Forest Peoples Programme: The World Bank and Human Rights

This briefing provides a short overview of the legal issues related to the obligations of the World Bank to account for and respect human rights in both its safeguard polices and development/loan operations.

1. The World Bank has no formal, written policy on human rights, either in terms of the Bank’s role, or lack thereof, in promoting and requiring respect for human rights in its operations or internally in terms of its policies. OD 4.20 on Indigenous Peoples of 1991 is the only operational policy that explicitly mentions human rights and the Bank has never officially stated its understanding of the term “human rights” in that directive.

a) largely on the legal interpretation given to the Bank’s Articles of Agreement (its Constitutional instrument) and its Relationship Agreement with the United Nations and;

b) an examination of the status of the Bank in the international legal system and whether a duty to respect human rights attaches to that status. In other words, two fundamental questions are: I. is the Bank prohibited from or limited in some way from addressing and accounting for indigenous peoples’ and other human rights by its Articles and; II is the Bank a subject of international law bound by its norms?

3. The Bank has long maintained that it is not required to respect and promote all human rights in its operations and policies. Similarly, it also maintains that it cannot require that its borrowers respect human rights in connection with Bank-funded projects.

a) The Bank’s Articles of Agreement is the highest law applying to the Bank, prohibits it from interfering in the political affairs of its members and requires that all of its decision-making must be based solely on economic considerations, and;

b) Its borrowers are sovereign states and, therefore, the Bank may not require that they account for and respect human rights in Bank-funded projects because this would be illegitimate interference in the internal affairs of their borrowers.

4. The prevailing interpretation within the Bank of its Articles leads to a classification of human rights issues as either economic or political; those that can be classified as economic, social or cultural rights are legitimate and cognizable, those classified as political rights are beyond the jurisdiction of the Bank. For this reason, the Bank has often highlighted what it perceives to be its contribution to furthering economic, social and cultural human rights through poverty alleviation, while disregarding the majority of civil and political rights[1] -- “For the World Bank, protecting and advancing human rights means helping the world’s poorest people escape poverty.”[2]

5. The counter argument made by numerous scholars, lawyers and UN experts states, on the first point, that interpretation of the term “political affairs” must occur in the context of contemporary international law. This position is supported by the International Court of Justice, which stated that “an international instrument has to be interpreted and applied within the framework of the entire legal system prevailing at the time of its interpretation.”[3] In contemporary international law, human rights are considered to be of international concern rather than the domestic political affairs of states. As Judge Weeramantry of the International Court of Justice observed

In its ongoing development, the concept of human rights has long passed the stage when it was a narrow parochial concern between sovereign and subject. We have reached the stage, today, at which the human rights of anyone, anywhere, are the concern of everyone, everywhere. [4]

6. The UN Charter has a similar provision prohibiting interference in internal political affairs.[5] However, it is standard and accepted practice within the UN that this provision does not apply to human rights, which are deemed of international concern and therefore not solely within the internal sovereign or political sphere of states.[6]

7. With regard to the term “only economic considerations”, it is well documented that human rights have economic implications and therefore such rights can also be characterized as economic considerations. For instance, World Bank studies show that countries with good human rights records have greater success in implementing Bank-funded economic development projects and receive higher levels of investment that countries with bad records.[7] Similarly, World Bank publications have recognized the economic costs of discrimination against indigenous peoples.[8] James Wolfensohn, the current President of the Bank, goes further stating unequivocally that “Without the protection of human and property rights, and a comprehensive framework of laws, no equitable development is possible.”[9]

8. On the second point, the vast majority of the Bank’s members have voluntarily committed themselves to abide by human rights standards through ratification of international conventions, through the formation of international customary human rights norms and, in some cases, by assenting to UN and other declarations.[10] In doing so, they have accepted international obligations to promote, respect, protect and fulfil human rights and, in many cases, international oversight of their compliance with these obligations. As stated by Judge Weeramantry of the ICJ, “there is not even the semblance of a suggestion in contemporary international law that [human rights] obligations amount to a derogation of sovereignty.[11]

9. Integration of human rights issues into Bank policy setting and operational activities would, in the majority of cases, merely restate aims, objectives and obligations to which the vast majority of its members have already subscribed. In states with a monist legal system[1] – a significant number of Bank members - these international obligations are an integral part of their domestic law; in dualist states[2] they have been incorporated, or are required to be incorporated, into domestic law.[12]

10. The preceding shows that there are strong legal arguments that the Bank’s Articles cannot prohibit attention to and respect for all human rights and that state sovereignty is not a valid excuse for not requiring that borrowers respect human rights in Bank-funded operations. However, it does not address the more fundamental issue of whether the Bank has a legal obligation to respect, promote and protect human rights.

11. The Bank has legal obligations to respect human rights and to account for these rights in its safeguard policies and operations for four reasons:

b) The Bank, as a general principle and as a Specialized Agency of the United Nations, has obligations derived from the human rights provisions of the Charter of the UN and international human rights instruments interpreting and elaborating upon those provisions;

c) The Bank is an international organization created by and comprised of states, each of which has an obligation to promote and respect human rights both individually and through collective action; the Bank is one place such collective action is required, and;

d) The Bank is required by general international law not to interfere with or facilitate violations of its borrowers international obligations, including those pertaining to human rights.

12. A subject of international law is an entity capable of possessing international rights and duties as well as the capacity to enforce these in international tribunals. The Bank is regarded as a subject of international law by scholars and the Bank itself. As a subject of international law, the Bank has rights and duties, separate from and in addition to its member states, defined by international law.

13. Neither the Bank nor its Articles are above the law; as the International Court of Justice observed, “international organizations are bound by any obligations incumbent upon them under general rules of international law . . .”[13] These general rules include principles of customary international law, jus cogens norms, such as the right to self-determination, the right to life and the prohibition of systematic racial discrimination, and international obligations erga omnes. The latter are duties owed by states “towards the international community as a whole . . .,”[14] and derive from, among others, the prohibition of genocide and “from the principles and rules concerning the basic rights of the human person, including protection from slavery and racial discrimination.”[15] Based in part on this statement, the International Law Institute has supported the proposition that the general obligation to respect human rights is itself an obligation erga omnes.

14. Concerning treaties, the general rule of international law is that third parties are not bound by treaties without their express consent.[16] The Bank is not party to any human rights conventions and therefore is not directly bound. This does not mean however that these instruments are irrelevant to the Bank’s obligations: they may restate or inform the content of binding rules of customary international law,[17] they set out the obligations of most Bank members, and they elaborate upon the human rights provisions of the UN Charter, a source of obligations for both the Bank and its members (see below).

15. Both the Bank and its members have obligations under the UN Charter that supersede the provisions of the Bank’s Articles.[18] Article 103 of the Charter states unequivocally that: “In the event of a conflict between the obligations of the Members of the United Nations under the present Charter and their obligations under any other international instrument, their obligations under the present Charter shall prevail.” Article 1(3) of the UN Charter defines one of the primary purposes and principles of the UN to be “promoting and encouraging respect for human rights and fundamental freedoms for all without distinction as to race, sex, language or religion.” Under the heading “International Economic and Social Cooperation,” Article 55 of the Charter requires the UN to promote “universal respect for, and observance of human rights and fundamental freedoms for all . . ..” The UN Charter’s provisions on human rights are therefore directly relevant to the larger issue of the Bank’s responsibility towards human rights.

16. The Bank is also a Specialized Agency of the UN. Its status as a specialized agency of the UN, and the nature of the relationship between the Bank and UN, is based upon and defined by a treaty known as the Relationship Agreement.[19] Article 4(3) of the Relationship Agreement stresses that the Bank is an independent organization and recognizes that:

action to be taken by the Bank on any loan matter is to be determined by the independent exercise of the Bank’s own judgment in accordance with the Bank’s Articles of Agreement. The United Nations recognises, therefore, that it would be sound policy to refrain from making recommendations to the Bank with respect to particular loans or with respect to the terms or conditions of financing by the Bank.

17. While this provision provides for a much looser association between the UN and the Bank than exists between the UN and other specialized agencies, it relates only to UN involvement in Bank-decision making processes rather than any larger responsibility the Bank may have under the UN Charter or international law in general. Skogly observes that, “part of the reasoning behind bringing these organizations [specialized agencies] into a formalised relationship with the UN must have been to grant them, both legally and practically, rights and obligations in relationship to the UN . . ..”[20] These obligations, at a minimum, include respect for the principles and purposes of the UN. Therefore, as a specialized agency of the UN, the Bank has obligations derived from the UN Charter, in particular to act in conformity with the Charter.[21] This means that the Bank’s policies, internal and external, and operations must be formulated and implemented in accordance with the Charter’s provisions related to human rights.

18. The Charter’s provisions dealing with human rights are very basic. Other than self-determination, the only right explicitly mentioned is the prohibition of discrimination. Partly for this reason, in 1948, the UN General Assembly adopted the Universal Declaration of Human Rights to elaborate upon and specify the Charter’s human rights provisions and obligations. The Universal Declaration, wholly or in part, is widely considered to express general principles of international law and binding norms of customary law despite its non-binding status when adopted.[22] Subsequent codification of human rights by the UN, the International Covenants and CERD in particular, has also further clarified ambiguities in the meaning of the Charter’s provisions. Professor Sohn observes that, although the Covenants

resemble traditional international agreements which bind only those who ratify them, it seems clear that they partake of the creative force found in the Declaration and constitute in a similar fashion an authoritative interpretation of the basic rules of international law on the subject of human rights which are embodied in the Charter of the United Nations. . . . Consequently, . . . they are of some importance . . . with respect to the interpretation of the Charter obligations of the non-ratifying states.[23]

19. Presumably this would also apply to the Charter obligations of non-ratifying subjects of international law, especially members of the UN system such as the Bank. The jurisprudence of the UN bodies, such as the Human Rights Committee and the Committee on the Elimination of All Racial Discrimination, charged with monitoring state compliance with human rights instruments is also important in this context. Their interpretations of the human rights instruments not only inform the obligations of state-parties, they also develop greater understanding of the nature of Charter-based obligations.

20. The conclusion that can be drawn from the preceding is that the Bank has obligations towards human rights derived from the UN Charter, both as a general principle of international law and as a Specialized Agency. These obligations also extend to at least the core rights set forth in the Universal Declaration and UN human rights treaties, as these instruments are simply interpretations of the Charter’s human rights provisions.

21. The obligations of the Bank’s members are relatively straightforward. As members of the UN, Bank members are legally bound by the UN Charter “to take a joint and separate action in cooperation with the Organisation for the achievement of the purposes set forth in Article 55” (see, para. 15, above).[24] This obligation also requires that states act in conformity with human rights guarantees in their conduct within and with the Bank, for instance, as members of the board, as policy setters and as borrowers.

The obligations of the Bank vis-à-vis the human rights obligations of its members

22. While the Bank has rights and duties separate from and in addition to its member states, the obligations of its members states are not irrelevant. On the contrary, the Bank is obliged, as is any other subject of the law, to ensure that it neither undermines the ability of other subjects, including its members, to faithfully fulfil their international obligations nor facilitates or assists violation of those obligations.[25] This duty is binding on all subjects of international law. This adds an extra dimension to the obligations of the Bank and requires that its policies and operations account for and respect the obligations of its members under ratified human rights conventions, regional as well as universal, and other sources of law binding on them.

As parties to UN and regional human rights instruments, the Bank’s members are obligated to respect, ensure and fulfil the rights set forth in those instruments. What this means in practice will vary depending on the specific obligations of the various members of the Bank and how those obligations are implicated in Bank-financed activities. On a policy level, the Bank is obliged to ensure that policy formulation and implementation account for and respect its members” human rights obligations. Bradlow and Grossman concur: “in general, it is safe to assume that the IFIs should perform their functions in a way which supports the fundamental rights of individuals and peoples.”[26]

Finally, it is relevant in this context to note that the Bank’s Operational Policy 4.01 on Environmental Assessment clearly states that “the Bank takes into account . . . the obligations of the country, pertaining to project activities, under relevant international environmental treaties and agreements. The Bank does not finance project activities that would contravene such country obligations, as identified during the EA” (para. 3 ). If this is possible with regard to environmental obligations, is there a compelling reason why human rights obligations should not be accorded equal status?[27]

[1] Monist legal systems are those in which international law, including ratified international instruments, are considered to be part of an integrated whole together with domestic law.

[2] Dualist legal systems are those which consider international and domestic law to be separate and distinct, the former entering the latter only by way of act of Parliament incorporating international law directly into domestic law.

[1] See, generally, Development and Human Rights: The Role of the World Bank: Washington DC: World Bank (1998).

[2] Id., at 30.

[3] Advisory Opinion on the Legal Consequences for States of the Continued Presence of South Africa in Namibia, ICJ Rep. 16 (1971), at 31.

[4] Separate Opinion of Judge Weeramantry, Bosnia and Herzegovina v. Yugoslavia, 11 July 1996.

[5] U.N. Charter, Art. 2(7): “Nothing contained in the present Charter shall authorize the United Nations to intervene in matters which are essentially within the domestic jurisdiction of any state . . ..”

[6] See, among others, Vienna Declaration and Programme of Action of the UN World Conference on Human Rights (1993), Sec. II, para. 2: “The promotion and protection of all human rights and fundamental freedoms must be considered as a priority objective of the United Nations in accordance with it purposes and principles, in particular the purpose of international cooperation. In the framework of these purposes and principles, the promotion and protection of human rights is a legitimate concern of the international community.”

[7] J. Isham, D. Kaufmann and L. Pritchett, Civil Liberties, Democracy, and the Performance of Government Projects, 11The World Bank Economic Review, 1997.

[8] H.A.Patrinos, The Costs of Discrimination in Latin America. Human Capital Development and Operations Policy, HCO Discussion Papers. Washington DC: World Bank. See, also, G. Psacharopoulos & H.A. Patrinos (eds.). Indigenous People and Poverty in Latin America: An Empirical Analysis. Washington, DC: The World Bank. (1994).

[9] A Proposal for a Comprehensive Development Framework, Memorandum from James Wolfensohn, President of the World Bank, to the Board, Management and Staff of the World Bank Group, Jan. 21, 1999.

[10] Of the Bank’s 181 members, 144 have ratified the International Covenant on Civil and Political Rights, 142 the International Covenant on Economic, Social and Cultural Rights and 179 the Convention on the Rights of the Child.

[11] Separate Opinion of Judge Weeramantry, Bosnia and Herzegovina v. Yugoslavia, 11 July 1996.

[12] Article 2(2) of the ICCPR, for instance, “Where not already provided for by existing legislative or other measures, each State Party to the present Covenant undertakes to take the necessary steps, in accordance with its constitutional processes and with the provisions of the present Covenant, to adopt such legislative or other measures as may be necessary to give effect to the rights recognized in the present Covenant.”

[13] Interpretation of the Agreement of 25 March 1951 between the WHO and Egypt. International Court of Justice, Reports of Judgment, Advisory Opinions and Orders. (1980), at 89-90.

[14] Barcelona Traction, Light and Power Company, Limited, Second Phase, Judgment, ICJ Rep., 32, paras. 33-4, at 33. (1970); reaffirmed in, East Timor (Portugal v Australia) ICJ Reports (1995), 90 et seq. and, Bosnia Herzegovina v. Yugoslavia, Preliminary Objections, ICJ Reports (1996), 595 et seq.

[15] Id., at para. 34.

[16] Art. 34, Vienna Convention on the Law of Treaties (1969).

[17] A rule in a treaty may become binding on non-parties if it becomes part of international customary law. Art. 38, Vienna Convention on the Law of Treaties (1969) and Art. 38, Vienna Convention on the Law of Treaties between States and International Organizations or between International Organizations (1986).

[18] I. Shihata, the former General Counsel of the Bank stated that: “Members obligations under the UN Charter prevail over their other treaty obligations, including their obligations under the Bank’s Articles of Agreement, by force of an explicit provision in the UN Charter (Article 103). The Bank itself is bound, by virtue of its Relationship Agreement with the UN, to take note of the above-mentioned Charter obligations assumed by its members . . ..”

[19] Agreement Between the United Nations and the International Bank for Reconstruction and Development, Nov. 15, 1947, 16 U.N.T.S. 346

[20] S. Skogly, Human Rights Obligations of the World Bank and IMF, at 100.

[21] Id., 99-102.

[22] The International Court of Justice recognized the obligatory force of the Charter and Declaration in, among others, United States Diplomatic and Consular Staff in Tehran (United States of America v. Iran), ICJ Rep. 3, 42, 1980.

[23] L. Sohn, The Human Rights Law of the Charter, 12 Tex. Int’l LJ 129, 135-36 (1977).

[24] Article 56, Charter of the United Nations.

[25] The World Bank, the IMF and Human Rights, at 63; and, D. Bradlow & C. Grossman, Limited Mandates and Intertwined Problems: A New Challenge for the World Bank and the IMF. 17 Human Rights Q. 411, 428;

[26] D. Bradlow & C. Grossman, Limited Mandates and Intertwined Problems: A New Challenge for the World Bank and the IMF. 17 Human Rights Q. 411, at note 63.

[27] During a meeting with human rights NGOs in Prague in September 2000, the Bank’s President, James Wolfensohn, committed to “making explicit reference to human rights in Bank documents,” and “to work with Bank staff to include human rights in their policy documents . . ..” Human Rights Watch, Press Release, 22 September 2000, ‘NGOs Urge Implementation of Wolfensohn Commitment to Human Rights’.