Remedy: – setting a wrong, right
These and other questions are being considered in a new research project called Accessing Remedy in Development Finance (DevRem) undertaken by the Office of the UN High Commissioner for Human Rights (OHCHR). The project’s objective is to survey existing good practices on providing or enabling remedies for harm caused by development projects and programmes. The DevRem project seeks to recommend ways in which effective remedies can be obtained more consistently by project-affected people.
In June 2020, the Independent Redress Mechanism (IRM) of the Green Climate Fund (GCF) partnered with OHCHR and hosted a regional virtual consultation among Asian Multi-lateral Development Banks (MDBs), bilateral Development Finance Institutions (DFIs) and their accountability mechanisms, and civil society organisations. Over 30 participants attended from institutions including the Asian Infrastructure Investment Bank, Asian Development Bank, Green Climate Fund, Japan International Cooperation Agency, Nippon Export and Investment Insurance, NGO Forum on ADB, PT Sarana Multi Infrastruktur, and VedvarendeEnergi.
There were animated and constructive discussions on a range of topics, including on the prevention of harm and tools for early action, the implications of operating in high risk circumstances (including in the context of Covid-19), and how to close the existing gaps in providing remedies. Participants debated the differences between private and public sector financial institutions and how they operate, and how to increase transparency and engagement. While independent accountability mechanisms like the IRM of the GCF have an important role to play in providing remedies, there were discussions around other tools to empower affected communities.
One way to provide greater legal rights to affected communities is to write these into legal agreements between the international financial institution and the borrower or project developer. Communities will then be able to directly enforce these contractual rights. Project teams should also have the time, scope and incentives to redesign projects early on, so that problems can be identified and addressed before they cause harm. When project plans have been finalised and set in stone by the time they are taken to the affected community for consultation, the project misses out on the opportunity to build trust with the community and promote long-term sustainability. Current “decide, announce and justify” strategies often followed by international financial institutions lose the opportunity to be welcomed by a community and inevitably give up the possibility of having a supportive and integrated community response to the project. Instead, this sows the seeds of dissent and conflict.
Participants also discussed the challenges faced by complainants in obtaining remedies in the face of rising incidents of retaliation against them. This is worsened by the Covid-19 pandemic which has, in some countries in the Asian region, led to restrictions on civil society space.
The most animated discussion came towards the end of the 3-hour consultation, when creative juices were flowing, and participants became more comfortable with the virtual platform, switching on their videos and engaging as if they were in the same room. The discussion was sparked by the mention of “lender liability” by one participant, a topic that is controversial in the world of development finance. Lender liability is about the legal rights and duties of a financial institution that lends money for development to a country or private sector entity to implement a project. To what extent is a lender liable for the harm caused by a project implemented by a borrower? Will investors be scared off if too much is expected of them in terms of monitoring what happens with their money and being held liable for harm caused? Do lenders owe no duties of care, when they actively shape the content and actions of development projects together with a borrower, and claim brownie points for achieving good development outcomes? If lenders are not liable for the harm caused from projects funded by them, why is it that they have over the last three decades adopted and implemented environmental and social safeguard policies for preventing that very harm? If lenders have chosen to establish these policies, then should they also not be expected to do due diligence to monitor the implementation of those safeguards? Other participants drew attention to recent legal developments and trends, where the older theories of lender immunity from liability for harm caused by projects have given way to new theories of lender liability for project based environmental, human rights and labour related harms.
The animated discussion made it clear that another webinar on this issue would be justified. The IRM is also giving thought to how it can meaningfully contribute to this debate, particularly as this issue appears to be resurfacing at a time when modern thinking has evolved on the DFI’s duty and responsibilities for project harm. Watch this space for more research and critical reflection on the issue!
In summary, the discussions provided much food for thought. The discussions will feed into the preparation of OHCHR’s “Accessing Remedy in Development Finance” publication. This work also draws and builds upon previous research conducted by OHCHR - the Accountability and Remedy Project (ARP). The ARP was conducted in three phases, with the third phase recently completed. ARPIII considers the role of non-State-based grievance mechanisms in achieving accountability and access to remedy. The final report was officially released at a launch event on 8 July 2020, in which the IRM’s Head, Dr. Lalanath de Silva, also spoke as a panellist. For more information on ARPIII visit the ARPIII website.