differences between ‘human’ and ‘automated’ indexing, see James D. Anderson & José Pérez-Carballo, ‘The Nature of Indexing: How Humans and Machines Analyze Messages and Texts for Retrieval’ (2001) 37 Information Processing and Management 255. For an extract from the index overview, see Appendix Table 9.4. For examples of how this data has been employed in research output, see in general Naudé Fourie, The World Bank Inspection Panel Casebook (n 8).

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Both of these techniques, however, involve a predominantly descriptive – as opposed to an analytical – approach. The data of the issue overview-component, by contrast, are collected through analytical approaches, including legal doctrinal methods.56 The issue overview consists of recurring topics or structural themes in IAM practice material – ‘issues’, in other words, such as the ‘definition of indigenous people’; the ‘delineation of the project’s area (of influence)’; or the procedural and substantive meaning of ‘meaningful consultation with project-affected people’. The issue overview, which is also the largest and most complex database component, has played a critical role in the project’s ability to identify, describe and analyse various forms of normative development in IAM practice – including the development of good governance principles. The remainder of this section will therefore emphasise this aspect of the database. 3.4 Designing and Constructing the Database 3.4.1 Database Design During the database design stage the project determines what types of data are to be extracted from the available data sources and how the data will eventually be identified, collected and configured in the database. The database design is informed, firstly, by those methodological aspects that are specific to the research project, such as its aims, research questions, dynamic hypotheses and the types of analyses the data would eventually have to facilitate. Second, the design is informed by the structure, form and content of the data – as well as any inconsistencies concerning these aspects that would have to be taken into account. The database design also describes the relationships between various data entries, on the one hand, and between the different database components, on the other. This means that the design should clarify how different data entries and database components relate to specific research questions, dynamic hypotheses and related conceptual models, as well as (planned) analyses. These relationships, furthermore, influence the sequence in which particular design and construction activities are scheduled. In this project, for instance, 56  Referring to the same analytical and conceptual tools – methods – that ‘abundantly’ serve ‘judges’, namely: ‘textual analysis’, ‘practical argumentation’ as well as principled or structured ‘reasoning’: Jan Vranken, ‘Exciting Times for Legal Scholarship’ (2012) 2 Recht en Methode in Onderzoek en Onderwijs 42, 43. For a discussion of the place of legal doctrinal analysis within the research methodology, see Naudé Fourie, The World Bank Inspection Panel Casebook (n 8); and see Andria Naudé Fourie, ‘Expounding the Place of Legal Doctrinal Methods in Legal-Interdisciplinary Research: Experiences with Studying the Practice of Independent Accountability Mechanisms at Multilateral Development Banks’ (n 42).

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the design and construction of the comparative overview were completed first, thereafter, those of the IAM case overview and statistical overview-components (completed in parallel), followed by the index overview. The design and construction of the issue overview-component were completed last since the component has the most relationships (with other data entries and database components), while also requiring the most effort, given its size and complexity. Finally, the design approach underlying the comparative overview, IAM case overview, statistical overview and index overview-components might be best described as ‘data-driven’ – meaning, the design is directed primarily by the structure, format and content of the data; whereas the data are collected and configured by means of a ‘bottom-up’ approach that systematically processes all the data. By contrast, the design approach underlying the issue overview is ‘hypothesis-driven’ – referring to a ‘top-down’ approach in which the structure, format and content of the data are taken into account, but the design, data collection and configuration processes are primarily directed by a ‘working’ or dynamic hypothesis which, in this project, has been expressed as various conceptual models, as will be illustrated below. In other words, if a body of data could be likened to the proverbial haystack, a data-driven approach would require the systematic processing of the haystack and the recording of everything that is found in the course of that process (hay; needles; various insects). A hypothesis-driven approach might direct those processing the haystack to look specifically for ‘needles’, whereas the conceptual model underlying the hypothesis can inform those efforts by describing, for instance, its characteristics and functions (sharp-ended; cylinder-shaped; metal, wood or plastic; used for sewing). 3.4.2 Database Construction The database construction stage includes the following processes: (1) Data identification and collection from identified data sources, in accordance with the database design. (2) Data configuration – thus, determining the location(s) within the database where a particular data item should be entered. With respect to the issue overview-component, data configuration includes the categorisation or classification (coding) of collected data entries – referring to the process of assigning the appropriate ‘issue code’ or descriptor to the particular data entry.57 57  To facilitate this process, the project employs ‘issue classification’ methods such as ‘analytic coding’, which involves the process of ‘classifying and categorizing’ data: Corrine Glesne, Becoming Qualitative Researchers (Pearson 2011) 194–199.

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(3) Data testing, which is aimed at ensuring the quality of data that had already been identified, collected and configured, by reviewing data accuracy and refining the configuration of the data. These processes have been shaped by the notion of ‘evolutionary prototyping’, employed in information technology projects, which is characterised by iteration and collaboration within teams.58 In accordance with this approach, the activities of the database construction stage are scheduled as distinct cycles, illustrated by Figure 9.3 (below), in which the research team works with a progressively larger dataset while simultaneously improving data quality. In practice, this approach meant that the research team conducted reviews, at regular intervals during each cycle, of all data entries that had since been added to the database. These reviews checked the accuracy of individual data entries and also provided opportunities for discussion about the inclusion of specific entries, as well as their configuration. These review discussions were particularly important during the construction of the issue overview-component. For example, an identified data entry (here, a textual extract from IAM practice material) could possibly be indicative of more than one issue and would therefore have to be associated with more than one ‘code’ or ‘issue descriptor’; or a data entry had been identified that seemed to fit within the conceptual model, but could not be linked to an existing issue descriptor, which, in turn, could be indicative that further refinement of the data model (and possibly the related conceptual model) would be required. Because each cycle provided ample opportunities for review, the research team adopted a “precautionary” approach through which the initial inclusion of “false positives” was preferred over the exclusion of “false negatives”. In other words: when in doubt, a research team member would include the data entry, assign it a temporary issue descriptor(s), flag the data entry for discussion, whereupon a final decision would be made during the team’s data review discussion. The number of required cycles before the dataset could be considered as “finalised” (or, sufficient for facilitating the intended analyses) was influenced by factors such as project scope (for instance, the number of IAMs and IAM cases included), and the time and effort required by the research team for learning – referring both to the learning involved in becoming familiar with the broader 58  Jeffrey L. Brewer and Kevin C. Dittman, Methods of IT Project Management (2nd edn, Purdue University Press 2008): ‘[e]volutionary prototyping models are initiated with initial planning and risk assessment, followed by the development of a prototype, evaluation of the prototype – and iteration of this cycle as often as required.’

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figure 9.3 Database construction as a process of evolutionary prototyping Source: The author

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research context and IAM practice (which, as noted earlier, hold particular challenges), and becoming experienced with the methodology (notably, of the data identification, collection, configuration and testing activities). The existence of a consistent methodology expedited such learning, while allowing for the activities described in this section to be repeated as the project periodically increased its scope. Illustrative: the Issue Overview-component – from Conceptual Model to Database Entry To make the abstract more concrete, let us look at how the conceptualisation, database design and construction stages of the methodology resulted in a particular portion of the issue overview-component. One of the project’s dynamic hypotheses has been that there is a significant degree of functional equivalence between judicial institutions executing mandates of judicial review and citizen-driven IAMs at MDBs executing mandates of compliance review. This equivalence is reflected in what these IAMs are mandated to do, how they execute their review mandates in practice, the outcomes to which their review efforts contribute, and in the dynamics involved – especially between the IAMs and the MDBs’ ‘political institutions’ (thus, MDB management and Executive Boards).59 During the contextualisation stage,60 the project analysed a small subset of IAM practice material. This analysis, together with a legal doctrinal and comparative constitutional law analysis of judicial and political institutions in selected national and ‘supranational’ constitutional systems, served as the primary input for a series of conceptual models developed during the conceptualisation stage, such as the model presented in Figure 9.4 (below). The model, which describes the nature, the effect and underlying dynamics61 involved in judicial review, posits that judicial and quasi-judicial institutions assert (and when possible, expand) their de facto independence and authority (judicialisation) vis-à-vis political institutions, but will not do so indefinitely. This is because such expansive actions are bound to trigger factors ‘limiting’ further expansion (growth) – including backlash from political institutions. On the other hand, a period of reduced degrees of (quasi-) judicial independence and authority is also likely to trigger limiting factors that will ‘limit’ further retraction (decline) – such as backlash from external actors questioning the 3.5

59  Naudé Fourie, The World Bank Inspection Panel and Quasi-Judicial Oversight: In Search of the ‘Judicial Spirit’ in Public International Law (n 22) 131–156 and 323–328. 60  Ibid. 59–159. Specifically, the US, EU, and South African constitutional systems. 61  Ibid. 33–56; and see in general Naudé Fourie, ‘The World Bank Inspection Panel’s Normative Potential: A Critical Assessment, and a Restatement’ (n 5).

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figure 9.4 A model of (quasi-) judicial review Source: The author

(quasi-) judicial institution’s credibility. In this way, judicial and quasi-judicial institutions tend to fluctuate between periods of ‘activism’ and ‘restraint’, but their long-term survival ultimately requires (albeit incremental) expansion along a ‘general line of progression’.62 Conceptual models such as these provided the basis for the design of the issue overview-component. Figure 9.5 (below), provides an excerpt from the data model (issue tree) that had been developed during the database design stage.63

62  This reasoning is an example of the ‘limits to success’ systems archetype – see Sterman (n 46) 111–113; and see Virginia Anderson and Lauren Johnson, Systems Thinking Basics: From Concepts to Causal Loops (Pegasus Communications Inc 1997) 59. 63  For an extract from the data model underlying the issue overview-component, see Appendix Table 9.5.

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figure 9.5 Excerpt from data model (‘issue tree’) Source: The author

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The data model directed the data collection, configuration and testing activities of the database construction stage, during which the project worked with progressively increasing data subsets of IAM practice material – while also refining the data model so as to cover progressively lower levels of abstraction (thus, incorporating higher levels of detail and complexity). Figure 9.6 (below), provides an extract from the resulting issue overview-component as illustration.64 4 Conclusion IAM practice presents significant opportunities for inquiry – including opportunities to study normative development that occurs in a transnational development context involving multiple actors, levels of governance and intersecting systems of legal and social normativity. Although the study of IAM practice presents challenges, these can be addressed. The development and deployment of consistent research methodologies can play a pivotal role in addressing the challenges and unlocking the potential presented by IAM practice. This chapter describes such a methodology, which had been developed to facilitate a long-term, interdisciplinary research project aimed at studying the entire body of IAM practice. The design, development and deployment of a multipurpose database of IAM practice are at the core of this methodology. Drawing on the project’s experiences over the past decade, this section concludes by sharing some of the lessons learnt in the process of developing the methodology and, finally, by deploying it in order to study (among other things) the normative development that occurs in the context of IAM practice.65 4.1 A Sizeable Upfront Investment, Yielding Significant Dividends The realisation of a project of the scope and complexity of the one discussed in this chapter requires the development of a consistent and comprehensive methodology, which, in turn, clearly requires a significant “upfront investment” – both in terms of the time and effort required. An important part of this investment should be the allocation of adequate time and effort in order 64  For an extract of the data entries of the issue overview-component, see Appendix Table 9.6. 65  For lessons learnt pertaining specifically to the deployment of legal doctrinal methods in the context of this methodology, and concerning the integration of various legal and non-legal methodological aspects into the methodology, see Naudé Fourie, The World Bank Inspection Panel Casebook (n 8) 109–110; and see Andria Naudé Fourie, ‘Expounding the Place of Legal Doctrinal Methods in Legal-Interdisciplinary Research: Experiences with Studying the Practice of Independent Accountability Mechanisms at Multilateral Development Banks’ (n 42).

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figure 9.6 IAM practice database – excerpt from issue overview-component Source: The author

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to conceptualise and articulate the methodology, as well as periodically revisiting and refining it as the project progresses. Nevertheless, the “dividends” yielded by this upfront investment have proven to be significant. It is important to note, however, that these dividends have not been limited to the (research and teaching) output stage. While there is a logical linear flow between the different stages of the methodology, there is also a notable degree of non-linearity – as reflected in the overlap between stages and in the iteration allowed within and between stages. The non-linear aspects of the methodology have strengthened the project’s ability to learn and have also allowed for the generation of research and teaching outputs during the methodology’s earlier stages. On the other hand, the marked level of structure within the methodology has made the project easier to manage – including, for instance, the project’s ability to track progress, estimate effort required to complete discrete components, direct the efforts of individual research team members as well as periodically incorporate members. In this regard, the project was aided significantly in the use of various project management concepts and tools, including those emanating from the information technology (IT) project management area.66 4.1.1

Realising the Benefits – While Managing the Risks – of Working with Larger Datasets Inquiries focusing on individual or selected IAM cases will always maintain their place of importance, but the experiences with this project demonstrate that there are tremendous benefits to be reaped from working with larger datasets – thus, spanning longer periods of time and including a higher number of cases, from several IAMs. For it is when we work with larger datasets that we can identify emerging patterns in the data, for instance, and analyse different types of relationships between data components – information that has proven to be highly beneficial for developing new insights into the normative development that occurs in the context of IAM practice. The development of a database such as the one discussed in this chapter is one way of realising the potential inherent to IAM practice, while also facilitating knowledge-sharing and knowledge-generation with others. It has also proven to be an effective mechanism for managing the risks that form an inevitable part of a large undertaking that has to incorporate high levels of detail 66  See Juana Clark Craig, Project Management Lite: Just Enough to Get the Job Done … Nothing More (2012 CreateSpace); Shields and Rangarajan (n 44); Brewer and Dittman (n 58); and A Guide to the Project Management Body of Knowledge (5th edn, Project Management Institute 2013).

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and complexity, as well as simplifying the processes of retrieving information. For these reasons the IAM practice database had from the outset been designed and constructed in electronic format. Over time, the database may have reflected higher degrees of automation, but it had started off as nothing more than a set of carefully designed Microsoft Excel spreadsheets which required no more than a basic level of proficiency with this software. In other words, ‘complex IT-skills’ are not a prerequisite for working with larger datasets – and certainly because deep technical skills, when required, can always be obtained in the market, although cost will also be a consideration. It should also be said that the challenges presented by IAM practice material are likely to be even greater for those with technical expertise but without any background knowledge about the development context. The ‘Dispute Resolution Triad’ as Mechanism for Normative Development As MDB management and staff apply their operational policies and procedures across their development-lending portfolios, normative development of these frameworks might occur for two reasons: first, because the policies require a level of interpretation; and, second, because some policy provisions specifically allow for a degree of ‘managerial discretion’ or ‘professional judgement’.67 IAM practice provides some insight into this mechanism of normative development – especially as reflected in formal MDB management responses to claims and to IAM findings and recommendations.68 However, it is precisely because of the possibility of (and, indeed, necessity for) interpretation that the potential for conflict arises – among MDB management and staff;69 between MDBs and their borrowers;70 and, between an MDB and individuals that are in a ‘non-contractual relationship’ with the institution, such as project-affected people.71 IAM practice provides an excellent 4.2

67   M DB operational policies and procedures and project design documentation contain words and phrases such as ‘project area of influence’, ‘critical natural habitat’ and ‘encroachment’ that require interpretation. For examples from World Bank Inspection Panel practice, see Naudé Fourie, World Bank Accountability – In Theory and in Practice (n 6) ch 10. 68  See e.g., Bradlow and Naudé Fourie, ‘The Operational Policies of the World Bank and the International Finance Corporation: Creating Law-Making and Law-Governed Institutions?’ (n 6) 28–36. 69  See e.g., Galit A. Sarfaty, ‘The World Bank and the Internalization of Indigenous Rights Norms’ (2005) 114(7) Yale Law Journal 1791, 1801–1817 (about the World Bank’s application of its policy on Indigenous Peoples). 70  For examples from World Bank Inspection Panel practice, see Naudé Fourie, World Bank Accountability – In Theory and in Practice (n 6) ch 8. 71  Indeed, conflicting opinions about the relevant facts and about the manner in which particular policies has been applied (or not applied) to the specific project, form the heart of

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opportunity to study these different types of conflicts and the relationships between them, as well as the normative development of the ‘applicable standards’ that occurs as a by-product of the ‘back-and-forth discussion typical of most accountability processes’.72 Or, what Shapiro and Stone Sweet describe as the derivate of a ‘dispute resolution triad’73 – in IAM practice, formed between the claimants, MBD management and the IAM (with the MDB Board of Executive Directors often acting as final ‘arbitrator’).74 Generally speaking, IAMs are not mandated to provide authoritative interpretations of the operational policy frameworks, whereas MDB management is typically not under an obligation to accept IAM interpretations. In practice, the influence of an IAM’s policy interpretations within a particular institution will depend on several factors, including the credibility with which MDB management and staff – and Executive Board – view the IAM. Regardless of internal perceptions, however, the normative development that occurs through the mechanism of triadic dispute resolution has significant potential to influence the demands and expectations of external stakeholder groups75 – which also means that this influence may well extend beyond the development context.76 4.3 Forms of Normative Development in IAM Practice There are different forms of normative development that occur in the context of IAM practice, three of which are highlighted here. all claims filed at IAMs. 72  Jennifer Rubenstein, ‘Accountability in an Unequal World’ (2007) 69(3) The Journal of Politics 616, 620; see also Ruth W. Grant and Robert O. Keohane, ‘Accountability and Abuses of Power in World Politics’ (2005) 99(1) American Political Science Review 29. 73  On ‘triadic governance’, see Martin Shapiro and Alec Stone Sweet, On Law, Politics, and Judicialization (OUP 2002); see also Naudé Fourie, The World Bank Inspection Panel and Quasi-Judicial Oversight: In Search of the ‘Judicial Spirit’ in Public International Law (n 22) 50–51, quoting Stone Sweet who argues that ‘triadic dispute resolution’ enhances the ‘capacity of a triadic dispute resolver’ (here, the Panel) ‘to authoritatively determine the content of a community’s normative structure’. Stone Sweet describes the ‘“judicialization of dispute resolution” [as] the process through which a TDR mechanism appears, stabilizes, and develops authority over the normative structure governing exchange in a given community’. See also Kingsbury, ‘Operational Policies of International Institutions as Part of the Law-Making Process: The World Bank and Indigenous Peoples’ (n 5) 323; and Naudé Fourie, World Bank Accountability – In Theory and in Practice (n 6) ch 7. 74  See Naudé Fourie, World Bank Accountability – In Theory and in Practice (n 6) ch 7. 75  Bradlow and Naudé Fourie, ‘The Operational Policies of the World Bank and the International Finance Corporation: Creating Law-Making and Law-Governed Institutions?’ (n 6) 28–36. 76  See e.g., David D. Bradlow, ‘International Law and the Operations of the International Financial Institutions’ in Daniel D. Bradlow and David Hunter (eds), International Financial Institutions and International Law (Kluwer Law International 2010) 25–30.

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The first category relates to the linkages between various normative frameworks underlying MDB development-lending operations, including those frameworks containing international law, national law and social norms operating at the global level, such as professional or industry-specific standards and good practices.77 IAM practice provides insight into these linkages. Moreover, the IAMs’ findings and recommendations can highlight, describe, clarify – and occasionally – strengthen the linkages between the normative frameworks, notably: between particular operational policies and specific areas of international law. A prominent example thereof has been the World Bank Inspection Panel’s linkage of operational policy requirements concerning the ‘informed and meaningful participation’ in decision-making by project-affected people, with international human rights law.78 This form of normative development makes a particularly significant contribution in light of the pluralism that characterises the transnational development context, as reflected in the intersecting – and ‘heterarchical’ – normative systems underlying MDB development-lending operations, in which the assignment of ‘authority’ to particular ‘layers and bodies of law’ are determined through the ‘mutual challenge’ between competing constituencies.79 A second category consists of the emerging interpretative approaches or schemes that IAMs are developing to execute their mandates. These approaches or schemes might be described in terms of a number of variables, such as: the relative degree of flexibility or consistency with which the operational policy framework is applied across an MDB’s development-lending portfolio, and among its borrowers; the degree of managerial discretion or professional judgement allowed for in the application of individual provisions (narrower or broader); restrictive versus expansive interpretations of specific policy provisions; and, the extent to which an interpretative approach focused solely on procedural normative elements, as opposed to interpretations taking both procedural and substantive aspects into account when determining whether or not a policy’s application, in a particular project context, constituted ‘compliance’.80

77  See Naudé Fourie, World Bank Accountability – In Theory and in Practice (n 6) ch 5. 78  See e.g., the World Bank Inspection Panel’s investigation of the Chad: Petroleum case. See also Bradlow and Naudé Fourie, ‘The Operational Policies of the World Bank and the International Finance Corporation: Creating Law-Making and Law-Governed Institutions?’ (n 6) 54–57. 79  Krisch (n 25) 12, 274–277; and see John Morison and Gordon Anthony, ‘The Place of Public Interest’ in Gordon Anthony, Jean-Bernard Auby, John Morison and Tom Zwart (eds), Values in Global Administrative Law (Hart 2011) 215. 80  See Naudé Fourie, World Bank Accountability – In Theory and in Practice (n 6) ch 6.

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IAM practice reflects the tensions among these variables, as well as the IAMs’ attempts to address these tensions – while also achieving equilibrium among the diverse (and often conflicting) interests of a wide range of stakeholder groups. Therefore, the interpretative schemes adopted by IAMs have the potential to demonstrate what it might mean in practice when we say that a normative system – as a social structure – has the dual purpose of enabling and restraining the actions of dominant decision-makers.81 The third category pertains to normative development of particular policy areas, such as environmental assessment, indigenous peoples, involuntary resettlement and MDB project supervision.82 Importantly, as this research project demonstrated, normative development of these policies extends to the procedural and substantive elements within these policies – and, indeed, illustrates the intricate relationship between the procedural and the substantive. This form of normative development is of particular significance given that good governance principles are typically thought of as being procedural in nature, whereas efforts to strengthen the accountability of international organisations through the promotion of good governance principles have been criticised for their failure to address substantive matters.83 Indeed, by devising and deploying a methodology to study IAM practice, this project has been able to gain new insights as to how – through the initial adoption of procedural (thin) normative frameworks and with ‘increased interaction’ among diverse participants – ‘communities of practice can become more interconnected and value-based, allowing for [the development of] richer substantive rules’.84

81  See Brunnée and Toope (n 1) 21, quoting Anthony Giddens, The Constitution of Society: Outline of the Theory of Structuration (Polity Press 1984). 82  For examples from World Bank Inspection Panel practice, see Naudé Fourie, World Bank Accountability – In Theory and in Practice (n 6) ch 12 (involuntary resettlement), 13 (indigenous peoples), 14 (environmental assessment) and 15 (project supervision). 83  See e.g., B. S. Chimni, ‘Co-option and Resistance: Two Faces of Global Administrative Law’ (2005) 37 New York University Journal of International Law and Politics 799. 84  Brunnée and Toope (n 1) 86; see 42–43, the authors arguing that a major benefit ‘of working with such a “thin”, “procedural” conception as basis’, is its congeniality to pluralistic contexts, while ‘permit[ing] and encourage[ing] the gradual building up of global interaction’. For similar arguments about the role of triadic dispute resolution (TDR) (which is ‘constructed and maintained by rules’) as ‘a crucial mechanism of social cohesion and change’, see Shapiro & Stone Sweet (n 73) 66 and 70, arguing that TDR ‘constitutes modes of governance’ that ‘facilitat[e] social exchange and the adaptation of rule systems to the exigencies of those who exchange: hence its social utility. Other things being equal, it must be that dyadic governance is inherently less flexible and more brittle than triadic governance. Whereas conflict can destroy dyadic contracts, conflict activates TDR and establishes parameters of a politics that can recast the normative basis of social exchange.’

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5 Appendix table 9.1 Comparative overview (excerpt – illustrative)

Ref. to IAM founding document and / IAM interpretation thereof

IAM

Year established

Functional evaluation(s)

Organization structure / composition

IDB’s ICIM

1994 (old); 2009 (new)

2009; 2012–at time of writing, ongoing (thus reflecting pre-2015 operating procedure).

Policy Establishing ICIM Office: the ICIM of the Overseen by Executive Secretary, IDB, paras. 73, reporting to Board. Consisting of Exec. Secretary, Project Ombudsperson, Panel, all other staff & consultants. Consultation phase: Project Ombudsperson (3–5 year term, renewable); Compliance review: 5-member Roster of Experts; 5 year term, non-renewable;

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To whom does IAM report?

Ref. to IAM founding document and / IAM interpretation thereof

Appointment of staff & experts

Ref. to IAM founding document and / IAM interpretation thereof

Board oversight – except for projects not yet approved by Board (then, President)

Policy Establishing the ICIM of the IDB, paras. 73,

Policy Establishing Executive Secretary, Project Ombudsperson the ICIM of the IDB, paras. 73, 78, 85 & Roster of Experts: appointed by Board. Project Ombudsperson & Executive Secretary: same procedure as for ‘Director of the Evaluation and Oversight Office of the IDB’; ‘The Board shall appoint the initial Panel Chairperson and thereafter the Panel members shall select the Chairperson’

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table 9.1 Comparative overview (excerpt – illustrative) (cont.)

Who can interpret IAM founding document & who determines final interpretation?

Ref. to IAM founding document and / IAM interpretation thereof

Ref. to IAM founding Procedure for document and / IAM protecting the identity of requesters interpretation thereof from MDB & borrower?

Not addressed in Policy

N/A

Yes; but anonymous Requests not accepted; will agree procedure to handle this with Requesters.

Source: The Author

Policy Establishing the ICIM of the IDB, para. 33

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Does IAM processes interrupt MDB project?

Harmonization / Ref. to IAM cooperation with founding document and / other IAMs? IAM interpretation thereof

No, but Consultation phase: ‘In cases where the Project Ombudsperson believes that serious, irreparable harm may result if processing or execution of a Bank-Financed Operation continue, the Project Ombudsperson may recommend to the President, the Board or Donors Committee, as appropriate, that processing or execution be halted. The decision on the recommendation will be made by the body vested with the power to make such decision, subject to applicable Bank policies and legal documentation.’ Compliance Review phase: if Panel finds ‘serious, irreparable harm may result if processing or execution of a Bank-Financed Operation continue, the Panel may recommend to the President, Board or Donors Committee, as appropriate, that processing or execution be halted.‘ appropriate body decides about this

Policy Establishing the ICIM of the IDB, para. 48, 66

Executive Secretary must: ‘coordinating with peer institutions concerning potential harmonization of accountability mechanisms and sharing of experiences’. ‘Where a Request or Bank-Financed Operation involves another international financial institution or entity, the ICIM Office, Project Ombudsperson or Panel, as appropriate, shall endeavor to collaborate with such institution or entity’

217

Ref. to IAM founding document and / IAM interpretation thereof Policy Establishing the ICIM of the IDB, paras. 86 (f), 98

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table 9.2 Statistical overview (excerpt – illustrative)

Institution/ Case Country Year IAM no.

Project name

Process followed Mgt challenged and status, as of eligibility of Request? 25 September 2012

WB IP

Third Power Project, Fourth Power Project, and proposed Bujagali Hydropower Project

Request eligible/ No Recommendation to investigate/ Board approved/ Investigation completed /Board approved investigation report & mgt response

24

Uganda

2001

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Number Policies allegedly of policies violated allegedly violated

How long did IAM take to determine eligibility? (in days)

What is prescribed time for IAM to determine eligibility? (excluding possibility of getting extensions)

Project type / lending vehicle

28

21 days after receiving initial Mgt response to request

12 2 IDA Credits IDA Partial Risk Guarantee          

Number of policies violated

Environmental 7 assessment (OD 4.01) Environmental assessment (OP 4.01) Natural habitats (OP 4.04) Indigenous peoples (OD 4.20) Involuntary resettlement (OD 4.30) Safety of dams (OP 4.37) Management of cultural property in Bank-financed projects (OPN 1)

219

Policies violated / Number of violations per policy

Environmental Policy for Dam and Reservoir Projects (OD 4.00 Annex B1) (1) Project supervision (OD 13.05) Environmental assessment (OP 4.01) (3) Natural habitats (OP 4.04) (1) Economic evaluation of investment operations (OP 10.04) (6) Involuntary resettl  

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table 9.2 Statistical overview (excerpt – illustrative) (cont.)

Process followed Mgt challenged and status, as of eligibility of Request? 25 September 2012

Institution/ Case Country Year IAM no.

Project name

WB IP

Request eligible/ No Petroleum Development Recommendation to investigate/ and Pipeline Board approved/ Project, Management Investigation completed /Board of the approved Petroleum investigation Economy report & mgt Project, and response Petroleum Sector Management Capacity Building Project

22

Chad

2001

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Project type / lending vehicle

How long did IAM take to determine eligibility? (in days)

What is prescribed time for IAM to determine eligibility? (excluding possibility of getting extensions)

122

21 days after 3 IDA Credits receiving initial Mgt response to request

Number Policies allegedly of policies violated allegedly violated

12

Number of policies violated

Environmental 3 assessment (OD 4.01) Natural habitats (OP 4.04) Natural habitats (BP 4.04) Pest management (OP 4.09) Poverty reduction (OD 4.15) Indigenous peoples (OD 4.20) Involuntary resettlement (OD 4.30) Forestry (OP 4.36) Disclosure of operation

221

Policies violated / Number of violations per policy

Environmental assessment (OD 4.01) (8) Economic evaluation of investment operations (OP 10.04) (3) Poverty reduction (OD 4.15) (2)            

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table 9.2 Statistical overview (excerpt – illustrative) (cont.)

Institution/ Case Country Year IAM no.

Project name

Process followed Mgt challenged and status, as of eligibility of Request? 25 September 2012

WB IP

21

India

2000

NTPC Power Generation Project, 2nd Request

Not registered

WB IP

20

Ecuador

1999

Mining Development and Environmental Control Technical Assistance Project

Request eligible/ No Recommendation to investigate/ Board approved/ Investigation completed /Board approved investigation report & mgt response

No

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Project type / lending vehicle

Number Policies allegedly of policies violated allegedly violated

How long did IAM take to determine eligibility? (in days)

What is prescribed time for IAM to determine eligibility? (excluding possibility of getting extensions)

 

21 days after IBRD Loan receiving initial Mgt response to request

3

97

21 days after IBRD Loan receiving initial Mgt response to request

4

Number of policies violated

N/A Involuntary resettlement (OD 4.30) Project supervision (OD 13.05) Environmental assessment (OD 4.01) Environmental 1 assessment (OD 4.01) Wildlands (OPN 11.02) Indigenous peoples (OD 4.20) Project supervision (OD 13.05)

Policies violated / Number of violations per policy

N/A

Environmental assessment (OD 4.01) (4)

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table 9.2 Statistical overview (excerpt – illustrative) (cont.)

Institution/ Case Country Year IAM no.

Project name

Process followed Mgt challenged and status, as of eligibility of Request? 25 September 2012

WB IP

19

Kenya

1999

Lake Victoria Environmental Management Project

Request eligible/ No Recommendation to investigate/ Board approved/ Investigation completed /Board approved investigation report & mgt response

WB IP

18

Brazil

1999

Land Reform Poverty Alleviation Project, 2nd Request

Request not eligible/Board approved

Source: The Author

No

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Number Policies allegedly of policies violated allegedly violated

How long did IAM take to determine eligibility? (in days)

What is prescribed time for IAM to determine eligibility? (excluding possibility of getting extensions)

Project type / lending vehicle

76

21 days after receiving initial Mgt response to request

4 IDA Credit GEF Trust Fund Grant    

 

21 days after IBRD Loan 3 receiving initial Mgt response to request

Number of policies violated

Environmental 2 assessment (OD 4.01) Poverty reduction (OD 4.15) Economic evaluation of investment projects (OP 10.04) Project supervision (OD 13.05) N/A Poverty reduction (OD 4.15) Project supervision (OD 13.50) Disclosure of operational information (BP 17.50)

Policies violated / Number of violations per policy

Environmental assessment (OD 4.01) (2) Project supervision (OD 13.05) (1)    

N/A

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table 9.3 Structured summary of IAM case – EBRD IRM Georgia BTC Pipeline (Atskuri)

The Project Key facts

Ref.

EAR, § 1 On 6 July 2007, the IRM received a complaint relating to the Main Baku-Tbilisi-Ceyhan (BTC) Oil Pipeline Project, as implemented in the vicinity of Atskuri Village, Akhaltsikhe District, Georgia (the “Project”).

Objectives

Ref.

The BTC pipeline will help EBRD Website unlock the economic potential of the Caspian, bringing investment and revenues as well as the parallel economic development that will be broadly shared. The pipeline will strengthen competition as a first step to expanding capacity to transport oil and gas from the Caspian, adding competition between routes and ultimately increasing the share in revenues paid to host governments.

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The Complaints  Key claims

Ref.

EAR, § 2 A number of landowners, who are residents of Atskuri Village in the Akhaltsikhe District of Georgia (the “Affected Group”), claim that they have suffered losses as a result of the implementation of the BTC Oil Pipeline Project.

Alleged policy violation

Ref.

EAR, World Bank / § 11 IFC O.D. 4.30 on Involuntary Resettlement[.]

Suggested possibilities problem solving

Ref.

Cmplt, p. 7 We request the IRM:to undertake the compliance review with regard of the BTC oil pipeline project due diligence relevance towards EBRD Environmental and Public disclosure policy[;]

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table 9.3 Structured summary of IAM case – EBRD IRM Georgia BTC Pipeline (cont.)

EBRD response

Response per claim

Ref.

Action step per claim

EAR, § 23 N/A The EBRD reviewed the Project, including social issues and resettlement impacts, as part of a large group of lenders including numerous export credit agencies, commercial banks and the IFC. Social due diligence was assessed by independent lender consultants (Mott MacDonald Ltd.), as well as specialist staff from the various lender institutions. A framework for compensation for the effects of physical and economic displacement expected to be incurred as a result of the implementation of the project was presented in a Resettlement Action Plan (RAP), which was made public and approved by the group of lenders, including EBRD. Source: The Author

IRM eligibility assessment

Ref.

Eligibility criteria

Ref.

 

On 18 July 2007, the EAR, § 9 CCO determined that the Complaint contained the mandatory requirements of a complaint in accordance with IRM, RP 8, and was not otherwise manifestly ineligible for registration.

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IRM compliance review report/ problem-solving initiative report Recommendation Ref.

Findings per claim

Ref.

PSR, § 3 EAR, § 24 Previous atIn accordance tempts to carry with IRM, RP 27(b) out a Problem (ii), the Eligibility Solving Initiative Assessors under the IRM in recommend to relation to two declare the other complaints Complaint eligible, concerning but not warranting alleged impacts of a Compliance the BTC pipeline Review. This construction recommendation is on residents without prejudice in a) Gyrakh to the ability of the Kesemenli village CCO to recommend in Azerbaijan a PSI in accordance and b) in Akhali with IRM, RP 44. Samgori village in Georgia had both been unsuccessful.

Recommendations/ Suggestions

Ref.

PSR, § 9 Overall, the PSI achieved the required outcome of restoring an effective dialogue between the Parties. It resulted in the resolution of several of the individual complaints and brought clarity in the reasons and background for the closing of the remaining complaints following their review by BP/ BTC. In the opinion of the PsF and the CCO, there is no scope for further dialogue or new compensation offers from BP/BTC and the PSI is now satisfactorily completed. The full and active cooperation of all members of the Affected Group and the project sponsor BP/BTC throughout the PSI is hereby acknowledged.

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table 9.4 Index overview (excerpt – illustrative)

IAM

Case

Project type

Project type

Index code

Index item description

WBIP

Ghana/Nigeria: West African Pipeline

Oil/gas/ pipeline project

Financed by multiple actors (both public and private), ER, § 10, 12

1005

Transboundary Effects

WBIP

Ghana/Nigeria: West African Pipeline

Oil/gas/ pipeline project

Financed by multiple actors (both public and private), ER, § 10, 12

31000

Development and Conflict

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“See”/ “See also”

Field of law

OP/P

Contract law/ N/A Adverse environmental Environmental impact (“See law also”)

 

 

N/A

Quote

231

Reference

ER, § 9 The development, financing, construction, ownership, operation and maintenance of the Project was agreed in an International Project Agreement dated May 22, 2003, between the Republic of Benin, the Federal Republic of Nigeria, the Republic of Togo, the Republic of Ghana, and WAPCo. The International Project Agreement was negotiated pursuant to Article VII of the Treaty on the West African Gas Pipeline Project between the Republic of Benin, the Republic of Ghana, the Federal Republic of Nigeria, and the Republic of Togo, signed on January 31, 2003. ER (Final), IP: The Panel notes the § 48 economic importance of this infrastructure Project to the region, the important role of the private sector, and the volatile situation in parts of the Project area. The Panel observes that in such circumstances it is especially important to determine Bank compliance with its policies and procedures, and thus to facilitate the achievement of the objectives of the Project and Bank policies.

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table 9.4 Index overview (excerpt – illustrative) (cont.)

IAM

Case

Project type

Project type

Index code

Index item description

WBIP

Ghana/Nigeria: West African Pipeline

Oil/gas/ pipeline project

Financed by multiple actors (both public and private), ER, § 10, 12

6000

Involuntary Resettlement

Source: The Author

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“See”/ “See also”

Field of law

Environmental Right to property Assessment (“See also”)

OP/P

Quote

233

Reference

IR, § 125 IP: WAPCo [implementing OP 4.12 (Involuntary agency] was faced with the Resettlement) situation of having broad data on people living in the area from the ESIA [Environmental and Social Impact Assessment] survey. [§ 119: The ESIA was a broad social impact analysis. It did not specifically target the households whose lands and other assets were to be acquired for the Project.] WAPCo did not have the information needed specifically to assess the displaced persons’ impoverishment risks, the degree of exposure to their socioeconomic livelihoods, the magnitude of their expected losses, or to identify specific vulnerable peoples. The Panel found that Management did not ensure that the requisite socio-economic information was gathered as called for in the Bank Policy. This does not comply with OP 4.12.

IAM emphasizing substantive and process components Concern for future compliance Participation in decision-making Meaning of the phrases ‘meaningful and informed’ or ‘full and informed consultation’ Timing of consultation with PAP Identification / definition of PAP Quantification of PAP Minimum’ standards for participation Quality of communication with PAP The meaning of “broad community support” Credibility, trust, perceived independence/impartiality of contracted agencies among PAP

QJO/161110

Source: The Author

QJO/161620 QJO/161630 QJO/161631 QJO/161650 QJO/161660 QJO/161670 QJO/161680

QJO/161510 QJO/161600 QJO/161610

Could be indicative of intergenerational considerations   Considering both substantive and procedural elements of participation              

  Including application of existing norms / principles to MDB context elements of compliance; how to assess compliance; what do you have to do in order to be compliant in situation X  

Outcomes of Quasi-Judicial Oversight: Development of norms / standards / principles / ‘doctrines’ concerning: Assessment of compliance / due dilligence requirements

QJO/160000 QJO/161000

QJO/161100

Additional description – to be used in analysis & writing; observations/analysis that are more speculative in nature

Issue description

Issue code

table 9.5 Issue overview: data model (excerpt)

    QJO/161410       QJO/1614100

QJO/161570    

 

 

   

Issue related to / correlates with …

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WBIP 31

Issue code

OD 4.01,  § 4(c), OD 4.01, Annex B,  § (f)

Ref quote 1

IR, § 60 IP: A basic principle of environmental assessment is that there can be no choice if there is no alternative. This was recognized as early as the late 1960s. The purpose of environmental assessment is to improve decisions by making appropriate choices, so it follows that careful comparison of realistic alternatives is an important feature of environmental assessments. Without systematic consideration of realistic alternatives, any environmental impact assessment is seriously flawed.

Issue OP&P OP&P Quote 1 description concerned provision concerned

Colombia QJO/161440 Evaluation of OD 4.01 Cartagena alternatives Water Supply, Sewerage & Env Project

IAM IAM IAM case case no.

table 9.6 Issue overview: data entries (excerpt)

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Issue code

 

Ref quote 1

Assessment CAO: Buenaventura is undergoing a process of economic Report, p. 9 transformation due to the decision19 to consolidate its position as one of the most important ports in Colombia, by dramatically expanding its capacity. TCBuen [the Project] is only one of the many projects that are underway or in the pipeline to implement this decision. While social and environmental impact assessments have been conducted for TCBuen and may also be in place for other coming projects, there seems to be a gap in the assessment of their cumulative impact if considered as a whole. For example, those fishermen whose livelihoods depend on the resources of the bay will probably face a significant reduction in the area where they will be able to fish. Probably, the remaining area will be rapidly saturated and even disputed among them. It is likely that most of the fishermen are 50 years old or more and very unlikely that they can easily transition to other economic activities. In none of the meetings held, has the CAO found any reference neither to an assessment of cumulative impacts nor to plans to mitigate them and protect vulnerable segments of the population of Buenaventura, developed in consultation with them.

Issue OP&P OP&P Quote 1 description concerned provision concerned

Colombia / QJO/161710 IAM empha-   TCBuen-01/ sizing harm / Buenaventura highlighting plight of PAP

Source: The Author

IFC   CAO

IAM IAM IAM case case no.

table 9.6 Issue overview: data entries (excerpt) (cont.)

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chapter 10

Interpretation and Application of the World Bank’s Operational Policies and Bank Procedures Relating to Environmental Issues by the World Bank Inspection Panel Wei-Chung Lin 1 Introduction The introduction of independent accountability mechanisms (IAMs) into international financial institutions (IFIs) is important for tackling the negative social and environmental consequences of IFI-supported projects. These mechanisms allow those affected by project activities to raise their concerns. This innovation enables those who have historically been denied access to an international remedy to seek redress for harms resulting from development projects and to question the legitimacy of IFIs’ lending activities.1 The World Bank Inspection Panel (Panel or Inspection Panel) is the earliest example in this respect. The Inspection Panel was founded in 1993 to receive complaints from the public about the social and environmental results of projects that are financed by the International Bank for Reconstruction and Development (IBRD) or the International Development Association (IDA).2 The establishment of the Panel has a significant impact in protecting the rights or interests of the public when non-compliance is found to exist and remedial measures are consequently taken by the Bank’s Board of Executive Directors. Moreover, the Panel may play a crucial role in providing clarification of the contents of the rules applicable in addressing the complaints. This may also contribute to the development of the social and environmental standards for IFIs when handling project finance activities. The manner in which the 1  Daniel D. Bradlow, ‘Private Complainants and International Organizations: A Comparative Study of the Independent Inspection Mechanisms in International Financial Institutions’ (2005) 36 Georgetown Journal of International Law 403, 406–407. 2  Resolution of the Executive Directors Establishing the Inspection Panel for the International Bank for Reconstruction and Development (No. 93–10) and the International Development Association Resolution (No. 93–6) 34 ILM 520 (Resolution Establishing the Inspection Panel).

© Koninklijke Brill NV, Leiden, 2020 | doi:10.1163/9789004337787_011

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Inspection Panel has applied and interpreted the relevant rules to address the environmental issues brought before the Panel is what this chapter explores. After this introduction, the second section discusses the issue of the World Bank’s accountability to non-state actors in the context of project finance activities and explains the nature and function of IAMs within the World Bank Group. The third section considers the World Bank Inspection Panel’s investigation process. The fourth section then identifies the substantive environmental rules applicable in determining the complaints brought by project-affected people (PAP). In the fifth section, cases are selected to explore how the Panel has applied and interpreted the relevant policy provisions to tackle the environmental issues raised in the complaints. It also evaluates the influences the Inspection Panel may have on the application of the Bank’s environmental policies and the Bank’s project finance activities through its investigations. 2

The Establishment of the IAMs within Modern IFIs

2.1 The Accountability of the World Bank to Non-state Actors Today it is well established that those who exercise public power should be accountable for their conduct.3 International organisations (IOs) are accountable to their member states through IOs’ internal mechanisms. In addition, through the mechanisms established under the agreements, IOs are accountable to non-member states, other IOs and non-state actors with whom they have concluded treaties or entered into contractual relationships.4 However, in the absence of a contractual relationship, there are no instruments for private individuals to hold IOs directly accountable for their actions or omissions.5 At the domestic level, IOs generally enjoy immunity from national jurisdiction. Thus, unless IOs wave their immunity, it is difficult for individuals to seek remedies through domestic courts.6 At the international level, those most affected by IOs’ operations cannot file international claims on their own behalf. They can only seek representation by member states of 3  See Philippe Sands and Pierre Klein, Bowett’s Law of International Institutions (6th edn, Sweet & Maxwell 2009) 516–526. 4  Bradlow (n 1) 405–406. 5  Ibid. See also Ellen Hey, ‘The World Bank Inspection Panel: Towards the Recognition of a New Legally Relevant Relationship in International Law’ (1997) 2 Hofstra Law and Policy Symposium 61, 62–65. 6  See Emmanuel Gaillard and Isabelle Pingel-Lenuzza, ‘International Organisations and Immunity from Jurisdiction: To Restrict or to Bypass’ (2002) 51 International & Comparative Law Quarterly 1.

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the organisations of which they are nationals.7 Since on most occasions, IOs are not held accountable to those adversely affected for the way in which they exercise public power, concerns arise when their operations have negative impacts for individuals. As August Reinisch says, ‘[w]ith the increase of tasks that are fulfilled by international organisations […] it becomes more likely that not only interests but also rights and even fundamental rights of individuals may be impaired’.8 This is especially evident in the case of the World Bank, whose expanded project lending operations can profoundly affect the people living in the countries where the projects are located. Internal and external pressures in the light of World Bank project lending failures led to the establishment of the Inspection Panel.9 There has been criticism of the fact that, although the Bank staff responsible for project appraisal have had broad discretionary power in the loan approval process, there has been no independent mechanism to review the exercise of such power.10 The Bank’s ‘culture of approval’ has led its staff to approve as many projects as possible without adequately considering the Bank’s internal policies and properly supervising project implementation.11 An example exemplifying the negative social and environmental impacts arising from Bank-financed projects was the controversial Sardar Sarovar Projects in India in the 1980s.12 According to the Morse Commission, which 7  See Richard E. Bissell and Suresh Nanwani, ‘Multilateral Development Bank Accountability Mechanisms: Developments and Challenges’ (2009) 6 Manchester Journal of International Economic Law 2, 38–43. 8  August Reinisch, ‘Securing the Accountability of International Organizations’ (2001) 7 Global Governance 131, 131. 9  Dana Clark, ‘Understanding the World Bank Inspection Panel’ in Dana Clark, Jonathan Fox and Kay Treakle (eds), Demanding Accountability: Civil-Society Claims and the World Bank Inspection Panel (Rowman & Littlefield 2003) 2–6. 10  Daniel D. Bradlow, ‘International Organizations and Private Complaints: The Case of the World Bank Inspection Panel’ (1993) 34 Virginia Journal of International Law 553, 560–563. 11  Report of the World Bank’s Portfolio Management Task Force, Effectiveness Implementation: Key to Development Impact (3 November 1992). See also Ibrahim F. I. Shihata, ‘The World Bank Inspection Panel – Its Historical, Legal and Operational Aspects’ in Gudmundur Alfredsson and Rolf Ring (eds), The Inspection Panel of the World Bank: A Different Complaints Procedure (Martinus Nijhoff 2001) 8–9. 12  Narmada River Development (Gujarat) Sardar Sarovar Dam and Power Project (IDA Credit Agreement No. 1553-IN) and Narmada River Development (Gujarat) Water Delivery and Drainage Project (IBRD Loan Agreement No. 2497-IN). See also Thomas R. Berger, ‘The World Bank’s Independent Review of India’s Sardar Sarovar Projects’ (1993) 9 American University Journal of International Law & Policy 33.

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was established by the Bank to conduct an independent review in response to widespread opposition to the projects, the Bank had failed to incorporate its policies into the agreements with the borrower and to require the borrower to implement its contractual obligations.13 This dispute shows how IFI-financed projects can have significant adverse impacts on people’s livelihood and the environment. Growing pressure from the public eventually led to the establishment of IAMs within the World Bank Group. 2.2 The IAMs in the World Bank Group The origin of IAMs within IFIs can be traced back to the ombudsman institution in domestic society.14 Ombudsmen are normally appointed by the executive or parliament but operate independently of public authorities. They receive and investigate complaints from the public concerning the actions or decisions of administrative bodies but they may also conduct investigations into alleged improper administrative behaviour on their own initiative.15 Ombudsmen have extensive investigatory powers; something that traditional judicial methods of settlement do not have. By contrast, they are not designated powers of legal enforcement. If any misconduct is found, they can only make recommendations for changes to administrative practice or policies.16 On the international plane, this kind of complaint and grievance mechanisms was initially adopted to settle employment disputes between IOs and their staff.17 However, as noted, with the impact of IFI-financed projects on the increase, there has been a growing demand to hold IFIs accountable for the consequences of their activities. The establishment of IAMs within IFIs enhances the accountability of IOs in respect of their project finance activities. The World Bank Inspection Panel is the earliest example. The Inspection Panel receives complaints from those who believe that their rights or interests are affected because of the Bank’s failure to observe its social and environmental policies in its financed projects. This allows the public to challenge the legitimacy of the Bank’s project lending decisions and operations. 13  See Bradford Morse and Thomas R. Berger, Sardar Sarovar: Report of the Independent Review (Resources Future International 1992). 14   Duncan French and Richard Kirkham, ‘Complaint and Grievance Mechanisms in International Dispute Settlement’ in Duncan French, Matthew Saul and Nigel White (eds), International Law and Dispute Settlement: New Problems and Techniques (Hart Publishing 2010) 63–65. 15  Linda C. Reif, The Ombudsman, Good Governance and the International Human Rights System (Martinus Nijhoff 2004) 2–4. 16  Ibid.; French and Kirkham (n 14) 65–66. 17  Reif (n 15) ch 10.

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The aim of the Inspection Panel is to ensure that IBRD/IDA-financed projects conform to its own safeguard policies, thereby securing the quality of the projects and strengthening the Bank’s public accountability.18 Thus, the focus of the Panel is on actions or omissions of the Bank, but not on the borrower’s conduct. However, since the Bank has the responsibility to oversee the borrower’s fulfillment of its contractual obligations under the loan agreement, the Panel’s determination as to whether the Bank has failed to monitor and follow up on the borrower’s project implementation may also examine the borrower’s behaviour throughout the project. The establishment of the World Bank Inspection Panel prompts the Bank’s staff to be not only more aware of each project’s compliance with its safeguard policies but also to be responsive to the public’s social and environmental concerns.19 It has served as a model for similar mechanisms within other IFIs. For example, the Office of the Compliance Advisor Ombudsman (CAO) for the International Finance Corporation (IFC) and the Multilateral Investment Guarantee Agency (MIGA) was established in 1999 to receive complaints about the projects supported by the IFC and MIGA and implemented by private sector clients. Moreover, other IAMs have been set up in regional multilateral development banks (MDBs), such as the Inter-American Development Bank, the Asian Development Bank, the European Bank for Reconstruction and Development, the African Development Bank, and the Asian Infrastructure Investment Bank. 3

The Investigation Process

According to the Resolution Establishing the Inspection Panel20 and the Clarifications adopted in the first review of the Panel in 1996, any two or more persons who share some common interests or concerns in the borrower’s territory can make a request.21 When appropriate local representation of such affected parties is not available, the Bank’s Board of Executive Directors (Board) 18  Suresh Nanwani, ‘Holding Multilateral Banks to Account: Gateways and barriers’ (2008) 10 International Community Law Review 199, 221. 19  Dana Clark and David Hunter, ‘The World Bank Inspection Panel: Amplifying Citizen Voices for Sustainable Development’ in in Gudmundur Alfredsson and Rolf Ring (eds), The Inspection Panel of the World Bank: A Different Complaints Procedure (Martinus Nijhoff 2001) 171–172. 20  Resolution Establishing the Inspection Panel (n 2) [12]. 21  Review of the Resolution Establishing the Inspection Panel: Clarification of Certain Aspects of the Resolution (17 October 1996).

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may allow requests from non-local representatives.22 Moreover, in special cases of serious alleged violations of Bank policies and procedures,23 any Executive Director may ask the Panel for an investigation. The Executive Directors, acting as a Board, may also instruct the Panel to conduct an investigation.24 The investigation process has two phases – the eligibility phase and the investigation phase. During the eligibility phase, the Panel ascertains whether the request is admissible.25 In 2014, the Panel has piloted a new approach with a view to reaching early solutions without recourse to a full investigation. According to the revised Operating Procedures, the Panel will postpone its decision on registration of an eligible request to offer additional opportunities for Bank Management and the requester to address the issues concerned.26 This pilot approach is adopted on a case-by-case basis and depends on the willingness of Management and the consent of the requester.27 The adoption of this pilot approach does not affect the Panel’s discretion to recommend a full investigation. After the registration, Bank Management should submit its response to the request to the Panel.28 Once it has received Management’s response, the Panel conducts a preliminary review to determine whether to recommend an investigation to the Board.29 The Board then makes a final decision.30 The Board used to have considerable discretion in authorising a formal investigation.31 However, its discretionary power was restricted following the second review of the Inspection Panel in 1999.32 According to the 1999 Clarifications, the Board will authorise an investigation without examining the merits of the request. It can only reject the Panel’s recommendations for certain technical eligibility reasons.33 22  Resolution Establishing the Inspection Panel (n 2) [12]. 23  A serious violation of the Bank’s policies and procedures means that such violation has, or is likely to have, a material adverse effect. Conclusions of the Board’s Second Review of the Inspection Panel (6 November 1997) [9(b)] (1999 Clarifications) 18 August 2019. 24  Resolution Establishing the Inspection Panel (n 2) [12]. 25  Operating Procedures of the World Bank Inspection Panel (revised April 2014) [25] (Operating Procedures). 26  Ibid. Annex 1 [2]. 27  Ibid. [3]. 28  Ibid. [33]–[35]. 29  Ibid. [43]. 30  Ibid. [49]–[50]. 31  Bradlow (n 1) 418–419. 32  For the discussion in the second review of the Inspection Panel, see Ibrahim F. I. Shihata, The World Bank Inspection Panel: In Practice (2nd edn, OUP 2000) 173–203. 33  1999 Clarifications (n 23) [9].

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If an investigation is authorised, the Panel has extensive investigatory powers.34 Upon completion of its investigation, the Panel submits its findings and conclusions to the Board and the Bank’s President, indicating whether the Bank’s safeguard policies have been violated.35 Bank Management should then submit its report and recommendations (MRR) to the Board,36 including an action plan devised through consultation with the complainant and agreed between the Bank and the borrower.37 The Board then makes a final decision on the action plan to be taken.38 4

The Applicable Environmental Rules

The World Bank’s operational policies and bank procedures are the substantive rules for reviewing the complaints brought by PAP before the Inspection Panel. These rules describe the steps the Bank’s staff should follow during Bank-financed project activities. They govern the internal activities of the Bank and become legally binding when incorporated into loan agreements between the borrower and the Bank. According to the Resolution Establishing the Inspection Panel, the Bank’s safeguard policies include Operational Policies (OPs), Bank Procedures (BPs), Operational Directives (ODs) and similar documents.39 They are the instruments issued by Bank Management and agreed upon by the Board.40 Specifically, OPs are policy statements setting out the requirements for the Bank’s conduct in its operations.41 BPs are procedural instructions covering Bank staff requirements for carrying out the policies stipulated in OPs.42 ODs have now been replaced by OPs and BPs. The Panel’s jurisdiction is limited to investigating the Bank’s compliance with these OPs and BPs.

34  Resolution Establishing the Inspection Panel (n 2) [21]; Operating Procedures (n 25) [54]. 35  Resolution Establishing the Inspection Panel (n 2) [22]. 36  Operating Procedures (n 25) [67]. 37  World Bank Inspection Panel, Accountability at the World Bank: The Inspection Panel at 15 Years (The World Bank 2009) 41–42. 38  Operating Procedures (n 25) [71]. 39  Resolution Establishing the Inspection Panel (n 2) [12]. 40  For a description of the evolution of the Bank’s safeguard policies, see Shihata, The World Bank Inspection Panel: In Practice (n 32) 41–46. 41  The World Bank, A Guide to the World Bank: Third Edition (The World Bank 2011) 61 accessed 18 August 2019. 42  Ibid.

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The Bank’s safeguard policies address various environmental issues. These issues include ‘environmental impact assessment’ (OP/BP 4.01, the term ‘environmental assessment’ is used in OPs and BPs),43 ‘Environmental Action Plans’ (OP/BP 4.02),44 ‘Natural Habitats’ (OP/BP 4.04),45 ‘Pest Management’ (OP 4.09)46 and ‘Forests’ (OP/BP 4.36).47 Although the Bank’s safeguard policies are its internal rules aiming at binding Bank staff, the manner in which these rules are applied and interpreted by the Inspection Panel when addressing the complaints can have far-reaching implications.48 First, the Panel performs an important role in guiding how the Bank and the borrower implement the project. While Bank policies are not intended to impose obligations directly on the borrower, the borrower has to meet its obligations when these requirements are incorporated into the loan agreement.49 The Bank also has to supervise the borrower’s performance of its obligations. To avoid the breach of Bank 43  See The World Bank, Environmental Assessment (January 1999) OP 4.01 accessed 18 August 2019; The World Bank, Environmental Assessment (January 1999) BP 4.01 accessed 18 August 2019. 44  See The World Bank, Environmental Action Plans (July 2015) OP 4.02 accessed 18 August 2019; The World Bank, Environmental Action Plans (July 2015) BP 4.02 accessed 18 August 2019. 45  See The World Bank, Natural Habitats (April 2013) OP 4.04 accessed 18 August 2019; The World Bank, Natural Habitats (April 2013) BP 4.04 accessed 18 August 2019. 46  See The World Bank, Pest Management (August 2004) OP 4.09 accessed 18 August 2019. 47  See The World Bank, Forests (April 2013) OP 4.36  accessed 18 August 2019; The World Bank, Forests (April 2013) BP 4.36 accessed 18 August 2019. 48  Laurence Boisson de Chazournes, ‘Policy Guidance and Compliance: The World Bank Operational Standards’ in Dinah Shelton (ed), Commitment and Compliance: The Role of Non-Binding Norms in the International Legal System (OUP 2000) 297–301. 49  If the borrower fails to meet the requirements, the Bank can impose sanctions (such as suspension or cancellation of the loan) on the borrower. Ibrahim F. I. Shihata, ‘Implementation, Enforcement, and Compliance with International Environmental Agreements – Practical Suggestions in Light of the World Bank’s Experience’ (1996) 9 Georgetown International Environmental Law Review 37, 49–51.

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policies, the Bank and the borrower should be aware of how the substantive contents of the social and environmental standards have been elaborated by the Panel through its investigations. Consequently, the Panel’s practice has a significant impact on the manner in which relevant entities conduct their project activities. Furthermore, the Panel’s interpretation of Bank policies clarifies the meaning of the concepts adopted in policy provisions and contributes to the normative development of international standards for IFIs in addressing social and environmental issues during project activities.50 Second, when applying and interpreting Bank policies, the Panel may have to consider principles and rules of international law relating to the environmental issues concerned.51 This is especially so when Bank policies mention a specific multilateral environmental agreement (MEA),52 ‘international environmental treaties and agreements’53 or ‘applicable international environmental agreements’.54 This provides an opportunity for the Bank to promote the implementation of MEAs by requiring the borrowing government to meet its treaty commitments.55 Moreover, the Panel may examine the project’s compliance with Bank policies in light of the borrower’s MEA obligations relevant to project activities. It is worth noting that the Board approved the Environmental and Social Framework (ESF) on 4 August 2016. The newly-adopted ESF, which will apply to all new projects the Bank supports from 2018,56 includes the Version for 50  Andria Naudé Fourie, ‘The World Bank Inspection Panel’s Normative Potential: A Critical Assessment, and a Restatement’ (2012) 59 Netherland International Law Review 199; Daniel D. Bradlow and Andria Naudé Fourie, ‘The Operational Policies of the World Bank and the International Finance Corporation: Creating Law-Making and Law-Governed Institutions?’ (2013) 10 International Organizations Law Rev 3, 41–57; Daniel D. Bradlow and Megan S. Chapman, ‘Public Participation and the Private Sector: The Role of Multilateral Development Banks in the Evolution of International Legal Standards’ (2011) 4 Erasmus Law Review 91, 120. 51  Bradlow (n 10) 608–609; Daniel D. Bradlow and Sabine Schlemmer-Schulte, ‘The World Bank’s New Inspection Panel: A Constructive Step in the Transformation of the International Legal Order’ (1994) 54 Zeitschrift für ausländisches öffentliches Recht und Völkerrecht 392, 404–405. 52  See The World Bank, Physical Cultural Resources (June 2006) OP 4.11 [3] accessed 18 August 2019. 53  See OP 4.01, Environmental Assessment (n 43) [3]; BP 4.01, Environmental Assessment (n 43) [10] & [19]. 54  See OP 4.36, Forests (n 47) [6]. 55  Ibrahim F. I. Shihata, The World Bank in a Changing World, Vol. 3 (Brill 2000) 514–516. 56  See The World Bank, The Environmental and Social Framework (The World Bank 2017) accessed 18 August 2019.

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Sustainable Development, the World Bank Environmental and Social Policy for Investment Project Financing (ESPIP), and the ten Environmental and Social Standards (ESS).57 The Version for Sustainable Development illustrates the Bank’s aspirations for environmental and social sustainability. The ESPIP describes the standards the Bank must comply with in relation to its supported projects. The ESSs set out the requirements the borrower must meet throughout the project life cycle.58 The environment-related ESSs include the Environmental and Social Standard 1 (Assessment and Management of Environmental and Social Risks and Impacts), the Environmental and Social Standard 3 (Resource Efficiency and Pollution Prevention and Management) and the Environmental and Social Standard 6 (Biodiversity Conservation and Sustainable Management of Living Natural Resources). The ESF will replace several current OPs and BPs, including those relating to the environment, such as OP/BP 4.01, OP/BP 4.04, OP/BP 4.09 and OP/BP 4.36.59 5

The Practice of the World Bank Inspection Panel

This section begins by considering the substantive contents of the Bank’s environmental policies in the selected cases. It then examines how the Inspection Panel has applied and interpreted the relevant rules to address the environmental claims brought by PAP and evaluates the implications of these practices for the implementation of project activities. 5.1 Environmental Impact Assessment (EIA) The Bank’s safeguard policies require an EIA to be conducted to ensure that its funded projects are environmentally sound and sustainable.60 An EIA explores a project’s potential environmental impacts, identifies feasible alternatives and provides options for improving project implementation.61 The issues an EIA should consider include natural environment, human health and safety, social

57  See The World Bank, Environmental and Social Framework accessed 18 August 2019. 58  Ibid. ix. 59  Ibid. xi. 60   O P 4.01, Environmental Assessment (n 43) [1]. 61  Ibid. [2].

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aspects,62 and transboundary and global environmental aspects.63 Meanwhile, the country’s institutional capacities in addressing EIA-related issues,64 its domestic policy framework and legislation, and its obligations regarding project activities under international environmental agreements, must also be taken into account.65 The borrower has an obligation to conduct an EIA,66 though the Bank advises on its EIA requirements and reviews the findings and recommendations of the EIA to determine if it provides an adequate basis for processing the project for Bank financing. When the borrower has completed or partially completed EIA work prior to the Bank’s involvement in a project, the Bank also reviews the EIA to ensure it is consistent with this policy. It may require additional EIA work to be done by the borrower.67 5.1.1 Environmental Screening When undertaking an EIA of a proposed project, the first step is environmental screening, i.e. to decide the appropriate extent and type of analysis to adopt. According to OP 4.01 as revised in 2013, a project should be classified as Category A when it is likely to have ‘significant adverse environmental impacts that are sensitive, diverse, or unprecedented’.68 The impact is considered sensitive when it involves issues covered by other Bank policies, such as natural habitats, indigenous peoples, physical cultural resources or involuntary resettlement. An EIA for a Category A project should examine the project’s potential environmental impacts and compare them with those of feasible alternatives. 62  Social aspects include involuntary resettlement, indigenous peoples and physical cultural resources. There are other Bank policies addressing these issues: see The World Bank, Indigenous Peoples (July 2005) OP 4.10 accessed 18 August 2019; The World Bank, Indigenous Peoples (July 2005) BP 4.10 accessed 18 August 2019; Physical Cultural Resources, OP/BP 4.11 (n 52); The World Bank, Involuntary Resettlement (December 2001) OP 4.12 accessed 18 August 2019; The World Bank, Involuntary Resettlement (December 2001) BP 4.12 accessed 18 August 2019. 63   O P 4.01, Environmental Assessment (n 43) [3]. 64  Ibid. [13]. 65  Ibid. [3]. 66  Ibid. [4]. 67  Ibid. [5]. 68  Ibid. [8(a)].

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It should also recommend any measures to prevent, minimise, mitigate or compensate for such impacts and improve environmental performance.69 Moreover, the borrower should retain independent experts not affiliated with the project to undertake the EIA.70 An advisory panel, which comprises independent and internationally recognised environmental specialists, should be appointed to advise on all aspects of the project relevant to the EIA if the project is ‘highly risky or contentious or (…) involves serious and multidimensional environmental concerns’.71 A project is assigned as Category B when its potential impacts are less adverse than those of a Category A project. This means that such impacts are site-specific and few, if any, of them are irreversible. Also, mitigation measures for a Category B project can usually be designed more readily than for a Category A project.72 While a Category B EIA evaluates the same aspects as those of a Category A EIA, its scope is less extensive.73 Finally, a project is classified as Category C if it is likely to have minimal or no adverse environmental impacts. No further EIA action is required beyond screening for Category C projects.74 Assigning a proposed project to an appropriate category has been a contentious issue in several cases.75 In China: Western Poverty Reduction Project, for example, the project involved voluntary resettlement of many non-Tibetan and non-Mongolian settlers into new irrigation areas in a Tibetan and Mongolian autonomous region, and the conversion of land used by indigenous nomads for grazing into intensive agricultural production.76 The complainants argued, among other things, that the project’s categorisation was incorrect. This was because the project contained components specified in the illustrative list of 69  Ibid. 70  Ibid. [4]. 71  Ibid. 72  Ibid. [8(b)]. 73  Ibid. 74  Ibid. [8(c)]. 75  See, e.g., The Inspection Panel, Pakistan: National Drainage Program Project (Credit No. 2999-PAK), Investigation Report (6 July 2006) [272]–[275]; The Inspection Panel, Cambodia: Forest Concession Management and Control Pilot Project (Credit No. 3365-KH and Trust Fund. 26419-JPN ), Investigation Report (30 March 2006) [203]–[205]; The Inspection Panel, Democratic Republic of Congo: Transitional Support for Economic Recovery Grant (TSERO) (IDA Grant No. H 1920-DRC) and Emergency Economic and Social Reunification Project (EESRSP) (Credit No. 3824-DRC and Grant No. H 064-DRC), Investigation Report (31 August 2007) [343]–[346]. 76  The Qinghai Project, A Component of the China: Western Poverty Reduction Project (Credit No. 3255-CHA and Loan No. 4501-CHA) (China: Western Poverty Reduction Project).

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Category A projects in the Bank policy on EIA.77 In contrast to this, none of the components in the illustrative list for Category B projects – such as being a small-scale project, tourism, watershed management or rehabilitation and renewable energy – were in the project. A Category B designation for the project was thus said not to adhere to Bank policy. The complainants maintained that this inappropriate categorisation had resulted in the project’s failure to assess the potential social and environmental impacts.78 The Panel ruled that the Bank’s decision to assign the project as Category B did not comply with Bank policy, in that many of the project’s components, such as a dam and reservoirs, irrigation, and resettlement, were in the illustrative list for Category A projects in the Bank policy on EIA (OD 4.01). It also found that the project’s impacts could be sensitive as it concerned vulnerable ethnic minorities and involuntary resettlement.79 In particular, the Panel disagreed with Bank Management’s contention that Bank policies were non-mandatory statements that allowed flexible interpretations.80 It stated that ‘the directives cannot possibly be taken to authorise a level of “interpretation” and “flexibility” that would permit those who must follow these directives to simply override the portions of the directives that are clearly binding’.81 The Panel also refuted Management’s argument that ‘past experience’ or ‘precedent’ in similar Bank-financed projects in the country concerned evidenced compliance with safeguard policies.82 It held that while past experience in a country may be valuable in giving confidence that the work required by Bank policies would be successful,83 neither precedents in a country nor a country’s political and social systems provided exceptions for applying Bank policies,84 nor did they help determine what Bank policies required.85

77  The Inspection Panel, China: Western Poverty Reduction Project, Request for Inspection (18 June 1999) 3–4. 78  Ibid. 79  Ibid., Investigation Report (20 April 2000) [180]. 80  Ibid. [35]–[36]. In its response to the complaint, Management contested that the illustrative list was to help determine the extent of an EIA required in accordance with the actual components and specific setting of a particular project. It maintained that the list was used for general guidance rather than as a mandatory checklist. Ibid., Management Response (19 July 1999) 61. 81  Ibid., Investigation Report (n 79) [37]. 82  Ibid., Management Response (n 80) 18–19 and 63. 83  Ibid., Investigation Report (n 79) [42]. 84  Ibid. [152]. 85  Ibid. [43] and [185].

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The Panel’s rulings on the issue of project categorisation were of paramount importance. This concerned not only their implications for its subsequent findings on the project’s inadequate assessments of environmental impacts because of the miscategorisation in this case. They also excluded the practice in borrowing countries as a factor to consider when applying Bank policies, and confirmed the mandatory nature of Bank policies for its staff in tackling social and environmental issues. 5.1.2 Project Delimitation and Baseline Data In the complaints submitted to the Inspection Panel, the focus has been on the content of Category A EIA reports. An EIA report for a Category A project has to include an executive summary; a policy, legal and administrative framework; a project description; the baseline data; environmental impacts; an analysis of alternatives; and an environmental management plan.86 There are other issues that have to be addressed, including a potential regional/sectoral EIA87 and the institutional capacity of the borrower.88 Among other things, the Bank policy on EIA calls for a description of the proposed project and its geographic, ecological, social and temporal context (including any required offsite investments) in a Category A project’s EIA.89 The EIA should also indicate the need for any resettlement plan and an indigenous peoples’ development plan. This normally includes a map showing the project site and the project’s area of influence.90 Moreover, the Bank policy on EIA requires a Category A project’s EIA to identify the dimensions of the study area and relevant physical, biological and socioeconomic conditions.91 The EIA should also consider current and proposed development activities within the project area (but not directly connected to the project).92 The definition of the spatial and temporal scope of the proposed project has become a contentious issue in several cases.93 In China: Western Poverty 86   O P 4.01, Environmental Assessment (n 43) Annex B, [2]. 87  Ibid. [7]; Annex A, [7] and [9]. 88  Ibid. [13]. 89  Ibid. Annex B, [2(c)]. 90  Ibid. 91  Ibid. Annex B, [2(d)]. 92  Ibid. 93   See, e.g., The Inspection Panel, Ecuador: Mining Development and Environmental Control Technical Assistance Project (Loan Number 3655-EC), Investigation Report (23 February 2001) [60]–[66]; The Inspection Panel, Kenya: Lake Victoria Environmental Management Project (IDA Credit. 2907-KE and GEF TF 23819), Investigation Report (15 December 2000) [152]–[153]; The Inspection Panel, Chad-Cameroon Petroleum and Pipeline Project (Loan No. 4558-CD); Petroleum Sector Management Capacity Building

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Reduction Project, the complainants argued that the county as a whole, where the move-in and move-out areas were located, should be considered as the project area. They stated that ‘anything which dramatically changes the overall population and ethnic composition of a county will impact everyone in the county’.94 On the contrary, Bank Management contested that the immediate project area should not extend to the entire county as this would ‘distort planning and divert attention and limited resources away from those most directly affected by the project’.95 The Panel agreed with the complainants’ argument that the project area was narrowly defined in this case. It held that the term ‘project area’ used in the project document was imprecise and inconsistent. There was also no explanation about the space or time scales adopted in evaluating the project.96 Moreover, the Panel noted that while the project recognised two geographic areas as move-in and move-out areas, it did not provide the precise spatial dimensions being considered in either of these areas.97 The Panel ruled that due to the narrow definition of the boundaries of the project, a large number of people, including Mongolian and Tibetan ethnic minorities, had been excluded from the social and environmental assessment.98 5.1.3 The Analysis of Environmental Impacts According to the Bank policy on EIA, the aspects of environmental impacts that should be evaluated for a Category A project include (i) the project’s likely positive and negative impacts; (ii) mitigation measures and any residual impacts that cannot be mitigated; (iii) opportunities for environmental enhancement; and (iv) the extent and quality of available data, key data gaps, and uncertainties associated with those predictions.99 The lack of an adequate assessment of environmental impacts on resettlement sites and the daily lives of PAP has been raised in many cases.100 In China: Project (Credit No. 3373-CD); and Management of the Petroleum Economy (Credit No. 3316-CD), Investigation Report (17 July 2002) [26]–[29]; The Inspection Panel, Ghana: West African Gas Pipeline Project (IDA Guarantee No. B-006-0-GGH), Investigation Report (25 April 2008) [350]–[360]. 94  China: Western Poverty Reduction Project, Request for Inspection (n 77) 5. 95  Ibid., Management Response (n 80) 48. 96  Ibid., Investigation Report (n 79) [50]–[51]. 97  Ibid. 98  Ibid. [51]. 99   O P 4.01, Environmental Assessment (n 43) Annex B, [2(e)]. 100   See, e.g., The Inspection Panel, Paraguay – Reform Project for the Water and Telecommunications Sector (Loan No. 3842-PA), Argentina – SEGBA V Power Distribution Project (Loan 2854-AR), Investigation Report (24 February 2004) [137]–[157]; The

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Western Poverty Reduction Project, the Panel stated that ‘A well-established principle of Environmental Assessment is that the term ‘environment’ must be broadly interpreted and must include all relevant biophysical and social-cultural elements’.101 In that case, it noted that the issue of induced development (i.e. the potential impacts of the proposed in-migration and new towns on the regional economy and on existing commercial, social and political aspects) has not been addressed.102 The Panel held that a limited definition of ‘environment’ led to an incomplete assessment of the project’s full effects.103 Specifically, the Panel found that the EIA did not examine the project’s impacts on the network of social, commercial and political interactions in the existing towns and villages within the move-in area.104 In addition, the plans and budgets for improving the living conditions of those villagers staying in the move-out areas were absent.105 There was also a lack of social and economic assessment of the effects of moving out a significant number of the most productive and economically active residents from these areas.106 Moreover, as nomadic pastoralism was the primary economy in the region but had been subject to significant changes because of governmental intervention, the appropriateness of implanting large-scale irrigated agriculture in the area should have been evaluated.107 The Panel’s findings exemplify how a development project can have far-reaching impacts on PAP’s lives and the environment. In subsequent cases, the Panel repeatedly valued an integrated consideration of the natural and social aspects of projects.108 It is in this context that a broader definition of ‘environment’ emerged to include both biophysical and socio-cultural aspects of the project. In addition to physical infrastructure investment, projects involving policy and institutional reform can also have significant impacts on the environment Inspection Panel, India: Mumbai Urban Transport Project (IBRD Loan No. 4665-IN; IDA Credit No. 3662-IN ), Investigation Report (21 December 2005) [632]–[633] and [655]–[658]; The Inspection Panel, Colombia: Cartagena Water Supply, Sewerage and Environmental Project (Loan No. 4507-CO), Investigation Report (4 June 2005) [148]–[152]. 101  China: Western Poverty Reduction Project, Investigation Report (n 79) [191]. 102  Ibid. [194]. 103  Ibid. [195]. 104  Ibid. [213]–[216]. 105  Ibid. [217]–[219]. 106  Ibid. [220]. 107  Ibid. [225]–[226]. 108  See, e.g., India: Mumbai Urban Transport Project, Investigation Report (n 100) [638]–[640]; Ecuador: Mining Development and Environmental Control Technical Assistance Project, Investigation Report (n 93) [67]–[71].

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and the local people in borrowing countries. An inadequate analysis of impacts from a project that aimed to lay the foundation for the long-term approach in managing natural resources was found in DR Congo: Forest-related Operations Project.109 In this case, the Panel emphasised that in addition to infrastructure projects, secondary investment activities can also have significance impacts. This implies that investments of different natures do not affect the determination of project classification and the extent of an EIA that needs to be undertaken by the borrower. Specifically, the Panel stated that since the pilot forest zoning covered large areas of forest land where indigenous and other vulnerable people lived, the project should have anticipated diverse, sensitive and potentially irreversible impacts. Meanwhile, the project’s ‘pilot’ nature implied that it would lay the groundwork for further land use planning throughout the country.110 By failing to conduct an EIA on these issues as part of a Category A project, the Panel ruled that Bank policy had not been observed.111 The Panel also held that the logging concession review process in the project, which envisaged a review of existing logging contracts and their conversion into the new concession regime, had significant social and environmental implications. This was because the existing contracts, which could be transformed into long-term logging operations, covered vast stretches of forest. It stated that these forests had high non-timber values for the forest-living indigenous people. They were also biologically-rich and contained habitats of endangered species.112 The Panel concluded that the failure of the project to prepare an EIA for its forest-related component did not comply with Bank policy. The Panel particularly highlighted that even if a project did not involve infrastructure investment, policy and institutional reforms as well as technical advice and support in a sensitive sector could still have far-reaching social and environmental effects.113 It stated that ‘from the perspective of the people who depend on the forest environment, such a difference between so-called “investment” actions and “policy and institutional reform” actions does not exist’.114 Moreover, the Panel had also considered the borrower’s environmental treaty obligations concerning project activities in this case. It held that the DR Congo had obligations under the Convention Concerning the Protection 109   D R Congo: Forest-related Operations Project, Investigation Report (n 75). 110  Ibid. [343]–[345]. 111  Ibid. [346]. 112  Ibid. [349]–350]. 113  Ibid. [355]–[356]. 114  Ibid. [359].

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of the World Cultural and Natural Heritage (WHC) and the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES), to both of which the DR Congo was a party.115 The Panel indicated that the project’s EIA should have identified the relevant obligations under these MEAs and evaluated the project’s implications for the pertinent World Heritage Sites and CITES-listed species.116 5.1.4 Public Consultation and Disclosure of Information The Bank policy on EIA requires the borrower to provide relevant project documentation in a timely manner prior to consultation. Also, the information should be in a form and language understandable and accessible for those consulted.117 For Category A projects, a summary of the project’s objectives, description and its potential impacts should be provided for the initial consultation. A summary of the EIA’s conclusions should also be provided once the draft EIA has been prepared. The borrower should also make the draft EIA report available in a place accessible for PAP.118 Moreover, the borrower has to consult PAP and local NGOs about the environmental aspects of the project and consider their opinions in the EIA process. Public consultation should be held as early as possible.119 For Category A projects, consultations must be conducted at least twice: (i) shortly after environmental screening and before the terms of reference for the EIA have been finalised; and (ii) once a draft EIA report has been prepared. Consultations should be held throughout the project’s implementation, as necessary to address EIA-related issues affecting such groups.120 India: Coal Sector Environmental and Social Mitigation Project is an example of a project’s failure to meet the Bank’s information disclosure requirements. The project was intended to assist the borrowing government to manage social and environmental impacts arising from its mining expansion in several coalmines. The complaint concerned the mine owned and operated by Central Coal India Ltd. (CCL) in Parej East.121 In this case, the Panel noted that the project documents for consultation had not been deposited in a publicly accessible place for the PAP in Parej East (i.e. the project’s location) for review 115  Ibid. [387]. 116  Ibid. [394]. 117   O P 4.01, Environmental Assessment (n 43) [15]. 118  Ibid. [16]. 119  Ibid. [14]. 120  Ibid. 121  The Inspection Panel, India: Coal Sector Environmental and Social Mitigation Project (Credit No. 2862-IN), Investigation Report (25 November 2002) [1]–[4].

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and comment prior to project approval.122 It also found that the public information centre (PIC) in Parej East was a place for depositing selected formal project documents, rather than one aiming to disseminate information to the public. Despite the local people’s low levels of literacy, the document draft was of a highly technical nature and was not in the local language.123 Furthermore, the PIC was located in the gated CCL mine headquarters’ compound. This neither facilitated information disclosure nor was it accessible for poor, vulnerable and dependent people. During the Panel team’s visit to the PIC, the Panel also found that staff members were unfriendly when the team was joined by a member of the NGO bringing the complaint. The Panel thus concluded that the project did not comply with the Bank policy on EIA.124 In addition to information disclosure, the delay or absence in holding meaningful public consultations with PAP during project preparation and implementation has also become a contentious issue in several cases.125 In Albania: Power Sector Generation and Restructuring Project, in particular, the Inspection Panel considered the findings of the Aarhus Convention Compliance Committee. The project involved the construction of a thermal power station (Vlora Thermal Plant) in the Vlora area. In this case, the Panel indicated that the Aarhus Committee’s conclusions were relevant to the Panel, in that Bank policy imposed upon the borrower an obligation to hold public consultations and required the Bank to ensure the borrower’s implementation of this obligation.126 It also noted that Bank policy required an EIA to consider the borrower’s international environmental obligations relevant to project activities, and added that the Bank did not finance project activities that would contravene the borrower’s such obligations. The Panel held that since Management did not ensure the borrower’s fulfillment of its obligations under the Aarhus Convention, the project did not comply with Bank policy.127 122  Ibid. [392]–[394]. 123  Ibid. [402]–[403]. 124  Ibid. [406]–[408]. 125  See, e.g., Colombia: Cartagena Water Supply, Sewerage and Environmental Project, Investigation Report (n 100) paras 236–242; Ecuador: Mining Development and Environmental Control Technical Assistance Project, Investigation Report (n 93) [101]– [108]; Cambodia: Forest Concession Management and Control Pilot Project, Investigation Report (n 75) [251]–[254]; The Inspection Panel, Peru: Lima Urban Transport Project (Loan 7209-PE), Investigation Report (18 January 2011) [100]–[115]; The Inspection Panel, Uganda: Transport Sector Development Project – Additional Financing (P121097), Investigation Report (4 August 2016) [51]–[59]. 126  The Inspection Panel, Albania: Power Sector Generation and Restructuring Project (IDA Credit No. 3872-ALB), Investigation Report (7 August 2009) [323]. 127  Ibid. [330]–[332].

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Meanwhile, the Panel also noted that Bank policy required consultation to take place when preparing an EIA. In this case, the public meetings concerned were held only after the project site had been decided.128 Such consultation only provided post hoc justification for the site selection, which in essence was not a genuine consultation.129 Since there was a similarity between the requirements under Bank policy on EIA and the Aarhus Convention, and the Panel had also verified the facts the Aarhus Committee examined, it reached the same conclusion as the Aarhus Committee: the project did not ensure adequate notification and public participation in consultation meetings during project preparation.130 5.2 Natural Habitats According to Bank policy as revised in 2013, the Bank does not support projects involving significant conversion or degradation of critical natural habitats.131 Nor does the Bank support projects involving significant conversion of natural habitats,132 unless there are no feasible alternatives for the project and its siting, and comprehensive analysis shows that the project’s overall benefits substantially outweigh its environmental costs.133 When an EIA finds that the project would significantly convert or degrade natural habitats, mitigation measures, which may involve minimising habitat loss as well as founding and maintaining an ecologically similar protected area, should be included.134 Pakistan: National Drainage Program Project involved resolving the waterlogging and salinity problems in the Indus Basin’s existing irrigation network.135 The Panel found that the chosen route of the major drainage canal ran through the biodiversity-rich and productive wetlands and interconnected lakes (known as ‘dhands’). However, the dhands had become part of the Arabian Sea’s tidal system because of the structures’ failure. High salinity in the dhands had significantly affected the environment.136 The Panel held that the project had focused on evacuating effluents and had somewhat neglected the impacts 128  Ibid. [337]–[341]. 129  Ibid. [342]–[343]. 130  Ibid. [350]–[352]. 131  Ibid. [4]. For the meaning of “critical natural habitats”, see ibid. Annex A, [1(b)]. 132  For the meaning of ‘natural habitats’, see ibid. Annex A, [1(a)]. 133  Ibid. [5]. 134  Ibid. Appropriate conservation and mitigation measures are defined in OP 4.04, Natural Habitats (n 45) Annex A, [1(e)]. 135  The Inspection Panel, Pakistan: National Drainage Program Project (Credit No. 2999-PAK), Investigation Report (6 July 2006) [78]–[97]. 136  Ibid. [341]–[345].

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on, or means to rehabilitate, the dhands as a habitat and ecosystem. It concluded that this did not comply with Bank policy on natural habitats.137 It is also worth noting that the Panel referred to the objectives of the Ramsar Convention. It reiterated the States Parties’ treaty obligation to designate suitable wetlands within their territory for inclusion in the Ramsar List and to promote the conservation of wetlands in the List.138 The Panel found that the dhands on the Ramsar List had suffered negative impacts, which constituted a ‘significant conversion or degradation’ in terms of the Bank policy on natural habitats.139 It ruled that the Bank had failed to consider the risks of further degrading critical natural habitats adequately, saying that ‘these Ramsar-listed sites are the type of critical natural habitat that Bank policy promises not to significantly convert or degrade’.140 The Panel thus concluded that the project did not adhere to Bank policy.141 5.3 Forests According to the Bank policy on forests, as revised in 2013, the Bank does not finance projects that would involve significant conversion or degradation of critical forest areas or related critical natural habitats.142 Here, ‘critical forest areas’ refer to forest areas that qualify as ‘critical natural habitats’ under the Bank policy on natural habitats.143 Also, the Bank does not support projects if they would significantly convert or degrade natural forests or related natural habitats, unless there are no feasible alternatives for the project and its siting, and comparative analysis shows that the project’s overall benefits substantially outweigh its environmental costs.144 Moreover, the Bank does not support projects that would contravene applicable international environmental agreements.145 Cambodia: Forest Concession Management and Control Pilot Project provides an example which illustrates how the Panel has addressed forest and other related issues. The project involved reforming the regulatory framework for forest concession operations in Cambodia.146 The Panel firstly commended 137  Ibid. [346]. 138  Ibid. [347]–[348]. 139  Ibid. [349]–[354]. 140  Ibid. [357]. 141  Ibid. [366]–[369]. 142   O P 4.36, Forests (n 45) [5]. 143  Ibid. Annex A, [(c)]. 144  Ibid. [5]. 145  Ibid. [6]. 146  Cambodia: Forest Concession Management and Control Pilot Project, Investigation Report (n 75).

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the Bank’s involvement in the forest sector, indicating that such work was important for poverty reduction and development, though it might bring controversy and criticism.147 However, the Panel found that the Bank’s studies that guided the reform of the forest concession system focused on technical and financial aspects of industrial logging but did not address social and environmental aspects adequately.148 It noted that while the project had sought to tackle concession management and illegal logging issues, attention had not been paid to the interests of local communities and indigenous people in forest resources and to the contested nature of the forest domain.149 As for the project’s compliance with the Bank policy on forests, the Panel acknowledged that the Bank’s decision to engage in the project was not inconsistent with the objectives of Bank policy. It stated that ‘had the Bank avoided the concession issue, it may have had little chance to reform a system that was increasing deforestation, degrading the environmental contribution of forests and aggravating rural poverty’.150 The Panel then examined whether the borrowing government had made a credible commitment to sustainable forestry,151 finding that there had been widespread rampant forest destruction and community abuses. It thus ruled that Bank Management’s contention regarding the borrower’s commitment to sustainability and to adhering to Bank policy when formulating the project ‘may have been based on wrong assumptions’.152 The Panel also indicated that forests of high ecological value should have been identified in the project. It found that the Prey Long forest, which had been included in a listing of tentative natural sites for World Heritage consideration for Cambodia, was covered by the concessions and could be subject to industrial logging.153 The Panel held that the Prey Long forest should be designated a ‘forest of high ecological value’ in terms of the Bank policy on forests. It concluded that, by failing to identify the high ecological value of the forest

147  Ibid. [108]. 148  Ibid. [115]–[118]. 149  Ibid. [123]–[125]. 150  Ibid. [162]–[163]. 151  According to the Bank policy on forests as revised in 1993, which was applicable to the project, ‘The Bank does not finance commercial logging operations or the purchase of logging equipment for use in primary tropical moist forest. In borrowing countries where logging is being done in such forests, the Bank seeks the government’s commitment to move toward sustainable management of those forests … and to retain as much effective forest cover as possible’. This provision no longer exists in the 2013 version. 152  Cambodia: Forest Concession Management and Control Pilot Project, Investigation Report (n 146) [165]–[168]. 153  Ibid. [173]–[174].

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during the project’s early stages, the project did not comply with the Bank policy on forests.154 The Panel further examined the impacts of concession operations, especially cutting resin trees, on the livelihoods of local communities. It held that the importance of resin tapping for forest-dependent communities had been widely identified. Bank Management should have been aware of the resin trees issue and the complaints about the harm illegal logging of resin trees in the concession areas caused local communities.155 The Panel stated it could be determined from many sources that Management was aware of these issues.156 By failing to consider and investigate the negative impacts of the illegal logging of resin trees on the livelihood of local people, the Panel held that the project had not observed the Bank policy on forests.157 In this case, the Panel systematically examined the Bank-funded project according to its forestry policy. On the one hand, it recognised the significance of the Bank’s involvement in natural resource management and regulatory reform activities. On the other hand, it found that the project overemphasised financial aspects and paid inadequate attention to the social and environmental issues. The violation of many environmental policies by the project,158 including the Bank policy on forests, derived from this inadequate assessment. Inappropriate policy-level design in forest-related issues was also raised in DR Congo Forest-related Operations, as previously noted.159 In that case, while the Panel recognised the importance of the Bank’s engagement in advising the borrower to cancel illegal or expired concessions,160 it found that the project had focused on potential tax and revenue by increasing levels of industrial logging, and that insufficient attention had been given to the social and environmental issues arising from forest concession operations.161 This has resulted in violations of the Bank’s environmental safeguard policies.162 These two cases demonstrate both the economic benefits and the associated potential risks in Bank-financed domestic policy reforms. They also show the importance of the project’s observance of the Bank policy on forests, not only in realising other 154  Ibid. [180]. 155  Ibid. [229]–[230]. 156  Ibid. [231]–[239]. 157  Ibid. [241]. 158  Ibid. [181]–[188] (natural habitats); [189]–[199], [200]–[206], [212]–[216], [244]–[255] (EIA). 159   D RC Forest-related Operations, Request for Inspection (30 October 2005) 9. 160  Ibid.; Investigation Report (n 75) [119]. 161  Ibid. [157]–[168]. 162  Ibid. [340]–[367] (environmental assessment); [395]–[398] (natural habitats).

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Bank policies but also in ensuring the welfare of those dependent on forests for their livelihood. 6 Conclusion The aim of IAMs within IFIs is to hold IFIs accountable for their project finance activities. Those affected by IFI-financed development projects are allowed to make complaints about negative social and environmental impacts before the mechanisms and seek redress from the harm such activities cause. The establishment of IAMs is crucial in terms of protecting the rights and interests of PAP when IFIs’ failure to comply with relevant social and environmental standards is found to exist, and remedial measures are consequently taken. This also promotes the fulfillment of international obligations of IFIs and borrowers in the course of project activities. The World Bank Inspection Panel was the first of its kind at the international level. Its primary mandate is to examine whether the IBRD/IDA-financed projects complained of have complied with the Bank’s safeguard policies. The substantive rules that are applicable in its investigations, i.e. the World Bank’s operational policies and procedures, address different environmental issues, including EIA, natural habitats and forests. These Bank rules provide guidance for conducting project activities by the Bank and borrowers; they also constitute the substantive standards for the review of complaints by the Panel. The above case analyses show that the Inspection Panel has played a pivotal role in applying, interpreting and developing the social and environmental obligations of the World Bank and borrowers. The implications of the Panel’s role in elaborating Bank rules relating to environmental issues can be observed from the following dimensions. First, the Panel asserted the binding nature of the Bank’s safeguard policies in its early case, i.e. China: Western Poverty Reduction Project. This landmark decision serves as a precedent for the Panel’s future investigations. Second, the Panel has added to the precision of the environmental policy provisions in specific cases.163 This has showed in the exclusion of a borrowing country’s past experience, and of its political and social systems, as justifying exceptions to applying Bank policies, as well as broad interpretations of the concepts of ‘project area’ and ‘environment’ in China: Western Poverty Reduction Project and subsequent cases. Moreover, the Panel formulated the substantive requirements of information disclosure and public participation provisions in India: Coal Sector Environmental and Social 163  See Bradlow and Fourie (n 50) 51–54.

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Mitigation Project and Albania: Power Sector Generation and Restructuring Project. Third, in both DR Congo: Forest-related Operations Project and Cambodia: Forest Concession Management and Control Pilot Project, the Panel confirmed that in addition to physical infrastructure investment, structural reform, which involves changes in government policies and regulations in specific sectors, can also have significant environmental impacts that need to be treated with caution. These practices demonstrate the Panel’s endeavour in clarifying the character of the Bank’s safeguard policies and meaning of the relevant policy provisions relating to environmental issues. It has thus been argued that the Panel’s interpretation has also limited the discretion that Bank Management is granted when conducting project finance activities.164 Fourth, the Panel has taken into account the borrowers’ environmental treaty obligations in several cases when determining whether the Bank’s safeguard policies have been observed. On some occasions, it has even considered the borrowers’ MEA obligations without any explicit references to specific MEAs or ‘international environmental treaties and agreements’ in the relevant policy provisions. The Panel’s willingness to examine projects’ compliance with Bank policies in light of the borrowing governments’ MEA commitments not only creates a precedent for IAMs to consider sources of international law (especially treaties) relating to project activities when applying IFIs’ social and environmental standards, but also promotes the fulfillment of these treaty obligations during project finance activities. In conclusion, the application and interpretation of the Bank’s environmental policies by the World Bank Inspection Panel in reviewing complaints against Bank-financed projects have contributed to the clarification of the relevant policy provisions and constitute important guidance for both the Bank and the borrower on how to implement the projects. The practice of the Inspection Panel evidences the evolution and progressive development of the environmental standards for international development projects. This also shapes the substantive obligations of the Bank when conducting project finance activities and may influence the manner on which the Inspection Panel and other IAMs in regional MDBs deal with similar environmental issues in future cases.

164  See Fourié (n 50) 207–212; Bradlow and Fourie (n 50) 30–36 and 45–50.

chapter 11

Independent Accountability Mechanisms in Further Pursuit of Accountability: Directions, Cooperation and Engagement Suresh Nanwani 1 Introduction In 1993, when the World Bank set up the World Bank Inspection Panel (WBIP), the term ‘accountability mechanism’ was not used. In the next 10 years, the Inter-American Development Bank (IDB) had set up its independent investigation mechanism (1994), followed by the Asian Development Bank (ADB) in 1995 with an inspection function (1995) and by the Compliance Advisory Ombudsman Office (CAO Office)1 by the International Finance Corporation (IFC) and the Multilateral Investment Guarantee Agency (MIGA) in 1999. The term ‘accountability mechanism’ was first used by ADB in 2003 when the inspection function policy was reviewed and replaced by a new mechanism called ‘ADB Accountability Mechanism’. The term ‘accountability mechanism’ needs definition because it is widely used in the development context. By ‘accountability mechanism’ I mean a window of access for private individuals and groups to file claims under international law on the institution’s poorly designed and/or implemented projects to obtain redress and have opportunity to influence the institution’s decision-making process, excluding any other mechanism which accepts complaints on corruption or procurement irregularities. The WBIP 2014 Operating Procedures introduced a pilot approach to enhance opportunities for early solutions to concerns raised by complainants. This is separate and different from other accountability mechanisms such as grievance mechanisms set up in a project financed by an international agency to settle or resolve project problems or mechanisms such as the World Bank’s Grievance Redress Service (GRS) introduced in 2015 to address complaints related to World Bank-financed projects where the objective is ‘to support the identification and resolution of 1  In 1999, the term ‘Compliance Advisory/Ombudsman’ was used when the mechanism was set up and this term was changed to ‘Compliance Advisory Ombudsman’ following a review in 2012 as the ‘/’ was a redundancy within an office which has three separate roles.

© Koninklijke Brill NV, Leiden, 2020 | doi:10.1163/9789004337787_012

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legitimate project related concerns’ in the resolution of complaints.2 The GRS makes it clear that there is no formal relationship between it and the WBIP clarifying that the WBIP is ‘the Bank’s independent compliance mechanism which reports to the World Bank Board of Directors’.3 This next section discusses on the exponential growth of independent accountability mechanisms (IAMs) by various organisations, including most recently in 2014 by the United Nations Development Programme (UNDP) and in 2015 by the Caribbean Development Bank (CDB). This is followed by a consideration of the triggers relating to the creation of these accountability mechanisms, with a discussion of the directions, cooperation and engagement of these accountability mechanisms. Two specific issues are discussed. One is determining the number of claims filed or registered with these mechanisms and the difficulties in some cases in extrapolating data on the claims filed. The other is the challenges on cooperation and collaboration faced by IAMs. The chapter concludes with a discussion on the lessons ahead for IAMs to enhance their mechanisms in further pursuit of accountability. 2

Independent Accountability Mechanisms (IAMs) and Increasing Growth since 1993

In 2004, the WBIP hosted the first meeting of accountability mechanisms of international financial and related institutions. At this inaugural meeting, nine accountability mechanisms participated in the network of IAMs. In the following year, 2005, the ADB hosted the second annual meeting where eight accountability mechanisms participated. The IAMs have continued to meet annually and the name ‘accountability mechanisms’ meeting has changed to ‘accountability and recourse mechanisms.’4 This change came about primarily because some mechanisms, such as the CAO Office (the first IFI mechanism focused on problem-solving through the Ombudsman), were seen as recourse mechanisms rather than accountability mechanisms. More entities with these mechanisms were included in the annual meetings and when the EBRD hosted the 11th Annual Meeting of the IAMs Network in September 2014 the meeting was for ‘current member institutions’ without an indication of the number.5 2  ‘Grievance Redress Service’ (World Bank) accessed 1 February 2016. 3  Ibid. 4  ‘The Inspection Panel Annual Report: July 1, 2004–June 30, 2005’ (World Bank, 2016) 12. 5  ‘EBRD Project Complaint Mechanism Annual Report 2014’ (European Bank for Reconstruc­ tion and Development, 2015) 20.

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As of 1 February 2016, the World Bank Inspection Panel site indicates 11 accountability mechanisms in the network of IAMs6 and the Independent Accountability Mechanisms Network (IAM Network) indicates 15 accountability mechanisms.7 Typically, these accountability mechanisms are from international financial institutions (IFIs) such as development banks and national development agencies. Accountability mechanisms no longer listed include as the Citizens Submission Unit of the North American Commission on Environmental Cooperation (as it is not focusing on compliance issues relating to projects on international development). The most recent entry on the WBIP website is the UNDP with its Social and Environmental Compliance Unit and Stakeholder Response Mechanism (2014). When one considers the 15 IAMs listed in IAMnet, the main issue arises on the term ‘independent.’ Using the term ‘independent’ in the name of the mechanism such as the African Development Bank (AfDB)’s Independent Review Mechanism (IRM), Inter-American Development Bank (IDB)’s Independent Consultation and Investigation Mechanism (ICIM), EBRD’s Independent Recourse Mechanism (replaced by the Project Complaint Mechanism [PCM] in 2012), the joint DEG and FMO Independent Complaints Mechanism (ICM)8 does not necessarily mean that the other mechanisms at the World Bank, ADB, IFC and MIGA are not ‘independent.’ ‘Independence’ is a critical characteristic of an accountability mechanism and is frequently cited as a key feature of an accountability mechanism.9 ‘Independence’ is also seen as a subcomponent of ‘credibility’ in the four

6  ‘Independent Accountability Network’ (World Bank) accessed 1 February 2016. 7  See, generally, accessed 1 February 2016. The IAMnet site is handled by ADB. 8  ‘DEG’ refers to ‘Deutsche Investitions- und Entwicklungsgesellschaft mbH’ and ‘FMO’ refers to the ‘Entrepreneurial Development Bank’. 9  Independence; clarity of purpose; user friendliness; powers of investigation; impartiality, competence and fairness; efficiency and cost effectiveness; and effective management of issues presented by Daniel D. Bradlow, ‘Private Complainants and International Organizations: A Comparative Study of The Independent Inspection Mechanisms in International Financial Institutions’ (2005) 43 Georgetown Journal of International Law 403; Independence; transparency; fairness and objectivity; professionalism; accessibility; and effectiveness by Natalie L. Bridgeman and David B. Hunter, ‘Narrowing the Accountability Gap: Toward a New Foreign Investor Accountability Mechanism’ (2008) 20 Georgetown International Environmental Law Review 187; and Independence; credibility; effectiveness; objectivity; professionalism; and accessibility by Richard E. Bissell and Suresh Nanwani, (2009) 3(2) ‘Multilateral Development Bank Accountability Mechanisms: Development and Challenges’ Central European Journal of International and Security Studies 154.

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criteria for evaluating an accountability mechanism.10 In the author’s view, this definition of ‘independence’ should be viewed from a wider perspective. The term ‘independence’ is relative and needs to be viewed from a variety of factors including (i) who appoints the key personnel in the mechanism and the selection process; (ii) who the key personnel report to – i.e. the board of directors or management or the head of the accountability mechanism as appropriate – and working separately from the operations departments; and (iii) an apparatus covering a policy approved by the board of directors (not by management and operational departments) and with public consultation, with dedicated office and personnel with adequate budget to carry out activities and issuing its own reports on the complaints handled. Examples of independence are appointment by the board of directors (such as the WBIP members, EBRD’s PCM experts, AfDB’s IRM roster of experts, IDB’s ICIM Director, and the Compliance Review Panel (CRP) members of the ADB Accountability Mechanism) or president (such as the Special Project Facilitator (SPF) of the ADB Accountability Mechanism handling problem-solving or the Director of the Compliance Review and Mediation Unit of AfDB’s IRM) or another high level authority (such as the World Bank President in the case of the CAO Office) or appointment by the head of the accountability mechanism such as the ICIM Director who will appoint the Compliance Review Phase Coordinator and the Consultation Phase Director and the CAO Office where the CAO appoints senior staff from outside the World Bank Group, as these appointments give the heads more independence in running the office. Independence is better safeguarded by provisions which prohibit permanent post-employment in any capacity in the institution served. Such exclusions extend to WBIP members, ADB CRP members (the SPF who is appointed by the president does not have such a bar), EBRD’s PCM experts (the PCM Officer who is appointed by the president does not have such a bar but is not allowed to work for the institution for at least 3 years after the assignment), the Director of the Compliance Review and Mediation Unit of AfDB’s IRM, the AfDB’s IRM roster of experts, and the ICIM Director together with the Compliance Review Phase Coordinator and the Consultation Phase Director. Independence is further entrenched in certain institutions such as the CAO 10  Independence concerns tend to arise in the context of the following questions: ‘Is the institution independent of management and staff and able to act independently of outside influences? Does it have adequate technical and financial resources for its work?’ The four criteria are access; credibility; efficiency; and effectiveness: Edith Brown Weiss, ‘Address to 4th Meeting of Accountability Mechanisms’ (London, 21 June 2007); World Bank Inspection Panel, Accountability at the World Bank The Inspection Panel at 15 Years (2009) 110–112.

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Office where professional staff contracts restrict the staff members from obtaining employment with IFC or MIGA for a period of two years after they end their engagement with the CAO Office. Independence is also accentuated in the other accountability mechanisms, such as (i) the FMO ICM where the Independent Expert Panel is approved by the institution’s Supervisory Board and (ii) the DEG ICM where the Independent Expert Panel is appointed by DEG’s Chief Executive Officer after consultation with DEG’s Supervisory Board. At the EIB Complaints Mechanism, the entity is part of the EIB Inspectorate General under the functional responsibility of a Vice President but the EIB-CM annual activity reports are submitted to the board of directors. Moreover, the EIB’s accountability mechanism is unique among all the 15 identified in the network as it provides that the public, if it is not satisfied with the outcome of the bank’s handling of the complaint, can seek an external and ‘fully independent, second level of recourse to the European Ombudsman.’11 The JBIC and NEXI accountability mechanisms also demonstrate independence in that at JBIC, the Examiners are appointed by the board of directors and at NEXI, the Examiner is appointed by the chairman and CEO after nomination by a selection committee whose members are not connected with NEXI. The OPIC accountability mechanism is also independent in that the Director of the Office of Accountability reports directly to the OPIC president and chief executive officer and reports his or her activities to the board of directors. The level of independence varies at the following institutions: UNDP’s Social and Environmental Compliance and Stakeholder Response Mechanism; the Black Sea Trade and Development Bank (BSTDB)’s internal audit department; the CDB’s Office of Integrity, Compliance and Accountability (ICA); and the Nordic Investment Bank (NIB)’s Office of the Chief Compliance Officer. Of these four mechanisms, UNDP’s mechanism stands out prominently as it has gone through public consultations resulting in a mechanism that has a compliance review and a stakeholder response mechanism to ensure that people have access to appropriate grievance resolution procedures for hearing and addressing project-related complaints and disputes with a dedicated case registry.12 UNDP’s mechanism also makes it clear that the Social and 11  ‘Board agrees exemplary transparency and accountability standards’ (European Invest­ ment Bank, 3 February 2010) accessed 1 February 2016. 12  Stakeholder Response Mechanism: Overview and Guidance (United Nations Development Programme, 2014) accessed 1 February 2016; Stakeholder Response Mechanism – Case Registry (United

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Environmental Compliance Unit (SECU) functions within the Office of Audit and Investigation (OAI) which is independent from all UNDP offices; OAI reports to the Administrator; and the Lead Compliance Office hired by OAI cannot work for UNDP upon completion of service. The accountability mechanisms in the BSTDB, CDB, and NIB are internal to the institution (without a formal mechanism policy in the case of BSTDB and NIB) and utilise existing staff in the current system under management’s direction to address citizen complaints on projects. If a critical approach is taken, it would appear that all accountability mechanisms are ‘semi-independent’ as they function within the structure of their respective institutions and their powers are strictly limited by the terms of their mandates.13 The WBIP has over the years been the subject of considerable critique, primarily because it is the first IFI accountability mechanism, has global coverage and has gained a lot of experience, and a former WBIP member has viewed that the WBIP’s independence is ‘partial at best’ with the board of directors often divided in supporting the statutory independence of the panel from management.14 Based on the three factors above, the 15 IAMs satisfy the test of independence in the widest sense, and many IAMs especially those of the development banks (World Bank, IDB, EBRD, ADB, and AfDB); IFC; MIGA; EIB; OPIC, USA; UNDP; JBIC, NEXI; DEG; FMO have higher degree of ‘independence’ although there continues to be room for improvement. For example, EBRD’s former accountability mechanism was viewed in 2003 as failing the test of independence as it was ‘an internal mechanism, managed by the President’ but the changes resulting in its present policy certainly reflect a more robust standard of independence.15 Independence is difficult to measure because the ultimate test is the determination by the mechanism users. This is for public citizens to avail of and whether they believe they have been effectively heard by person(s) who have nothing to lose in expressing views in addressing the complaint

Nations Development Programme) accessed 1 February 2016. 13  Namita Wahi, ‘Human Rights Accountability of the IMF and the World Bank: A Critique of Existing Mechanisms and Articulation of a Theory of Horizontal Accountability’ (2005– 2006) 12 UC Davis Journal International Law and Policy 331, 356. 14  Richard E. Bissell, ‘Institutional and Procedural Aspects of the Inspection Panel’ in Gudmundur Alfredsson and Rolf Ring (eds), The Inspection Panel of the World Bank: A Different Complaints Procedure (Kluwer Law International 2001) 124. 15  Letter from Richard E. Bissell and Jim MacNeill to the EBRD President (15 January 2003) accessed 1 February 2016.

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before the institution. Furthermore, users’ determinations may vary depending on the outcome. The remaining institutions – the BSTDB, CDB, and NIB – have recourse mechanisms but work within a context that does not meet the high level of independence developed at the other institutions. For example, at NIB, it is stated that a person or persons, believing that they are or will be adversely affected by a project financed by NIB due to non-compliance with NIB policies such as sustainability policy and guidelines or the public information policy, can submit a complaint to the Chief Compliance Officer. There is no complaint mechanism policy provided in the website; the complaint form provided in the website does not indicate what relief can be provided to the complainant. Indeed, insufficient information is provided in relation to timelines in addressing the complaint through problem-solving or investigation; moreover, the form has information that is not relevant for complaint filing such as ‘time of incident’, ‘place of incident’, and ‘source of information.’16 The CDB has a project complaints mechanism policy17 (approved in May 2015) which states that the mechanism is ‘a single dedicated independent mechanism for the submission, handling and resolution of all [c]omplaints’ to ensure compliance with any environmental and social safeguards policy and operates through the Office of Integrity, Compliance and Accountability (OICA).18 The OICA states it is ‘an operationally independent office’ and explains that independence means that OICA ‘is functionally independent of the other units, divisions, departments and offices of the Bank’ and that it reports ‘administratively to the President and functionally to the Board of Directors through its Oversight and Assurance Committee.’19 The policy indicates that there is no external panel or mechanism experts engaged and it is the management of the bank who ‘bears primary responsibility for working with OICA to ensure effective implementation of, and adherence to, this Policy.’20 At the BSTDB, there is a mechanism for handling complaints related to ‘suspected adverse environmental and/or social impacts’ of the bank’s operations where complaints

16  ‘Report misconduct, corruption and non-compliance’ (Nordic Investment Bank) accessed 21 August 2019. 17  See accessed 21 August 2019. 18   C DB Project Complaints Mechanism Policy (May 2015) [5.01]. 19  See accessed 21 August 2019. 20   C DB Project Complaints Mechanism Policy (May 2015) [12].

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can ‘preferably’21 be filed online as provided in the ‘Complaints Receipt and Retention Mechanism’ following the bank’s Corporate Governance Framework (July 2007)22 and in the ‘Procedure for the Receipt, Retention and Treatment of Complaints at the Black Sea Trade and Development Bank’ with the Internal Audit Department tasked to handle complaints.23 This internal implementation does not demonstrate the higher level of independence seen in other accountability mechanisms. 3

Triggers Relating to the Creation of IAMs

There is considerable literature on the raison d’être of accountability mechanisms by multilaterals and other organisations.24 The triggers are internal and external and the external triggers have played a stronger role in influencing the establishment of IAMs with specific reference to the first mechanisms set up in the 1990s. The main voices from the external triggers were: (i) civil society organizations (CSOs), primarily based in the United States and Europe, over protests in badly designed projects such as the Sardar Sarovar Dam Projects in India (financed by the World Bank), CSO increasing concerns on transparency and compliance by multilaterals over their policies in their lending operations, and the impact of the Rio Summit of 1992 on environmental compliance by financiers; (ii) donors (primarily in the United States, the United Kingdom, Netherlands, Germany, and other European countries) which made it a condition for reform by multilateral banks to have an accountability mechanism for donor replenishments to fund these banks; (iii) reports from an independent commission by the World Bank arising from the Sardar Sarovar Dam Projects and from an independent review 21  ‘Complaints’ (Black Sea Trade and Development Bank) accessed 17 September 2019. 22  ‘Corporate Governance Framework’ (Black Sea Trade and Development Bank, 28 July 2007) accessed 21 August 2019. 23  ‘Procedure for the Receipt, Retention and Treatment of Complaints at the Black Sea Trade and Development Bank’ (Black Sea Trade and Development Bank) accessed 21 August 2019. 24  See, for example, Ibrahim F. I. Shihata, The World Bank Inspection Panel: In Practice (2nd edn, OUP 2000); Bradlow (n 9); Maartje van Putten, Policing the Banks: Accountability Mechanisms for the Financial Sector (McGill-Queen’s University Press 2008); Bridgeman and Hunter (n 9); Bissell and Nanwani (n 9).

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team authorized by the World Bank President Wolfensohn on the Pangue Project financed by IFC;25 and (iv) declarations at G7 meetings such as the G-7 Palermo Statement 2001 which recommended that multilateral development banks should ‘further improve and strengthen accountability and transparency, including through the establishment or the reinforcement of central control mechanisms to ensure compliance with agreed policies and safeguards.’26 The Pangue report, together with the claim filed by the claimants on the Pangue Project with the WBIP and the support given by the CSOs, was critical of the IFC and MIGA having an accountability mechanism function (the CAO Office) for private sector operations, to complement the establishment of the WBIP for IBRD and IDA for public sector operations. The G-7 Palermo Statement 2001 specifically had an impact on the replacement of the 1995 inspection function policy at ADB with the 2003 ADB accountability mechanism policy as well as the 2003 EBRD independent recourse mechanism policy. Internal pressures also played a role in the establishment of accountability mechanisms, though these were largely cascaded down from external pressures. The Wapenhans Report and the ADB Task Force Report, reports on investment portfolio and poor design of projects at the World Bank and ADB, have also highlighted the need for institutional reform to ensure quality entry of projects.27 Together with the external pressures, there was growing realisation that multilateral banks had to promote transparency and accountability in their operations, as well as enhance efficiency and development effectiveness. 4

Directions, Cooperation and Engagement of IAMs

The WBIP, being the first IFI accountability mechanism created in 1993 and its credibility and experience gained over the years, has invariably been the basis for consideration by any IAM model. Indeed, the ensuing accountability 25  Bradford Morse and Thomas R. Berger, ‘Sardar Sarovar – Report of the Independent Review’ (Resource Futures International, 1992); David Hunter, Cristián Opaso and Marcos Orellana, ‘The Biobio’s Legacy: Institutional Reforms and the Unfilled Promises at the International Finance Corporation’ in Dana Clark, Jonathan Fox, and Kay Treakle (eds), Demanding Accountability: Civil-Society Claims and the World Bank Inspection Panel (Rowman and Littlefield 2003). 26  ‘Statement of G-7 Finance Ministers and Central Bank Governors’ (Palermo, 21 February 2001) [12]. 27   World Bank, ‘Effective Implementation: Key to Development Impact’ (Wapenhans Report) (World Bank, 1992); ‘Report of the Task Force on Improving Project Quality’ (Asian Development Bank, 1994).

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mechanisms at IDB, ADB (twice in 1995 on the inspection function policy and in 2003 on the ADB Accountability Mechanism), IFC, MIGA, and EBRD had its reference point to WBIP and had the benefit of lessons learnt by WBIP and assistance from WBIP. The WBIP itself has acknowledged that it ‘offered advice and consulted with the Asian Development Bank and Inter-American Development Bank in the context of their efforts to review and improve their accountability mechanisms.’28 The spearheading of the IAM meeting held first in 2004 and hosted by the WBIP demonstrates the leading role played by the panel in bringing the various IAMs together at a single forum. Over the years, these IAM meetings have seen greater participation from other accountability mechanisms with the result that the annual IAM meeting has become a forum where IAMs meet to exchange views and collaborate on development of international best practices on accountability in multilateral and bilateral lending institutions. In recent years, IAMs have been clear about the need for cooperating (or collaborating) and engaging with each other. On the one hand, the ADB accountability mechanism is silent, with the express reference that the CRP will ‘liaise with accountability mechanisms at other institutions.’29 On the other hand, the EIB has taken a clear approach by expressly stating that the EIB Complaints Office will inform the other co-financing institution’s complaint mechanism if a complaint is received concerning an EIB project that involves other IFIs and will endeavor to collaborate with the mechanism, while ensuring that the findings and conclusions will be independent.30 EBRD’s accountability mechanism provides that where a complaint is subject to co-financing by another institution, the PCM Officer ‘may notify the accountability mechanism(s) of the co-financing institution(s)’ and ‘may communicate and cooperate with the accountability mechanisms of such institution(s) so as to avoid duplication of efforts and/or disruption or disturbance to common parties.’31 IDB’s accountability mechanism goes further in that it says it ‘will’, rather than ‘may’, collaborate (rather than ‘cooperate’) with the other IAMs to improve the mechanism’s ‘cost-effectiveness and avoid duplication of efforts’ for the parties involved.32 28  ‘Accountability at the World Bank: The Inspection Panel 10 Years On’ (World Bank, 2003) 116. 29   ‘Review of the Accountability Mechanism Policy’ (Asian Development Bank, February 2012) [131]. 30   E IB Complaints Mechanism, ‘Principles, Terms of Reference and Rules of Procedures’ (adopted February 2010 with revisions in 30 April 2012 and 31 October 2012) [7.1]. 31   E BRD Project Complaint Mechanism Rules of Procedure (7 May 2014) [23]. 32   I DB Policy of the Independent Consultation and Investigation Mechanism (17 December 2014) [68].

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Three accountability mechanisms make explicit reference in their operating procedures to IAMs which were absent in their initial years of operation. The first is IDB’s ICIM which refers to ‘independent accountability mechanism’ in its policy.33 The second is the World Bank Inspection Panel 2014 Operating Procedures which provides that if the panel receives a complaint that is also submitted to an independent accountability mechanism of other IFIs on a co-financed project, the panel ‘will make its best efforts to cooperate with the other accountability mechanism(s)’; and these Operating Procedures specifically state that ‘Building on past practice, and sharing of experience across the Independent Accountability Mechanisms Network, the elements of such cooperation will be set forth in a Memorandum of Understanding agreed between the Panel and the other mechanism(s).’34 The third is the reference in the EIB accountability mechanism which expressly states that the ‘EIB-CM participates in the annual meetings of the independent accountability mechanisms peer group.’35 In 2007, a memorandum of understanding was entered into between the WBIP and AfDB accountability mechanism on cooperation between these two entities in their respective investigation of the Uganda: Private Power Generation Project (Bujagali)/Bujagali Hydropower and Bujagali Interconnection Projects (Bujagali Projects).36 This was the first time that such an agreement was reached within the framework of IFIs harmonising activities for development cooperation under the Paris Declaration of Aid Effectiveness 2005 and the Accra Agenda for Action 2008 where the IAMs cooperated and worked together using common resources such as engaging consultants and sharing reports while ensuring that their institutional mandates are respected. This cooperation agreement has also been replicated in other projects involving IAMs having common activities such as carrying out either problem-solving or compliance review.37 If the projects are not co-financed by 33  Ibid. 34  The Inspection Panel at the World Bank: Operating Procedures (April 2014) [62]. This provision is under the heading of ‘Collaboration with other accountability mechanisms’ though ‘cooperation’ not ‘collaboration’ is not used in the text. The assumption made by the author is that these words are used interchangeably as in the case of paragraph 68 of IDB Policy of the Independent Consultation and Investigation Mechanism (n 32) where the text uses ‘collaboration’ but the heading is ‘Cooperation with other Independent Accountability Mechanisms’. 35   E IB Complaints Mechanism (n 30) [7.2]. 36  The MOU is available in World Bank Inspection Panel, Accountability at the World Bank The Inspection Panel at 15 Years (n 10) 214–216. 37  Panama/Pando Montelirio-01/Chiriquí (Compliance Advisor Ombudsman, 27 January 2010) involved problem solving.

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IAMs or co-financed by an IAM and an entity that is not within the IAM list, the lessons and experience gained through these cooperation agreements can be viewed as a reference in carrying out specific arrangements tailored to address the complaint. In 2007, the AfDB hosted the annual IAM meeting whose purpose is ‘to provide the different accountability mechanisms with an opportunity to discuss and learn from each other’s experiences and best practices on mediation and compliance reviews, as a way to improve their performance.’38 For the first time, this annual meeting had a new dimension as the AfDB organised a separate seminar for CSOs on the accessibility to the IAMs. The seminar was aimed at learning from the experiences and views of the participant NGOs with regard to the IAM’s handling of complaints submitted by civil society organisations, either on their own right or on behalf of people adversely affected by development projects, and 20 representatives of international and national CSOs from 11 African countries participated together with IAM representatives.39 This was a milestone event as it widened the audience perspective of these annual IAM meetings though CSOs could not participate, and are still not allowed to participate, in the IAM meetings which are for IAM representatives. Nevertheless, this seminar provided the opportunity for CSOs to be briefed about the compliance review that was jointly carried out by the WBIP and AfDB accountability mechanisms on the Bujagali Projects. In 2014, the EBRD hosted the IAM meeting, and at this meeting, there were two parallel events, one organised by the hosting EBRD PCM and one by CSOs. The PCM hosted an Open Symposium on the Practice of Accountability Mechanisms involving IAM representatives, multilateral development bank management, private sector banks, legal professionals, academics and civil society. The symposium covered three themes: (i) IAMs and the promotion of good governance standards; (ii) the shifting boundaries of accountability for banking operations; and (iii) the evolving practice of accountability towards a ‘community of practice.’40 It also marked the first time CSOs – hosted by Accountability Counsel, CEE Bankwatch Network, Amnesty International, Center for International Environmental Law (CIEL) and Human Rights Watch – took the opportunity to organise a parallel event, a roundtable on ‘Learning from our Shared Experience’ where IAM representatives were invited to discuss three issues: (i) how IAM success can be

38  ‘The Independent Review Mechanism: Annual Report 2008’ (Compliance Review and Mediation Unit of the African Development Bank, 2009) 5. 39  Ibid. 13. 40  ‘EBRD Project Complaint Mechanism Annual Report 2014’ (n 5) 21.

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measured; (ii) the challenges in reaching successful outcomes on the ground; and (iii) how the challenges can be addressed. From the 2004 IAM annual meeting where nine accountability mechanisms participated to 2014 where the number of IAMs has increased to 15 (and Export Credit Canada and Citizens Submission Unit of the North American Commission on Environmental Cooperation were in attendance in the first few years), the IAM meetings have proved to be successful. They are not a forum for IAM representatives to meet and exchange views and discuss new topics (such as working together through collaborative arrangements when carrying out joint problem-solving or compliance review or planning joint outreach to reach a wider audience) but a venue where CSOs can join and participate in parallel sessions, organised by the hosting IAM or by CSOs themselves. There is still room for improvement for the expansion of audience – to also include government and project affectees in projects that have been considered by IAMs as this will be within the spirit of IAMs to serve as citizen-grievance mechanisms. This will be addressed in a subsequent section as the IAM representatives attending these meetings are ‘committed to responding to the grievances of people affected by projects’41 and it would benefit all stakeholders including potential or actual project affectees to know more of the IAMs. IAMs themselves have seen these annual meetings as a means to improve their operations. The WBIP Operating Procedures 2014 included new provisions on raising awareness of the mechanism for effective functioning to people whose rights and interests may be affected by World Bank projects such as improved communications and outreach ‘often in collaboration with other independent accountability mechanisms.’42 These include enhancements to the WBIP’s online communication capabilities such as an improved WBIP website, WBIP newsletter (from an annual publication to a quarterly publication) and a presence on new social media platforms including blogs, Facebook, LinkedIn, and Twitter to ensure more timely information to stakeholders.43

41  For the outcome of the 10th Annual Meeting of Independent Accountability Mechanisms hosted by the WBIP in Washington, DC in September 2013 see ‘The Inspection Panel Annual Report: July 1, 2004–June 30, 2005’ (n 4) 48. 42  World Bank Inspection Panel, Operating Procedures (April 2014) [76]–[77]. 43  ‘The Inspection Panel Annual Report: July 1, 2004–June 30, 2005’ (n 4) 16–17.

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275

Claims Filed or Registered with IAMs and Difficulties in Extrapolating Data on Claims Filed

IAMs have claims filed or registered with them and it is important to know how many such claims have been filed or registered as this will indicate the kinds of problem projects, the harm and issues faced by the claimants, and the disposition of these claims. However, it is not easy to determine the number of claims filed or registered with all IAMs for a variety of reasons. In most IAMs, there are public registries or annual reports and this is a good measurement of ascertaining the number of claims filed or registered. However, the complaints/ requests/cases are categorised differently, such as unregistered, registered but ineligible, and registered and eligible. Also, sometimes different terms are used in one accountability mechanism such as ‘cases’ or ‘complaint log’ or ‘case log’ as in the case of the CAO Office.44 In the CAO Office, 66 ‘cases’ were handled from fiscal year 2000 to fiscal year 200745 but in the same period, it is indicated that 81 ‘complaints’ were filed in the ‘Complaint Log.’46 A closer look needs to be made on whether it is cases or complaints filed by individuals for the CAO Ombudsman and not cases that were brought directly to CAO Compliance by either the World Bank Group President or IFC senior management as requests for compliance audits as out of the 66 ‘cases’ handled by the CAO Office, 64 cases were complaints to the CAO Ombudsman and two were complaints (requests for compliance audits). The 2015 Annual Report of the CAO focuses on the caseload for 2015 stating that ‘63 cases were handled during the past year’ and also says that ‘[a] fter 15 years of operation, CAO has handled over 150 cases from 46 countries’ so one has to go to the CAO website for a better understanding of the number of cases filed.47 This is in stark contrast to the 246 cases handled by the CAO Office from 1999 to 30 June 2015 listed in a report by CSOs48 and 196 cases (from 1999 to 30 June 2013) in Table 11.1 below. The CAO website on CAO Cases does .

44  ‘Cases’ is used in the 2006–07 CAO Annual Report: ‘The Office of the Compliance Advisor/ Ombudsman 2006–07 Annual Report’ (CAO 2007); ‘complaint log’ is used in 2013 CAO Annual Report: ‘2013 Annual Report’ (CAO 2014); ‘case log’ is used in 2015 CAO Annual Report: ‘2015 Annual Report’ (CAO 2015). 45  ‘The Office of the Compliance Advisor/Ombudsman 2006–07 Annual Report’, ibid. 50–52. 46  ‘2013 Annual Report’ (n 44) 88–91. 47  ‘2015 Annual Report’ (n 44) 5, 71 (emphasis added). 48  Caitlin Daniel, Kristen Genovese, Mariëtte van Huijstee and Sarah Singh (eds), ‘Glass Half Full? The State of Accountability in Development Finance’ (SOMO, January 2016) 31. The report interprets cases to mean cases filed by individuals, CSOs, and IAMs themselves through senior management or President of the World Bank Group, which has happened in the case of the CAO Office and the EIB Complaints Mechanism. This author has not

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not really help in understanding the number of cases filed by individuals for ombudsman/problem-solving as there is no registry which easily lists cases filed in chronological order by year (which is the case in the WBIP site, ADB Accountability Mechanism site, and EBRD PCM site) but rather lists 148 cases closed and open (either Ombudsman or Compliance or both) according to different regions (such as East Asia and the Pacific, Europe and Central Asia, and South Asia) without a chronological reference.49 At the IDB accountability mechanism, it was indicated that 90% of requests were not registered in the year covered by the 2012 annual report.50 In the 2013 annual report, it was stated that between 2010 and 2013, 52 requests were not registered. Of these 52 requests, 21 were matters outside the mechanism’s remit e.g. on integrity and procurement; 15 were requests for information; 10 requests were made without presenting to IDB management previously; four requests had no sufficient information to be managed; 1 request was not related to an IDB operation; and one request was integrated with an existing request.51 In EIB accountability mechanism, there was no public registry of cases handled till recently and it is instructive that in 2009, EIB Complaints Mechanism stated, in response to a suggestion that a public registry be set up and maintained under the policy with listing on the EIB site, that: [a]ll complaints are treated confidential, unless otherwise requested by the complainant(s). Unlike other IFIs accountability mechanism concern other types of complaints which can be of a commercial or personal nature, not just complaints regarding project impacts. In this context, a register might not be easy to set-up whilst ensuring appropriate data protection and confidentiality.52 The EIB accountability now has a complaint register and its annual reports now lists casework statistics which were not reported in its prior annual reports which made it difficult to ascertain the number of cases filed and disposed

included such referrals by senior management and beyond in Table 11.1 as this chapter is focused on citizen-driven complaints. 49  ‘CAO Cases’ (Compliance Advisor Ombudsman) accessed 1 February 2016. 50  Marquez Mees and Victoria Aurora, ‘The Independent Consultation and Investigation Mechanism: 2012 Annual Report’ (IDB, 2013) 5. 51  Ibid. 47. 52   E IB Review Panel 2nd Round of Public Consultation (2009) Matrix of Issues Raised (on file).

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in relation to EIB’s lending operations.53 The EIB accountability mechanism covers a far wider range of requests such as poor performance of an investment in EIB bonds and unfair evaluation of bids, so it is difficult to extrapolate the specific cases on EIB’s lending operations and project impacts suffered by claimants. Table 11.1 below provides a summary of IAMs and the number of claims filed or registered as of 15 January 2016 (as of 30 June 2013 for the CAO Office), totaling more than 642. table 11.1 IAMs and claims filed or registered as of 15 January 2016 (up to 30 June 2013 for the CAO Office)a

1

2

3

IAM Indicating initial mechanism (if applicable) followed by latest mechanism (if applicable) and latest operating procedures/policy

Years

Claims (complaints/ requests/cases) filed or registered

African Development Bank (AfDB): Independent Review Mechanism (IRM) 2004–2006 establishment and operationalisation dates IRM Operating Rules and Procedures (Jan 2015) Asian Development Bank (ADB): ADB Accountability Mechanism 1995 Inspection Function; 2003 New ADB Accountability Mechanism 2012 ADB Accountability Mechanism Black Sea Trade and Development Bank (BSTDB): Complaints Receipt and Retention Mechanism Corporate Governance Framework (Jul 2007) setting out the Complaints Receipt and Retention Mechanism Procedure for the Receipt, Retention and Treatment of Complaints at BSTDB (online)

10

10

21

118 8 under Inspection Function 40 from 2003–2012 70 from 2012 to present Not known No public register

9

53  ‘Complaints mechanism cases’ (European Investment Bank) accessed 1 February 2016.

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table 11.1 IAMs and claims filed or registered as of 15 January 2016 (cont.)

4

5

7

8

9

8

IAM Indicating initial mechanism (if applicable) followed by latest mechanism (if applicable) and latest operating procedures/policy

Years

Claims (complaints/ requests/cases) filed or registered

Caribbean Development Bank (CDB): Project Complaints Mechanism Projects complaint policy (2015) DEG: Independent Complaints Mechanism (ICM) Independent Complaints Mechanism DEG (Feb 2014) European Bank for Reconstruction and Development (EBRD): Project Complaint Mechanism (PCM) 2003 Independent Recourse Mechanism PCM Rules of Procedure 2014 European Investment Bank: Complaints Mechanism (CM) and European Ombudsman 2008 on initial complaints mechanism policy EIB-CM Principles, Terms of Reference and Rules of Procedure (Feb 2010) revised Oct 2012; EIB-CM Operating Procedures 2013 FMO: Independent Complaints Mechanism (ICM) Independent Complaints Mechanism FMO (2013) Inter-American Development Bank (IDB): Independent Consultation and Investigation Mechanism (ICIM) 1994 Independent Investigation Mechanism (IIM); 2010 ICIM 2014 New ICIM policy

1

Not known No public register

2

4 – joint DEG/FMO ICM

13

27 5 from 2003 to 2010 22 from 2010 to present

7

82 Environmental/​social/​ development impacts complaints registered by EIB CM from 2009 to 2014

2

4 – joint DEG/FMO ICM

21

93 5 under IIM 83 from 2010 to 2014 5 from new policy to present

279

Directions, Cooperation and Engagement table 11.1 IAMs and claims filed or registered as of 15 January 2016 (cont.)

IAM Indicating initial mechanism (if applicable) followed by latest mechanism (if applicable) and latest operating procedures/policy International Finance Corporation-Multilateral Investment Guarantee Agency: CAO Office (Compliance Advisor Ombudsman) 1999 established CAO Operational Guidelines 2013 10 Japan Bank for International Corporation (JBIC): Office of Examiner for Environmental Guidelines 2003 establishment date Summary of Procedures to Submit Objections concerning JBIC Guidelines for Confirmation of Environmental and Social Considerations (Jan 2015) 11 Nippon Export and Investment Insurance (NEXI): Objection Procedures on Environmental Guidelines 2003 establishment date Procedures for Submitting Objections on Guidelines of Environmental and Social Considerations in Trade Insurance (May 2015) 12 Nordic Investment Bank (NIB) Reporting complaints on non-compliance to Chief Compliance Officer 13 Overseas Private Investment Corporation (OPIC): Office of Accountability 2004 Accountability and Advisory Mechanism for OPIC policy

9

Years

Claims (complaints/ requests/cases) filed or registered

17

196 as of 30 June 2013

13

2

13

Not known No public register

–

Not known No public register

11

4

280

Nanwani

table 11.1 IAMs and claims filed or registered as of 15 January 2016 (cont.)

14

15

IAM Indicating initial mechanism (if applicable) followed by latest mechanism (if applicable) and latest operating procedures/policy

Years

Claims (complaints/ requests/cases) filed or registered

United Nations Development Programme (UNDP): Social and Environmental Compliance Review and Stakeholder Response Mechanism Stakeholder and Response Mechanism: Overview and Guidance (2014) effective 1 Jan 2015 Social and Environmental Compliance Unit (SECU) Investigation Guidelines (Dec 2014) World Bank: Inspection Panel 1993 establishment date Operating Procedures 2014

1

1

23

105

a Based on IAM websites, public registries or registers (the term is used interchangeably as ‘registry’ in the ADB accountability mechanism website and in the UNDP Stakeholder Response Mechanism website, and ‘register’ at the EBRD PCM website), annual reports, and other materials such as EIB Complaints Mechanism communication and outreach presentation dated 15 March 2015 and Annual Report DEG/FMO Independent First Panel Report January 2014– June 2015.

From Table 11.1, it appears that overall the number of claims filed with these 15 IAMs from 1993 to present is not inordinately high in the sense that there is no deluge of claims presented before IAMs though in complex projects involving co-financing, there can be multiple claims filed with different mechanisms as there is no bar on forum shopping. Second, the claims are varied as they can mean specific project complaint (as is the case at the WBIP cases registry) or any complaint (at ADB accountability mechanism complaints registry54 maintained by the Complaint Receiving Officer as the initial contact point before disposition is made of the complaint to problem-solving, compliance review, 54   ‘Complaint Receiving Officer’s Complaints Registry’ (Asian Development Bank) accessed 1 February 2016.

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or referral to appropriate office). Third, some figures are for those without public registries (such as BSTDB, CDB, NEXI, and NIB); JBIC does not have a public registry but has annual reports from where one has to ascertain the number of claims filed by going through each annual report. In a recent CSO Report, it is indicated that as of 30 June 2015 ‘a total of 758 cases had been submitted to various IAMs.’55 The IAMs covered in this CSO Report are mostly the same as those covered here. In Table 11.1, the figure of ‘more than 642’ is of 15 January 2016 (up to 30 June 2013 for the CAO Office as it is not easy to extrapolate the actual figure filed with the CAO Office for the reasons explained above). Overall, the figures in the CSO Report and in Table 11.1 are more realistic and verifiable than in the Citizen-Driven Accountability for Sustainable Development (June 2012) which states that as of April 2012, 10 IAMs have ‘addressed more than 260 cases from 72 countries.’56 This information is helpful, but it is not clear about what is meant by ‘addressed cases’ as cases could mean claims/complaints/requests (the term ‘request’ is specifically used in WBIP terminology) and ‘addressed’ could mean matters separate from filing or registering. It is not also clear what methodology was used in determining this number, and it is noted that the 260 figure (as of April 2012) is significantly lower than the 758 figure (as of 30 June 2015 in the CSO Report) and the 642 figure (as of 15 January 2016, and up to 30 June 2013 for the CAO Office in Table 11.1). There are commonalities in the findings between the CSO Report and Table 11.1 in that the two most referred to accountability mechanisms are the CAO Office and the WBIP. Both the CSO Report and Table 11.1 demonstrate that the CAO Office has received most claims (more than 30%) followed by the WBIP (more than 12%).57 55  Daniel et al. (n 48) 27. 56  Kristen Lewis, Citizen-Driven Accountability for Sustainable Development: Giving Affected People a Greater Voice – 20 Years On (Independent Accountability Mechanisms Network, June 2012) 2 accessed 12 August 2018. 57  Separately, the CSO Report indicates that up to 30 June 2015, 92 cases have been submitted to the EBRD accountability mechanism (Independent Recourse Mechanism and Project Complaint Mechanism). From Table 11.1, the number of cases/requests filed with the EBRD mechanism is 27 (5 from 2003 to 2010, and 22 from 2010 to 30 June 2015) based on the figures in the public registers at the EBRD PCM website: ‘PCM Register’ (European Bank for Reconstruction and Development) accessed 1 February 2016; ‘IRM register’ (European Bank for Reconstruction and Development) accessed 1 February 2016. It is not known how an increased figure is given by the CSO Report but the methodology used in the determination of cases/requests for the EBRD mechanism is from the public registers.

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The issue is about having a robust registry of claims on whether they were filed/registered or transferred to the appropriate office for handling (such as the integrity office for matters on fraud and corruption as these are typically not within the remit of an accountability mechanism). From that perspective, the ADB accountability mechanism complaints registry provides a good example on how many claims the mechanism has received and how the claim was handled within if the matter was within the remit of the mechanism or transferred as appropriate.58 Even then, the complaints registry format from 2012 to 2014 has been replaced by a new format in 2015 (and no explanation is provided why a new format was adopted), and it would be useful to have a registry of all complaints that is easily accessible by the public. Some projects have multiple claims filed with the same accountability mechanism (like the Yacyretá Hydroelectric Project before the WBIP in 1996 and 2002);59 some projects have multiple claims filed with different accountability mechanisms over similar subject matter (such as the Panama Pando Moneteliro-01/Chiriqui claim filed with the IDB ICIM and CAO Office at the same time in 2010; and the Bujagali project filed with the WBIP [two requests, one in 2001 and one in 2007], the AfDB accountability mechanism [one claim in 2007 about the same time when the claim was filed with WBIP], CAO Office [six claims], and EIB-Complaint Mechanism and Ombudsman [two claims]). Some accountability mechanisms have had many claims filed in relation to the same project (the Southern Transport Development Project had four claims filed with the previous ADB Inspection Function and two with the ADB Accountability Mechanism, one for problem-solving and one for compliance review). The project which has had the highest number of claims is the Baku-Tbilisi-Ceyhan Pipeline Project; it has given rise to at least 36 claims (33 filed with the CAO Office and three filed with EBRD’s IRM). The approach taken by IDB ICIM is good in that it is holistic in that a registry is kept of all claims/complaints received and how the accountability mechanism disposes of the matter. The author is of the view that a proactive stance taken in registering all claims received and redirecting claims not within the remit of the mechanism to the appropriate office will enable the accountability 58  ‘Asian Development Bank Accountability Mechanism Complaint Receiving Officer’s Complaints Registry’ (Asian Development Bank) accessed 1 February 2016. 59  The Yacyretá Project extends more than two decades and had several sources of World Bank financing. The WBIP investigation report concluded the Panel’s investigation into the matters alleged in the Request for Inspection submitted to the WBIP in 2002 as at that time the Board of Directors did not approve the WBIP’s recommendation to carry out an investigation.

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mechanism to be interactive with civil society at large in realising how many claims are relevant for its consideration (for problem-solving or compliance review) and also knowing at the same time how to plan its outreach communications to better inform the public about the mechanism’s mandate. It will also provide the accountability mechanisms the opportunity to work with other institutional offices such as integrity office so that development effectiveness is enhanced. The data can also be used in ascertaining difficult or complex projects which have resulted in multiple claims spanning over a period of time, and knowing whether institutions have tried to harmonise efforts in working together to address these claims through cooperation agreements or understandings reached. Better case management and registry maintenance could be a matter for IAMs to work together to serve a wider audience including possible project affectees who wish to know and understand processes before filing their claims. 6

Challenges on Cooperation and Collaboration Faced by IAMs

In the initial years of IAM operations, claimants had no choice but to go to a particular IAM if their claim was financed by the institution concerned and obtain redress as provided for in that institution’s accountability mechanism. For example, in the proposed Arun III Hydroelectric Project claim (1994), the project had various co-financiers including the World Bank and ADB, but the claimants filed with the WBIP as the ADB at that time did not have an accountability mechanism. In the Jamuna Bridge Project claim (1996), which had co-financing involving the World Bank and ADB, the claimants filed with the WBIP and not with ADB as at that point, the WBIP was already functioning and the ADB Inspection Function was not operating yet. In the Southern Transport Development Project claim (2004), the claimants could have filed with both the ADB Accountability Mechanism and the JBIC accountability mechanism but pursued filing with the former mechanism in view of the previous claims filed with the previous Inspection Function at ADB, and also the JBIC mechanism was still untested. With more IAMs on board now, claimants have a choice as there is no bar on forum shopping in the sense that multiple project claims relating to harm suffered by the claimants from the institution’s financing of the project can be filed with different accountability mechanisms at the same time. This was what happened in the Bujagali Projects (2007) and the claimants filed with both WBIP and the AfDB accountability mechanism for compliance review (AfDB mechanism had an alternative for problem-solving but the claimants pursued the route of compliance review). With more IAMs

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and with an increase of parallel or joint financing of projects, there has been a need for IAMs to cooperate and collaborate when conducting investigation or problem-solving. The Bujagali Projects claim (2007) was the first of its kind in having a formal collaborative approach adopted by two IAMs as there was joint financing of projects by the World Bank and AfDB, and at that time, other institutional accountability mechanisms were not being referred to. The timing was right for a collaborative approach as the claim was filed at about the same time, and the collaborative approach was in line with the Paris Declaration of Aid Effectiveness (2005) and Accra Agenda for Action (2008). The MOU dated November 2007 that was entered into between WBIP and the AfDB IRM specifically stated that the agreement was entered into ‘in good faith and in a spirit of cooperation, in support of their respective missions and mandates’ while applying each institution’s own policies and procedures.60 Through this MOU, the entities worked on a joint exercise which provided sharing of resources and consultant reports, sharing of views by panel members, and less time consumed by the claimants and government and other stakeholders in having two separate sets of investigations over similar issues (such as hydrological risks and impact assessment, economic analysis, indigenous peoples’ rights concerning cultural and spiritual issues, compensation and consultation) while at the same time ensuring that each panel was making its own determination of findings on non-compliance based on the specific institution’s policies and procedures. There have been other instances of cooperation agreements reached, but the experience to date is fairly limited and the results are mixed, though the author views that cooperation agreements can be productive for all stakeholders involved, provided the agreements are drafted well to reflect each mechanism’s understanding and also shared with the claimants and published with the panel’s investigation report consistent with the purpose of IAMs to pursue accountability. In the Panama Canal Expansion Program claim (2011) (which was filed with IDB, EIB, and JBIC accountability mechanisms), the collaborative approach taken by the 3 institutions did not work as candidly stated in the ICIM’s recommendation for a compliance review: [t]he Panel has been in contact with the IAMs of other financial institutions [namely, EIB Complaints Mechanism and JBIC’s Officer of Examiner 60  World Bank Inspection Panel, Accountability at the World Bank The Inspection Panel at 15 Years (n 10) 214–216.

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for Environmental Guidelines] supporting the Program. Although such cooperation affords certain synergies, it has become evident that the process of coordination is time consuming and difficult because the IAMs have different procedural requirements. Notwithstanding the necessity and merits of such cooperation, planning of review activities has turned out to be difficult and logistically cumbersome.61 The panel’s recommendation is also couched in nuanced language stating that: [t]he Panel hopes to have access to consultants’ reports commissioned by the other IAMs and participate in information exchange, which may permit cost savings. Discussions continue to fine-tune coordination and to carry out a joint site visit to Panama to maximize synergy and cost-effectiveness.62 In the finalised Compliance Review Report, the IDB ICIM noted that each IAM makes its independent determination on the question of compliance according to the institution’s policies or procedures, and noted that the JBIC accountability mechanism released its Examination Report establishing that JBIC’s confirmation procedures for environmental and social considerations were carried out in accordance with JBIC’s Environmental Guidelines (though the IDB ICIM panel found that there was non-compliance with the bank’s environmental and safeguards compliance policy [OP-703]). The Panama Canal Expansion Program claim (2011) before the IDB ICIM saw problems in the IDB ICIM panel process such as changes in panel membership and leadership, the reshaping of the ICIM work by a combination of decisions made by the board of directors as a result of the findings of the evaluation department and a review of the ICIM policy, and slippages in timelines: the board of directors approved the panel’s recommendation to conduct an investigation in September 2013 with the envisaged timeline for panel report in February 2014 but the panel report was published in August 2015. (The JBIC accountability mechanism examination report was published in March 2014.) The panel report stated that the EIB-CM was finalising its report in 2015,63 but as of 15 January 2016, there is no outcome of the project on EIB-CM’s cases 61   Recommendation for a Compliance Review for Loan 2027-OC-PN Panama Canal Expansion (PN-MICI1002-2011) (12 September 2013) 13 (emphasis added). 62  Ibid. (emphasis added). 63   Compliance Review Panel Report Panama Canal Expansion (PN-MICI002-2011) (12 September 2013), App II, 3.

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registry.64 The approach taken by these three IAMs was collaborative in the sense of having these IAMs having meetings with the claimants and other stakeholders (twice in September 2013 and December 2013) but no formal agreement was reached in carrying out the collaboration, unlike the MOU that was entered into between WBIP and AfDB IRM in the Bujagali Projects claim. Collaboration or cooperation does not necessarily need to have a written agreement (though that may help to make matters clear) and as events flowed, the entities did not pursue a written agreement given that their panel processes were different and that IDB ICIM had changes in panel membership and leadership. A formal collaborative agreement was signed between the CAO Office and IDB ICIM in the Pando-Monte Lirio Hydroelectric Project Power Project where the claim for problem-solving was presented to both IAMs in 2010, and joint missions were carried out by these two entities to handle the case ‘collaboratively and efficiently.’65 The problem-solving exercise did not succeed as the project sponsor withdrew from the process, but this does not impair the usefulness of a cooperation agreement for problem-solving and shows that cooperation agreements can be considered for both problem-solving and compliance review. 7

Lessons Ahead for IAMs to Enhance Their Mechanisms in Further Pursuit of Accountability

The chapter concludes on the lessons ahead for IAMs to enhance their mechanisms in further pursuit of accountability. The IAM meetings have brought together representatives of many IAMs (presently 15) from about 10 when it was inaugurated about 12 years ago, and the present list is focused on IAMs involved in problem-solving and/or compliance review, unlike in the incipient years when other organisations which joined were not accountability mechanisms for project operations by development agencies (such as the Citizens Submission Unit of the North American Commission on Environmental Cooperation). First, IAMs have come a long way in placing themselves as an imprimatur for any IAM to be included in the network. The network has broadened 64  The EIB-CM issued its Conclusions Report on 8 May 2019 and the case was closed on 27 May 2019 on the registry. See accessed 21 August 2019. 65  ‘The Independent Consultation and Investigation Mechanism 2011 Annual Report’ (IDB, 2012) 28.

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from international development institutions including regional development banks, to other international banks (NIB), sub-regional banks (such as CDB), UN agency (UNDP), and bilaterals (such as the joint initiative of the DEF/FMO ICM). Their annual meetings are useful not only for the IAM representatives to share lessons learned and exchange best practices relevant to their mandate, but beyond that, these meetings address new topics such as use of country systems in bank operations, opportunities for cooperation and coordination among mechanisms in awareness-building activities, and (in the 2014 annual meeting) how the introduction of new human rights standards in some institutions may affect the mandates of accountability mechanisms.66 New topics for discussion will demonstrate how IAMs adapt themselves to see how they can serve the people better as they exist to promote greater accountability in their institutions by ensuring that people have access to an independent complaints body to express their claims and seek recourse. It is suggested that the valuable discussions of the annual IAM meetings be placed in a common website link such as IAMnet or prominently in each individual IAM website (or each individual IAM website can have a link to the IAMnet). Joint publications of the IAMs such as those presented at the Rio+20 conference in 201267 could be uploaded in one common site to give greater visibility to the IAM Network and the work done, including summaries of side events organised by the host IAM at a particular meeting or by CSOs at an IAM meeting. Sharing of information enhances transparency and accountability. The usefulness of the IAM Network is demonstrated by the ongoing public consultation policy review of the DEG/FMO ICM which is due for completion in 2016, where it is stated that the DEG/FCO ICM has ‘compared [its] Policy with peers in the Independent Accountability Mechanism (IAM) network, who had just updated their policies in order to benefit from good practices available in the industry.’68 The fact that some IAMs in their policies like EIB Complaints Mechanism makes express reference to the IAM participating in the IAM peer group is indicative that the network has relevance and the IAM Network should take this opportunity to take these annual meetings as a learning curve to engage through communication and outreach with the board of directors and management of the institutions, CSOs, project affectees, private sector, legal practitioners, and other stakeholders to have a better understanding

66  ‘EBRD Project Complaint Mechanism Annual Report 2014’ (n 5) 20. 67  Lewis (n 56). 68   Public consultation Independent Complaints Mechanism Policy DEG and FMO (14 January 2016) accessed 1 February 2016.

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of how IAMs can help the institution to advance development effectiveness, transparency and accountability. Second, through the IAM Network and on their own initiative, IAMs can improve their outreach through website reconstruction and other ways to reach out to civil society and other users of their mechanisms in a more accessible and friendly way through providing case trackers with more information on documents published and milestones in tracking the progress of claims filed (such as WBIP’s introduction of enhancements to its website and launching the use of several social media instruments, including Facebook, Twitter, and LinkedIn in line with its commitment to transparency and accountability).69 Third, the maintenance of a public complaint registry in each IAM is important as it strengthens engagement with stakeholders, and the public will know what the IAM is doing in handling or processing the claims received. A public complaint registry with a good tracking system as in the WBIP’s cases registry also enhances transparency, accountability and good governance. It is suggested that all claims be filed as this will also benefit the institution in knowing how many claims it receives, even if not all claims are within the IAM’s remit. The opportunity for the IAM to be contact point between the institution and the outside world should not be missed and in fact, lessons can be gained on how the institution can respond better (and how the IAM can support the institution on this) in its operations by hearing claims. On matters that are outside the remit of the IAM, these can be summarily recorded without giving details and depending whether the claim is to be treated with confidentiality. Fourth, the IAMnet website can be improved to reach a far wider audience or consider working with other organisations to improve case management and tracking, and to share information with a wider audience to enhance transparency and accountability.70 The IAMnet website is currently maintained by ADB’s Office of the Compliance Review Panel (OCRP), the secretariat supporting the CRP, which the institution has hosted since a pilot study under a technical assistance (TA) grant in 2009 (with the study completed in December 2011).71 Under the TA study to pilot a community of practice for IAMs, the TA’s objective was to establish a virtual learning network and knowledge sharing platform where IAM members can communicate, collaborate and share materials on shared topics of interest. 69  ‘The Inspection Panel Annual Report: July 1, 2004–June 30, 2005’ (n 4) 16. 70  See generally accessed 1 February 2016. 71   Technical Assistance on Piloting of a Community of Practice for Independent Accountability Mechanisms (TA 7349-REG) accessed 1 February 2016.

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The TA found that for ‘a collaborative platform such as the IAM net to be sustained, it should be something that is more open/less restrictive in membership for more spontaneous collaboration and sharing of ideas and knowledge products.’72 The result was that ADB’s OCRP would try to design and develop a more user friendly website. The resulting website launched in August 2015 lists all IAM net member institutions and links to their mechanisms, with publications and has updates based on new information and inputs from members. This website is still a work in progress as its full potential has not been tapped and it is open for partnership opportunities with other institutions including learning and research institutions that are interested in publication of academic articles and publication of project database of compliance cases heard by IAMs.73 The introduction in the IAMnet states that the ‘IAMnet is a virtual network of dedicated practitioners who contribute to the regular exchange of ideas and assist with institutional capacity building in accountability and compliance as components of corporate governance’ is limited and can be broadened as there are other stakeholders also involved in exchange of ideas on accountability and compliance.74 Under the International Grievance Mechanisms (IGMs) research project,75 funded by the European Research Council of the European Union, the French National Centre for Scientific Research (CNRS) at the Centre for International Studies and Research (CERIC), Aix-Marseille University, hosts a database of cases (mainly on compliance review) which is a work in progress and importantly shows the interest in highlighting international grievance mechanisms and how their cases have been handled.76 IAMs should consider working with academic and learning institutions as well as CSOs interested in the operations of IAMs in sharing information on cases handled and the documents that have been disclosed. Fifth, IAMs can make more use of cooperation agreements (or arrangements without the need to have formal agreement) to work better in joint problem-solving or compliance review exercises. The experience of the IAMs in the collaborative approach undertaken in the Panama Canal Expansion Program claim (2011) could be a lesson that moving forward, there may be other ways of cooperation for the IAMs such as in sharing information, reports 72  Ibid. 73  Such as the Centre d’Etudes de Recherches Internationales et Communutaires (CERIC) at CNRS-Aix Marseille Université. 74  See generally accessed 1 February 2016. 75  See generally accessed 1 February 2016. 76  ‘IGMs Cases Database’ (IGMs) accessed 1 February 2016.

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and findings during joint field visits. The Kenya Electricity Expansion Project claim (2014) was filed with both the WBIP (one request) and EIB-CM (four complaints) and the two entities entered into a memorandum of understanding to coordinate on processing the complaints in ‘the interests of efficiency and effectiveness.’77 Through this MOU, the two entities carried out joint field missions in the Nairobi and the project area and met with various stakeholders including the complainants, on the basis that the cooperation is subject to the policies and procedures of their respective institutions. More use of these cooperation agreements will enhance the transparency and accountability of the IAMs and their respective institutions, with the need to ensure that the claimants are informed of the agreements reached so that they fully understand the investigation or problem solving process. In the cases where the WBIP has entered into an MOU with other IAMs on co-financed projects, the WBIP has always included the MOU in their investigation report,78 and this is in line with transparency and accountability. IAMs, by virtue of their mandate, have continually been under both internal and public scrutiny, and have found that they need to work with each other, both for learning from each other’s experience and from working in co-financed projects, in order that they can improve their own effectiveness and help contribute to institutional development effectiveness, transparency and accountability. The IAM Network is a step in the right direction, with increasing coverage of IAMs and continued engagement with various stakeholders including management, CSOs, private sector, governments, and learning and research institutions.

77  ‘Inspection Panel Kenya Electricity Expansion Project (Report No. 97705-KE)’ (World Bank, 2 July 2015) 1. 78  Ibid. 59–61.

chapter 12

Civil Society in the Independent Accountability Mechanism Community of Practice Komala Ramachandra 1 Introduction Civil society and independent accountability mechanisms (IAMs) at international financial institutions (IFIs) are inextricably linked, both historically and in today’s community of practice. Civil society organisations (CSOs) have played a critical role in the creation of the IAMs and continue to bolster and sustain their functioning. This relationship arises out of a set of shared interests, centered on promoting transparency and accountability at IFIs, though the modes for achieving these benchmarks are not always closely aligned. Civil society representatives advocate for the effective functioning of IAMs with the objective of ensuring that people and communities affected by IFI investments have access not only to grievance processes, but also remedy for environmental harm and rights abuses. Working jointly, CSOs and IAMs have been crucial in pressing for greater sustainability, poverty reduction, and inclusivity in IFI investments. 2

Civil Society and Its Role

The term ‘civil society’ encompasses a wide range of actors, everything from individual activists, community-based organisations, and grassroots movements to international advocacy groups. In the IAMs’ community of practice, many CSOs share certain values and seek to make changes in IFI policy and practice. Beyond that, however, they vary greatly: most are non-profits, some are membership-based, many consider themselves non-governmental organisations (NGOs).1 Some are in metropolitan areas and capital cities in the Global

1  Non-governmental organisations are often intermediaries, without specific constituencies that they represent. They often provide support to grassroots groups and engage in advocacy. For further description, see Jonathan A. Fox and L. David Brown, ‘Introduction’ in

© Koninklijke Brill NV, Leiden, 2020 | doi:10.1163/9789004337787_013

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North, like Washington DC, while others are based in countries and communities around the world. In advocating for change at IFIs and IAMs, civil society groups often come together in transnational advocacy networks.2 These networks are ‘bound together by shared values, a common discourse, and dense exchanges of information and services’.3 They have distinct and often varying goals in coming together. Some seek justice for human rights abuses or environmental harm at the local level, and include IFIs and IAMs in their strategy to ‘internationalize’ their struggles.4 Others focus on creating policy and institutional changes, bringing legitimacy to their campaigns by working with directly affected communities.5 In reaching their goals, CSOs at multiple levels work together by sharing information, strategies, and expertise. David Hunter describes two kinds of networks active in promoting environmental standards at IFIs: horizontal and vertical. Horizontal networks are often permanent and ‘committed over the long term to cooperate in the monitoring and reform of the targeted financial institutions.’6 Typically international networks, they are active in many regions of the world. Examples include the NGO Forum on Asian Development Bank, an Asian-led network in the Asia and the Pacific region,7 and CEE Bankwatch Network in Central and Eastern Europe.8 Some of these networks are less formal, simply providing a platform for communication and information sharing, while others meet regularly within an established framework. For instance, the International Advocates Working Group (IAWG) is a coalition of international, regional, and national NGOs ‘committed to ensuring that non-judicial grievance mechanisms deliver justice and accountability.’9 Vertical networks, comprised of groups ranging from the grassroots to the international level, often arise in response to specific cases or projects, and Jonathan A. Fox and L. David Brown (eds), The Struggle for Accountability: The World Bank, NGOs and Grassroots Movements (MIT Press 1998) 21. 2  Margaret E. Keck and Kathryn Sikkink, ‘Transnational advocacy networks in international and regional politics’ (1999) 51 International Social Science Journal 89. 3  Ibid. 89. 4  David B. Hunter, ‘Civil Society Networks and the Development of Environmental Standards at International Financial Institutions’ (2008) 8(2) Chicago Journal of International Law 462. 5  Fox and Brown (n 1) 3. 6  Hunter, ‘Civil Society Networks and the Development of Environmental Standards at International Financial Institutions’ (n 4) 452. 7  N GO Forum on ADB: accessed 10 August 2018. 8  C EE Bankwatch Network: accessed 10 August 2018. 9  ‘IAWG Network’ (Accountability Counsel) accessed 10 August 2018.

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in many cases involve complaints to IAMs.10 By sharing information from the local level, where problems are occurring or anticipated, to the international level, where groups have access to high-level decision makers, vertical networks can harness a wide range of skills and unique access to address a variety of issues. The priorities of the groups operating at different levels may vary: in a typical vertical network, local and national groups may seek to address a specific project and its impacts or their own government’s development strategies, while international groups may attempt to shift broader IFI policy or international law.11 However, these priorities have been realigning in recent years. As particular communities and countries face repeated impacts from IFI projects, local and national groups have grown more engaged in policy advocacy and efforts to build enduring networks across levels.12 Transnational advocacy networks have played a variety of roles in promoting higher standards at the IFIs, including at the IAMs. Some groups rely on external pressure and protest to highlight problems and elicit change.13 Others engage directly with the institutions, for instance, by monitoring the implementation of projects, policies, and accountability processes on the ground, or participating in advocacy during IFI annual meetings. Vertical networks are positioned to observe local realities and convey information to international partners, who in turn share it with IFI management and boards, the media, 10  Hunter, ‘Civil Society Networks and the Development of Environmental Standards at International Financial Institutions’ (n 4) 454. 11  Fox and Brown (n 1) 7. 12  For examples of local groups getting more involved in policy advocacy at the IFIs, see National Alliance of People’s Movements, ‘Twenty Four Groups Write to the World Bank: No More Destructive Development’ (countercurrents.org, 30 June 2016) accessed 10 August 2018; see also the range of signatories to a letter calling for improvements to the 2014 draft of the World Bank safeguards, ‘World Bank’s Draft Safeguards Fail to Protect Land Rights and Prevent Impoverishment: Major Revisions Required’ (World Bank, 2014) accessed 10 August 2018. These vertical coalitions advocating for policy change are becoming more common, in part facilitated by greater communication. 13  For example, see the statement by the Peoples Front against IFIs prior to the 46th Annual Board of Governors Meeting of the Asian Development Bank: ‘Peoples Front Against IFIs PFAI call’ (Indian Social Action Forum – INSAF) accessed 10 August 2018; see also Peoples Forum against ADB, ‘Peoples’ Forum against ADB: Call for Action!’ (Focus on the Global South, 2006) accessed 10 August 2018; ‘Peoples Forum against ADB’ (CADTM 2012) accessed 10 August 2018.

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and other CSOs, as well as filing complaints to IAMs.14 CSOs are critical to upholding standards at IFIs as they are uniquely placed to identify problems, often arising out of specific cases and projects, and translate this into the promotion of stronger norms and policies. Hunter asserts that ‘CSOs essentially set the environmental and social policy agenda’ of the financial institutions.15 Transnational civil society networks work to ensure that improvements at one IFI or IAM are disseminated and implemented at other institutions. CSOs compare and evaluate the relative strengths of social and environmental standards, transparency and accountability policies, and procedural rules at different institutions, and promote upward harmonization.16 The annual IAMs meeting is an important space for cross pollination, and the addition of civil society engagements in those meetings allows for civil society to raise concerns arising from their networks and advocate for upward harmonization of standards and procedures. The following section explores the history of civil society impact on IFIs and IAMs in greater detail. 3

A Foundation of Civil Society Engagement

Civil society has worked to influence the role and functioning of the World Bank Group and other IFIs since well before the creation of the IAMs. This has included contesting structural adjustment programs and promoting social and environmental standards. Civil society began raising concerns about large infrastructure projects funded by the World Bank in the 1970s and 1980s, leading to the creation of social and environmental safeguard policies that eventually spread to all the IFIs and some private financial institutions.17 A key catalyst in the creation of the first IAM, the Inspection Panel at the World Bank, started with community resistance to the World Bank-funded Sardar Sarovar Dam and Power Project on the Narmada River in India.18 Local movements and national groups in India organised to halt the project as it 14  Hunter, ‘Civil Society Networks and the Development of Environmental Standards at International Financial Institutions’ (n 4) 461. 15  Ibid. 457. 16  Ibid. 458. 17  Ibid. 438–9. Private financial institutions created standards called the Equator Principles. 18  While there were both internal and external pressures on the World Bank to create an accountability mechanism, some authors assert that it was ‘primarily external’ forces that led to the creation of the Inspection Panel: Richard E. Bissell and Suresh Nanwani, ‘Multilateral Development Bank Accountability Mechanisms: Developments and Challenges’ (2009) 6(1) Manchester Journal of International Economic Law 2.

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was expected to force hundreds of thousands of people from their homes and lands. These groups raised their concerns in a letter to the World Bank President, who subsequently commissioned an independent investigation into the allegations. The commission, headed by Bradford Morse, visited the affected areas and met with representatives from the affected communities, allied CSOs, and the government. The final Morse Report, released in 1992, found numerous violations of World Bank policy on resettlement and rehabilitation. Vertical civil society networks formed to advocate for improvements in this case, and forcefully rejected what they considered inadequate responses by the Bank management to the Morse Report findings.19 In 1993 the US House of Representatives held hearings on the 10th replenishment of the World Bank’s International Development Association (IDA). Activists and civil society used this as an opportunity to strengthen a demand that lawmakers refuse to provide US funding unless the Bank created an accountability mechanism. CSOs led similar efforts in other donor countries, particularly in Europe. With internal pressures at the World Bank also growing, several proposals for a system of accountability emerged, eventually resulting in the Inspection Panel. The Compliance Adviser Ombudsman (CAO) at the International Finance Corporation (IFC) was the result of a 1995 complaint to the Inspection Panel about an IFC-funded project.20 Because the Inspection Panel did not have jurisdiction over IFC investments, it was unable to register a complaint regarding the Pangue Dam Project on the Biobío River in Chile. As with the Sardar Sarovar Dam Project, civil society pressure led the World Bank president to commission an independent investigation into the project. The commission found various violations of the IFC’s social and environmental policies.21 Ultimately, this gap in accountability for private sector investments at the 19  Just before the annual meetings in 1992, CSOs took out full page ads in the Financial Times, Washington Post, and New York Times to publish an open letter endorsed by 250 organisations to World Bank President Lewis Preston demanding the Bank’s withdrawal from the project. 20  David Hunter, Cristián Opaso and Marcos Orellana, ‘The Biobio’s Legacy: Institutional Reforms and Unfulfilled Promises at the International Finance Corporation’ in Dana Clark, Jonathan Fox and Kay Treakle (eds), Demanding Accountability: Civil Society Claims and the World Bank Inspection Panel (Rowman & Littlefield 2003) 115. Benjamin M. Saper, ‘The International Finance Corporation’s Compliance Advisor/Ombudsman (CAO): An Examination of Accountability and Effectiveness from a Global Administration Law Perspective’ (2012) 44 NYU Journal of International Law and Politics 1279. 21  Pangue Audit Team, Pangue Hydroelectric Project (Chile): An Independent Review of the International Finance Corporation’s Compliance with Applicable World Bank Group Environmental and Social Requirements (April 1997).

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World Bank Group led to civil society successfully pressing for the creation of the CAO in 1999. Sustained civil society pressure through the Biobío campaign also resulted in the IFC adopting and implementing social and environmental review of all projects, and the creation of an information disclosure policy.22 Civil society called for the creation of an accountability mechanism at the Asian Development Bank (ADB), but played a less active role in its first iteration, known as the Inspection Function. A variety of internal and external factors drove the creation of the Inspection Function in 1995, including an internal attempt to improve transparency and accountability prompted by the creation of the World Bank’s Inspection Panel. However, CSOs found that the Inspection Function unsatisfactorily addressed its first case regarding the Samut Prakarn Wastewater Management Project in Thailand. Advocacy networks grew out of objections to this case, putting pressure on donor countries during the ADB replenishment process in 2000 and the G7 meetings in 2001. Ultimately this pressure led to a significant restructuring of the Inspection Function into the current ADB Accountability Mechanism in 2003.23 4

Shared Interest and Objectives

Civil society’s engagement with IAMs has not stopped with the creation of the mechanisms. The evolution and effectiveness of the accountability mechanisms rest in large part on continued engagement from civil society networks and movements. Yet while some celebrated the creation of the World Bank Inspection Panel and subsequent IAMs, not all hailed these accountability processes as the solution to harmful IFI investments. Some were concerned that the mechanisms are diversionary tactics, occupying affected communities and civil society, without holding adequate power to effect real change.24 22  David Hunter, Opaso and Orellana (n 20). 23  Bissell and Nanwani (n 18). 24  Underlying concerns about the effectiveness of IAMs have been studied and documented in a number or articles and studies, such as Roxanna Altholz and Chris Sullivan, ‘Accountability and International Financial Institutions: Community Perspectives on the World Bank’s Office of the Compliance Advisor Ombudsman’ (International Human Rights Law Clinic, University of California, Berkeley, Law School, March 2017); Allard K. Lowenstein International Human Rights Clinic, Yale Law School, ‘Deferring Accountability: Delays at the World Bank’s Inspection Panel’ (March 2017); Caitlin Daniel, Kristen Genovese, Mariëtte van Huijstee and Sarah Singh (eds), ‘Glass Half Full? The State of Accountability in Development Finance’ (SOMO, January 2016); Taylor Fulton, Jinhwa Ha, Michael Karimian, Eva Lerner, Annalisa Castillo Meier and Isabelle Plessis, ‘What is Remedy for Corporate Human Rights Abuses? Listening to Community Voices,

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In addition, though IFIs played a significant role in the development of the IAMs, some members of IFI management and boards had reservations about the necessity and potential impact of the mechanisms. Therefore, the campaign for IFI accountability through the IAMs is a continuing process; civil society and IAMs work together to ensure that the mechanisms are able to function properly and independently, providing meaningful outcomes for affected communities. Civil society supports the functioning of IAMs through engagement with donor governments, IFIs, the IAMS themselves, and other CSOs. Civil society networks regularly advocate for changes at IFIs and IAMs by engaging their governments, particularly donors to these institutions, pressing them to support the social, environmental, and accountability agendas at IFIs. In the US, for example, civil society regularly communicates with the Department of Treasury, Department of State, and Congress, both on specific cases and policy.25 IDA replenishments offer civil society opportunities every three years to pressure donor governments to make case-specific and policy reforms.26 In a 2008 hearing on the 15th Replenishment, Lori Udall testified before the US House of Representatives Committee on Financial Services recommending a number of reforms to the World Bank Inspection Panel.27 CSOs have been A Field Report’ (SIPA 2015); Jeff Tyson, ‘Is the World Bank’s Inspection Panel working the way it should?’ (Devex, 10 November 2015) accessed 10 August 2018; Mathieu Vervynckt, ‘An assessment of transparency and accountability mechanisms at the European Investment Bank and the International Finance Corporation’ (Eurodad, September 2015); Martijn Willem Scheltema, ‘Assessing the Effectiveness of Remedy Outcomes of Non-Judicial Grievance Mechanisms’ (Dovenschmidt, 12 February 2014); Xavier Dias, ‘World Bank in Jharkhand: Accountability Mechanism & Indigenous Peoples’ (2005) 1 Law, Environment and Development Journal 5071. 25  For example, Bank Information Center hosts a monthly meeting between civil society and the US government: ‘About BIC’ (Bank Center Information) accessed 10 August 2018. See also ‘World Bank Lending and Human Rights’ (Tom Lantos Human Rights Commission, 9 April 2014) accessed 10 August 2018; ‘International Financial Institutions and Human Rights’ (Tom Lantos Human Rights Commission, 30 September 2015) accessed 10 August 2018. 26  Fox and Brown (n 1) 7. See also Bissell and Nanwani (n 18). 27  Lori L. Udall, Statement Regarding the World Bank Inspection Panel – Update and Recommendations for Reform in the Context of The Fifteenth Replenishment of the International Development Association Update and Recommendations for Reform in the Context of The Fifteenth Replenishment of the International Development Association (Committee on Financial Services, US House of Representatives, 18 June 2008)

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successful in using the legislative process in the US to include new provisions in the 2014 Consolidated Appropriations Act. These include a provision for US executive directors at IFIs to respond to the IAMs’ findings and recommendations ‘by providing just compensation or other appropriate redress to individuals and communities that suffer violations of human rights.’28 European civil society has also engaged in similar government advocacy on appropriations.29 Within the IFIs, civil society has been active in shoring up the IAMs – defending them from external interference, ensuring adequate resourcing, and, in some cases, fighting for their continued existence. One of the first attacks on Inspection Panel independence occurred during the first request in 1994 when the World Bank’s Office of General Counsel (OGC) took an active role in interpreting Inspection Panel policy and limiting standing for complainants. This presented conflict of interest concerns given the OGC’s role advising the World Bank Board and President and supporting Bank management. Potential complainants could also see this as interference in the Panel process. Civil society advocates were ultimately able to work with donor governments and engage directly with the OGC to limit its role in Inspection Panel policy interpretation.30 The early years of the Inspection Panel raised other challenges. Procedures were not yet established, and practice led to significant deviations. The eligibility phase, which was meant to be brief and to determine whether a full investigation was warranted, grew lengthier, nearly to the point of becoming full investigations in themselves.31 World Bank Management would then submit their response to allegations, in the form of a remedial action plan, along with the Panel’s findings on eligibility, prior to any official investigation and full examination of the issues. This raised numerous questions and tensions: Was a full investigation even necessary after all the effort put into the eligibility determination? Could the Panel carry out an independent investigation given the Bank’s preemptive response? What role should the requesters play in the development of management’s remedial action plan? To address these frictions, the Board established a Working Group of six Executive Directors to  accessed 10 August 2018. 28  ‘US Congress Passes Law Demanding Redress for Boeung Kak Community, Pressures World Bank to Take Action’ (Inclusive Development International, 16 January 16 2012) accessed 10 August 2018. 29  Fox and Brown (n 1) 6. 30  David Hunter, ‘Using the World Bank Inspection Panel to Defend the Interests of Project-Affected People’ (2003) 4(1) Chicago Journal of International Law 208. 31  Daniel D. Bradlow, ‘Precedent-Setting NGO Campaign Saves the World Bank’s Inspection Panel’ (1999) 6(3) Human Rights Brief 7–8, 24, 27.

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develop a proposed solution, which the Board intended to release once it was finalised with no input from civil society or affected communities. Civil society pushed back on this process, which not only led to a comment period on a draft proposal, but also a global meeting of civil society with the Bank in 1999.32 The final changes were a vast improvement on the Working Group’s proposal to ensure independent Panel investigations. These changes included creating ‘technical eligibility criteria’ to be assessed during the eligibility phase, reducing the discretion of the Board to challenge the Panel’s decisions on whether to carry out a full investigation, and restricting the scope of management’s anticipatory responses to a complaint, allowing only for evidence of its intent to comply with policies when it accepts some responsibility for harm.33 In another example in 2014, the Independent Consultation and Investigation Mechanism (ICIM), the IAM of the Inter-American Development Bank, underwent a significant review and restructuring process. This followed an internal evaluation by the Office of Evaluation and Oversight calling for the suspension of the ICIM.34 Civil society networks actively participated in the public consultations on the ICIM, vigilantly monitoring not only the substantive changes but also the procedure for review and comment on the proposed policy.35 Civil society has played a crucial role in supporting IAM functions, including maintaining institutional memory, providing information and advice, and aligning strategies. CSO networks monitor and participate in the periodic review and assessment of IAM policies and procedures. For example, over a dozen organisations submitted joint comments during a consultation on an update of the CAO’s Operational Guidelines in 2012, resulting in significant changes from the 2007 Operational Guidelines.36 Civil society has also 32  Ibid. 27. 33  Ibid. 7–8, 24, 27. 34  ‘Evaluation of the Independent Consultation and Investigation Mechanism (Office of Evaluation and Oversight, Inter-American Development Bank, December 2012) accessed 10 August 2018. 35   ‘Comments on the Draft of the Revised Policy of the Independent Consultation and Investigation Mechanism (ICIM)’ (Accountability Counsel, September 2014) accessed 10 August 2018; Letter from the Accountability Counsel and other signatories to the Inter-American Development Bank (5 July 2014). 36  ‘Comments submitted: CAO Operational Guidelines Consultation 2012’ (CAO 2012) accessed 10 August 2018.

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advocated for external participation in the selection and hiring of accountability mechanism staff. In April 2017, a coalition of 26 CSOs requested external stakeholder participation in the selection of Inspection Panel members, citing similar policies at a number of other IAMs, including the CAO.37 The World Bank has yet to agree to this. Following years of civil society advocacy about the safety of human rights defenders who bring complaints to accountability mechanisms, including an extensive Human Rights Watch report on the subject,38 IAMs made it a topic of discussion during their annual meeting in 2015 in Paris.39 A number of IAMs have since introduced or are considering guidelines on responding to threats and reprisals. In March 2016 the Inspection Panel introduced a set of guidelines to reduce retaliation risks and to respond in cases where retaliation may have taken place.40 That same year the CAO released a draft approach on responding to threats and reprisals, followed by a period of consultation, culminating in a final document to be operationalised by December 2017.41 Within civil society, groups disseminate information about IAMs, particularly from the international level to regional, national, and local groups. Alongside this, CSOs provide support to communities in preparing and filing complaints to IAMs. In some cases workshops are limited to CSOs,42 but increasingly trainings and outreach events are taking place in coordination

37  Letter from the Accountability Counsel et al. to the World Bank Executive Directors (25 April 2017) accessed 10 August 2018. 38  ‘At Your Own Risk: Reprisals against Critics of World Bank Group Projects’ (Human Rights Watch, 22 June 2015) accessed 10 August 2018. 39  ‘EBRD Project Complaint Mechanism Annual Report 2014’ (European Bank for Reconstruction and Development, 2016) accessed 10 August 2018. 40  ‘Guidelines to Reduce Retaliation Risks and Respond to Retaliation during the Panel Process’ (Inspection Panel, 30 March 2016) accessed 10 August 2018. 41  ‘CAO Approach to Responding to Concerns of Threats and Incidents of Reprisals in CAO Operations (Compliance Advisor Ombudsman) accessed 10 August 2018. 42  For example, the Dutch organisation SOMO held a series of trainings on grievance mechanisms in Indonesia, Kenya, and Mexico: ‘About the Human Rights & Grievance Mechanisms programme’ (Human Rights & Grievance Mechanisms) accessed 10 August 2018.

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with IAMs.43 Workshops typically involve explaining how a complaint process works, and often include answering the questions of skeptical communities and local organisations that want to understand the benefits of using these mechanisms, particularly given the perceived lack of independence and inability to deliver meaningful remedy.44 While civil society aims to support the use of IAMs, for many it has become increasingly difficult to justify this position, as recent studies demonstrate a poor track record of meaningful outcomes, discussed in greater detail below. Some CSOs and networks arise in support of specific complaints to IAMs. While a complaint process may be initiated by an affected individual or community, the process of preparing a comprehensive complaint often requires extensive outreach and training for affected individuals and local and national civil society, in some cases undertaken with the support of national and international organisations. A number of organisations, including Accountability Counsel, Forest Peoples Programme, Inclusive Development International, and International Accountability Project, support communities to translate their concerns into the language of IFI social and environmental standards and to meet the technical requirements of IAMs complaints procedures. Without this critical support, far fewer community complaints would reach IAMs. Civil society works to bolster the independence, resourcing, and effectiveness of IFI accountability mechanisms. IAMs, therefore, stand to benefit from the active participation of civil society. Periodic attempts by IAMs to exclude civil society involvement have served to strengthen the critics of accountability systems, undermining the IAMs. Yet for civil society to continue their advocacy for IAMs, sufficient reason must exist to do so. The following section will examine the outcomes of recent analyses and studies of IAM functioning and outcomes. 5

Improving Accountability

Since the creation of the IAMs, there have been various attempts to monitor and evaluate their performance. Until recently this was largely undertaken on 43  For example, the CAO co-hosted an outreach session in New Delhi, India, on 5 February 2016: ‘CAO News: Issue 3’ (Compliance Advisor Ombudsman) accessed 10 August 2018. 44  Hunter describes his experiences responding to local civil society concerns in a workshop; this is very similar to the author’s experiences: Hunter, ‘Using the World Bank Inspection Panel to Defend the Interests of Project-Affected People’ (n 30) 208–09.

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a case-by-case basis.45 A 2003 edited volume explored the requests before the Inspection Panel and drew various lessons learned from the first ten years of its existence.46 The book describes how the Inspection Panel’s credibility was established from its first request regarding the Arun III Hydroelectric Project in Nepal. The request raised numerous procedural questions, including the role of the Office of General Counsel discussed above. It led to a report in June 1995 broadly finding that while the project’s design might be in compliance with World Bank policies, it could not be implemented according to that design and would likely cause harm to the affected communities.47 Given the level of controversy created by the request and Panel report, the World Bank President James Wolfensohn restructured the agreement with Nepal to exclude the problematic Arun III project. Despite the fact that the Panel process never officially reached a final conclusion, the process was seen as a success. Some chapters in the 2003 volume provide examples of positive outcomes for affected communities, while others raised concerns about both the procedures and outcomes from complaints processes. Shortcomings were not isolated to problems with the IAMs themselves, but also included the consequences when Panel reports met with resistance from World Bank management, Board members, and borrower countries. For example, a request regarding the industrialisation of the Singrauli region of India gave rise to questions of sovereignty when the government of India rejected a visit by the Inspection Panel.48 The China Western Poverty Reduction Project request caused significant tension between Board members and diplomatic tension between the US and China, spurring concerns by borrower countries that civil society had too much influence on the World Bank.49 While both requests led to critical Inspection Panel reports – and project cancellation in the case of the China request – the ultimate impact for affected communities was mixed.50 The authors note 45  Lori Udall, ‘The World Bank Inspection Panel: A Three Year Review’ (Bank Information Center, 1997). 46  Dana Clark, Jonathan Fox and Kay Treakle (eds), Demanding Accountability: Civil Society Claims and the World Bank Inspection Panel (Rowman & Littlefield 2003). 47  Richard E. Bissell, ‘The Arun III Hydroelectric Project, Nepal’ in Dana Clark, Jonathan Fox and Kay Treakle (eds), Demanding Accountability: Civil Society Claims and the World Bank Inspection Panel (Rowman & Littlefield 2003). 48  Dana Clark, ‘Singrauli: An Unfulfilled Struggle for Justice’ in Dana Clark, Jonathan Fox and Kay Treakle (eds), Demanding Accountability: Civil Society Claims and the World Bank Inspection Panel (Rowman & Littlefield 2003). 49  Dana Clark and Kay Treakle, ‘The China Western Poverty Reduction Project’ in Dana Clark, Jonathan Fox and Kay Treakle (eds), Demanding Accountability: Civil Society Claims and the World Bank Inspection Panel (Rowman & Littlefield 2003). 50  Ibid. 237.

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that though the influence of the Panel process may not always be as direct as a requester would like, there are indirect and less tangible impacts, like ‘oblig[ing] global authorities to get up and officially listen’ and ‘us[ing] reform policies to shift the balance of power in their favor.’51 Numerous articles and analyses about individual requests have been published over the years,52 but few systematic reviews across IAMs have been done. A proposal for precisely that type of study was raised by civil society during an IAMs-civil society roundtable at the 2014 London IAMs meeting. In January 2016, eleven CSOs released the resulting study, titled ‘Glass Half Full: The State of Accountability in Development Finance,’ consisting of both qualitative and quantitative analysis of the 758 complaints filed to eleven IAMs since the creation of the Inspection Panel.53 The conclusions were sobering. Given the expansive scope of the investigation – eleven IAMs over two decades – the number of complaints has been lower than might be expected, reflecting the fact that most affected communities are not aware of either IFI involvement in the project causing them harm or the existence of an IAM to address their complaint, or both.54 While the authors recognised that most complainants were probably better off because of the existence of the IAMs, they also found that going through a complaints process seldom led to remedy. Numerous bottlenecks exist in the process itself: less than half of the complaints filed were found eligible (42.5% of total complaints); fewer than a third reached the substantive phase of either problem solving or compliance (28% of total complaints); and fewer than one in five cases reached a result of either a negotiated agreement or compliance finding (19.5% of total complaints).55 Only approximately half of complaints

51  Jonathan Fox and Kay Treakle, ‘Concluding Propositions’ in Dana Clark, Jonathan Fox and Kay Treakle (eds), Demanding Accountability: Civil Society Claims and the World Bank Inspection Panel (Rowman & Littlefield 2003) 286. 52  Numerous examples can be found on the Bretton Woods Project website: accessed 10 August 2018. See also Clark, Fox and Treakle (n 46); ‘Palm oil giant Wilmar resorts to dirty tricks’ (Forest Peoples Programme, July 2015) accessed 10 August 2018; Sarah Bedy, ‘Sufficient Recourse? Controversial Oil and Gas Projects in the Former Soviet Union and Recommendations to Improve the Compliance Advisor/Ombudsman Function of the World Bank Group’ (Crude Accountability, November 2011) accessed 10 August 2018; Dias (n 24). 53  Daniel, Genovese, van Huijstee and Singh (n 24). 54  Ibid. 48. 55  Ibid. 30–37.

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deemed eligible by IAMs were resolved. The nature and acceptability of those resolutions was not measured by the study. A qualitative analysis of recent complaint processes, those concluded between July 1 2014 and June 30 2015, did not yield much better results. While some communities reported positive elements of going through an IAMs process, like being heard by IAMs staff, few reported adequate redress and remedy, in large part due to the failure of the IFIs to take IAMs’ findings seriously and ensure that commitments are kept.56 To the contrary, several communities and complainants that have raised concerns have faced threats, intimidation, and reprisals.57 Another 2015 study commissioned by ACCESS Facility and conducted by the Columbia School of International and Public Affairs looked specifically at cases that had reached a negotiated agreement.58 The study starts with a sample of over 300 complaints from both IFI complaints mechanisms and OECD National Contact Points and narrows them based on three criteria: the case was accepted by the mechanism, the parties came to the table, and an agreement was reached. Applying these criteria left the authors with only seven cases to study, illustrating the limited success of the problem-solving approach. They selected two cases to study in-depth, including interviews with affected community members and participants in the negotiation. Though the authors do not specify whether the two in-depth case studies are from IAMs or NCPs, the results shed light on the effectiveness of problem-solving. The study found that problem solving adds value by raising awareness, creating space for dialogue, and providing opportunities for affected people to be heard. Despite agreements being reached in both case studies, however, community members highlight several procedural issues, including failures to address power imbalances between parties, ensure implementation, and provide monitoring of the negotiated agreement.59 Notably, the study found that community members expressed ‘clear opinions about the inadequacy of the remedy provided,’ particularly for those who did not directly participate in the negotiation. Over time community members realised the limited nature of remedy provided.60 The International Human Rights Clinic at Berkeley Law School produced a quantitative and qualitative analysis of CAO complaints in March 2017, drawing 56  Ibid. 60–70. 57  Human Rights Watch (n 38). 58  Fulton et al. (n 24). 59  Ibid. 300. 60  Ibid. 13, 24, 301.

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extensively from interviews with affected communities and civil society representatives. Their review of the first eleven years of the CAO complaints found that the CAO was not able to meet the expectations that it has created around accountability, in part because it lacks the ability to issue binding decisions or stop harmful projects. They also found that while the CAO had some success as a problem solver, in a majority of cases during the time period it studied, the CAO neither mediated a case nor conducted a compliance audit. Investigators also identified specific challenges in problem-solving, including the intractability of conflicts, imbalances of power, and differentiated outcomes based on the nature of the complainant and the wealth of companies involved.61 6

Recommendations for Cultivating a Robust Community of Practice

The rich relationship between IAMs, IFIs, civil society endures and grows with new challenges and opportunities. Examining the history of this relationship shows that there are times of crisis and significant reform, followed by periods of consolidation. The current moment can be considered one of crisis, with discontent among civil society, particularly regarding the effectiveness of remedy and accountability. Three primary recommendations emerge, principally aimed at IFIs to address limitations in IAMs’ processes that stand in the way of sustainable, poverty-reducing, and just outcomes for affected people and communities. Transparency has been a civil society demand even before the creation of the IAMs, and remains a foundational challenge in IFI accountability. Increased transparency is needed at all levels: information about projects and their impacts, in greater detail and well in advance of project approval; dissemination of information about the role of IFIs in projects and their social and environmental standards; adequate notification to affected people about the existence of IAMs and ways to access them and other forms of remedy; consistent and predictable disclosure of IAMs’ cases, their progress, and resolution. Improving transparency and disclosure will also begin to equalise the power imbalances that are a major impediment to IAMs effectiveness. An initial step toward facilitating greater transparency, as well as trust and collaboration, is better and more regular communication between IAMs and civil society around the world. The IAMs annual meeting provides a critical opportunity for IAMs staff to meet and speak with civil society, particularly those that are not based near IFI headquarters. Expanding this communication, particularly 61  Altholz and Sullivan (n 24).

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to include more CSOs from countries where projects are located, would foster important support for the relationship between civil society and IAMs. Independence is perhaps one of the most crucial elements in the effectiveness of IAMs. Building legitimacy and community trust relies heavily on the assurance of independence. In deciding on the best option available for addressing harms, communities often seek to understand the relationship between the IAM and the IFI that it is positioned within. The perception of interference, whether directly in decision-making or indirectly through pressure on resources and budgets, can raise doubts. Without independence of process, the legitimacy of findings and outcomes comes into question, potentially leading to protracted conflict. Both IAMs and civil society have reason to protect the IAMs’ independence and can find common cause in working to protect it. While IFI non-interference during investigations is critical for legitimacy, IFI responsiveness post-investigation is necessary in providing redress and remedy for the harm identified. IFIs have increasingly come under fire for failing to take adequate remedial action based on IAMs’ findings, or in some cases, even rejecting IAMs’ findings.62 Failure to provide remedy is a recurring critique of IAMs, one that is emerging as the most pressing area for action.63 IAMs have more than two decades of cases and experience, yet startlingly little to show by way of impact on the ground to improve the lives of communities affected by IFI investments. The oft-repeated critique that IAMs are a diversionary tactic without tangible outcomes or changes on the ground can appear affirmed by various qualitative and quantitative studies. The indirect benefits of IAMs’ processes have long been cited as a response to dissatisfaction with outcomes, but these secondary results are no longer sufficient for civil society demanding a rights-based approach that includes a right to remedy. Communities and local civil society are questioning the relevance of IAMs in their struggles for justice. Broad civil society support and engagement with IFIs and IAMs is unlikely if the failure of these bodies to provide remedy continues. Indeed, civil society’s frustrations have pushed many back to earlier tactics of protest, pressure on donor governments, and resorting to other avenues for remedy. Most notably, 62  For example, see Letter from IFC World Bank Group to MegTaylor (12 September 2013) accessed 10 August 2018. 63  See Daniel, Genovese, van Huijstee and Singh (n 24); Fulton et al. (n 24); Clark, Fox and Treakle (n 46). See also Daniel D. Bradlow and David B. Hunter, ‘Conclusion: The Future of International Law and International Financial Institutions’ in Daniel D. Bradlow and David B. Hunter (eds), International Financial Institutions and International Law (Kluwer Law International 2010) 391.

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some CSOs have used the US judicial system to overcome IFC immunity in an attempt to hold it accountable for social and environmental harm.64 The complainants in two lawsuits against the IFC had approached the CAO, which reported findings of non-compliance but resulted in little change for the affected communities. While the IFC had previously been successful in asserting its absolute immunity from judicial action, the US Supreme Court declared in a landmark 2019 decision that the IFC does not enjoy absolute immunity from suit in US courts.65 The complainants’ attempts to overcome IFC immunity faced an uphill battle, yet they pursued their case to the highest judicial body in the US in a determined quest for real remedy: binding decisions that can provide compensation and the opportunity for rehabilitation. While the existing accountability processes may require IFIs to respond by improving transparency or making minor reforms in implementation, real remedy would also foster fundamental and lasting changes in institutional behavior. It would bring all stakeholders in the IAMs community of practice closer to the shared goal of preventing harm and promoting development for communities around the world. 7 Conclusion The twin goals of accountability and improved development outcomes are best served when IAMs and civil society work together to achieve them. Civil society networks use complaint processes to protect the rights of communities, while also working to protect the IAMs from interference and dilution. In the pursuit of greater accountability, civil society also critiques IAMs and advocates for improvements, both in the mechanisms and the IFIs. The current moment of crisis at the IAMs, particularly with regard to providing remedy for affected communities, is an opportunity for concerted internal and external efforts to move closer to the goals that IAMs and civil society share.

64  See Jam v IFC and Doe v IFC: ‘Tata Mundra Coal Power Plant’ (EarthRights International) accessed 10 August 2018; ‘Honduran Farmers Sue World Bank Group for Human Rights Violations’ (EarthRights International) accessed 10 August 2018. 65   Jam v. International Finance Corporation, https://www.supremecourt.gov/opinions/ 18pdf/17-1011_mkhn.pdf.

chapter 13

Independent Accountability Mechanisms as Guardians of a Kaleidoscopic Legal Accountability Vanessa Richard 1 Introduction International Accountability Mechanisms (IAMs) of Multilateral Development Banks (MDBs) are peculiar creatures, which cannot be easily captured and put into a definite box. They are not tribunals. They cannot decide on compensating requesters. They are bodies of an international organisation. They are bound by a mandate born from the politics of their institution but are generally expected to act as an independent, unbiased balancing voice. All of them are given mandate to assess whether MDBs have significantly breached the environmental and social (E&S) standards they have adopted, resulting in harm caused to the affected people who submitted a request. One can therefore argue that they ensure a type of legal accountability of their institution. At the same time, except for one IAM, compliance review is but one of IAMs’ role, and both the legal nature and binding character of the concerned E&S standards are uncertain. All in all, they appear as an ‘unknown normative object.’ The research presented here is based on a four-year research program (2012– 2016) funded by the European Research Council: the ‘International Grievance Mechanisms and International Law & Governance’ (IGMs) project.1 The IGMs project intended to explore what can be seen as regulation and justiciability gaps in international law and decision-making, through an in-depth study of certain international mechanisms that seem to fill in some of these gaps. The project focuses on international grievance mechanisms which are not tribunals, but permanent international mechanisms created by non-binding international instruments, which nevertheless allow people affected or potentially affected to ask directly some entities – either public or not – to account for the impacts of their activities, when no or hardly any international responsibility / liability mechanism can be triggered. The studied grievance mechanisms include: 1  See generally IGMs Project accessed 1 February 2016.

© Koninklijke Brill NV, Leiden, 2020 | doi:10.1163/9789004337787_014

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– the Inspection Panel, the IAM of the World Bank’s International Bank for Reconstruction and Development (IBRD) and International Development Agency (IDA), created in 1993;2 – the Compliance Advisor Ombudsman (CAO), the IAM of the International Finance Corporation (IFC) and the Multilateral Investment Guarantee Agency (MIGA), created in 1999;3 – the Mecanismo Independiente de Consulta e Investigación (MICI), the IAM of the Interamerican Development Bank (IDB) and the Interamerican Investment Corporation (ICC), first created under the form of an Independ­ ent Inspection Mechanism in 1994;4 – the Accountability Mechanism (AM), the IAM of the Asian Development Bank (ADB), first created under the form of an Independent Function in 1995;5 – the Project Complaint Mechanism (PCM), the IAM of the European Bank for Reconstruction and Development (EBRD), first created under the form of an Independent Recourse Mechanism in 2003, and;6 2  ‘Operating Procedures April 2014 (with Annex 2 added in February 2016)’ (Inspection Panel at the World Bank) accessed 19 August 2018. The Inspection Panel will be referred to as the IPN. 3  ‘CAO Operational Guidelines’ (Compliance Advisor Ombudsman, 2013) accessed 10 August 2018. 4  The effective commencement of the ICC’s operations on 1 January 2016 has resulted in increased complexity as regards the MICI rules or procedure. The MICI IDB Policy of 17 December 2014 replaced the 2010 MICI Policy. Because of the take-off of the ICC, the Board adopted a second MICI Policy on 15 December 2015, that applies to the ICC’s operations (hereinafter the MICI ICC Policy), and amended the 2014 MICI IDB Policy. Thus, the MICI is bound by two sets of rules of procedures, depending on whether the case is related to a project supported by the ICC or the IDB. A preamble was added in the MICI IDB Policy to organize how the cases related to private projects that were managed by IDB should be handled. See ‘Policy of the Independent Consultation and Investigation Mechanism’ (Independent Consultation and Investigation Mechanism, 2015) accessed 10 August 2018; ‘Policy of the Independent Consultation and Investigation Mechanism of the ICC’ (Independent Consultation and Investigation Mechanism, 15 December 2015) accessed 10 August 2018. 5   ‘Operations Manual Bank Policies: OM Section L1/BP’ (Asian Development Bank, 24 May 2012) accessed 10 August 2018; ‘Accountability Mechanism Policy 2012’ (Asian Development Bank, 24 May 2012) accessed 10 August 2018. 6  ‘Project Complaint Mechanism: Rules of Procedure’ (European Bank for Reconstruction and Development, May 2014) accessed 10 August 2018.

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– the Independent Review Mechanism (IRM), entrusted to a Compliance Review and Mediation Unit (CRMU), the IAM of the African Development Bank Group (AfDB), created in 2004.7 The IAM of the European Investment Bank (EIB) was not included in this study as, until recently (late 2014 or early 2015), no proper registry of its cases was made available to the public, and its Complaints Mechanism is the only IAM who does not automatically disclose its documents. Such documents are only put online if the parties have agreed to it.8 In the framework of this research, the team has performed some sixty semi-directed, qualitative confidential interviews with complainants, persons who work or used to work for the above-mentioned IAMs, and persons who have participated in their creation or revision. In addition, the project’s team has created a database of IAMs’ cases.9 This research is primarily interested in cases that have led either to a full compliance review – sometimes called ‘audit’ or else ‘investigation’ depending on the language of the IAM – or at least to a compliance review assessment, that some IAMs conduct to check whether there are prima facie serious grounds for believing that the case deserves a compliance review. As of 1 September 2016, this database contains 157 cases.10 The exploration of the role IAMs play/could play/should play in global governance, performed in the framework of the IGMs project, resulted in highlighting the fact that the practice of MDBs’ international accountability 7   ‘Independent Review Mechanism: Operating Rules and Procedures’ (African Development Bank, January 2015) accessed 10 August 2018. 8   ‘Complaints Mechanism: Operating Procedures’ (European Investment Bank, 28 August 2013) accessed 10 August 2018. 9  ‘IGMs Cases Database’ (IGMs) accessed 1 February 2016. 10  All of the documents related to IAMs’ cases mentioned here are available on the corresponding IAM’s website. AM-CRP (the AM’s Compliance Review Panel): accessed 10 August 2018; CAO: accessed 10 August 2018; IPN: accessed 10 August 2018; IRM/CRMU: ‘Independent Review Mechanism’ (African Development Bank) accessed 10 August 2018; MICI: ‘The Independent Consultation and Investigation Mechanism’ (Inter-American Development Bank) accessed 10 August 2018; PCM: ‘Project Complaint Mechanism’ (European Bank for Reconstruction and Development) accessed 10 August 2018.

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mechanisms mobilises various aspects of what this chapter defines as ‘international legal accountability.’ The use of the notion of ‘legal accountability’ allows some legal thinking on certain transnational normative phenomena that a narrow, legalistic view would be unable to grasp. Although many authors do not distinguish between legal accountability and legal responsibility, a distinct notion of legal accountability is quite valuable when used to address issues that do not fit into the traditional categories of international law because of the source of the international instruments at play, the nature of involved actors, and/or the fact the situation does not fit into any territorial or personal jurisdiction. It is all the more important since the activities of modern international organisations cover an impressive range of matters: ‘in aggregate [international institutions] regulate and manage vast sectors of economic and social life through specific decisions and rulemaking.’ And yet, they are immune to liability unless they expressly agree differently (and they rarely do). International organisations such as MDBs therefore operate without having to render legal account to anyone for the adverse impacts of their activities.11 The notion of international legal accountability allows addressing questions such as: what of the justiciability of the internal rules adopted by international organisations, who are subjects of international law but hardly subject to it? The International Law Commission’s Draft Articles on the Responsibility of International Organisations (DARIOs) do not address this issue.12 The standards that MDBs apply are, according to the terminology of the DARIOs, ‘rules of the organization.’13 Their legal nature is debated and there is no consensus on whether they are part of international law or can only bind the organisation’s staff.14 Besides, Article 64 of the DARIOs specify that unless the lex specialis of the organisation provides otherwise, a breach of the rules of the organisation 11   See inter alia Matthew Parish, ‘An Essay on the Accountability of International Organizations’ (2010) 7 International Organizations Law Review 277. 12  Vanessa Richard, ‘Les organisations internationales entre responsibility et accountability : le régime de responsabilité esquissé par la CDI est-il adapté aux organisations internationales ?’ (2013) 1 Revue Belge de Droit International 190. 13   I LC, ‘Draft Articles on the Responsibility of International Organizations, with Commentaries’ (2011) Yearbook of the International Law Commission: Part Two, Art 2(b): ‘“rules of the organization” means, in particular, the constituent instruments, decisions, resolutions and other acts of the international organization adopted in accordance with those instruments, and established practice of the organization’. 14  See the debates presented in ILC, ‘Third report on responsibility of international organizations, by Mr Giorgio Gaja, Special Rapporteur’ (13 May 2005) UN Doc A/CN.4/5 [18]–[19]; Christiane Ahlborn, ‘The Rules of International Organizations and the Law of International Responsibility’ (2011) 8 International Organizations Law Review 397.

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can amount to an internationally wrongful act only if the rules ‘are part of international law’; what is more, ‘while the rules of the organization may affect international obligations for the relations between an organization and its members, they cannot have a similar effect in relation to non-members’.15 This rules out the idea that persons affected by the activities of international organisations can invoke this organisation’s international legal responsibility.16 Moreover, being international organisations, MDBs are covered by jurisdictional immunities and are extremely difficult to bring before a tribunal, even where their activities resulted in obvious violations of local or international law, including human rights norms.17 Recently, an international NGO, EarthRights International, has supported the lawsuit of three fishermen against IFC before the federal court in Washington DC. The complaint concerns the financing by IFC of the Tata Mundra Coal Power Plant in India.18 The complainants alleged that although the IFC’s own accountability mechanism (CAO) has found that part of the project does not comply with the IFC’s environmental and social safeguards,19 the IFC is not taking appropriate action to remedy the harm done to the local population. In March 2016, the judge decided that the IFC had not waived its immunity and, as a result, could not be liable and dismissed the

15   I LC, ‘Draft Articles on the Responsibility of International Organizations, with Commentaries’ (n 13) Commentary of Art 5(3). 16  Along the same line, see Armin von Bogdandy and Mateja Steinbrück Platise, ‘ARIO and Human Rights Protection: Leaving the Individual in the Cold’ (2012) 9 International Organizations Law Review 67. 17  See inter alia August Reinisch and Ulf A. Weber, ‘In the Shadow of Waite and Kennedy. The Jurisdictional Immunity of International Organizations, the Individual’s Right of Access to the Courts and Administrative Tribunals as Alternative Means of Dispute Settlement’ (2004) 1 International Organizations Law Review 59; Niels Blokker, ‘International Organizations: The Untouchables?’ in Niels Blokker and Nico Schrijver (eds), Immunity of International Organizations (Brill 2015) 1–17; United Nations Human Rights-Office of the High Commissioner, ‘Who will be Accountable? Human Rights and the Post2015 Development Agenda’ (United Nations 2013), accessed 2 March 2017. 18   I FC, Tata Ultra Mega, Project number 25797 (approved 8 April 2008) accessed 2 March 2017. 19   C AO, India / Tata Ultra Mega-01/Mundra and Anjar (CAO Audit Report, 22 August 2013). A complaint about the same project has also been filed with the Asian Development Bank’s Accountability Mechanism (AM), since ADB also finances part of it. The AM Compliance Review Panel (AM-CRP) has likewise found that the ADB had breached some of its environmental and social standards. See AM-CRP, India: Mundra Ultra Mega Power Project, Request 2013/1, CRP Final Report (issued 7 April 2015).

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case without oral argument.20 The plaintiffs are preparing an appeal.21 The ‘untouchability’ of MDBs is in stark contrast with the magnitude of the potential impacts of their activities on the ground and their power to influence the course of things. It makes accountability mechanisms all the more precious. IAMs are not tribunals and they do not look into the legal responsibility of MDBs. They are also distinct from the General Counsels of MDBs, who are entrusted with the mandate of giving legal advice to the bank. One of the core features of IAMs is that accountability is often not so much polarised on the violation of a norm than on harm, whether it has already occurred or might occur. The logic of IAMs’ accountability process is thus not rights-based but rather wrongs-based. For this reason, except for the Inspection Panel regarding public projects (and public-private partnerships) supported by the World Bank Group,22 all other IAMs articulate a problem-solving procedure with a compliance control procedure. Generally speaking, their role is threefold: – to assess, upon request of the people affected – or likely to be affected – by the bank’s activities, the compliance of the Management of the bank (Management) with its own internal rules, that is to say, with its policies and procedures inter alia related to the disclosure of information, environmental and social assessment, indigenous people rights. If Management is

20  United States District Court for the District of Columbia, Budha Ismail Jam et al. v International Finance Corporation, Civil Action No 15-612 (JDB) Memorandum Opinion, 24 March 2016 accessed 2 March 2017. 21  ‘Tata Mundra Coal Power Plant’ (EarthRights International) accessed 10 August 2018. See also Claire Provost and Matt Kennard, ‘World Bank Lending Arm Sees off Lawsuit by Indian Fishermen’ The Guardian (London, 30 March 2016) accessed 2 March 2017. 22  The 2014 review of the Inspection Panel’s Operating Procedures has introduced a highly controversial ‘pilot approach to support early solutions’ that aims at facilitating dialogue between Management and the complainants before registering the complaint. Though it is not supposed to prevent complainants to access the compliance control procedure if this dialogue fails, the first attempt resulted in some of the complainant seeing the compliance control path barred. See IPN Operating Procedures (n 2); IPN, Nigeria: Lagos Metropolitan Development and Governance Project (Pilot – Not Registered) Case 91 (complaint received 30 September 2013); ‘World Bank: Investigate Inspection Panel’s Pilot Approach to Early Solutions and Its Application in Badia East, Lagos, Nigeria’ (Amnesty International, 2 September 2014) accessed 2 March 2017.

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found not to be compliant, it does not result in the legal implication of the bank but it is expected to adopt corrective measures; – to offer redress for negative environmental and social impacts, based on a problem-solving approach tailored to the needs of the requesters, using techniques such as fact-finding, mediation, consultation, negotiation … Except for the IRM and MICI,23 the latest being the less accessible of all IAMs, access to problem-solving (sometimes called dispute resolution or consultation phase) is not conditioned by the fact that claimants allege a breach of the bank’s standards and; – to provide the bank with lessons learned from cases, including recommendations related to the changes in MDBs’ policies and procedures that would be needed to prevent future noncompliance situations. In this respect, CAO used to be the only IAM whose mandate expressly includes direct ‘advice to the President and IFC/MIGA on broader environmental and social issues related to policies, standards, guidelines, procedures, resources, and systems established to improve the performance of IFC/MIGA projects.’24 The recent revision of the AfDB’s IRM has given the CRMU the possibility to propose advisory services.25 As for the other IAMs, this ‘lessons learned’ function is not distinguished from their compliance review and/or problem-solving roles.26 The purpose of this chapter is to highlight the interplays at work between the specific purposes of IAMs – redress for affected people, better development assistance effectiveness etc. – and the various aspects of what is/could be/ should be international legal accountability. This chapter first explains the notion of legal accountability, drawing on the main existing analyses and typologies of accountability practices and on Jutta Brunnée’s definition. Under the angle of international legal accountability, the chapter shows that IAMs have strong normative components since they assess 23   M ICI IDB Policy and MICI ICC Policy (n 4) [24]; IRM Operating Rules and Procedures 2014 (n 7) [1] and [6]. Note that in the case of the IRM, the combination of paras 7(c) and 41 reveals that though formally the Operating Rules and Procedures require that the requesters ‘allege that an actual or threatened material adverse effect on the affected persons’ rights or interests arises directly from an act or omission of a member institution of the Bank Group as a result of the failure by the said institution to follow any of its own operational policies and procedures’ (para 1), the question of breach is not considered during problem-solving exercises. 24   C AO Operational Guidelines (n 3) [5.1.1]. 25   I RM Operating Rules and Procedures (n 7) [71]. 26   P CM Rules of Procedure (n 6) [44 (a)]; MICI IDB Policy and MICI ICC Policy (n 4) [61] MICI IDB; CAO Operational Guidelines (n 3) [1.2]; Accountability Mechanism Policy (n 5) [128 (vii)], [128 (viii)], [131 (xiii)].

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the behaviour of MDBs in the eyes of the standards the banks have adopted and take account of both the substance and intent of these standards, as well as the overarching ‘due diligence’, ‘supervision’ and ‘do no harm’ principles. Second, by cross-analysing the different levels of understanding of what are the general purposes of legal accountability with what are the purposes of IAMs more specifically, the contribution offers a panoramic view of how general and specific purposes intertwine and how IAMs contribute to the building of an international legal accountability of international institutions. 2

What Does ‘International Legal Accountability’ Relate to?

Accountability is widely used as a catchword for describing quite varied phenomena and is often mixed up with the concepts of participation and transparency.27 It has been defined as ‘a relationship between an actor and a forum, in which the actor has an obligation to explain and to justify his or her conduct, the forum can pose questions and pass judgment, and the actor may face consequences.’28 It then means: that policy-makers have to ‘give an account’ to accountability holders – publics or otherwise. This requires three things: (1) a set of standards to which they are held to account; (2) relevant information available to the accountability holders; and (3) the ability of the accountability holders to sanction the policy-makers.29 Based on different definitions which have been proposed and brought back to ‘concrete practices of account giving,’30 one can put forward that accountability is operative when the following components are gathered together: 27  R  ichard B. Stewart, ‘Remedying Disregard in Global Regulatory Governance: Accountability, Participation, and Responsiveness’ (2014) 108 American Journal of International Law 233; Richard Mulgan, ‘Accountability: An Ever-Expending Concept?’ (2000) 78 Public Administration Review 555; Jerry L. Mashaw, ‘Structuring a “Dense Complexity”: Accountability and the Project of Administrative Law’ [2005] Issues in Legal Scholar­ ship 17 accessed 2 March 2017. 28  Mark Bovens, ‘Analysing and Assessing Accountability: A Conceptual Framework’ (2007) 13 European Law Journal 447. 29  Robert O. Keohane, ‘Decisiveness and Accountability as Part of a Principled Response to Nonstate Threats’ (2006) 20 Ethics & International Affairs 221. 30  Bovens (n 28) 450.

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– Identifiable accountable entities (accounters); – Identifiable account-holders; – Standards by which the behaviour of accounters can be assessed; – A forum or a procedure that frames the assessment of this behaviour; – The assessment has an impact on the behaviour of the accounter (sanction, remedial measures, better performance).31 Hence, this chapter does not deal with the concept of accountability per se, but addresses issues related to the contours and role of international legal accountability mechanisms. Several taxonomies of accountability mechanisms have been elaborated. The classification of the types of accountability mechanisms is first and foremost based on the nature of the relationship existing between entities that are expected to account and account-holders. In addition, depending on the framework in which the typology has been drafted, the nature of those relationships is more or less varied because, in different domains, accounters and account-holders are different and have different kinds of relationship. For example, Mashaw proposes a taxonomy of ‘accountability regimes’ distributed in three domains: in the realm of ‘State Governance’, accountability regimes can be political, administrative or legal; in the realm of ‘Private Markets’, accountability regimes relate to products, labour or finance; in the realm of ‘Social Networks’, accountability regimes relate to the fact one belongs inter alia to a family, a profession or a team.32 Mashaw specifies that: Putting the characteristics of these accountability regimes into boxes or grids surely overstates the degree to which they are distinctive. In the real world, these ‘regimes’ flow and blend into each other in just about every imaginable way. Nevertheless, broad differences in kind are clearly distinguishable.33 31  Put differently:  “in any accountability relationship we should be able to specify the answers to six important questions: Who is liable or accountable to whom; what they are liable to be called to account for; through what processes accountability is to be assured; by what standards the putatively accountable behavior is to be judged; and, what the potential effects are of finding that those standards have been breached”  Mashaw (n 27) 17; see also Bovens, ibid. 452: ‘[a] relationship qualifies as a case of accountability when: 1. there is a relationship between an actor and a forum; 2. in which the actor is obliged; 3. to explain and justify; 4. his conduct; 5. the forum can pose questions; 6. pass judgment; 7. and the actor may face consequences’. 32  Mashaw (n 27) 27. 33  Ibid. 28.

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In mapping accountability, Bovens, whose work considers accountability as a social relation in the public sphere, proposes a classification which depends on whether accountability is based on the nature of fora (political accountability, legal accountability, administrative accountability, professional accountability, social accountability), the nature of actors (corporate accountability, hierarchical accountability, collective accountability, individual accountability), the nature of conducts (financial accountability, procedural accountability, product accountability) or else based on the nature of obligations (vertical accountability, diagonal accountability, horizontal accountability.)34 Analysing accountability mechanisms in the narrower realm of world politics, Grant and Keohane count seven kinds of accountability mechanisms: hierarchical, supervisory, fiscal, legal, market, peer, public-reputational.35 Stewart, who addresses accountability as a means to remedy the problem of disregard in global regulatory governance – that is to say the fact that ‘the present structures and practices of global regulatory governance often generate unjustified disregard of and consequent harm to the interests and concerns of weaker groups and targeted individuals’36 – specifies that accountability mechanisms exist on three conditions: (1) a specified accounter, who is subject to being called to provide account, including, as appropriate, explanation and justification for his conduct; (2) a specified account holder who can require that the accounter render account for his performance; and (3) the ability and authority of the account holder to impose sanctions or mobilize other remedies for deficient performance by the accounter and perhaps also to confer rewards for a superior performance by the accounter.37 Based on this definition, Stewart counts five types of accountability mechanisms (electoral, hierarchical, supervisory, fiscal and legal), that belong to two categories (the first four types in the first category, legal accountability mechanisms in the second). The first category is based on the fact that the relationship between the accounter and the account-holders involves ‘a delegation or a transfer of authority or resources … where the accounters are to act in the interest of the grantors/account-holders or designated third persons.’38 34  Bovens (n 28) 461. 35  Ruth W. Grant and Robert O. Keohane, ‘Accountability and Abuses of Power in World Politics’ (2005) 1 American Political Science Review 35–37. 36  Stewart (n 27) 211. 37  Ibid. 245. 38  Ibid. 246.

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The second category is characterised by the fact that it is triggered when the accounter is acting contrary to applicable law, applicable rules also providing for a legal remedy. All in all, as Jutta Brunnée states, ‘[i]nternational legal accountability, then, involves the legal justification of an international actor’s performance vis-à-vis others, the assessment or judgment of that performance against international legal standards, and the possible imposition of consequences if the actor fails to live up to applicable legal standards.’39 2.1 Judgement against International (Applicable) Legal Standards In a global regulatory governance context, it would be unrealistic to expect applicable legal standards to always be legally binding rules, i.e. rules provided for by instruments that belong to the traditional sources of international law. Huge areas of global regulation are governed by the so-called soft law.40 As Smith has stated ‘[t]he term “accountability standard” stands for predefined rules and procedures for organizational behaviour with regard to social and/or environmental issues that are often not required by law.’41 In the case of MdBs, these international legal standards are the ‘rule of the organization’, that is to say, depending on the bank’s vocabulary: operational policies (OPs), bank procedures (BPs), performance safeguards (PSs), performance requirements (PRs), operational safeguards (OSs). I – with others42 – contend that although these standards are not considered to be a source of international law, resolutions from the executive bodies of MDBs and policies adopted to frame MDB’s operations have an obvious normative dimension and constitute international legal standards against which the behaviour of MDBs can be assessed and in the eyes of which accountability can be triggered. Part of the IAMs’ mandate (and almost all of it in the case of the Inspection Panel) is to look into Management’s compliance with the institution’s standards. Generally speaking, IAMs are allowed to use only specific types of

39  Jutta Brunnée, ‘International Legal Accountability through the Lens of the Law of State Responsibility’ (2005) XXXVI Netherlands Yearbook of International Law 24 (emphasis in the original). 40  See inter alia Benedict Kingsbury, Nico Krisch and Richard B. Stewart, ‘The Emergence of Global Administrative Law’ (2005) 68 Law & Contemporary Problems 15. 41  Deborah Smith, Demonstrating Corporate Values: Which Standard for Your Company? (Institute of Business Ethics 2002) 21. 42  See inter alia Daniel D. Bradlow and Andria Naudé Fourie, ‘The Operational Policies of the World Bank and the International Finance Corporation Creating Law-Making and Law-Governed Institutions?’ (2013) 10 International Organizations Law Review 30.

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standards,43 which do not automatically apply to all of the MDBs’ activities. For example, the World Bank’s E&S standards apply to what they call ‘investment project financing,’ meaning operations related to specific, circumscribed projects (a dam, a road etc.) but not to ‘development policy lending’, which supports programs of policy and institutional actions and replaces structural adjustment loans and sectoral adjustment loans, or to the trust funds managed by the bank.44 The extent to which applicable standards are binding on MDBs’ staff is subject to seemingly endless debates, even from the viewpoint of the staff. In any case, this binding character is usually considered by MDBs’ Managements to result from practical considerations, rather than from any legally binding character. It first depends on the language of the concerned standards: the vaguer it is, the more Management has leeway in interpreting them. Second, the designation of the different kinds of standard indicates that some are considered to be more binding than others: Management seems to be expected to follow policies and procedures, while guidance notes, good practices and so on are only indicative.45 Early cases submitted to IAMs have given an opportunity to clarify a few things about the binding character of MDBs’ standards. The first Inspection Panel case, related to the Arun III Proposed Hydroelectric Project in Nepal, had given rise to a skirmish on Managements’ leeway in interpreting applicable standards.46 The Inspection Panel’s position in this regard was made clear in the Western Poverty Reduction Project case, also called the ‘Qinghai project’: During the course of examining some 20 projects over the past five years, the Panel has encountered certain differences in views among staff on just how the Bank’s operational policies and procedures should be applied…. [A] number of staff members felt that the Bank’s Operational Directives and other policies were simply idealized policy statements, and should be seen largely as a set of goals to be striven after. Others of equal or more senior rank disagreed with this view. They felt that this interpretation 43  For example, the global and sectoral Strategies of the MDBs cannot be used by IAMs. The CRMU however used AfDB’s handbooks, draft policies, and strategies to determine whether there was compliance with applicable standards in the Medupi case, without triggering any noticeable reaction from the Board: CRMU, South Africa: Medupi Power Project, Request 2010/2 (Compliance Review, 19 December 2011). It is unsure that the CRMU will have this leeway again in the future. 44  On the latter situation see IPN, Haiti: Haiti Mining Dialogue Technical Assistance, Case 100 (Notice of non-registration, 9 February 2015). 45  See Bradlow and Fourie (n 42) 18–20. 46   I PN, Nepal: Arun III Proposed Hydroelectric Project and Restructuring of IDA Credit, Case 1 (Management Response, 22 November 1994) 5.

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could render the policies virtually meaningless and certainly incapable of being employed as benchmarks against which to measure compliance…. [S]taff often pointed out that the policies allow for flexibility of interpretation. The decisions made on the specific matters were thus covered and in compliance. It was simply a matter of ‘judgement at Management’s sole discretion.’ … Other staff argued, however, that the policies are clear enough to distinguish areas that are binding from areas where some reasonable flexibility in interpretation is called for. Read in their entirety, the Panel feels that the directives cannot possibly be taken to authorize a level of ‘interpretation’ and ‘flexibility’ that would permit those who must follow these directives to simply override the portions of the directives that are clearly binding…. Faced with these widely divergent views among the staff, the Panel was forced to revisit its views on and experience with Bank policies and compliance. In the end, it returned to the approach reflected in its earlier reports. There is indeed room for some flexibility and interpretation but, as provided in the Resolution that established the Panel, the Operational Directives (and updated OPs, BPs, GPs, etc.) are the primary source of Bank policy for purposes of assessing compliance.47 Likewise, the second case before the Inspection Function of the ADB, which was then turned into the Accountability Mechanism, led the IAM of the ADB to vigorously affirm the limits of the leeway that Management has in interpreting applicable standards: Management said that ADB’s ‘internal laws’ were ‘not written as rule-based statutes but as operational principles that Staff should apply’ and that Management is called upon to make ‘evaluations and decisions about what is possible and ‘doable’ while adhering to the integrity and spirit of ADB’s internal laws.’ Management refers to its qualifications and capacity to make professional judgments…. Since the issue of professional judgment is referred to at great length and not inconsiderable reliance is placed on professional judgment as a reason for non-compliance with the Bank’s operational policies and procedures, the Panel feels obliged to explain at some length why it shares the General Counsel’s view that the ‘internal laws’ of the Bank are mandatory…. Good governance requires that the affairs of any organization should be conducted 47   I PN, China: Western Poverty Reduction Project, Case 16 (Investigation Report, 28 April 2000) [9]–[15].

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in an orderly and reasonably predictable way. This is usually ensured by a hierarchy of norms, including good practices, guidelines, instructions and policy-based operational procedures. Clues to identifying the importance of a norm and the expected level of compliance are ordinarily found in the manner of its formulation and expression and its source…. As far as ADB is concerned, it seems to the Panel that the greatest importance is attached to compliance with its procedures anchored in Bank policy and formally declared and prescribed by the Bank’s apex governing body – the Board. Their paramount importance and the nature of the compliance expected is reflected in their description as internal ‘laws’ of the Bank. Merely adhering to their ‘integrity and spirit’ is less than what is expected of those from whom obedience is expected…. Unless in the circumstances and to the extent prescribed by the Board expressly permitting departures and deviations, compliance is mandatory. There is no choice. It is not a matter for professional judgment as to whether there may or may not be compliance. The need for compliance is not based on any assumption of the qualifications or qualities of any person. It is based on a perceived need of the Board with regard to the conduct it has prescribed.48 It is important to note that, in addition to the substance of applicable standards, the behaviour of the institution is also assessed with regard to their spirit and intent and in the eyes of three overarching obligations: ‘due diligence’, ‘supervision’ and ‘do no harm.’ Due diligence refers to the fact that, when scoping and screening,49 the bank’s staff must act by taking all of the relevant data about the borrower/ client and the proposed project into account. For example, Management is expected to make sure that the borrower/client has the capacity to implement requirements.50 The EBRD’s PCM stressed for its part that:

48  Inspection Function’s ad hoc Inspection Panel, Pakistan: Chashma Right Bank Irrigation Project Stage III (Final Report, 10 June 2004) [68]–[72]. 49  Scoping and screening: when submitted with a funding proposal for a development project, the Management must evaluate the type of project (which sector/activities), its scale and proposed location, whether it is prima facie sensitive or likely to generate significant social and/or environmental impacts. This leads to categorizing the project, which in turn conditions the type and extent of the bank’s requirements as regards the environmental and social assessment, which is carried out by the borrower/client. 50  See for example CAO, Democratic Republic of Congo / Anvil Mining Congo, SARL-01/World Bank President Request (Audit Report, November 2005) [3.3.4].

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the requirements imposed upon EBRD under the Environmental Policy 2003 primarily amount to ‘due diligence’ obligations, comprising obligations as to conduct rather than as to result, and so the occurrence of actual harm of the type which the relevant obligation is designed to prevent will not be determinative of non-compliance on the part of the Bank…. Therefore, the fact that the Bank exercised appropriate due diligence and discharged its obligations under the Environmental Policy would generally amount to compliance, even in the event that harm nevertheless occurs.51 Supervision refers to the duty to make sure that the borrower/client complies with applicable environmental and social standards, and to take the necessary steps in case of non-compliance during the full lifecycle of the project. Thus, non-compliance may result from the fact that ‘key E&S issues identified by IFC in project supervision were not translated into corrective action plans’52 or: that IFC is not in a position to demonstrate either that its client’s monitoring is commensurate to risk (as required by PS1) or that its supervision allows it to meet the stated purposes of supervision as set out in the ESRPs: namely, the development and retention of information needed to assess the status of E&S compliance,53 or else that: [d]uring implementation, ADB did not act on early information from its own supervision missions on systemic problems with the functioning of the grievance redress process, and in particular the lack of capacity on the part of the government entities managing this process. Notwithstanding later efforts by ADB to address this issue, the omissions during the early stages of implementation resulted in noncompliance.54 Depending on the circumstances of each case, Management’s compliance with supervision obligations may consist in the fact ‘that Management responded 51   P CM, D1 Motorway Phase I (Slovakia), Case 2010/01 (Compliance Review Report, 11 May 2011) [59]. 52   C AO, Peru / Quellaveco-01/Moquegua (Investigation Report, 29 August 2014) 3. 53   C AO, India / Tata Ultra Mega-01/Mundra and Anjar (n 19) 5. 54   A M-CRP, Greater Mekong Subregion: Rehabilitation of the Railway in Cambodia Project, Request 2012/2 (CRP Final Report, 7 February 2014) [136].

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repeatedly and firmly and brought to the attention of the Borrower instances of non-compliance with social safeguards obligations.’55 Finally, the obligation to ‘do no harm’ directly stems from MDBs’ standards and, arguably, from the very mission of these development banks. For example, IFC’s Policy on Environmental and Social Sustainability states that ‘[c]entral to IFC’s development mission are its efforts to carry out investment and advisory activities with the intent to “do no harm” to people and the environment.’56 The ADB’s Safeguard Policy Statement provides that ‘[t]he goal of the Safeguard Policy Statement (SPS) is to promote the sustainability of project outcomes by protecting the environment and people from potential adverse impacts of projects’.57 The AfDB’s Integrated Safeguards Policy Statement indicates that the bank ‘recognises that human well-being in Africa depends on the quality of the environment and the sustainable use of natural resources. This is why it strives to ensure that Bank operations have no unintended adverse direct or indirect environmental or social impact on communities’.58 2.2 Justification vis à vis Others Accountability procedures concern ‘a much broader group of stakeholders than simply those who have formal authority over [the organisation].’59 Other bodies of the institution, member States, affected people and even civil society at large are involved one way or another. Regarding account-holders in particular, the perimeter of ‘affected people’ is more diffuse than one may think. First, ‘affected people’ are not restricted to those who have been identified by Management during the scoping and screening phase. In a number of cases, IAMs have found that the ‘area of influence’ of the project had been underestimated. As per the World Bank, the area of influence is:

55   I PN, Kenya: Natural Resource Management Project, Case 84 (Investigation Report, 22 May 2014) [16]. 56  ‘International Finance Corporation’s Policy on Environmental and Social Sustainability’ (International Finance Corporation, 1 January 2012) [9] accessed 10 August 2018. 57  ‘Safeguard Policy Statement’ (Asian Development Bank, June 2009) [1]. 58  African Development Bank Group’s Integrated Safeguards System: Policy statement and operational safeguard (African Development Bank Group, December 2013) 15. 59  Simon Burall and Caroline Neligan, ‘The Accountability of International Organizations’, (2005) 2 Global Public Policy Institute Research Paper Series 7, accessed 2 March 2017.

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[t]he area likely to be affected by the project, including all its ancillary aspects, such as power transmission corridors, pipelines, canals, tunnels, relocation and access roads, borrow and disposal areas, and construction camps, as well as unplanned developments induced by the project (e.g., spontaneous settlement, logging, or shifting agriculture along access roads).60 This ensures that IAMs are open to both affected people and people likely to be affected. If Management defines the area of influence too narrowly, some potential environmental and social impacts will not be assessed and no management or mitigation plan can be set up, thereby excluding some affected people.61 Likewise, in some cases, IAMs have revealed failures in the delineation of the scope of affected people from the beginning, mainly by not taking into account people who do not have an official title over the land where they live, lower castes, or ethnic minorities, and they have considered that some cases were eligible despite the fact the requesters were not part of the affected people identified by Management.62 Second, the conditions of access to IAMs are different from one IAM to another. While some retain a narrower definition of eligible people, others adopt a broader understanding of eligible stakeholders. For example, the MICI IDB Policy stipulates that ‘[r]equests may be filed by: … [a]ny group of two or more people residing in the country where a Bank-Financed Operation is implemented who are or anticipate being affected by such Operation’63 whereas the PCM Rules of Procedure provide that the following constitute affected people: 60  ‘OP. 4.01 Environmental Assessment’ (World Bank, January 1999) Annex A [6]. 61   I PN, China: Western Poverty Reduction Project (n 47); IPN, India: Mumbai Urban Transport Project (First Request) Case 32 (Investigation Report, 21 December 2005); IPN, Uganda: Private Power Generation Project, Case 44 (Investigation Report, 29 August 2008); IPN, Ghana: Second Urban Environment Sanitation Project, Case 49 (Investigation Report, 13 March 2009); CAO, Honduras / Dinant-01/CAO Vice President Request (Audit Report, 20 December 2013); CAO, India / Tata Ultra Mega-01/Mundra and Anjar (n 19). 62   I PN, Nepal: Arun III Proposed Hydroelectric Project and Restructuring of IDA Credit, Case 1 (Investigation Report, 21 June 1995); IPN, China: Western Poverty Reduction Project (n 47).; IPN, Congo, Democratic Republic of: Transitional Support for Economic Recovery Credit (TSERO) and Emergency Economic and Social Reunification Support Project (EESRSP) Case 37 (Investigation Report, 31 August 2007); AM-CRP, Mundra Ultra Mega Power Project (n 19); CRMU, Uganda: Bujagali Hydropower Project and Bujagali Interconnection Project, Request 2007/1, Compliance Review, 20 June 2008; MICI (IIM), Brazil – Cana Brava Hydroelectric Power Project, Investigation Report, 6 February 2006; CAO, Honduras / Dinant-01/CAO Vice President Request, ibid. 63   M ICI IDB Policy (n 4) [19 (e)].

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1.

One or more individual(s) located in an Impacted Area, or who has or have an economic interest, including social and cultural interests, in an Impacted Area, may submit a Complaint seeking a Problem-solving Initiative. 2. One or more individual(s) or Organisation(s) may submit a Complaint seeking a Compliance Review.64 Third, accountability vis à vis a wider group of stakeholders might also result from the interpretation that IAMs make of applicable standards. For example, the PCM reasoned in the Paravani HPP case this way: Firstly are ‘International NGOs (the terminology used in the complaint) a relevant stakeholder group and if so should the project information have been ‘accessible’ to them (i.e. in a language they could understand). In the view of the PCM expert this judgement must be related to the significance of the project…. So, even though the Paravani project is not ‘large’ in physical or power generation terms it has certain characteristics which make it ‘significant’…. In the context of such a project it is the PCM expert’s view that it would be inappropriate to tightly define the relevant stakeholders as those directly affected by the project (though these stakeholders are of primary importance) and it is a reasonable expectation of EBRD to ensure that such projects are accessible to the broader analysis that national and International NGO (and other) groups can bring…. The Paravani HPP (and transmission line) project is of local, national and some regional significance and EBRD should have ensured that the project ESIA – the core environmental and social document which sets out the projects impacts and was used for permitting purposes in Georgia and in securing International Financial backing –, was available and accessible for review by all legitimate stakeholders. This would include making it available in an internationally accessible language if reasonably requested to NGO groups.65

Finally, one must mention the fact that the CAO Vice President – the Chair of the IFC’s IAM – can initiate a compliance review ‘based on project-specific or systemic concerns resulting from CAO Dispute Resolution and Compliance casework’.66 It is the only IAM which is allowed to ‘self-trigger’ and this possibility shows that MDBs might also have to justify themselves vis á vis themselves. 64   P CM Rules of Procedure (n 6) 1. 65   P CM, Paravani HPP (Georgia) Case 2012/01 (Compliance Review Report, 1 January 2014) 39–41. 66   C AO Operational Guidelines (n 3) [4.2.1].

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Hence, concerns raised in the framework of the Celulosas de M’Bopicua (CMB) & Orion-01/Argentina & Uruguay case led CAO Vice President to commence a compliance audit related to internal due diligence issues, in order to ensure greater clarity in the implementation of social and environmental appraisal procedures by both IFC and MIGA.67 Following the AD Hydro Power Limited-01/ Himachal Pradesh case – that was addressed under the CAO’s Ombudsman (now called ‘dispute resolution’) role68 and that involved SN Power, a commercial investor and developer of hydropower projects that IFC and MIGA had supported several times – in December 2008 the CAO Vice President requested a compliance appraisal of IFC’s/MIGA’s due diligence and supervision of health and safety issues on all the projects in which SN Power was involved.69 Following the events of April 2010 in the Gulf of Mexico involving deepwater offshore exploration of oil and gas, the CAO Vice President initiated an investigation to assess IFC’s procedures and standards when appraising investments in deepwater off shore oil and gas exploration projects.70 In the Dinant case, the CAO Vice President initiated in April 2012 an appraisal of IFC’s investment in Corporación Dinant, in response to concerns raised in a letter received by the World Bank President in November 2010 and subsequent discussions between CAO and local NGOs.71 Findings in the Dinant case resulted in CAO Vice President initiating the Ficohsa case.72 Consequences If the Actor Fails to Live Up to Applicable Legal Standards Consequences are completely different from what would be expected from a tribunal and are conditioned to a number of considerations, some being common to all IAMs, others depending on their specific rules of procedure and on the special culture of each MDB and of each IAM. First of all, who is the accountable actor we are speaking of? The fact that IAMs are concerned with the sole MDB’s accountability is a common crucial point. IAMs do not investigate the borrower/client. It is inscribed in the rules of procedure of every IAM. In practice, however, the line is very thin between 2.3

67   C AO, Uruguay / Celulosas de M’Bopicua (CMB) & Orion-01/Argentina & Uruguay (CAO Audit of IFC’s and MIGA’s Due Diligence, 22 February 2006). 68   C AO, India / AD Hydro Power Limited-01/Himachal Pradesh (Request received 1 October 2004). 69   C AO, India / SN Power-01/CAO Vice President Request (CAO Appraisal: Case of IFC and MIGA involvement with SN Power with special focus on the Allain Duhangan Hydropower Project in India, 17 December 2009). 70   C AO, Ghana / Tullow Oil, Kosmos Energy & Jubilee FPSO-01/CAO Vice President Request (triggered 19 August 2010). 71   C AO, Honduras / Dinant-01/CAO Vice President Request (triggered 17 April 2012). 72   C AO, Honduras / Ficohsa-01/ CAO Vice President Request (triggered 21 April 2013).

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investigating the bank or the borrower/client. In order to check whether Management is compliant, IAMs must assess whether it has complied with its due diligence and supervision obligations vis a vis the borrower/client’s implementation of the safeguards. This possibly implies stating that the borrower/ client’s capacity was insufficient or did not deliver the environmental and social assessments and plans, as required, before the Board’s approval – which would trigger the due diligence obligation of Management –, or else that some measures necessary to comply with the safeguards have not been properly implemented by the borrower/client, which triggers Management’s supervision duty. Thus, IAMs have to look into the shortcomings of the borrower/client in order to make findings on Management’s compliance with applicable standards. Unsurprisingly, some borrower/clients, despite being told that their own accountability is not at issue, do not appreciate feeling investigated.73 In addition, the Executive Director concerned who sits in the Board, and possibly other Executive Directors who defend the same interests, sometimes take up the borrower/client’s ‘cause’ to such an extent that the Board ends up preventing the IAM from doing its job. This has resulted in the Board not authorising a compliance review despite the fact the IAM finds the complaint eligible,74 or agreeing to a compliance review but on conditions75 or else, in the end, rejecting the compliance review report.76 Second, what kind of consequences can be expected? IAMs’ mandates do not include the power to make decisions on the remedial actions that will be 73  See for example AM-CRP, Sri Lanka Southern Transport Development Project, Request 2004/1 (5th and Final Monitoring Report, 5 August 2011) [27]–[33]. Another example is China’s refusal to authorize an IAM to make a site visit, thus preventing the IAM to perform an important part of its fact-finding mission: AM-CRP, People’s Republic of China: Fuzhou Environmental Improvement Project (CRP Final Report, 21 October 2010). 74   M ICI, Bolivia – Santa Barbara-Rurrenabaque Northern Corridor Highway Improvement Program, Case BO-MICI001-2011 (Decision of the Board of Executive Directors, 22 December 2014); MICI, Brazil – Mario Covas Rodoanel Project – Northern Section 1, Case BR-MICI003-2011 (Decision of the Board of Executive Directors, 10 July 2013); MICI, Brazil – Mario Covas Rodoanel Project – Northern Section 1, Case BR-MICI005-2011 (Decision of the Board of Executive Directors, 10 July 2013); IPN, Brazil: Itaparica Resettlement and Irrigation Project, Case 9, (Request received 12 March 1997). 75   I PN, India: NTPC Power Generation Project, Case 10 (Investigation Report, 22 December 1997) (the Board authorised only a desk study and no on-site fact-finding mission); CRMU, South Africa: Medupi Power Project, Request 2010/2 (Revised Reassessment and Revision of the Terms of Reference for the Compliance Review, July 2011) (the Board refused that the sixth point of the complaint, which claimed that ‘the poor people will not benefit from the project’, be included in the compliance review’s terms of reference.) 76   M ICI, Paraguay – Program to Improve Highway Corridors in Paraguay, Case PR-MICI002-2010 (Final Decision of the Board of Executive Directors, 12 July 2013).

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implemented by Management in response to the IAM’s compliance review report. All IAMs make findings and some – the PCM, the MICI, the CRMU and the CAO – are also mandated to recommend remedial actions. These recommendations are primarily related to the case at hand, but they can also highlight the systemic changes that might prove necessary at the level of the bank, the need to clarify the procedures that Management applies for example. The compliance reviews of the Inspection Panel and the AM-CRP have ‘only’ fact-finding purposes;77 remedial actions are proposed by the Manage­ ment on the basis of the IAM’s findings.78 In any case, it is the Board of the MDB, composed of Executive Directors representing the shareholders (countries), or sometimes the President of the MDB,79 who has the power to decide on remedial actions. Depending on the institution, such power to make the final decision can be formal, as it is the case as regards CAO’s reports,80 or can give rise to internal debates that may end with the Board amending the recommendations81 or even rejecting the whole report.82 Moreover, all of the MDB’s IAMs except one have the power to monitor the implementation of the remedial actions approved by the Board on the basis of the compliance review report; the Inspection Panel was not granted any monitoring power, which can however be allowed by the Board on a case by case basis.83 77  It has lost its power to make recommendations in the latest version (2012) of its policy, but keeps its power to monitor the implementation of remedial actions. 78  See the Inspection Panel Operating Procedures 1994 in the Inspection Panel, Annual Report 1996–1997 (World Bank 1997) Annex 2 [52], [54] accessed 2 March 2017; IPN Operating Procedures (n 2) [63], [67]; Accountability Mechanism Policy (n 5) [79], [83]. 79   C AO Operational Guidelines, (n 3) [4.4.5]; IRM Operating Rules and Procedures (n 7) 1: the IRM ‘reports to the Boards of Directors of the Bank and Fund (collectively the “Boards”) on approved projects or to the President of the Bank Group (the “President”), on projects under consideration for financing by the Bank Group’. 80   C AO Operational Guidelines (n 3) [4.4.5]:  C AO will forward the Investigation Report and the IFC/MIGA response to the President. The President has no editorial input as to the content of the compliance Investigation Report, but may take the opportunity to discuss the investigation findings with CAO. Once the President is satisfied with the response by IFC/MIGA senior management, the President will provide clearance for the Investigation Report and the response. The President retains discretion over clearance. 81  It has happened for example in the Greater Mekong Subregion: Rehabilitation of the Railway in Cambodia Project case: AM-CRP, Request 2012/2 (Board’s Decision, 31 January 2014). 82   M ICI, Paraguay – Program to Improve Highway Corridors in Paraguay (n 76). 83  Lately the Inspection Panel has made a cautious move in the direction of monitoring and has negotiated with the Management some procedures which allow tracking the state of implementation of Management Action Plans in response to the Panel’s reports. See

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Panorama of Interplays between the Purposes of IAMs and Those of an International Legal Accountability

How do the purposes specific to IAMs intersect with this notion of international legal accountability, and what do these intersections say about how IAMs contribute to the building of an international legal accountability of international institutions? In the context of global governance and with the concept of global administrative law in mind,84 international legal accountability is expected to serve a number of general purposes geared towards ‘better governance.’ In short, this relates to the fact that international institutions, given their impact on society, have established, are establishing or should establish a number of procedural safeguards to ensure a certain threshold of normative quality/ legitimacy to the decisions they adopt,85 rooted in a conception of democracy with strong deliberative aspects.86 The International Law Association’s report on the Accountability of International Organisations87 identifies a set of Recommended Rules and Practices (RRPs) ‘derived from common principles, objectives and notions related to the accountability of IO-s and [which] reflect considerable practice.’88 These include the principle of good governance – which covers transparency, participatory decision-making process, access to information, well-functioning international civil service, sound financial management, and reporting and evaluation –, the principle of good faith, the principles of constitutionality and institutional balance, the principle of supervision and control, the principle of stating the reasons for decisions or a particular IPN Operating Procedures (n 2) Annex 2 ‘Enhancing Consultation with Requesters and Tracking Action Plans’; ‘Overview of Status of Implementation of Management Action Plans Prepared in Response to Inspection Panel Eligibility and Investigation Reports’ (World Bank Management, April 2016) accessed 2 March 2017. 84  See Chapter 3 in this book. 85  Benedict Kingsbury and Lorenzo Casini, ‘Global Administrative Law Dimensions of International Organizations Law’ (2010) 6 International Organizations Law Review 319. 86  See inter alia William Smith and James Brassett, ‘Deliberation and Global Governance: Liberal, Cosmopolitan, and Critical Perspectives’ (2008) 22(1) Ethics and International Affairs 69; Allen Buchanan and Robert O. Keohane, ‘The Legitimacy of Global Governance Institutions’ (2006) 20(4) Ethics and International Affairs 405; John Rawls, Political Liberalism (Columbia University Press 1993); Bernard Manin, ‘Volonté générale ou délibération. Esquisse d’une théorie de la déliberation politiqu’ [1985] Le débat 72. 87   I LA, ‘Accountability of International Organisations – Final Report’ (2004) accessed 2 March 2017. 88  Ibid. 8.

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course of action, the principle of procedural regularity, the principle of objectivity and impartiality, and finally the principle of due diligence.89 Considering this typology and applied to a ‘better governance’ of MDBs, international legal accountability mechanisms may obviously have both internal (to the institution) and external dimensions.90 General Purposes of International Legal Accountability in the Context of MDBs Regarding internal dimensions, IAMs inter alia contribute to: the rule of law within the institution,91 referring to whether decisions were made consistently with internal rules of decision-making and may be checked; transparency in decision-making and implementation of decisions; good checks and balances between Management and the Board; international institutions learning lessons from their successes and failures; reflexive decision-making and adaptive management of projects; reflexive law/standard-making; and rooting the idea that with power comes responsibility. Here ‘responsibility’ does not relate to any legal category or else to a moral responsibility stricto sensu for the choice one makes (I should have, they shouldn’t have etc.) In line with Hart,92 the source of this aspect of responsibility is located ‘upstream’ of all this and is not connected to the notion of guilt: you are responsible as soon as you are the one who has the choice, when you are the one who can decide. Such approach is besides much more consistent with what psychology has to say about being responsible for one’s own choices. Against the background of international accountability, it takes on additional flesh: 3.1

When we say that someone is responsible for something, we mean that it is up to them to take care of it. When we say that someone is accountable for something, we mean that they have an extra responsibility on top of this – a responsibility to be able to show that they have fulfilled their original responsibility. It is up to an accountable agent to be able to show that they have done what it is up to them to do…. An accountable agent is 89  Ibid. 8–5. 90  Alexandru Grigorescu, ‘Horizontal Accountability in Intergovernmental Organizations’ (2008) 22(3) Ethics & International Affairs 286; Edith Brown Weiss, ‘On Being Accountable in a Kaleidoscopic World’ (2010) 104 American Society of International Law 481. 91  Martin de Jong and Suzan Stoter, ‘Institutional Transplantation and the Rule of Law: How this Interdisciplinary Method Can Enhance the Legitimacy of International Organisations’ (2009) 2 Erasmus Law Review 311. 92  Herbert L. A. Hart, Punishment and Responsibility: Essays in the Philosophy of Law (1st edn, OUP 1968).

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accountable to some person or agency. Accountability has a ‘direction’–it points to those to whom one must give account.93 Of course, all of these internal dimensions of international legal accountability are interrelated. For example, ensuring the rule of law within the institution is very likely to promote transparency, and the rule of law and transparency both contribute to appropriate checks and balances between Management – those who run the operations of MDBs – and the Board – the MDBs shareholders’ executive body. Regarding the external dimensions of international legal accountability tools or mechanisms – i.e. related to interactions between MDBs and external actors – they very much mirror internal dimensions but are not identical. Here the principle ‘with power comes responsibility’ opens up on a ‘bottom-up accountability,’ triggered by those who are affected by the institution’s deeds.94 Checks and balances move to a conception where balance is to be made between those who have the decision-making power and those who bear the consequences of their decisions. This has to do with what Stewart calls the ‘problem of disregard’: [O]verall, the present structures and practices of global regulatory governance often generate unjustified disregard of and consequent harm to the interests and concerns of weaker groups and targeted individuals – referred to here as the problem of disregard. The disregarded include, for example, vulnerable poor communities inundated as a result of climate change, developing-country workers in global supply chain factories, sick people lacking access to essential medicines because of international patent-protection regimes, refugee claimants, individuals targeted for UN Security Council sanctions, and Haitians stricken by cholera due to UN peacekeepers’ negligence … accountability mechanisms [belong to those mechanisms] that substantially determine whose interests and concerns are given regard by global decision-makers.95 This is, in my opinion, a major expectation regarding the role IAMs play/could play/should play in global governance. In the same vein, an important external 93  Leif Wenar, ‘Accountability in International Development Aid’ (2006) 20(1) Ethics & International Affairs 5–6. 94  Edith Brown Weiss, ‘Bottom Up Accountability’ (2007) 37 Environmental Policy and Law 259. 95  Stewart (n 27) 211–212.

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dimension of international legal accountability mechanisms is that they provide access to a remedy in a context where no international legal liability can be triggered. In turn, being able to ask an international organisation to account for its behaviour is completely part of the participation of external stakeholders in the lifecycle of the decisions and standards adopted by this organisation. Affected people and, beyond, cause entrepreneurs, contribute to the creation and evolution of ‘shared understandings’ about the standards which must be complied with and thus to some kind of ‘interactional law’.96 Another interrelated dimension is that of transparency. International legal accountability mechanisms contribute to shed light on how – including rule of law considerations – and why decisions about development projects were designed and implemented the way they were. Not only is it a welcome source of information for affected parties, but it is also precious to anyone, researchers included, who want to know about the functioning of MDBs, which would otherwise remain hidden to all but insiders. Transparency, rule of law, participation are crucial for the legitimacy of or trust in the institution. The moral authority of an institution depends on the belief that it is legitimate by those who are to be governed by its rules or who support it…. Output legitimacy is achieved through a record of accomplishments that can be judged, on the whole, to be good – and, crucially, better than any feasible alternative institutional arrangements would have produced.97 Legitimacy is then interrelated with an ‘oversight responsibility’: the institution is responsible for ensuring that its officers act consistently with their obligations and, when they do not, takes appropriate measures to put an end to breaches.98 Other external dimensions of international legal accountability in the context of MDBs are related to the ‘do no harm’ principle and to development assistance effectiveness. 3.2 Cross-analysing the Specific Purposes of IAMs IAMs have been created to serve several purposes to varying degrees, depending on each MDB’s own culture. The exploration of their main specific roles 96  Jutta Brunée and Stephen J. Toope, Legitimacy and Legality in International Law. An Interactional Account (CUP 2010) 56–77. 97  Keohane (n 29) 219. 98  Definition adapted from Dennis F. Thompson, ‘À la recherche d’une responsabilité du contrôle’ (2008) 6 Revue française de science politique 933; see also Colin Scott, ‘Accountability in the Regulatory State’ (2000) 1 Journal of Law and Society 39.

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show that IAMs are at crossroads of different levels of understanding of what international legal accountability might bring to global governance. A first purpose specific to IAMs of MDBs is that they are aimed at finding case-by-case solutions, that is to say at addressing the specific harm of requesters. This is the reason why, as mentioned above, all of the studied IAMs except for the Inspection Panel provide for a problem-solving procedure. All interviews made in the framework of the IGMs project with people who sit or have sit in an IAM, or have participated in their creation or revision, mention that such case-by-case approach, which is not focused on issues of noncompliance, is clearly favoured by MDB’s Management. This specific purpose is related to the general purposes of international legal accountability which are development assistance effectiveness, the principle ‘with power comes responsibility’, addressing the problem of disregard and the overarching ‘do no harm’ principle. A second specific purpose is that IAMs are aimed at acknowledging when the institution failed to live up to its standards. Compliance reviews contribute to shed light on possible flaws in decision-making processes and in the way issues that arose during the design, appraisal and/or implementation phase of projects were handled by the institution. This intersects with the general purposes of international legal accountability that are the rule of law, trust/legitimacy, transparency, lessons learned, development assistance effectiveness and the principle ‘with power comes responsibility.’ Third, IAMs are aimed at bringing the institution back to compliance, with the adoption of remedial measures including, for all of IAMs but one, the monitoring of the implementation of these measures. This allows reflexive decision-making and adaptive management of projects, but only to a certain extent: the earlier in the lifecycle of the project are remedial measures implemented, the better. In a number of cases, a too narrow assessment of the area of influence of the project,99 failure to take account of cumulative impacts,100 99   I PN, China: Western Poverty Reduction Project (n 47); IPN, India: Mumbai Urban Transport Project (First Request) Case 32 (Investigation Report, 21 December 2005); IPN, Uganda: Private Power Generation Project (n 61); IPN, Ghana: Second Urban Environment Sanitation Project (n 61); IPN, Argentina: Santa Fe Road Infrastructure Project and Provincial Road Infrastructure Project (Third Request) Case 51 (Investigation Report, 2 July 2009); CAO, Honduras / Dinant-01/CAO Vice President Request (n 71); CAO, India / Tata Ultra Mega-01/ Mundra and Anjar (n 19). 100   A M-CRP, Mundra Ultra Mega Power Project (n 19); CRMU, Uganda: Bujagali Hydropower Project and Bujagali Interconnection Project (n 62); CRMU, South Africa, Medupi Power Project (n 43); MICI (IIM) Mexico – Termoeléctrica del Golfo Project (Investigation Report, 21 February 2003); MICI, Panama – Pando-Monte Lirio Hydroelectric Power Project, Case PN-MICI001-2010 (Compliance Review Report, 19 October 2012); CAO, India / Tata

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the use of outdated or lacking studies to establish baseline data101 have resulted in costly measures to bring back the project into compliance,102 measures that might also come too late to bring any kind of relief to affected people. This third purpose of IAMs also relates to the rule of law, development assistance effectiveness, legitimacy/trust, remedying the problem of disregard and the ‘do no harm’ principle. Fourth, IAMs are aimed at a better understanding and application of policies through their interpretation, so that policies are consistently and meaningfully applicable, especially when these policies are ‘too open-textured’103 and need to be fleshed-out. On the one hand, Management has more leeway in interpreting vague policies and, on the other hand, vague policies are more likely to give rise to an interpretation by IAMs which conflicts with or substantially curbs that of Management. This aspect of IAMs’ role is closely related to one Ultra Mega-01/Mundra and Anjar (n 19); IPN, Chad: Petroleum Development and Pipeline Project-Management of the Petroleum Economy Project-and Petroleum Sector Management Capacity Building Project, Case 22 (Investigation Report, 17 July 2002); IPN, Uganda: Third Power Project-Fourth Power Project and proposed Bujagali Hydropower Project, Case 24 (Investigation Report, 23 May 2002); IPN, Cameroon: Petroleum Development and Pipeline Project and Petroleum Environment Capacity Enhancement Project, Case 27 (Investigation Report, 2 May 2003); IPN, Uganda: Private Power Generation Project (n 61); IPN, Albania: Power Sector Generation and Restructuring Project, Case 46 (Investigation Report, 7 August 2009); IPN, South Africa: Eskom Investment Support Project, Case 65 (Investigation Report, 21 November 2011). 101   I PN, Paraguay/Argentina: Reform Project for the Water and Telecommunications Sectors, SEGBA V Power Distribution Project (Yacyretá) Case 26 (Investigation Report, 24 February 2004); IPN, Ghana: Second Urban Environment Sanitation Project (n 61); CAO, Honduras / Dinant-01/CAO Vice President Request (n 71); CAO, Honduras / Ficohsa-01/ CAO Vice President Request (CAO Investigation Report of IFC Environmental and Social Performance in relation to Investments in Banco Financiera Comercial Hondurena SA (Ficohsa), 6 August 2014); PCM, Boskov Most Hydro Power (FYR Macedonia) Case 2011/05 (Compliance Review Report, 1 January 2014); AM-CRP, Visayas Base-Load Power Development Project, Request 2011/1 (CRP Final Report, 11 April 2012). 102  Especially when shortcomings result in the wrong categorisation of the project, which has serious consequences over the type and stringency of applicable environmental assessment requirements: see Inspection Function’s ad hoc Inspection Panel, Pakistan: Chashma Right Bank Irrigation Project Stage III (n 48); AM-CRP, Kyrgyz Republic: CAREC Transport Corridor I (Bishkek-Torugart Road), Request 2011/2 (CRP Final Report, 9 August 2012); CAO, Brazil / Amaggi Expansion-01/IFC Executive Vice President (Audit Report, May 2005); CAO, Indonesia / Wilmar Group-01/West Kalimantan (Audit Report, 19 June 2009); CAO, Honduras / Dinant-01/CAO Vice President Request (n 71); IPN, China: Western Poverty Reduction Project (n 47); IPN, Pakistan: National Drainage Program Project, Case 34 (Investigation Report, 6 July 2006); IPN, Cambodia: Forest Concession Management and Control Pilot Project, Case 36 (Investigation Report, 30 March 2006). 103  Brunnée (n 39) 44.

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of the general purposes of international legal accountability which is reflexive law-making and to the ‘lessons learned’ dimension. From this point of view, lessons learned from IAMs’ cases do not benefit MDBs only. Future requesters and civil society organisations (CSOs) may also draw important lessons from IAMs’ findings. One shining example is the approach that AM-CRP adopted in dealing with the requesters’ allegations of human rights violations in the Greater Mekong Subregion: Rehabilitation of the Railway in Cambodia Project case. The request stated that: the harms suffered amount to violations of the ratified international treaty obligations that are binding of the Kingdom of Cambodia, including the International Covenant on Economic, Social and Cultural Rights, the International Covenant on Civil and Political Rights, and the United Nations Convention on the Rights of the Child, and specifically: The right to be protected from forced eviction … The right to adequate housing … The right to an affordable and adequate supply of water … The right to be free from discrimination … The right of every child to an adequate standard of living … The right of every child to the enjoyment of the highest attainable standard of health … The right of every child … to education … The right to an effective remedy.104 AM-CRP could not investigate these allegations since the invoked human rights could not be solidly attached either to a policy applicable to the project or to a provision of the loan agreement signed between Cambodia and the ADB.105 It however considered ‘that all the human rights allegations could be adequately addressed under applicable ADB safeguard policies’106 and established a table which shows how human rights allegations in this case could be invoked using applicable ADB standards.107 Depending on whether one sees the glass half-empty or half-full, one can regret that AM-CRP did not prove more daring or, conversely, one can rejoice that AM-CRP plainly formulated the recipe of how to turn human rights allegations into allegations directly related to applicable policies and thus, allegations that IAMs can investigate. The specific purpose of IAMs to allow a better understanding and a better application of standards also relate to the rule of law, ‘do no harm’ principle, development 104   A M-CRP, Greater Mekong Subregion: Rehabilitation of the Railway in Cambodia Project, Request 2012/2 (Request for Compliance Review, 28 August 2017) [94]. 105  Greater Mekong Subregion: Rehabilitation of the Railway in Cambodia Project (n 54) [255]. 106  Ibid. [254]. 107  Ibid. App 4.

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table 13.1 Tentative cross-tabulation of the specific purposes of IAMs and the general purposes of international legal accountability

IAMs specific purposes → General purposes of international legal accountability ↓

Case-by-case solutions

Do no harm Addressing the problem of disregard Development assistance effectiveness With power comes responsibility Rule of law Trust / Legitimacy Transparency Lessons learned Adaptive decision-making and management Reflexive law-making

X X X X X

Acknowledging the institution failed to live up to its standards

X X X X X X

assistance effectiveness, legitimacy/trust and transparency aspects of the general purposes of international legal accountability. Fifth, IAMs are aimed at enhancing the whole institution’s understanding of its impacts. They remind MDBs that they are not operating in a vacuum, either from the viewpoint that it is but one transnational actor among others, whose interests must also be taken into account, or else that they are not immune to what is expected by and from international/transnational law. This purpose intersects with considerations of adaptive decision-making and management, lessons learned, addressing the problem of disregard, rule of law, the ‘do no harm’ principle, the ‘with power comes responsibility’ principle, development assistance effectiveness, trust/legitimacy, and transparency. Finally, IAMs are more broadly aimed at enhancing the whole of the institution’s consistency: are the institution’s operations appropriate with regard to its overarching mission? Do they match its core purpose or vision? Are the paradigmatic shifts of the institution reflected into its operations or does the work of IAMs shed light on institutional loop-systems which prevent the institution to learn and adapt? This issue has obvious relationships with the lessons learned purpose, reflexive law-making, adaptive decision-making and

Independent Accountability Mechanisms as Guardians

Back to compliance using remedial measures

Better understanding Enhancing the and better application institution’s understanding of of policies its impacts

Enhancing the institution’s consistency

X X X

X X X

X X

X X X X X

X X X X X X

X

X

X X X X X X X X X

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management, rule of law, trust/legitimacy, the ‘do no harm’ and ‘with power comes responsibility’ principles, and the problem of disregard. 4 Conclusion One conclusion is that both IAMs and international legal accountability appear as kaleidoscopic. Depending on the angle under which one looks at them – do they contribute to development assistance effectiveness? To the promotion of the rule of law in global governance? The same components may offer different general pictures. It is also obvious that one cannot remove a component without destroying the kaleidoscope. IAMs must have a composite role if they are to ensure as many accountability objectives as possible. For example, finding case-by-case solutions to each case is a crucial role of IAMs in every respect. At the same time, this sole role does not clearly contribute either to promoting the rule of law within the institution or else to transparency. Even the ‘Trust/Legitimacy’ box, ticked in the below table, refers to a fragile kind of trust, in my opinion.

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One conclusion is therefore that, although problem-solving is very much favoured by Management and some Executive Directors, it should not be treated as the panacea. IAMs would achieve their full potential by facilitating case by case, concrete solutions which result as far as possible in requesters being better off, together with performing compliance reviews if the screening phase of the request’s eligibility suggests that the case raises serious compliance issues, irrespective of whether the problem-solving side of the case is successful or not. Likewise, at the other end of the ladder, the turmoil which resulted from the Inspection Panel’s ‘pilot approach to support early solutions’108 emphasises that, beyond the very real issue of the adequacy of this procedure’s design, an international accountability mechanism whose mandate is limited to strict compliance review, without any built-in problem-solving role and any monitoring power, risks ending up engulfed by the frustrations of requesters, CSOs and Management all at once. IAMs then appear as kaleidoscopic guardians of a kaleidoscopic legal accountability. The fact that they are too often the only accountability mechanism available to affected people puts a lot of pressure and emphasis on this ‘guardian angel’ role. Indeed, the IGMs’ project cases database and interviews show that, in most cases, it is the last resort mechanism, because of a lack of effective remedies – whether amicable or judicial – at project, local and national levels.109 IAMs are expected by those affected to be a forum where they can voice their concerns, obtain information and/or expected to do something: stop the project, alleviate adverse impacts, force the borrower/client to compensate for the harm done … Advocacy organisations expect them to play both the role of a(n independent) white knight and that of a watchdog (with teeth).110 And, more often than not, it is also seen by Management as the ‘big bad wolf’ to end the chapter.111 108   I PN Operating Procedures (n 2). 109  In all the cases about which the IGMs project’s team has interviewed complainants, this point has been clearly mentioned. 110  See for example over a more than 10 year-time span: Dana Clark, Jonathan Fox, and Kay Treakle (eds), Demanding Accountability: Civil-Society Claims and the World Bank Inspection Panel (Rowman and Littlefield 2003); Caitlin Daniel, Kristen Genovese, Mariëtte van Huijstee and Sarah Singh (eds), ‘Glass Half Full? The State of Accountability in Development Finance’ (SOMO, January 2016). 111  As plainly put by Alistair Clark, Managing Director, Environment and Sustainability Department of the EBRD, during the Open Symposium on the Practice of Independent Accountability Mechanisms (IAMs), organised by the Project Complaint Mechanism of the EBRD (EBRD Headquarters London, 17 September 2014). See also Jean Aden, ‘Summary of Targeted Discussions with Bank Management’ (World Bank 2011), accessed 2 March 2017.

chapter 14

Independent Accountability Mechanisms: Promotion of Standards, Good Governance and Accountability Suresh Nanwani and Owen McIntyre 1 Introduction Since 1993, international accountability mechanisms (IAMs) have been established by the following international financial institutions (IFIs) to handle problem projects which adversely impact on people: the World Bank (International Bank for Reconstruction and Development [IBRD] and International Development Association [IDA]); International Finance Corporation; Multilateral Investment and Guarantee Agency; and the regional development banks.1 The mandate of these mechanisms is primarily to address the concerns of affected peoples, improve the quality of projects, and enhance good governance and accountability. In the next section, five project case studies will be analysed on the extent of promotion of standards, good governance, and accountability. In these case studies, claims for four projects were filed with the accountability mechanisms at the World Bank and ADB; and in the fifth case study, there was no claim filed with any IFI accountability mechanism but the financing institutions took a strong stance on project cancellation pursuant to their anticorruption policies. The outcome and impact of the decisions taken by the institutions will also be considered on whether these IAMs or IFIs play a purposeful role in ensuring that institutional development effectiveness is achieved. The following section discusses the potential role of IAMs in the elaboration and promotion of standards of good environmental and social governance through progressive interpretation and application of novel and emerging requirements of environmental and social protection, which tend to be incorporated early into MDB safeguard policies. The chapter concludes with measures that can be taken by these IFIs to better address promotion of standards, good governance, and accountability. 1  These regional development banks are the African Development Bank (AfDB), the Asian Development Bank (ADB), the European Bank for Reconstruction and Development (EBRD), and the Inter-American Development (IDB).

© Koninklijke Brill NV, Leiden, 2020 | doi:10.1163/9789004337787_015

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Case Studies of Five Projects

Electricity Expansion Project, Kenya Filed with the World Bank Inspection Panel The request in the Electricity Expansion Project, Kenya (KEEP) was filed with the World Bank Inspection Panel (WBIP) in 2014 by member and representative of a Maasai community resettled in the project area under the geothermal power generation component of the project. The complaint related to harm caused to the Maasai people as a result of resettlement required by the geothermal power plant and the complaint alleged that four Maasai villages were resettled near the plant which affected their livelihoods and traditional life style. The WBIP entered into a memorandum of understanding with the European Investment Bank Complaints Mechanism (EIB-CM) as the EIB accountability mechanism also received two complaints relating to the project and raising similar concerns. The purpose was to coordinate joint processing of these complaints in the interests of efficiency and effectiveness, while ensuring that the cooperation would be subject to the policies and procedures of the respective institutions. The WBIP carried out an investigation focusing on four main issues: (i) indigenous peoples and physical cultural resources; (ii) resettlement process; (iii) socioeconomic impacts of resettlement; and (iv) supervision and monitoring. The WBIP found the World Bank to be compliant with the policy on physical cultural resources but non-compliant with the indigenous peoples policy and involuntary resettlement policy, as well as having insufficient capacity to deal with the complex issues arising out of the resettlement activities under the project resulting in inadequate supervision of resettlement activities and insufficient monitoring.2 On non-compliance with the indigenous peoples policy, the WBIP was of the view that applying this policy to the Maasai people might have avoided some of the harms caused by the project as applying this policy ‘could have provided for the contribution of Maasai-specific expertise which would have resulted in a higher standard of consultations, a better culturally compatible resettlement approach, and discussion on generation and sharing of additional benefits.’3 2.1

2  ‘Kenya Electricity Expansion Project (P103037) Investigation Report (Report No. 97705-KE)’ (World Bank Inspection Panel, 2 July 2015) vi and vii accessed 21 August 2019. 3  ‘Case description of Kenya Electricity Expansion Project’ (World Bank Inspection Panel)  accessed 27 February 2016.

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On the non-compliance with the involuntary resettlement policy, the panel ‘determined that the process for identifying eligible PAPs [project affected persons] was unsatisfactory, there were delays in the provision of land title and some infrastructure at the resettlement site, and livelihood restoration measures were insufficient.’4 In its Investigation Report, the WBIP noted the positive attributes of the resettlement in the Olkaria project area as a model and the efforts made by the World Bank Management and KenGen (Kenya Electricity Generating Company Ltd, the implementing agency for the project component on geothermal power generation) in coordination with the Ministry of Energy (having responsibility for overall project coordination) with several actions identified such as the introduction of participatory structures like the Resettlement Action Plan Implementation Committee (RAPIC) under the project. The WBIP noted that by ‘redressing harms and incorporating lessons learned, the model initially envisioned could still be realized’ such as redressing harms to project affected persons through livelihood restoration measures with a focus on the most vulnerable segments.5 The WBIP also noted in its Investigation Report that the EIB-CM was initiating a mediation effort among the parties aimed at building trust and agreeing on solutions. The World Bank Management response to the WBIP’s Investigation Report is particularly instructive. It noted that the investigation process was ‘exceptional’ as it was jointly done by the WBIP and EIB-CM. It also noted that different approaches ensued from the investigation by the WBIP and EIB-CM. Under the WBIP process, Management was required to propose actions to address panel findings of noncompliance for the consideration of the Board of Executive Directors, while under the EIB-CM process, the EIB had started a mediation process at the request of KenGen ‘with the aim of agreeing with the [r]equesters on remedial actions.’6 The World Bank Management stated that the different approaches by the World Bank and EIB ‘result in a situation where it is neither feasible nor constructive for World Bank Management to develop a separate action plan and consult on such a plan with the [b]orrower and the

4  Ibid. 5  World Bank Inspection Panel, Kenya Electricity Expansion Project (P103037) Investigation Report (Report No. 97705-KE) (n 2) vii. 6  ‘Management Report and Recommendation in response to the Inspection Panel Investigation Report on Kenya Electricity Expansion Project (Credit No P103037) (INSP/97705-KE)’ (World Bank, 17 September 2015) 19 accessed 21 August 2019.

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[re]questers’7 as this would result in (i) duplicating the ongoing EIB-sponsored mediation process which was covering the same issues; (ii) the likelihood of confusion for the requesters with two parallel processes; and (iii) having the borrower to address two sets of action plan requirements for the same issues in the same project. The World Bank Management proposed that the World Bank participate in the EIB-sponsored mediation process ‘in order to minimize any mutual interference and to achieve the required outcome, i.e., addressing the issues noted in the Panel’s findings’ and to ‘achieve the goal intended by the Panel Resolution [the resolution by the World Bank Board of Executive Directors establishing the WBIP], which is to address adverse impacts resulting from policy non-compliance.’8 The role to be played by the World Bank would be a co-facilitator in the mediation process supported through the World Bank’s Grievance Redress Service with the World Bank and EIB entering into a memorandum of understanding between the World Bank and EIB-CM (MOU). In the proposed MOU, the parties have identified that their collaborative efforts will focus on specific areas including the following: identification of project affected persons; consultation, participation and grievance redress; adequacy of resettlement site and related infrastructure; and livelihood restoration measures.9 The outcome of the Board of Executive Directors discussion of the WBIP investigation of KEEP was that the board ‘approved the World Bank’s participation in the mediation process and welcomed the Bank’s commitment to work through mediation to resolve outstanding issues.’10 From the EIB-CM’s side, an initial assessment report was issued in June 2015, following its mission to Kenya with the WBIP to ‘clarify the allegations and define the future course of action’11 with respect to the two complaints it received, and the EIB-CM proposed a ‘problem solving approach concerning the issues related to restoration of livelihoods and the effectiveness of the

7  Ibid. 8  Ibid. 19–20. 9  Ibid. 20, Annex 4. 10  ‘World Bank Board Approves Mediation to Resolve Issues In Kenya Inspection Panel Case’ (World Bank, 23 October 2015) accessed 29 September 2018. 11  ‘Initial Assessment Report: Olkaria I and IV, Kenya – Complaint (Complaint SG/E/2014/07 and Complaint SG/E/2014/08)’ (European Investment Bank-Complaints Mechanism, June 2015) 5 accessed 29 September 2018.

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[g]rievance [m]echanism [under the project].’12 The EIB-CM case registry shows that the case is presently in the mediation stage.13 The outcome of the WBIP investigation is that there was no specific action plan presented by the World Bank management as what was proposed was the Bank’s participation as co-facilitator and that Management would work with KenGen on the four identified Panel findings which were specifically covered in the MOU as areas where both the World Bank and EIB-CM would work on. Within one year from Board discussion (by October 2016), the World Bank Management will present the results of the mediation and an action plan for its approval. In this claim, it was fortunate that the complaints were similar in both institutions, and both institutions found it suitable to collaborate together to redress the harms caused to the project, applying their own policies and procedures. If the findings had been different, it would have been interesting to see the course of action plan proposed by the World Bank’s Management. Also, what is unusual about the outcome is that the World Bank is now the ‘co-facilitator’ with the EIB in the mediation process on the remedial actions, supported by the World Bank’s GRS14 which is at the forefront of World Bank operations where further reference can be made to the WBIP for unresolved project concerns. The GRS ensures that complaints are being promptly reviewed and addressed by the responsible units in the World Bank and the objective is to make the World Bank more accessible for project affected communities and to help ensure faster and better resolution of project-related complaints, and where parties may have access to the WBIP after exercising their access under the GRS. How the World Bank will act as a co-facilitator in a project brought about by violation of its policies and by inadequate supervision and monitoring is unique. It could have been open to an independent third party to act as co-facilitator for objective purposes but that was not the case here. The World Bank’s role as co-facilitator here is on unchartered waters and the manner of its co-facilitation will be a challenge for the institution. Nevertheless, the claim had positive results arising from a combined and collaborative approach by two institutions in working together to redress harm and through this approach, also result in a process that is not confusing for the affected 12  Ibid. 17. 13  See  accessed 27 February 2016. 14   ‘Grievance Redress Service’ (World Bank) accessed 27 February 2016.

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peoples, the government, and implementing agencies in working with different co-financiers on the same problems. In terms of process, the outcome in this claim is better than in the Bujagali Hydropower Project claim filed with both the WBIP and the AfDB Independent Review Mechanism. In the Bujagali claim, both entities had also entered into an MOU to carry out joint investigation, subject to the policies and procedures of the respective institutions. While there were violations of policies such as involuntary resettlement found by the two entities, the outcome at the World Bank was that Management provided the Board with an annual progress report (the fifth was issued in December 2015 and the sixth is due this year)15 whereas the outcome at the AfDB was that the panel issued the Board with monitoring reports (the last monitoring report was issued in September 2012).16 In this instance, there is a continued working relationship between the World Bank and EIB on the monitoring of outcomes, and that is more responsive to the project concerns raised by the claimants. Transport Sector Development Project – Additional Financing, Uganda Filed with the World Bank Inspection Panel A request was filed in September 2015 with the WBIP under the Transport Sector Development Project – Additional Financing (AF), Uganda. Under the AF, an IDA credit for US$75 million equivalent was approved by the World Bank in 2011 and the project objectives were the same as under the original project to (i) improved condition of national road network; (ii) improved capacity for road safety management; and (iii) improved transport sector and national road management.17 The AF provided funding for (i) upgrading and rehabilitation of the Kamwenge-Fort Portal (66 km) road to bitumen standard and, (ii) technical assistance for strengthening the internal audit functions of Uganda National Roads Authority (UNRA), the project implementing agency. The World Bank partnered with AfDB to finance the 209-km road from Nyakita to Fort Portal, with the World Bank financing the 66-km section from Kamwenge to Fort Portal NRA, which was the subject of the request. 2.2

15  See Case Tracker of Uganda: Private Power Generation Project (World Bank) accessed 27 February 2016. 16  See registry of Uganda: Bujagali Hydropower Project and Bujagali Interconnection Project (African Development Bank) accessed 21 August 2019. 17  ‘Project Paper on Proposed Additional Credit for the Transport Sector Development Project (Credit 4679-UG) (Report No: 59825)’ (14 May 2011) 2.

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An earlier request on the same project was filed in December 2014 but the WBIP determined that the World Bank Management was not aware or the concerns raised by the request and did not register the request and forwarded the request to management so that it could have the ‘opportunity to address these concerns’.18 These concerns in the first request filed by local community members in the project area were restated in the request filed in September 2015 by three members of the local communities in the project area. The requesters claimed they were dissatisfied with the bank’s actions in response to their earlier concerns, asked to keep their identities confidential, and designated a local civil society organisation (CSO), Joy for Children Uganda (JFCU), to act on their behalf. The requesters restated the allegations previously raised, including sex with minors and teenage pregnancy by road workers, increased sex work, the spread of HIV/AIDS, sexual harassment of female employees, child labour, school dropouts, lack of compensation and inadequate compensation, fear of retaliation, lack of participation, poor labour practices, and lack of adequate road and workplace health and safety measures. The WBIP registered the request in September 2015 and a Management response was due in October 2015, as provided under the WBIP Operating Procedures. Management requested two extensions till December 2015 due to removal of a substantial number of staff from UNRA and the ‘serious issues identified concerning the performance of the Project’s contractor’.19 From January to August 2015, the World Bank fielded five supervision missions in response to the first request filed in December 2014; in October 2015, the World Bank suspended project financing; and in November and December 2015, the World Bank fielded two missions, before issuing the Management response on 18 December 2015.20 The WBIP visited the project site from 18 to 21 December 2015 and on 21 December 2015, the World Bank cancelled the project,21 followed by suspension of two additional projects in Uganda. 18  ‘Report and Recommendation on Request for Inspection, Republic of Uganda Transport Sector Development Project – Additional Financing (P12109) (Report No. 102478-UG)’ (Inspection Panel, 8 January 2016) 1 accessed 21 August 2019. 19  Ibid. 2. 20  ‘Management Response to Request for Inspection Panel Review of the Uganda Transport Sector Development Project – Additional Financing (P121097)’ (17 December 2015) 62 accessed 21 August 2019. 21  ‘World Bank Statement on Cancellation of the Uganda Transport Sector Development Project’ (World Bank 21 December 2015) accessed 27 February 2016. 22  ‘Report and Recommendation on Request for Inspection, Republic of Uganda Transport Sector Development Project – Additional Financing’ (n 18). 23   ‘Republic of Uganda: Transport Sector Development Project – Additional Financing (P121097) Investigation Plan’ (Inspection Panel, 1 February 2016) 21 August 2019. 24  The Albertine Region Sustainable Development Project and the North Eastern RoadCorridor Asset Management Project. 25  ‘Report and Recommendation on Request for Inspection, Republic of Uganda Transport Sector Development Project – Additional Financing’ (n 18) 17.

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risks in other parts of the [its] programs in Uganda and other countries;’26 and (3) ‘commission its own review of the project, which will include a focus on Bank supervision’.27 Third, the WBIP will carry out an investigation into the alleged issues of harm and compliance on (1) harms of a sexual nature (including sex with minors and teenage pregnancies, spread of sexually transmitted infections [STIs], increased sex work, and sexual harassment); (2) involuntary resettlement and compensation; (3) road design, access and safety; (4) occupational health and safety, and child labour; (5) consultation and grievance redress; and (6) supervision and the bank’s response.28 In the Management Response of 17 December 2015, Management noted that supervision had been insufficient: While Bank supervision focused on addressing many of the complex environmental and resettlement related issues facing the Project, far less attention was devoted to monitoring and addressing the risks to girls from the conduct of road workers, until they were flagged in the December 2014 complaint. Bank supervision did not take adequate steps to monitor and ensure that the mitigation measures related to the risks of sexual misconduct identified in [Environmental and Social Impact Assessment (ESIA)] were implemented, and should not have allowed for civil work to commence in the absence of site specific mitigation measures that would have been provided in an adequate Contractor’s [Environmental and Social Management Plan (ESMP)].29 The ESIA identified a higher incidence of illicit and unsafe sexual behaviour as distinct risks arising from the influx of road workers into the community, and it included an ESMP with broad mitigation measures to address these risks. The Management Response noted that the World Bank had conducted 11 missions to review the issues raised following the December 2014 complaint letter filed with the WBIP; and that determining the factual basis of the allegations related to sexual misconduct of workers was extremely difficult, in 26  ‘World Bank Statement on Cancellation of the Uganda Transport Sector Development Project’ (World Bank 12 December 2015) accessed 27 February 2016. 27  Ibid. 28  ‘Republic of Uganda: Transport Sector Development Project – Additional Financing (P121097) Investigation Plan’ (n 23). 29  ‘Management Response to Request for Inspection Panel Review of the Uganda Transport Sector Development Project – Additional Financing’ (n 20) 9 (emphasis added).

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part because the missions ‘encountered continuous reluctance on the part of many community members and officials to discuss such issues.’30 Through the missions, and the engagement of specialised social development consultants in April 2015, the World Bank concluded that ‘there is credible evidence of at least three cases of Project road workers engaging in sexual misconduct with minors, one of which has resulted in a pregnancy’.31 The WBIP itself recognised in its report and recommendation on the request dated 8 January 2016 of the ‘extreme sensitivity and complexity of this issue [that is, the complaints related to harms of a sexual nature, including teenage pregnancy, early marriages, sexual harassment and spread of HIV/AIDS and STIs] and note[d] the difficulty of discussing it overtly.’32 In its investigation plan, the WBIP has stated it will be assisted by three experts, including an expert on child protection and gender issues with experience in dealing with children facing trauma, and that its investigation will be conducted in three phases from January 2016 to July 2016 before its investigation report and Management response are discussed by the World Bank’s Board of Executive Directors.33 The candid disclosure by the World Bank President issued in the statement on the cancellation of the project indicates an open admission of lapses of proper supervision and at the same time, a commitment to learn from failures so that they do not happen again: ‘[t]he multiple failures we’ve seen in this project – on the part of the World Bank, the government of Uganda, and a government contractor – are unacceptable,’ and that it is: [the World Bank’s] obligation to properly supervise all investment projects to ensure that the poor and vulnerable are protected in our work. In this case, we did not. I am committed to making sure we do everything in our power – working with other stakeholders – first to fully review the circumstances of this project and then to quickly learn from our and others’ failures so they do not happen again.34 The WBIP process and the World Bank’s internal review done at the same time highlight the seriousness of the actions taken by the institution – by 30  Ibid. v. 31  Ibid. 32  ‘Report and Recommendation on Request for Inspection, Republic of Uganda Transport Sector Development Project – Additional Financing’ (n 18) 12. 33  Ibid. 6. 34  ‘World Bank Statement on Cancellation of the Uganda Transport Sector Development Project’ (n 21).

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Management on the one hand and by the WBIP on the other – but may cause confusion to stakeholders who would be subject to the reviews and investigations and may have different comfort levels in communicating with Management and WBIP. However, the speedy efforts taken by the institution highlight the organisation’s imperative to promote good governance and accountability in its operations. CAREC Transport Corridor I (Bishkek-Torugart Road) Project 1, Kyrgyz Republic Filed with the ADB Accountability Mechanism The claim in the CAREC Transport Corridor I (Bishkek-Torugart Road) Project, Kyrgyz Republic (CAREC Transport Project) went through both phases of the 2003 ADB Accountability Mechanism policy (problem-solving and compliance review) with a transfer to compliance review on a parallel process of both phases during the implementation of the course of action developed under the problem-solving phase, as allowed under the policy.35 This claim is highlighted for various reasons including (1) showing the responsiveness of the mechanism in handling two aspects – problem-solving and compliance – and being able to respond to the claimants’ concern through a dual approach carried out at the same time; (2) the interventions by the ADB management and staff in trying to find solutions to work out problems and restoring project compliance in accordance with policies that were alleged to be violated; (3) the cost involved in carrying out the Accountability Mechanism process (problem-solving and compliance review) and the impact on development effectiveness; and (4) whether the process adopted by the Compliance Review Panel (CRP) could have been clearer as the panel made recommendations but was silent on the monitoring of outcomes. The CAREC Transport Project includes improvement of a 39 km stretch of road linking the Kyrgyz Republic and China and other Central Asian countries. A complaint was filed by three groups of two persons (with authority given to a local CSO Bugu Mural in the project area to represent them) with the Special Project Facilitator (SPF). The SPF found the complaint eligible in November 2010. The issues of the complaint related to equitable compensation and information sharing; the complainants asked for compensation of two 2.3

35  ‘Report on Eligibility on CRP Request No. 2011/2 on the CAREC Transport Corridor I (Bishkek-Torugart Road) Project 1, Kyrgyz Republic (Grant No. 0123-KGZ)’ (Compliance Review Panel, 29 June 2011) 5 accessed 27 February 2016.

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shops and some trees that were being removed as part of the road improvement under the project. The SPF concluded after carrying out a review and assessment that the problems could be resolved through the Land Acquisition and Resettlement Plan (LARP) embodying the complainants’ entitlements under the ADB’s involuntary resettlement policy. The SPF’s review and assessment involved stakeholders including the complainants, the Ministry of Transport and Communications [MOTC] (as the project executing agency), ADB projects operations department, and two CSOs (the local CSO Bugu Mural, and the NGO Forum on ADB, an NGO based in Manila, Philippines as the complainants later assigned Ms Maya Eralieva, Central Asia and Caucasus Coordinator, ADB Forum on NGO to be their representative). The SPF’s review and assessment resulted in a proposed course of action which was agreed upon by all parties involved and implemented, with the last compensation payment to the complainants in August 2011, and the SPF’s final mission in September 2011 confirmed the payments and the satisfaction of the complainants with the complaint closed in October 2011.36 The request for compliance review was submitted to the CRP in May 2011 and the CRP found the claim eligible in June 2011, noting that the consultation process would continue as a parallel process if the compliance review proceeds.37 The claimants under the compliance review phase were five requesters who also designated Ms Eralieva as their representative. The CRP found that the affected people appeared the same as the signatures verified by the SPF during the problem-solving phase and that the requesting parties are the affected persons. The affected persons asked for their identities to be kept confidential (as was the case in problem-solving) and alleged non-compliance by ADB of the involuntary resettlement policy and the public communications policy with a request for (i) cash compensation for the stores; (ii) assistance in securing business permits for new shops and repayment of registration costs supported by receipts, checks, and orders; and (iii) the inclusion of one of the requesters in a loan repayment program.38 36  ‘Final Report of the Special Project Facilitator, Kyrgyz Republic: CAREC Transport Corridor I (Bishkek-Torugart Road)’ (October 2011) 3 accessed 10 August 2018. 37  ‘Report on Eligibility on CRP Request No. 2011/2 on the CAREC Transport Corridor I (Bishkek-Torugart Road) Project 1, Kyrgyz Republic (Grant No. 0123-KGZ)’ (n 35). 38  ‘CRP Final Report, Kyrgyz Republic: CAREC Transport Corridor I (Bishkek-Torugart Road) Request 2011/2’ (July 2012) 3 accessed 27 February 2016.

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The CRP carried out an investigation and noted the SPF had mediated the preparation of an action plan, including a survey of all affected properties, and the preparation of the LARP. It also noted that the resettlement plan developed by MOTC and approved by ADB in July 2011 responded to the demolition of 3 shops, the removal and reconstruction of 1,750 meters of fences, and the cutting of 211 trees. The plan was implemented from July to September 2011 and affected 45 households and one public health centre. Resettlement payments were made to 43 of the 46 parties from 12 August to 30 September 2011; compensation for the remaining 3 was to be held in escrow until after their titles were cleared to avoid multiple claims, with the project being reclassified from category C (no involuntary resettlement effects foreseen) to category B (involuntary resettlement impact not deemed significant) on 26 July 2011.39 The CRP found the ADB in violation of: (i) the involuntary resettlement policy; (ii) public communications policy; and (iii) the incorporation of social dimensions into ADB operations policy. On (i), the bank erred in classifying the project as a category C project for involuntary resettlement. Also, ADB had accepted MOTC’s compensation agreement in October 2010 which did not consider loss of income and other assets including trees, and this acceptance did not comply with the involuntary resettlement policy that included a comprehensive survey of all affected assets, valuation at replacement cost, compensation for lost income, and grievance redress. During project supervision, ADB failed to identify the unanticipated road design change, which it later found to be the reason for the demolition of shops, the cutting down of trees, and the removal of fences. ADB did not know about this unanticipated and unauthorised design change until almost a year later in June 2011, during its review of the complaints. On (ii), ADB failed to respond in a timely and appropriate manner to requests for key project documents from CSOs, and to ensure that project-affected people received timely information on construction schedules and impact. On (iii), there was violation since the summary poverty reduction and social strategy neither identified nor addressed potential involuntary resettlement. Notwithstanding the finding of policy violations, the CRP stated that these violations were addressed by the bank through compliance in the course of the panel investigations: Once [the SPF] received the complaint in September 2010, ADB undertook the appropriate actions and worked diligently with the government to ensure that the [LARP] was prepared and implemented in accordance 39  Ibid. 11.

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with ADB policies. In the CRP’s assessment, in general, the plan and its implementation were satisfactory and complied with the Involuntary Resettlement Policy (1995) and the Public Communications Policy (2005).40 The claim that was presented to both processes of the Accountability Mechanism had a successful outcome not only in terms of the satisfaction of the claimants concerns on the project (through problem-solving by the SPF and then the addressing by ADB operations department in project implementation) but in terms of ADB management and staff ensuring project compliance through the implementation of the project after the LARP was in place, and this was confirmed by the panel in its final report. There was an effective system of checks and balances within the institution which worked well by the parties involved – the SPF, bank staff and management, and the CRP. The unique aspect of the claim was that ADB management and staff found solutions to work out problems and restore project compliance in accordance with policies that were alleged to be violated. This proactive approach by the bank demonstrated a concerted effort to understand where it could take measures with the cooperation of the government, the project executing agency, and the project affected people. The CRP, in its final report, concluded and lauded the bank noting that ‘ADB eventually undertook the appropriate actions and diligently worked with the government to ensure that the LARP was prepared and implemented in accordance with ADB policies.’41 The CRP also expressed its confidence in the bank’s action as part of the lessons learnt in the investigation: The CRP … acknowledges the lessons learned from the difficulties and mistakes have inspired greater resolve in ADB to strengthen its policy dialogue, capacity building, and technical support to help government and other stakeholders adopt sound land acquisition and involuntary resettlement policies and practices, consistent with international standards. The CRP notes that ADB is assuming leadership among donors developing the CAREC regional transportation network, providing significant technical assistance resources to increase the capacity of the government and other stakeholders to deal with the associated land acquisition and resettlement issues.42 40  Ibid. 41  Ibid. 11–12. 42  Ibid. 12 (emphasis added).

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Having applauded the bank above as part of the lessons learned, the CRP highlighted another lesson learnt – the cost involved in carrying out the investigation with the finding of non-compliance – by stating that ‘ADB’s noncompliance with its policies had many direct and indirect negative impacts including significant project delays and additional cost to the government and ADB’.43 The CRP in its final report listed at least 34 persons, and states that this list is not exhaustive as it does not include persons who requested that their identities be kept confidential: 24 ADB personnel; the NGO Forum on ADB; the local CSO Bugu Mural; requesters (names not given as identities were kept confidential); three project executing agency officials; two project consultants; and two civil works contractors.44 The problem-solving process carried out by the SPF also involved extensive consultation with ADB staff involved in the project; complainants; government officials including those from the project executing agency; and 2 NGOs.45 The SPF’s consultation process included a 2-day session on communication and negotiation skills which was for the two affected communities of Kara Suu and Kara Bulun; local leaders, elders, village organizations, members of the village council, the local police, and members of the interdepartmental commission …; local NGOs; and the provincial ombudsman, who had become an important impartial actor in the problem-solving process.46 Considering the issue of the demolition of 3 shops, the removal and reconstruction of 1,750 metres of fences, and the cutting of 211 trees, and the panel’s note that the ‘cost of compensation itself was approximately $17,200 and was covered by the ADB grant’,47 this raises questions on the money and time that needed to be spent on the problem-solving and compliance review processes of the Accountability Mechanism. In terms of time taken, the SPF registered the complaint in September 2010 and issued its final report in November 2011, within a 14-month period while the CRP registered the request in June 2011 and issued its final report in July 2012, within a 13-month period. The time and cost spent in addressing the matter through the Accountability Mechanism raises 43  Ibid. (emphasis added). 44  Ibid. 21–22. 45  ‘Final Report of the Special Project Facilitator, Kyrgyz Republic: CAREC Transport Corridor I (Bishkek-Torugart Road)’ (n 36) 1–2. 46  Ibid. 3. 47  ‘CRP Final Report, Kyrgyz Republic: CAREC Transport Corridor I (Bishkek-Torugart Road) Request 2011/2’ (n 38) 11.

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queries on the impact of development effectiveness as it would appear that if prior actions, including learning from ‘mistakes’ and from the inadequate project supervision, had been taken earlier on the relatively small amount involved, significant costs and delays to all stakeholders including the project affected people could have been avoided. The CRP’s comment on the lesson learnt does not include the cost and time involved for the requesters who had to refer to the local CSO and to the other CSO, NGO Forum on ADB (in the problem solving) and to NGO Forum on ADB (in the compliance review) for help in translation as the claimants were communicating in Russian and various documents had to be translated. Other aspects of cost and time are those for the SPF in fielding at least 4 missions (eligibility; review and assessment; and two consultation missions during implementation of the course of action), and for the CRP members with 2 consultants in fielding the investigation mission plus the time and costs spent by other stakeholders such as the CSOs assisting the claimants. Finally, the process adopted by the CRP could have been clearer as the panel made recommendations but was silent on the monitoring of outcomes. The CRP found that compliance with the bank’s policies and procedures was restored with Management’s proactive stance of implementing the LARP but proceeded to make three recommendations: two related to what the bank should do in relation to the CAREC Transport Project and to the ‘projects covering additional sections of the CAREC Transport Corridor 1’, and one of general application to ‘road projects that traverse rural communities even in remote areas … [where] ADB should carefully consider classification criteria and requirements for such projects.’48 The Board approved the panel’s recommendations in its decision.49 From the CRP website, there is no information given on any panel monitoring and it is unclear whether there is, or will be, any monitoring. Under the 2003 accountability mechanism policy, it is stated that the CRP will monitor implementation of any remedial actions approved by the Board as a result of a compliance review. The matter on monitoring is only clarified in the annual report where it is clearly stated that ‘[as] the RP [resettlement plan] had been completed in full and there were no outstanding issues, no specific action plan was needed from Management, and no further monitoring by the CRP was required’.50 For purposes of accountability and transpar48  Ibid. 12. 49  ‘Minutes of the Board of Directors of the Asian Development Bank held at 10:00 AM on 24 July 2012’ (Asian Development Bank, 9 August 2012) accessed 10 August 2018. 50  ‘ADB Accountability Mechanism Annual Report 2012’ (Asian Development Bank, 2013) 5 accessed 10 August 2018 (emphasis added). 51  ‘Final Report to the Board of Directors on the Compliance Review Process for Request No. 2009/1 Regarding the Fu-zhou Environmental Improvement Project (Asian Develop­ ment Bank Loan No. 2176-PRC)’ (Asian Development Bank Accountability Mechanism: Compliance Review Panel, 24 September 2010) v accessed 10 August 2018. 52  Ibid. 27.

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During the course of the investigation, the CRP was informed in November 2009 by the PRC Executive Director on the Board of Directors that a site visit was ‘no longer necessary’ and the reasons are stated in the panel’s final report: (i) the resettlement plan was in accordance with both PRC and ADB relevant policies; (ii) the rerouting of the river had made the compliance review request obsolete; (iii) a senior government official who visited the project site confirmed that the requesting parties no longer lived in the area; and finally (iv) previous project site visits by the [SPF] should provide the CRP with sufficient information for its compliance review.53 The CRP was of the unanimous view that a site visit was ‘indispensable to assess independently the physical conditions in the project site’54 had even though the panel had reviewed the documents forwarded by the SPF, interviewed 19 ADB staff and had telephone calls with the requesters. The CRP obtained comments from management and the requesters on its draft report. Management noted that in the CRP’s draft report, CRP ‘decline[d] to present its findings and is therefore not in a position to make recommendations.’55 The requesters noted that ‘we are very disappointed that it was not possible to draw the necessary conclusion(s) because of the lack of a site visit’ and requested that the ‘CRP should mention that [it] has drawn “preliminary” conclusions currently after reviewing relevant files and documents interviewing ADB staff and making conversations with requesting parties over the phone.’56 The terms of reference (TOR) for the compliance review were cleared in July 2009 by the Compliance Review Committee of the Board of Directors (BCRC), which has oversight of the CRP’s activities under the accountability mechanism policy. The TOR specified a period of 12 weeks from BCRC clearance (given in July 2009) for the CRP draft report to be issued for comments for Management and the requesters (for 30 days) followed by the issuance of the final report within 14 days from receipt of comments from Management and the requesters.57 The CRP issued its draft report in August 2010, 11 months after BCRC’s clearance of the TOR of compliance review, instead of 12 weeks (3 months) as provided in the TOR. In the TOR, it was stated that the compliance

53  Ibid. 5 (emphasis added). 54  Ibid. 4. 55  Ibid. 27. 56  Ibid. 25 (emphasis added). 57  Ibid. 19–22, App 4.

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review will include conduct of site visits only ‘with the prior consent of the Government of the PRC.’58 The CRP issued in September 2010 its final report about 2 weeks from receipt of comments from Management and the requesters, for Board consideration on its decision in October 2009. In the final report,59 the CRP stated it was ‘unable to complete this compliance review’ and ‘unable to present findings’ and ended its final report with one recommendation: [i]n light of the inability of the CRP to reach any conclusions in the request for review before it, due to the inability to conduct a site visit to complete that review, the CRP recommends that the Board re-consider this issue in the Accountability Mechanism policy and determine whether an alternative approach to site visits may be adopted in order to avoid the uncertainty and potential negative implications of the current policy on this issue.60 The CRP’s draft report is not published on the panel’s website and the Board of Directors discussions on the CRP’s final report is not published under the Bank’s public communications policy (as it is within the exception list) except for the Board’s decision which is published on the panel’s website and this Board decision states: The Board discussed and noted [the Compliance Review Panel Final Report on the request for the Fuzhou Environmental Improvement Project] and supported the recommendation that the Board reconsider the issue of site visits under the ongoing review of the Accountability Mechanism policy.61 In the 1995 Inspection Function policy, there were two claims investigated, the first of which was the Samut Prakarn Waste Water Project claim. This claim 58  Ibid. 21. 59  Ibid. 6. 60  ‘Final Report to the Board of Directors on the Compliance Review Process for Request No. 2009/1 Regarding the Fuzhou Environmental Improvement Project (Asian Development Bank Loan No. 2176-PRC)’ (n 51) (emphasis added). 61  ‘Decision of the ADB Board of Directors on the PRC: Fuzhou Environmental Improvement Project’ (Asian Development Bank Accountability Mechanism: Compliance Review Panel, 19 October 2010) accessed 17 September 2019.

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highlighted that the inspection process and procedures were ‘lengthy, confusing and complex for most stakeholders both inside and outside ADB.’62 The issue of site visits was one of the many complex issues that arose in the inspection process. Under the inspection function policy, all field visits must be approved by the borrowing member country and the Thai government refused to allow the investigators to visit the project site without assurance that they would be liable for ‘any loss or damages claimed by the contractors as a result of the Panel’s visit.’63 The Samut Prakarn claim led to ‘a frustrated investigation and a stalemate at the Board of Executive Directors.’64 It is significant that notwithstanding the conduct of a site visit, the panel prepared a desk report and concluded ‘that ADB had violated six policies and part of a seventh.’65 The Inspection Function policy went through an extensive review of more than 2 years with internal and external stakeholders resulting in the 2003 accountability mechanism policy. The operative words on the controversial issue of site visits were as follows: When the Board approves the proposed mechanism, the policy and procedures should assume the good faith cooperation of all parties in the compliance review process, including the borrowing country…. Seeking prior consent of the borrowing country, under an operating assumption that such consent would be routinely given, would be preferable to the heavy-handed approach of including conditions in the loan agreement. For this reason, ADB does not propose at this time any changes regarding site visits during panel investigation. ADB expects that site visits will be a routine and noncontroversial aspect of the accountability mechanism in the future, and that the ADB accountability mechanism personnel and

62  ‘Review of the Inspection Function: Establishment of a new ADB Accountability Mechanism’ (Asian Development Bank, May 2003) 1  accessed 10 August 2018. 63   Susan Park, ‘Assessing Accountability in Practice: The Asian Development Bank’s Accountability Mechanism’ (2005) 6(4) Global Policy 458 quoting Wiertsema cited in Maartje van Putten, Policing the Banks: Accountability Mechanisms for the Financial Sector (McGill-Queen’s University Press 2008). 64  Park, ibid., 459. See also Kenji Fukuda, ‘Critical Analysis of the New Accountability Mechanism of the Asian Development Bank’ in Dorothy Guerrero (ed), A Handbook on the Asian Development Bank: The ADB and its Operations in Asia and the Pacific Region (Asienstiftung/Asienhaus 2003) 31–38. 65  Ibid. 458.

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borrowing countries will cooperate with each other to enhance the effectiveness of the compliance review process.66 The CRP’s final report with the single recommendation was supported by the Board of Directors and the ensuing review of the 2003 Accountability Mechanism policy in the 2012 Accountability Mechanism, with oversight by a Board member (also chair of the BCRC) as chair of the working group on the review of the policy, noted the following: Under this approach, the CRP site visits would be handled using the same principles and practices applicable to all ADB missions, but without recourse to provisions in a loan covenant. Management and staff would facilitate a borrowing country’s concurrence for site visits…. The assumption in the 2003 Accountability Mechanism policy that site visits will be granted routinely should be maintained. In the exceptional situation of refusal, Management will discuss with the borrowing country the reasons for not accepting the requested site visit. In consultation with the BCRC and the borrowing country, Management will convey the reasons to the Board through an information paper…. In the unlikely event that a site visit is declined, a closure of the compliance review process will be highly desirable, especially from the perspective of the complainants. The CRP will complete its work and deliver its final report without a site visit. The CRP will use all available information, make appropriate assumptions, and draw appropriate inferences to complete its work. The CRP will present the best and most detailed analysis possible after exhausting the most cost-effective and logical alternative means to acquire necessary information. In the absence of a necessary site visit, the CRP may give added weight to the complainants’ views.67 At the time when the CRP issued its final report, it could have issued a desk report as was the case in the Samut Prakarn claim and was also done in WBIP handling the investigation of the NTPC [National Thermal Power Corporation] Power Generation Project claim in India (1997) where a site visit did not take place due to complaints by the government of India for the panel to carry out 66  ‘Review of the Inspection Function: Establishment of a new ADB Accountability Mechanism’ (n 62) 14 (emphasis added). 67   ‘Review of the Accountability Mechanism Policy’ (Asian Development Bank, February 2012) 15–16 accessed 10 August 2018 (emphasis added).

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its investigation (though the WBIP made a project site visit in its preliminary work before recommending to the Board that an investigation be carried out). In the WBIP, the Second Clarification (1999) stated the following: The Board recognizes that enhancing the effectiveness of the Inspection Panel process through the above clarifications assumes adherence to them by all parties in good faith. It also assumes the borrowers’ consent for field visits envisaged in the Resolution. If these assumptions prove to be incorrect, the Board will revisit the above conclusions.68 The WBIP had determined that the request was eligible and issued a report recommending that there should be an investigation.69 The World Bank Board of Executive Directors authorised the investigation following which the WBIP issued its investigation report noting that the World Bank Board of Directors had decided that in light of the conclusions and recommendation by the Panel, bearing in mind the preliminary review already undertaken by the Panel, an investigation should be conducted at the Bank’s Headquarters in Washington to further determine the extent to which the Bank adhered to its own policies and procedures under the project.70 What happened, as stated by the World Bank, was that there were strong complaints from the Indian Government against what they saw as an investigation into internal affairs, and they argued that the Inspection Panel’s mandate was only to investigate the Bank’s own conduct, not the actions of the Indian Government or its agencies.’71 With ‘strong resistance from both the 68  1999 Clarification of the Board’s Second Review of the Inspection Panel (World Bank, 20 April 1999 [19] accessed 21 August 2019) (emphasis added). 69  ‘Report and Recommendation India: NTPC Power Generation Project (Loan 3362-IN)’ (World Bank: Inspection Panel, 24 July 1997) accessed 21 August 2019. 70  ‘Report on Investigation of Request for inspection India: NTPC Power Generation Project (Loan 3362-IN)’ (World Bank: Inspection Panel, 22 December 1997) 4 accessed 21 August 2019. 71  ‘Implementation Completion Report. NTPC Power Generation Project (Loan 3632-IN) (Report No. 20526)’ (World Bank, 14 June 2000) 86 accessed 17 September 2019.

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borrower and management,’72 the Board of Executive Directors approved in September 1997 a limited investigation by the WBIP within a three month period in the World Bank’s headquarters. The WBIP presented its report within the 3-month period in December 1997 confirming violations of bank policies on involuntary resettlement, environmental assessment, and associated aspects of the project. The board agreed to wait before taking any action until the progress reports prepared by Management on implementation of the action plan together with a report by an independent monitoring panel and another by an independent institute for social impact assessment were completed, and in December 1998, the Board noted that the issues raised in the panel’s report were being adequately addressed.73 In the FEI Project claim, the CRP had already issued a draft report (which was issued 11 months instead of the 3 months as stated in the TOR for compliance review), and with the comments from the requesters expressing great disappointment and that the panel should draw ‘preliminary’ conclusions after reviewing relevant files and documents, interviewing ADB staff and making conversations with requesting parties over the phone, the CRP could have restricted itself to a completed desk study with a caveat on its ‘preliminary’ conclusions.74 The CRP had access to written documents comprising ‘41 project-specific files with more than 8,000 pages’ and also the information received from SPF who had conducted 3 missions to PRC, including site visits on each occasion.75 The wording in the present 2012 accountability mechanism policy that the CRP will (i) complete its work and deliver its final report without a site visit and (ii) use all available information, make appropriate assumptions, and draw appropriate inferences to complete its work is a constructive way of ensuring that the CRP and the accountability mechanism can respond to the needs of the requesters. So far, there has been no case of a declined site visit under the present policy to test whether the new policy formulation will work better than in previous cases. In the FEI Project claim, there were issues for the CRP in determining that a site visit was indispensable, but given the context of the long wait for the issuance of the draft report and the reference to extensive 72  Dana Clark, ‘Singrauli: An Unfulfilled Struggle for Justice’ in Dana Clark, Jonathan Fox, and Kay Treakle (eds), Demanding Accountability: Civil-Society Claims and the World Bank Inspection Panel (Rowman and Littlefield, 2003) 179. 73  Ibrahim F. I. Shihata, The World Bank Inspection Panel: In Practice (2nd edn, OUP 2000) 130–133. 74  Compliance Review Panel Final Report on the Compliance Review Process for Request No. 2009/1 (n 51) 25. 75  Ibid. 27.

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documentation of over 8,000 pages and interviews with ADB staff and the requesters (over the phone), a desk study could have been a suitable approach to effectively respond to the requesters needs. The outcome was the case is still not closed as the panel could not complete its compliance review and reach ‘any conclusions’ and that is, in the view of the authors, not necessarily the best approach in handling claims given that the requesters specifically asked for ‘preliminary’ conclusions on the panel’s draft report. This approach impairs the purpose of the accountability mechanism when it does not respond as effectively as possible to the peoples’ grievance filed with the institution on a project financed by the institution and the project affected persons are left bereft without any further recourse. There may be circumstances beyond control of the institution or the borrower as in security situations. In the Chashma Right Bank Irrigation Stage III Project in Pakistan, the CRP was mandated by the Board of Directors to monitor the outcomes following the investigation under the previous inspection function policy, as approved by the Board. Due to the deteriorating security situation in the project area, the CRP was unable to field a project site visit in at least two of its monitoring missions and noted in its 2006–2007 annual monitoring report as follows: Because the Panel was unable to travel to Pakistan as security clearance was not given by ADB’s Pakistan Resident Mission (PRM), the Panel could not gather views and insights at the field level, including the project area, through meetings with affected people, GOP [Government of Pakistan], and other parties to the same degree as in its previous monitoring reports. The Panel will field a mission to Pakistan later this year when PRM’s security clearance is given to update parts of this report which would benefit from information obtained at the field level.76 In the following year, the CRP issued its annual monitoring report but this time, the CRP fielded a monitoring mission but noted that the panel was not able to meet with affected people in the project area as clearance was not given

76  ‘Annual Monitoring Report 2006–2007 on Implementation of Remedial Actions on the Inspection Request on the Chashma Right Bank Irrigation Project (Stage III) in Pakistan (ADB Loan No. 1146-PAK[SF])’ (Compliance Review Panel: Asian Development Bank, 12 November 2007) 1 accessed 10 August 2018.

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for the mission to visit the project area.77 As it turned out, the panel issued reports which were reflective of the panel’s monitoring and that was a proactive approach taken in the circumstances without compromising its independence and ability. Padma Multipurpose Bridge Project, Bangladesh Financed by the World Bank and ADB with Other Institutions The Padma Multipurpose Bridge Project (PMBP) in Bangladesh is an example where without a claim filed with an IFI accountability mechanism, the project was cancelled by the development partners financing the project due to corruption allegations. When claims are filed with the accountability mechanisms, there can be requests for project suspension but the policy is that these institutions are bound by the legal agreements entered into with the governments and implementing authorities concerned notwithstanding requests for halts in disbursements unless there is approval by the board of directors or management.78 It was a rare instance that in the Transport Sector Development Project (Uganda) that the World Bank suspended disbursements in October 2015 and cancelled the project in December 2015 when the WBIP was carrying out its investigation under the WBIP Operating Procedures (after the panel had registered the request in September 2015). Under the PMBP, the World Bank as lead co-financier took a zero tolerance in response to evidence of corruption findings by cancelling its financing and ceasing to participate in the project, and its action was adopted by the other development co-financiers, such as ADB, Japan International Cooperation Agency (JICA), and Islamic Development Bank (IDB). The PMBP was a massive infrastructure project approved by the World Bank in February 2011, with a cost of about US$2,915 million (with the other development co-financiers). The World Bank played a leading co-financing role with its credit financing of US$1,200 million. The PMBP was designed to connect the isolated southwestern region of the country with the rest of the country as well as reduce travel times country-wide and connect the country’s two seaports as well as being an important transport infrastructure to ensure physical 2.5

77  ‘Annual Monitoring Report 2007–2008 on Implementation of Remedial Actions on the Inspection Request on the Chashma Right Bank Irrigation Project (Stage III) in Pakistan (ADB Loan No. 1146-PAK[SF])’ (Compliance Review Panel: Asian Development Bank, 11 February 2009) 1 accessed 27 February 2016. 78  Such as in the Southern Transport Development Project, Sri Lanka (claim filed with the ADB Accountability Mechanism for compliance review).

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continuity in the corridor connecting Tokyo and Istanbul, benefitting trade throughout the region.79 In February 2011, the World Bank Board of Executive Directors gave its approval to the IDA credit stressing that it ‘took note of the strong Governance and Accountability Action Plan [GAPP]’ under the project.80 The GAAP was an extensive document to be implemented by the Bangladesh Bridge Authority (BBA) with the World Bank as the ‘Coordinating Donor’ for all the donors. The GAAP was to ‘mitigate and guard against governance, corruption and fraud risks and improve transparency and accountability in implementation of project activities’ including the appointment of a Project Integrity Advisor, satisfactory to the World Bank, who would ‘serve as the liaison to the World Bank and other co-financiers on all issues related to governance and corruption.’81 After the project approval by the World Bank Board of Executive Directors, the World Bank management presented evidence of corruption under the PMBP to the government of Bangladesh in September 2011 and April 2012, and suggested that the government adopt four measures but the government was unable to commit to two of the four measures.82 The government did not agree with two proposals: (i) providing information to an external panel under World Bank auspices; and (ii) excluding public officials from public service for the duration of the investigation although Bangladeshi law permits this. In June 2012, World Bank informed the government that in the absence of satisfaction of conditions that would need to be met for the financing to be made available for the project, it decided to terminate the legal agreements with immediate effect.83 The World Bank issued a press release on the same day, 29 June 2012, considering the government’s response ‘unsatisfactory’84 and 79  ‘Project Appraisal Document for the Padma Multipurpose Bridge Project’ (Report No: 56512-BD) (World Bank, 24 January 2011) 6. 80  Ibid. 81  Ibid. 82  ‘Frequently Asked Questions related to the Cancellation of the World Bank Credit for the Padma Multipurpose Bridge Project’ (World Bank, 17 July 2012) accessed 27 February 2016. 83  ‘Note on Cancelled Operation Report for Padma Multipurpose Bridge Project’ (Report No: NVO00002797) (World Bank, 15 August 2013) 1 accessed 10 August 2018. 84  ‘World Bank Statement on Padma Bridge’ (World Bank. 29 June 2012) accessed 27 February 2016.

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stating that in view of the inadequate response, the World Bank decided to cancel its US$1.2 billion IDA credit in support of the project. In January 2013, the government informed the World Bank that it was withdrawing its request for World Bank financing for the project. The government of Bangladesh has proceeded moving ahead with the project and has awarded the construction contract to a foreign firm.85 From an external perspective, there are diverse views held on the correctness or otherwise of the World Bank’s decision to disengage from this project. An extreme view has been expressed that ‘the World Bank has become a big bully’ and is ‘[p]osing as the proponent of good governance’.86 The view expressed by Transparency International Bangladesh is that the World Bank is ‘a new-comer to the world of openness and accountability’ and should ‘review the decision, and find ways to provide the credit by sharing the responsibility as a key fiduciary agent of the project to ensure integrity, transparency and accountability in the implementation process.’87 A supporting view has been provided that ‘the Bank ultimately did the right thing in pulling out of the Padma Bridge project.’88 What is striking is that the World Bank disengaged from the project after giving the Bangladeshi government the opportunity to reform and continue to receive funds, and reiterated its fight against corruption as a core element in fighting poverty, while maintaining its reputation and position that there is zero tolerance on anticorruption.89 The World Bank made it clear that it ‘will not turn a blind eye to evidence of corruption’90 and it ‘has an obligation 85  See Daniel Binette, ‘When Should Corruption Be Tolerated? The Case of the Padma Bridge’ (GAB: The Global Anticorruption Blog, 6 November 2015) accessed 27 February 2016. 86  Forrest Cookson, ‘Padma Bridge and the role of the World Bank’ The Independent (London, 5 September 2015) accessed 21 August 2019. 87  ‘Padma Bridge Acid-Test for the Government; World Bank Cancellation Questionable, Says TIB’ (Transparency International Bangladesh, 30 June 2012) accessed 27 February 2016. 88  Binette (n 85). 89  In 1996, the then World Bank President Wolfensohn gave a groundbreaking ‘cancer of corruption’ speech to the World Bank/IMF annual meeting citing corruption as a major burden for the poor in developing countries. See ‘James Wolfensohn’s Presidency’ (World Bank)  accessed 21 August 2019. 90  ‘World Bank Statement on Padma Bridge’ (n 84).

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to ensure that its funds reach their intended beneficiaries’ and will ‘remain committed to helping Bangladeshis rise out of poverty and achieve their dream of a prosperous and empowered nation, built on a foundation of good governance.’91 In this case, the cancellation was viewed necessary by the World Bank from the perspectives of combatting corruption to end poverty and ensuring good governance in project implementation. The Bangladeshi government chose to proceed with the project without the institutional co-financiers and the estimated project cost ‘has climbed by over $1 billion and the expected completion date is being pushed back by 2 years to 2020.’92 There is no clear and definitive answer on the ‘right’ response to the cancellation of the project by the World Bank as it viewed its actions necessary and reasonable; and the government was free to proceed on its own with the project. The World Bank and the Bangladeshi government clearly had different approaches. The authors supports the position taken by the World Bank (which had used the feasibility studies made by the other development partners and which itself carried out its environmental impact assessment study in 2009 prior to obtaining project approval from its Board of Executive Directors in 2011) as any use of the funds disbursed on a project tainted with corrupt allegations would not have benefitted the borrowing country or the peoples. The World Bank saw its fiduciary responsibility to its shareholder countries and to IDA countries compromised and was acting within this broad framework as the anticorruption policy is pivotal to its operations and also has a spill over effect of not benefitting the borrowing country or the peoples. The World Bank’s cancellation of the project was followed swiftly by cancellation by the other co-financiers, including ADB and JICA.93 ADB followed the World Bank’s decision stating that it ‘understands and respects the reasons that have led the World Bank (WB) to its decision. ADB and the World Bank follow similar policies, rules and procedures on governance and fiduciary oversight’.94 In a statement issued in February 2013, ADB emphasised that given the ‘cofinancing arrangement, a discontinuation of funding by the World Bank means

91  ‘Frequently Asked Questions related to the Cancellation of the World Bank Credit for the Padma Multipurpose Bridge Project’ (n 82). 92  Binette (n 85). 93  ‘JICA, ADB pull out of Padma Bridge project’ (Bangladesh Business News, 2 February 2013)

accessed 27 February 2016. 94  ‘ADB follows WB decision on Padma bridge financing’ (Bangladesh Business News, 2 July 2012) accessed 27 February 2016.

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ADB is also unable to proceed with the transaction’ and that ‘ADB is committed to the highest integrity, governance, and anti-corruption standards.’95 3

Promoting Good Governance Standards through Progressive Interpretive Elaboration of Environmental and Social Safeguard Policies

MDBs can play a very significant proactive role in promoting good governance standards more generally through the responsive, incremental elaboration of their environmental and social policies. Of course, IAMs enjoy their usual role in ensuring compliance with such standards, but may have a particular impact on good governance through the progressive interpretation of concepts intrinsic to the more leading edge environmental and social standards contained in MDB safeguard policies, which may not yet be perfectly understood. For example, the 2014 European Bank for Reconstruction and Development (EBRD) Environmental and Social Policy includes a stipulation that The EBRD will assess to what extent tariff changes caused by projects may create problems of affordability of basic levels of services for disadvantaged and/or vulnerable groups of the population, and satisfy itself that effective schemes to address this issue are developed and put in place.96 This suggests that the Bank is concerned to promote the realisation of certain so-called ‘welfare rights’, originally arising from the 1966 International Covenant on Economic, Social and Cultural Rights.97 Such emerging rights include, for example, the purported right(s) of access to water and sanitation,98 95  See accessed 27 February 2016. 96  ‘Environmental and Social Policy’ (European Bank for Reconstruction and Development, May 2014) [11]. 97   U NGA Res 2200 (1967) GAOR, 22nd Session Supp 49, UN Doc A/6316. Adopted and opened for signature, ratification and accession by UN General Assembly Resolution 2200A (XXI) of 16 December 1966, the Covenant has now been ratified by 147 States. 98  Committee on Economic, Social and Cultural Rights, ‘General Comment No. 15, The Right to Water (Articles 11 and 12 of the International Covenant on Economic, Social and Cultural Rights)’ UN Doc E/C.12/2002/11 (26 November 2002). See further, Stephen C. McCaffrey, ‘The Human Right to Water’ in Edith Brown Weiss, Laurence Boisson de Chazournes, and Nathalie Bernasconi-Osterwalder (eds), Fresh Water and International Economic Law (OUP 2005) 93; Melina Williams, ‘Privatization and the Human Right to Water: Challenges for the New Century’ (2007) 28 Michigan Journal of International Law 469; E. B. Bluemel, ‘The

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and often require careful consideration of such legally indeterminate concepts as ‘affordability’. A 2013 report submitted to the Human Rights Council by the former UN Special Rapporteur on the human right to safe drinking water and sanitation highlighted the difficulties in ensuring compliance with the requirement of affordability in the face of austerity measures.99 Only recently, the US Congress instructed the National Academy of Public Administration (NAPA) to study more equitable ways of measuring household water affordability with a view to assisting the EPA in revising its outdated community affordability guidelines, with the resulting report presented to Congress in October 2017.100 It is worth noting, therefore, that MDBs such as the World Bank and African Development Bank (AfDB) have pioneered work in this field.101 Since 2010 the African Development Bank (AfDB) has published detailed guidelines on user fees and cost recovery which helpfully distinguish between cost recovery

Implications of Formulating a Human Right to Water’ (2004) 31 Ecology Law Quarterly 957; Emilie Filmer-Wilson, ‘The Human-Rights-Based Approach to Development: the Right to Water’ (2005) 23 Netherlands Quarterly of Human Rights 213; Amy Hardberger, ‘Life, Liberty and the Pursuit of Water: Evaluating Water as a Human Right and the Duties and Obligations it Creates’ (2005) 4(2) Northwestern Journal of International Human Rights 331; Salman M. A. Salman and Siobhan McInerney-Lankford, The Human Right to Water: Legal and Policy Dimensions (World Bank Publications 2004); Owen McIntyre, ‘The Human Right to Water as a Creature of Global Administrative Law’ 37(6) (2012) Water International 654. 99   O HCHR, ‘Report of the Special Rapporteur on the human right to safe drinking water and sanitation’ (11 July 2013) UN Doc A/HRC/24/44 accessed 10 August. The link between fiscal austerity and States’ commitments to economic, social and cultural rights has also been recognised by civil society organisations in the Vienna+20 CSO Declaration, adopted on 26 June 2013. See further, Owen McIntyre, ‘The Human Right to Water and Reform of the Irish Water Sector’ (2014) 5(1) Journal of Human Rights and the Environment 74, 75–76. 100  ‘Developing a New Framework for Community Affordability of Clean Water Services’ (National Academy of Public Administration, 5 October 2017) accessed 10 August 2018. For recent work by US scholars seeking to inform the reform of affordability criteria, see Manuel P. Teodoro, ‘Measuring Water and Sewer Utility Affordability’ (Texas A&M University Working Paper, August 2017) accessed 10 August 2018. 101  See, for example, the Water Resources Sector Strategy (World Bank, 2004) 2 accessed 10 August 2018: ‘[it emphasises that] poverty-targeted water service interventions (such as water and sanitation and irrigation services for the unserved poor)’.

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options in respect of networked urban and non-networked rural water supply and sanitation services.102 IAMs can similarly contribute to the technical elaboration of novel environmental requirements. For example, a 2012 complaint103 brought to the EBRD Project Complaint Mechanism (PCM) alleged a failure to conduct an adequate assessment of the readiness of a proposed Slovenian coal-fired power plant for the eventual deployment (whenever available) of carbon capture and storage (CCS) technology, as required under Article 33 of the 2009 EU CCS Directive.104 Despite the fact that all parties to the complaint, including the complainants, conceded that there were no clear standards governing the type or level of assessment required by Article 33, in terms of how to adequately evaluate the suitability of storage or the technical and economic feasibility of CO2 transport and of retrofitting a plant with CCS technology, the PCM proceeded to elaborate upon the likely reasonable parameters for such an assessment.105 In so doing the Compliance Review Expert had regard, in the absence of any reported case law on the subject, to a wide range of sources of guidance, including EU Commission guidance,106 other EU Member States’

102  See ‘Guidelines for User Fees and Cost Recovery for Urban Water and Sanitation’ (African Development Bank, 2010) accessed 10 August 2018; ‘Guidelines for User Fees and Cost Recovery for Rural, Non-Networked, Water and Sanitation Delivery’ (African Development Bank, 2010) accessed 10 August 2018. See further, Owen McIntyre, ‘The Human Right(s) to Water and Sanitation and the Relentless Development of Standards’, in Stephen Turner, Dinah Shelton, Jona Razzaque, Owen McIntyre and J. R. May (eds), Environmental Rights: The Development of Standards (CUP forthcoming). 103   ‘Šoštanj Thermal Power Project: Request No. 2012/03, Compliance Review Report’ (European Bank for Reconstruction and Development) accessed 10 August 2018. 104  Directive 2009/31/EC of the European Parliament and the Council of 23 April 2009 on the geological storage of carbon dioxide and amending Council Directive 85/337/EEC, European Parliament and Council Directives 2000/60/EC, 2001/80/EC, 2004/35/EC, 2006/12/EC, 2008/1/EC and Regulation (EC) No. 1013/2006 [2009] OJ L 140/114. 105  ‘Šoštanj Thermal Power Project: Request No. 2012/03, Compliance Review Report’ (n 103) 13–19, [36]–[46]. 106  ‘Implementation of Directive 2009/31EC on the Geological Storage of Carbon Dioxide: Guidance Document 2 – Characterisation of the Storage Complex, CO₂ Stream Composition, Monitoring and Corrective Measures’ (European Commission, 2011) accessed 10 August 2018.

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national legislation implementing the CCS Directive,107 International Energy Agency guidance,108 energy industry guidelines,109 and civil society research.110 Because MDB safeguard policies undergo regular periodic review and updating, including benchmarking against the policies of peer institutions and against the international commitments of the relevant bank’s Member States, they often contain commitments and standards that go well beyond the more established requirements of formal national or international legal frameworks.111 For this reason IAMs are commonly called upon to address issues at the leading edge of policy-making on environmental and social protection, presenting them with a unique opportunity to promote good governance standards in an innovative and progressive manner. 4

Conclusion: Measures That Can Be Taken by These IFIs to Better Address Promotion of Standards, Good Governance, and Accountability

Nearly 30 years since the WBIP’s creation in 1993, there has been continuous promotion of standards, good governance, and accountability by IFIs. This is seen in the growth of IAMs in multilaterals, bilaterals and in the United Nations at the United Nations Development Programme’s accountability mechanism established in 2014; in the development of social and environmental policies; and in periodic reviews of these policies and of the IAMs. There is however still room for improvement for IFIs to better address promotion of standards, good governance, and accountability through various other ways. First, improvement can be brought about within the organisation itself through creation of or strengthening of oversight offices checking on policy compliance in project formulation and preparation at entry points before institutional approval is given (by the board of directors or management where matters are delegated 107  ‘A Guidance Note for Section 36 Electricity Act 1989 Consent Applications’ (Department of Energy and Climate Change (UK), Carbon Capture Readiness, 2009). 108  ‘CO₂ Capture as a Factor in Power Plant Investment Decisions: IEA GHG Report 2006/8’ (IEA Greenhouse Gas R&D Programme). 109  ‘CCS Ready Policy: Considerations and Recommended Practices for Policymakers’ (ICF International, 2010)  accessed 10 August 2018. 110  ‘CCS Readiness at Šoštanj: Ticking Boxes or Preparing for the Future?’ (Bellona Foundation, 2011). 111  See Owen McIntyre’s contribution to this volume.

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to it by the board).112 Over the years, there has been an increase in the number of compliance specialists in IFIs to ensure that projects are better designed and implemented in accordance with the institution’s safeguard policies and providing them training to update their skills in new areas such as human rights and child labour. For example, in ADB, there has been an increase in the number of safeguard staff positions, from 65 positions in 2009 to 107 positions in 2014.113 Second, the IAMs themselves are vehicles for ensuring that in pursuit of their mandates, they promote standards, for example, by playing a proactive role in advancing standards that are not part of the institution’s policies. An example is the WBIP’s investigation of the Chad-Cameroon Pipeline Project claim, where the WBIP’s investigation broke ‘new ground’.114 The panel examined several reports addressing the human rights situation in Chad and the extensive exchange of correspondence between the Bank and local and international NGOs. The panel placed ‘more emphasis on human rights considerations by noting that they are embedded in Bank policies and by supporting the ongoing internal discussion to reconsider the Bank’s position concerning respect for human rights in its borrowing countries’.115 Third, where inadequate supervision and monitoring has been found in some of the case studies (KEEP, AF, and the CAREC Transport Project), a more rigorous approach can be taken internally by the institution such as increased supervision and monitoring in related projects by the operations department, followed by periodic reviews by the independent evaluation department (which reports to the Board of Directors), or by independent third party reviews. These will also help ensure project quality at entry for other projects. The role of IAMs continue to be relevant and invaluable as their findings on inadequate supervision and monitoring are timely reminders for the institutions to be vigilant and to exercise due diligence from project design to implementation.

112  Examples are the Quality Assurance and Compliance Unit in the World Bank; the Chief Compliance Officer at ADB’s Social Development and Climate Change Department; and the Office of the Chief Compliance Officer at EBRD. 113  See ‘Safeguards Operational Review: ADB Processes, Portfolio, Country Systems, and Financial Intermediaries’ (Corporate Evaluation Study, October 2014) App D, 3 10 August 2018. 114  ‘Accountability at the World Bank: The Inspection Panel 10 Years On’ (World Bank, 2003) 97. 115  Ibid. 98.

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Finally, the institutions have policies which they themselves can enforce such as in the case of the PMBP where a zero tolerance approach was taken to cancel the financing and a joint approach taken by the development institutions concerned to coordinate together in not financing the project to promote standards, governance, and accountability. Through cooperation and collaborative arrangements, whether in pursuing anticorruption activities or problem-solving or compliance review, these institutions with different and broader constituents and stakeholders will take stronger positions in promoting standards, good governance, and accountability.

chapter 15

Conclusion Owen McIntyre and Suresh Nanwani Few would now deny that expectations of and demands for accountability in respect of the decisions and actions of public institutions are central to global discourse on public administration and, thus, that accountability mechanisms of one form or another have become an essential feature of public institutions that require broad legitimacy in order to function. This is particularly true of organisations that play key roles in global governance, and such demands for accountability are constantly adapting to take account of new and evolving forms of governance, including the internationalisation of many areas of regulatory and developmental activity and policy. Multilateral development banks (MDBs) and other international financial institutions (IFIs) undoubtedly play such a governance role in their development lending, having universally adopted elaborate environmental and social safeguard policies which inevitably generate corresponding expectations and demands among a wide and diverse range of stakeholders including, most notably, project-affected persons and civil society. With a view to identifying a ‘minimal conceptual consensus’ regarding the practice of “accountability” across the entire spectrum of public accountability, scholars have highlighted three central elements or stages of an accountability mechanism.1 First of all, the accountable actor is obliged to inform the mechanism about its conduct in the performance of its tasks, and to explain and justify its actions in the light of applicable performance requirements. Secondly, the mechanism must have the possibility of interrogating the accountable actor on the action or omission, or on the legitimacy of the conduct in question. Thirdly, by interpreting and applying the relevant and applicable performance requirements, the mechanism delivers findings on the conduct of the actor and, where appropriate, recommends corrective action. All three elements will be familiar to IAMs practitioners, suggesting that there is much to be learned from general accountability practice, research and scholarship regarding the propriety and effectiveness of their own mechanisms. 1  M. Bovens, T. Schillemans and R. E. Goodin, ‘Public Accountability’, in M. Bovens, T. Schillemans and R. E. Goodin (eds), The Oxford Handbook of Public Accountability (OUP, Oxford, 2014) 1–20, at 8.

© Koninklijke Brill NV, Leiden, 2020 | doi:10.1163/9789004337787_016

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In the broad field of accountability research, a range of elements have been identified as centrally important for effective public accountability. For example, the public character of such accountability is usually associated with the exercise of public powers or the use of public funds by public institutions with the aim of furthering the public interest or performing public responsibilities. Of course, this suggests that accountability is owed to all members of the public, that public institutions’ performance of their functions should be as open to scrutiny as possible in the circumstances, and that any accountability mechanisms must operate in a culture of accessibility and transparency. Similarly, due process and related requirements of procedural fairness are generally understood to be centrally important. It goes without saying that the impartiality and fairness of any accountability mechanism will always be of paramount importance. However, as formal, structured accountability frameworks for public institutions, along with the practices generated thereby, proliferate and grow in scope and complexity, there arises the risk of the fragmentation of such practice and of confusion as regards the core requirements of meaningful accountability among diverse institutions, each performing highly specialised functions. It is important, therefore, also to focus on the specific characteristics and idiosyncratic features of IAMs, with a view to better understanding the unique context within which they operate, the particular challenges that they face, and the essential governance role that they have evolved to fulfil. How else might we assist the wider IAMs community to reflect critically upon what they do on a daily basis, to question why they do things in a particular way, and, most importantly, to evaluate how well they fulfil their role and to suggest how they might do it better. As stated in the introduction to this volume, the idea for this book project arose out of an annual meeting of IAMs practitioners and interested civil society actors, and was intended to encourage the contributors to reflect further upon the quasi-legal character of the work of IAMs and upon the nature of the contribution made by these mechanisms to the environmental and social governance of development project lending. In so doing, each contributor has provided an in-depth exploration of different aspects of the origins, evolution, expanding role and practices of IAMs with a view to promoting better understanding of this important ‘community of practice’, both among the practitioners themselves and among the wider development and civil society communities. Each has given careful thought to his or her own unique experience of the development or operation of IAMs and, by gathering together their insights and observations, the editors have sought to provide

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the reader with multiple vantage points from which to consider the current governance role and potential future contribution of these unique mechanisms. Though falling outside of the formal normative frameworks provided by national and international legal systems, MDB safeguards, and the IAMs tasked with ensuring compliance therewith, have very quickly become a key element in the rapidly evolving and increasingly complex tableau of generally accepted and frequently demanded environmental and social governance standards, wherever such standards are relevant and applicable to project lending and to related activities of MDBs and certain other financial institutions. IAMs play an increasingly important role, not alone in defending such standards, but in shaping their normative elaboration, both through participation in the process of periodic review and through their interpretation and practical application to an ever wider range of activities and circumstances. As safeguard policies inevitably become more sophisticated, drawing inspiration from long established and highly elaborated fields of legal practice, such as environmental law and human rights law, the quasi-judicial role of IAMs is likely to become even more important and pronounced. This is illustrated by the recent tendency to incorporate human rights-type values into safeguard policies, which creates a potentially significant role for IAMS in framing the parameters of a human-rights based-approach to the protection of the interests of persons and communities adversely affected by bank-funded development projects. Indeed, this development also highlights the important informal and supplemental role of IAMs in promoting formal human rights standards, official enforcement of which may often be sorely lacking. Thus the quasi-legal character and the indirect legal significance of IAMs demands examination. As IAMs have always been intended to serve as mechanisms for fostering and promoting continuing institutional learning within MDBs regarding the growing societal demands for environmental and social governance, and the resulting continuing evolution of relevant environmental and social governance standards, it is only to be expected that IAMs practitioners should seize any opportunity to reflect upon and learn from their mutually relevant practices, challenges and general experience. Such reflection is absolutely vital for effective capacity-building in the practice of environmental and social accountability and compliance, as well as for the continuing elaboration of coherent and environmentally and socially progressive safeguard policies and of socially equitable and accessible rules of procedure governing the IAMs themselves. By reflecting upon established IAMs principles and practice, a stock-taking exercise of the sort undertaken in this volume may also assist in

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promoting the use of IAMs-type arrangements among new IFI institutions and private-sector lenders, and in informing the composition and functioning of such mechanisms.

IAMs: Origins, Evolution and Context

Several contributors to this volume have sought to trace the origins and evolution of IAMs, while placing these mechanisms within the broader context of global developments in environmental and social governance. Richard Bissell, who has been centrally involved with IAMs since their earliest appearance, examines the original creation of IAMs as a response to the demands of civil society for environmental and social accountability on the part of MDBs, and traces their evolution to date through their first 25 years. He also speculates on the future challenges that IAMs are likely to face including, inter alia, their spread to a new cohort of development organisations (FAO, UNEP, UNDP, etc.) which may alter the underlying expectations and challenges, the rise to prominence of human rights standards which might cause lenders to seek out alternative sources of finance, the rise of private sector accountability mechanisms, the rise of vertical funds (GEF, FCPF, GCF, etc.) as mobilisers of sustainable development finance, the proliferation of new instant communications technologies among (formerly) remote communities, and the increasingly complex range of functions and services offered by IAMs. Seeking to place the role of IAMs squarely within the broad range of practices and standards of administrative good governance, which are held forth by a diverse collection of transnational regulatory actors, and which are increasingly accepted universally as legitimate despite their lack of formal legal status, Owen McIntyre analyses and explains MDB safeguards and the oversight role of IAMs as exemplars of the ‘global administrative law’ phenomenon. This concept ‘encompasses the legal mechanisms, principles and practices, along with the supporting social understandings, that promote or otherwise affect the accountability of global administrative bodies’,2 which might be understood to include MDBs in the pursuit of their environmental and social goals. Such an analytical perspective is particularly helpful in seeking to understand the complex interrelationship between IAMs practice and the functioning of formal legal measures for environmental and social protection. With a view to illustrating how IAMs can function in practical terms to address and resolve “problem” development projects, and the differences 2  B. Kingsbury, N. Krisch and R. B. Stewart, ‘The Emergence of Global Administrative Law’, (2005) 65, No. 3/4, Law and Contemporary Problems 15–61.

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between individual mechanisms in terms of their functions and practical operation, Suresh Nanwani selects and analyses two complaints involving such projects: one from Indonesia addressed to the Asian Development Bank Accountability Mechanism; and one from Paraguay addressed to the World Bank Inspection Panel. He also examines alternative avenues within both MDBs, by which affected peoples’ concerns about a problem project might be addressed. On this basis, the author concludes that MDBs/IFIs have generally been proactive in seeking to address such concerns, either through mechanisms established specifically for this purpose, or using other mechanisms, such as the Grievance Redress Service (GRS) recently established by the World Bank. Focusing on the absolutely central role of civil society organisations in the creation and continuing development of IAMs, and on the shared interests of civil society and IAMs practitioners within the accountability ‘community of practice’, Komala Ramachandra reflects upon the functioning of civil society, often through transnational advocacy networks, in promoting transparency and accountability at MDBs/IFIs with a view to ensuring greater sustainability, poverty reduction and inclusivity. She introduces the various types of civil society organisation active in the accountability field, as well as the different types of network through which they act, before recounting the origins of the IAMs established at the World Bank, IFC and ADB. However, the author highlights the critical importance of continued civil society engagement with IAMs, characterising the campaign for MDB/IFI accountability through IAMs as ‘a continuing process’, within which civil society must ensure that IAMs can function independently in order to provide meaningful outcomes for affected communities. Civil society organisations do this by engaging actively with donor governments, MDB/IFI management, IAMs themselves and other CSOs. CSOs can defend IAMs from external interference, provide advice on emerging issues, supplement institutional memory, and participate in periodic reviews. CSOs have also sponsored attempts to monitor and evaluate the performance of IAMs. The author concludes with a number of recommendations intended to address discontent among civil society actors, particularly regarding the effectiveness of remedies currently available to affected persons from IAMs and the responsiveness of bank management to the findings of IAMs investigations.

IAMs: Leading-Edge Developments

Other contributors have explored developments at the leading-edge of IAMs practice, examining areas where IAMs are likely to have a key role to play including, inter alia, accountability in private sector development finance, ensuring

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compliance with human rights standards, and oversight of implementation of MDB access to information policies. In an examination of the prospects for ensuring the accountability of private sector development project lending, Karen Wendt considers the “Equator Principles”, which provide a risk management framework for environmental and social risks arising in project finance, foreign direct investment, public private partnerships and structured export finance. As the Equator Principles have been adopted to date by 94 financial institutions from 37 countries, the author describes them as providing the ‘gold standard’ as regards due diligence and monitoring to support responsible risk-related decision-making. She also explores the longer-term prospects for such private-sector financial institutions engaging in environmental and social conflict resolution processes and concludes that the benefits are wide-ranging, including conflict avoidance, de-risking of assets, avoidance of reputational risk, establishment of better relations with stakeholders and communities, and creation of an effective scheme for lessons learned and organisational development. Focusing on the increasingly important role of IAMs in ensuring respect and protection for human rights values and standards, Mara Tignino explains that, while international organisations tend to evade juridical oversight of their human rights performance, IAMs can remedy this gap by granting adversely affected individuals and communities the right to bring human rights-based complaints before an international forum. The author approaches this important topic from a number of directions, focusing first of all on the role of the accountability provided by IAMs in the realisation of the putative human right of access to justice, as set out and promoted in Principle 10 of the Rio Declaration on Environment and Development. Secondly, taking the World Bank’s recently adopted Environmental and Social Framework (ESF) as a benchmark, she examines the extent to which MDB safeguard policies import various human rights values, including environmental rights, indigenous peoples’ rights, and cross-cutting rights of public participation. Finally, by considering a number of case studies involving complaints brought to the World Bank Inspection Panel and the International Finance Corporation (IFC) CAO regarding the protection of indigenous rights, the author examines the functioning of IAMs as regards human rights. She concludes that IAMs have created a new pathway for public participation and access to justice, that human rights have entered the practice of IAMs as interpretive tools which serve to clarify the true normative meaning of safeguard standards, and that the increasingly detailed and harmonised human rights practice of MDBs enhances the relevance and significance of human rights values in the implementation of development project lending.

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Exploring an often overlooked function of IAMs, i.e. that of ensuring compliance with the access to information policies adopted by all MDBs, Maeve McDonagh examines the evolution and development of such policies across a number of institutions and reviews their adherence to best practice standards in access to information law, in particular the Article 19 principles for modelling freedom of information (FOI) legislation. MDB freedom of information policies represent a major and sometimes traumatic shift in the banks’ culture and operations, away from an instinctively secretive diplomatic and technocratic culture, and towards the greater transparency and related public participation which legitimacy demands and which now characterises the working environments of intergovernmental organisations generally. In charting the development and adoption by MDBs of their access to information policies, the author highlights the pivotal role of civil society actors in promoting greater transparency within MDBs. Despite some variation in the relative strength of the access to information policies of different MDBs, she finds a high degree of homogeneity, which increases with successive periodic policy revisions. However, she concludes in respect of all six of the institutional policies examined that the MDBs continue to fall short of international standards and of many of their counterpart regimes established under national access to information laws. The shortcomings identified include excessively broad exceptions to access requirements and a lack of transparency in the operation and administration of MDB access to information policies themselves.

IAMs: Operation and Performance

A third cohort of contributors examine the practical operation and routine performance of IAMs in the discharge of their core functions. For example, Susan Park sets out to identify whether the IAMs, as institutions which promote and ensure accountability on the part of their associated MDBs, are themselves accountable and, if so, by what metric. The author concludes, on the basis of a detailed examination of IAMs practice, that IAMs tend in practice to meet bureaucratic standards of accountability. In other words, they adhere to the substantive and procedural standards set out in their founding documents and seek to demonstrate this using five key indicators, i.e. independence, transparency, impartiality, accessibility and responsiveness. She also finds that the IAMs themselves, through their network or ‘community of practice’ have identified and developed two further indicators which shed light on how they are meeting their mandate, i.e. efficiency and effectiveness. However, the author also finds that IAMs do not generally enjoy the independence to determine

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when and how they meet international legal standards, and instead defer to the relationship existing between the particular MDB and international law, as determined by that MDB. Exceptions to this general position include the European Bank for Reconstruction and Development’s (EBRD) PCM, which applies EU and international legal standards as expressly incorporated into the EBRD Environmental and Social Policy, and the IFC’s CAO, which declares its adherence to the UN Guiding Principles on Business and Human Rights. She concludes, therefore, that more remains to be done in order to subject IAMs, and their associated MDBs, to international legal and normative standards, but that IAMs remain restricted by the reluctance of MDB Member States to embrace such progressive innovation. Having regard to the rapidly increasing scale and complexity of IAMs practice, Andria Naudé Fourie highlights the growing need to develop comprehensive methodologies for studying the application and normative development of good governance principles within this particular field of activity. She explains that the expansion of the body of practice is due, inter alia, to the growing number of new mechanisms being created, the growing number of cases filed before IAMs, the ever greater diversity of functions with which IAMs are entrusted, as well as the growing prevalence of co-financed projects which can involve complaints in respect of a single project being submitted to more than one mechanism. Based on her own extensive experience of research and teaching on IAMs, dating back to 2005, the author sets out a proposal for just such a learning methodology, that she believes is required if the IAMs community is to be sufficiently informed to be able to address emerging challenges and to realise potential opportunities for promoting progressive innovation in governance. In particular, she focuses on the lessons she has learned in the course of designing and developing a multipurpose database of IAMs practice material. Focusing specifically on the World Bank Inspection Panel’s ground-breaking practice in the interpretation and application of environmental norms and standards contained in the World Bank’s Operational Policies and Bank Procedures, Wei-Ching Lin provides a comprehensive account of the Bank’s policy requirements regarding environmental impact assessment, natural habitats, and forests, as well as a detailed analysis of the Panel’s approach to their application in selected cases. In so doing, the author provides fascinating insights into early challenges to the normative character of these environmental requirements, and into certain factors influencing the Panel’s thinking and approach. For example, the Panel confirmed early on that the Bank’s safeguard policies were binding in nature and, further, that in addition to physical infrastructure investment, structural reform, involving changes in government

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policies and regulations in specific sectors, could also result in significant environmental impacts that ought to be considered and managed under the Bank’s due diligence. In addition, the author illustrates how the Panel might have regard to a borrower State’s existing environmental treaty obligations when determining whether the Bank’s safeguard policies have been observed. He concludes that the Inspection Panel’s practice in this area testifies to ‘the evolution and progressive development of the environmental standards for international development projects’, and to the Panel’s influence and leadership as regards other IAMs in regional MDBs. Once again questioning the legal or quasi-legal nature of IAMs, Vanessa Richard explores whether these mechanisms function to provide a form of legal accountability. On the basis of a major four-year empirical research study funded by the European Research Council, she argues that the established practice of IAMs in their critical global governance role amounts in many respects to ‘international legal accountability’, broadly understood as a transnational normative phenomenon that can circumvent the formal immunity of MDBs in international law. She highlights the close interrelationship between the stated aims of IAMs, i.e. to provide redress for project-affected persons and to ensure more effective development financing, etc., and the additional, supplemental governance benefit of ensuring international legal accountability. She concludes that the role of IAMs in development governance is kaleidoscopic, i.e. that the particular one that can be seen among a range of related and closely interconnected roles changes depending on the angle at which it is viewed. She convincingly argues that, from one angle, it clearly encompasses the promotion of the rule of law in global governance. In a second contributed chapter, Suresh Nanwani explores the continuing proliferation of IAMs through the creation of new mechanisms by institutions such as the United Nations Development Programme (UNDP) and the Caribbean Development Bank. The author examines several aspects and implications of this growth in the sector including, in particular, the specific triggers for the establishment of new mechanisms, and the increasing challenge of cooperation and collaboration among an ever-expanding community of IAMs. As regards proliferation, the author points out that 9 mechanisms attended the first international gathering of IAMs in 2004, but that this had grown to 15 mechanisms listed on IAMnet at the time of writing. (As if to confirm his observations on proliferation, the IAMnet network has now grown to include 19 mechanisms). The author takes the time to consider the nature of the “independence” enjoyed by mechanisms old and new, examining the different events and contextual factors that triggered their creation. He considers the inspirational example provided by the World Bank Inspection Panel for

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institutions seeking to frame effective new mechanisms, though it is also clear that the entire IAMs community engages in a great deal of structured mutual learning. He also charts the number of cases filed and registered by the various mechanisms over the years. The author helpfully traces the emergence and development of inter-mechanism collaboration, from the 2007 Bujagali Project claims before the accountability mechanisms the co-funding MDBs, the World Bank and African Development Bank (AfDB), to the 2011 Panama Canal Expansion Program claims, which resulted in simultaneous complaints to the Inter-American Development Bank (IDB) ICIM, the Japan Bank for International Cooperation (JBIC) mechanism and European Investment Bank CM. He concludes with a section setting out lessons learned for the enhancement of IAMs in their pursuit of accountability. Co-editors Suresh Nanwani and Owen McIntyre close the volume with a joint contribution examining the outcome and impact of a selection of five case studies of high-profile complaints submitted to IAMs in order to determine the extent to which IAMs practice operates to promote good governance standards and effective institutional accountability. The authors also investigate whether IAMs influence the institutional development of their associated MDBs more generally. The chapter concludes with the identification of measures that might be taken in order to better address the promotion of standards, good governance and accountability. In particular, the authors explore the potentially significant role of IAMs in promoting good governance standards through the progressive interpretive elaboration of cutting-edge regulatory requirements incorporated into MDB environmental and social safeguard policies. These include such stipulations as the social protection requirement to consider the affordability of basic levels of essential services for disadvantaged or vulnerable people, or the climate-related requirement to conduct an assessment of the readiness of a coal-fired power plant for the eventual deployment (whenever available) of carbon capture and storage (CCS) technology. Taken together, these diverse contributions are intended to inform, question and challenge current IAMs practice with a view to its continuing progressive development, whilst highlighting the critical contribution of IAMs to the development and enforcement of the body of global governance rules and standards rapidly evolving in support of environmental and social sustainability. The editors are quite confident that these generous contributions, made in good faith by a very distinguished cohort of expert commentators and bringing together a wealth of experience in every aspect of IAMs practice, will help to frame the continuing debate on IAMs in particular, and on public accountability more generally, for many years to come.

Index Aarhus Convention 34, 138n, 255–256 access to information 7, 140, 142–144, 147, 150–151, 153, 155–160, 329 accountability, types of, including collective, individual, diagonal, hierarchical, legal, vertical 167, 180, 308, 311, 317, 381 accountability mechanisms in: AfDB, Independent Review Mechanism  172, 277 ADB, Accountability Mechanism 172, 277 BSTDB, Complaints mechanism, Internal Audit Department 277 CDB, Project Complaints Mechanism  278 DEG, Independent Complaints Mechanism 278 EBRD, Project Complaint Mechanism  172, 278 EIB, Complaints Mechanism and European Ombudsman 278 FMO, Independent Complaints Mechanism 278 IADB/IDB, Independent Consultation and Investigation Mechanism 172, 278 IFC and MIGA, Compliance Advisor Ombudsman (CAO) Office 172, 279 JBIC, Office of Examiner for Environmental Guidelines 279 NEXI, Objection Procedures on Environmental Guidelines 279 NIB, Complaints on non-compliance 279 OPIC, Office of Accountability 279 UNDP, Social and Environmental Compliance Review and Stakeholder Response Mechanism 280 World Bank (International Bank for Reconstruction and Development and International Development Association), World Bank Inspection Panel 172, 280 Accra Agenda for Action (2008)/Paris Declaration on Aid Effectiveness (2005) 118, 118n, 119, 272, 284

ADB. See Asian Development Bank ADB Safeguard Policy Statement (2009) 120, 131, 323 AfDB. See African Development Bank. AfDB Integrated Safeguards System (2013) 323, 323n African Development Bank (AfDB) anticorruption 52, 339, 365–367, 372 Article 19 Principles 134, 140, 142–143, 150, 153, 156, 158 Asian Development Bank (ADB) ATI (access to information) policies 136, 137–142, 144–154, 156–161 Bangladesh: Padma Multipurpose Bridge Project 363–367 Board of Directors, Board of Executive Directors viii, 7, 43, 50, 55–57, 120n, 121, 123, 166, 171, 177, 185, 211, 237, 241, 263, 265–268, 282n, 285, 287, 348, 356–364, 366, 370–371 borrower(s) 7, 8, 13, 24, 53, 55, 57, 60, 114–115, 117, 123–125, 132, 135–136, 145, 159, 162, 173–174, 179, 210, 212, 216, 240, 243–248, 250, 253–255, 259–261, 302, 321–323, 326–327, 338, 342, 360–362, 381 BSTDB. See Black Sea Trade and Development Bank CAO Office. See Compliance Advisor Ombudsman Office CDB. See Caribbean Development Bank civil society/civil society organizations/CSOs  viii, ix, 2–5, 8, 10, 19, 34, 38, 51, 109, 136–138, 159, 163–164, 166, 169, 179, 185, 269–270, 273–274, 283, 287–289, 290–292, 294–303, 305–307, 323, 335–338, 345, 350–351, 354, 370, 373–374, 376–377, 379 climate change 29, 74, 78, 98, 100, 119, 331, 371n Compliance Advisor Ombudsman (CAO) confidentiality 81, 92, 114, 134, 136n, 137, 139, 144, 154, 156, 186, 192n, 276, 288

384 DEG. See German Investment Corporation EBRD. See European Bank for Reconstruction and Development EBRD’s Environmental and Social Policy (2014) 21n, 22n, 30n, 33, 33n, 34n, 120, 180, 367, 367n, 380 EIB. See European Investment Bank (EIB) environmental impact assessment (EIA)  118–119, 199, 235–236, 244, 246, 366, 380 EPFIs/Equator Principles Financial Institutions 61, 64, 64n, 72–75, 78, 88–90, 93, 96–97, 103–104 Equator Principles vii, 3, 18, 23, 23n, 31, 31n, 60, 60n, 62, 66n, 75, 81, 93, 294n, 378 equity investment(s) vii, 1, 129 European Ombudsman 11n, 80, 82, 87, 158, 266, 278 FMO. See Netherlands Development Finance Company G-7 Finance Ministers Report, Fukuoka (2000) 12 G-7 Finance Ministers and Central Bank Governors Statement, Palermo (2001) 270 German Investment Corporation (DEG) global administrative law/GAL 21, 21n, 24, 28–33, 35–40, 65, 99, 169, 329, 376 globalization 25, 40

index indigenous peoples ix, 10, 16, 18, 34n, 48–49, 55–56, 71–72, 78, 92, 110, 118n, 120, 121, 121n, 123–124, 126, 128–130, 199, 200, 213, 219, 221, 223, 247, 250, 253, 284, 313, 340, 378 Inter-American Development Bank (IADB), (IDB) International Bank for Reconstruction and Development (IBRD) International Development Association (IDA) International Finance Corporation (IFC) JBIC. See Japan Bank for International Corporation Jam v. IFC 107, 108n, 307n, 313n Japan Bank for International Corporation (JBIC) management and staff ix, 13, 116, 210–211, 265n, 349, 352, 359 MIGA. See Multilateral Investment Guarantee Agency Multilateral Investment Guarantee Agency (MIGA)

human rights 2, 3, 11, 17, 21, 23–24, 31–34, 36, 60, 63, 68–72, 78, 82, 87, 90, 92, 97, 100, 103, 105–111, 116, 121–124, 125, 125n, 131, 132, 136, 162, 169, 188, 212, 287, 292, 298, 300, 307n, 312, 335, 371, 375–378

Netherlands Development Finance Company (FMO) NEXI. See Nippon Export and Investment Insurance NIB. See Nordic Investment Bank Nippon Export and Investment Insurance (NEXI) non-governmental organizations (NGOs) vii, 13, 16, 18, 35, 38, 45–50, 52, 55, 63, 66, 71, 73–78, 89, 95–97, 115, 133, 141, 162, 165, 175, 254, 273, 291–292, 325–326, 353, 371 Nordic Investment Bank (NIB)

IADB, IDB. See Inter-American Development Bank IFC. See International Finance Corporation IFC’s Sustainability Framework including Performance Standards (2012) 3, 23, 27n, 64, 72, 81, 132, 323 Independent Accountability Mechanisms Network/IAM Network 1, 4, 178, 182, 263, 264, 265, 287–288, 290

OECD Guidelines for Multinational Enterprises 27, 27n, 81, 85, 85n, 97n, 99, 100, 100n operational policies and procedures 43–44, 52, 117, 187, 191, 210, 260, 314n, 319, 320 OPIC. See Overseas Private Investment Corporation Overseas Private Investment Corporation (OPIC)

385

index Paris Declaration on Aid Effectiveness (2005)/Accra Agenda for Action (2008) 118, 118n, 119, 272, 284 procurement 12, 42, 52, 53, 58, 124n, 145, 146, 147, 149, 262, 276 project-affected people (PAP) 44, 58, 59, 88, 164, 168, 171, 175, 176, 179, 184–185, 200, 210, 212, 234, 236, 238, 243, 246, 251, 254–255, 260, 341, 351–352, 354 project claims/cases, Argentina, Paraguay: Yacyretá Hydroelectric Project 282, 334 Bangladesh: Jamuna Bridge Project  283 Cambodia: Forest Concession Management and Control Pilot Project 248n, 255n, 257–261, 334n Cambodia: Greater Mekong Subregion Rehabilitation of the Railway in Cambodia Project 322, 328, 335 Chad: Petroleum Development and Pipeline Project 125–126, 212n, 220–221, 250n, 334n, 371 Chile: Pangue Hydroelectric Project 129, 130, 270, 295–296 China: Fuzhou Environmental Improvement Project 327n, 355–363 China: Western Poverty Reduction Project/Qinghai Project 248–252, 260, 302, 319–320, 324, 333–334 Congo: Transitional Support for Economic Recovery Credit and Emergency Economic and Social Reunification Support Project (Forest-related operations project) 127–129, 248, 253–254, 259, 261 Georgia et al, Baku-Tbilisi-Ceyhan Pipeline Project 226–229, 282 India: Mumbai Urban Transport Project 54, 252, 324, 333 India: Sardar Sarovar (Narmada) dam projects 10, 31, 171, 239–240, 269–270, 294 India: Tata Mundra Coal Power Plant/ Mundra Ultra Mega Power 307, 312–313, 322–324, 333–334 Indonesia: Community Empowerment for Rural Development Project 45–48 Indonesia: Wilmar Group 28–29, 334

Kenya: Electricity Expansion Project  290, 340–344 Kyrgyz: CAREC Transport Corridor I Project 334, 349–355, 371 Nepal: Arun III Hydroelectric project (proposed) 55–56, 59, 283, 302, 319, 324 Pakistan: Chashma Right Bank Irrigation Project Stage III 334, 362–363 Pakistan: National Drainage Program Project 248, 256–257, 334 Panama: Pando-Monte Lirio Hydroelectric Power Project 272n, 282, 286, 333n Paraguay: Sustainable Agriculture and Rural Development Project 48–52, 58n Peru: Yanacocha/Cajamarca 130–131 Slovenia: Šoštanj Thermal Power Project  369–370 Sri Lanka: Southern Transport Development Project 53, 54, 282–283, 327, 363 Thailand: Samut Prakarn Wastewater Management Project 296, 357–359 Uganda: Bujagali Hydropower Project/ Bujagali projects 19, 218–219, 272–273, 282–283, 286, 324n, 333n, 334n, 344, 382 Uganda: Transport Sector Development Project – Additional Financing  255n, 344–349 reprisals 300, 304 retaliation 82, 300, 345–346 safeguard policies 1–3, 5, 19, 21–24, 26–28, 30–31, 34–38, 40, 65, 117, 119–121, 127, 133, 164, 168, 169, 173, 175, 241, 243–244, 246, 249, 259–261, 294, 335, 339, 367, 370, 371, 373, 375, 378, 380–382 Tshwane Principles (2013) 141–143 United Nations Development Programme (UNDP) United Nations Guiding Principles on Business and Human Rights 70, 75, 90n, 91, 98, 99, 111, 111n, 180, 380

386 United Nations International Covenant on Civil and Political Rights (1966) 106, 335 United Nations International Covenant on Economic, Social and Cultural Rights (1966) 106n, 335, 367 United Nations Universal Declaration of Human Rights (1948) 100, 106, 106n, 123 UNDP. See United Nations Development Programme

index vertical funds 17, 18, 376 Wapenhans Report (1992) 10, 10n, 164n, 170, 270, 270n WBIP. See World Bank Inspection Panel World Bank’s Environmental and Sustainable Framework (ESF) (2016) 108–110, 121, 123–125, 132, 245, 246, 378 World Bank’s Grievance Redress Service (GRS) 53n, 56, 56n, 57, 57n, 124, 262, 342–343, 377