XXXIX Course on International Law

Current Issues in International Development: Some

Perspectives from the World Bank

Lecture 1The Rule of Law in the World Bank: Legal and

Policy Issues

Anne-Marie LeroySenior Vice President and General Counsel,

World Bank

Outline

I. Introduction to the World Bank Group

II. The Legal Order of International Organizations

III. Understanding the Rule of Law in the World Bank’s Legal Order

Introduction to World Bank Group

What is the World Bank? World Bank Group - Composition

International Bank for Reconstruction and Development (IBRD) — 1944

International Finance Corporation (IFC) — 1956 International Development Association (IDA)

1960 International Centre for Settlement of

Investment Disputes (ICSID) — 1966 Multilateral Investment Guarantee Agency

(MIGA) — 1988 IBRD + IDA = “The World Bank”

International Bank for Reconstruction and Development (IBRD)

Established at Bretton Woods with IMF Reconstruction and Economic Development

after World War II Development assistance for Middle-Income

and Creditworthy Low-Income Countries Borrows from Capital Markets; AAA Rating Objectives and instruments Evolved over time Poverty Reduction Mandate

International Development Association (IDA)

Bank’s Concessional Lending Arm Loans on Most-Favourable Terms to

Development Countries Periodic Replenishments from Rich Members IDA Funds Allocated to Borrowers Based on

Income Levels and Track Record Special Allocations for Conflict Legally and Financially Distinct from IBRD but

Same Management and Staff

Bank Ownership and Governance Structure

Shareholders are all Member Countries IBRD – 187 members; and IDA – 170 members Voting Proportionate to Member’s Shares

Board of Governors Highest Decision-Making Organ; Each Member

Appoints a Governor Meets Annually; Mail Votes

Executive Directors (24) 5 Largest Shareholders Appoint Separate Directors Other Shareholders elect 19 Directors

President - appointed by Executive Directors

Bank’s Board of Governors v. Executive Directors

Board of Governors All corporate authority vested in governors Governors may delegate some powers to directors List of “Reserved Powers”

Powers of Executive Directors Responsibility for Bank’s general operations Exercise all powers delegated by Governors Power to select World Bank president, interpret

Articles, establish committees Dual duties: Bank official and country representative

Bank President Appointed and fired by Executive Directors

Cannot be a Governor or Executive Director 2011 New Guidelines

Chief of staff and Conducts Ordinary Business Subject to Board’s General Control

Appointment and Dismissal of Staff 5-Year Renewable Contract Duty to the Bank alone

Bank’s Accountability and Review Entities

Administrative Tribunal; Inspection Panel; Sanctions Board; Access to Information Board

Internal Audit Department; Independent Evaluations Group

Internal Transparency and Accountability No Strict Articles Basis

President’s Power to Conduct Ordinary Business Others Entities under Implied Powers

Varying Operational and Functional Autonomy

The Legal Order of International Organizations

Elements of the Legal Order Constitution Decisions and Rules of the

Organization International Law (treaties, general

principles, custom)

World Bank’s Internal Legal Hierarchy

Manuals Policies, Rules, and Procedures Issued by Management

Applicable Rules of

International Law (relevant treaties and

custom)

ARTICLES OF AGREEMENT

By-laws

Governors’ Resolutions (Including Statute of Administrative Tribunal)

(in

Board Resolutions and Board Approved Policies and Procedures

Understanding the Rule of Law in the World Bank’s Legal

Order

Characteristics of the Rule of Law Rules known in advance Enforceable rules Mechanisms for ensuring proper

application of rules and departure from them according to established procedures

Resolution of conflicts in the application of the rules through binding decisions of an independent judicial or arbitral body

Known procedures for amending rules when they no longer serve their purpose

Challenges in the application of the Rule of Law in the World Bank’s Internal Legal Order

Transparency and Predictability Existence of disperse and scattered rules Multiple processes for adopting exception

from rules Enforceability and Accountability

Operation of various accountability and oversight bodies

Absence of a court of law to adjudicate on internal institutional differences

Promotion of the Rule of Law through the Bank’s organs

Role of Executive Directors Interpretation of the Articles of

Agreements not as a court of law, but constrained by the Bank’s legal framework and guided by the requirements of effectiveness, reasonableness, good faith, and the Bank’s common interests and those of its members as a whole.

Possibility to acting as an informal dispute resolution mechanism for differences between entities established by the Board.

Promotion of the Rule of Law through the Bank’s organs Role of President and Management

Interpretation of the Bank’s internal rules within the Bank’s legal framework and guided by the requirements of effectiveness, reasonableness, good faith, and the Bank’s common interests.

Operation as informal dispute resolution mechanisms for institutional disputes between subordinate units

Promotion of the Rule of Law through the Bank’s organs Role of General Counsel

Provision of legal advise for the interpretation of the Bank’s Articles and policy decisions by the Executive Directors

Approval of all lending operations prior to the Executive Directors’ approval

Interventions in institutional controversies upon request from the Executive Directors or Management

Recent Initiatives for the Promotion of Internal Rule of Law

Access to Information Policy Sanctions Reform Modernization and Consolidation of Operational Policies and Procedures

The External Effect of a World Bank’s Legal Order governed by the Rule of Law

Effectiveness Legitimacy Consistency with the

organization’s mandate