Compliance with finance obligations under Paris Agreement

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Date produced: 14/11/2017

In what ways could the art 15 Committee meaningfully promote compliance with, and implementation of, developed countries’ finance obligations?


1.             Background

Article 15 of the Paris Agreement refers to the establishment of a mechanism to facilitate implementation of and promote compliance with the provisions of the Paris Agreement, to consist of an expert based committee that is “facilitative in nature” and should function “in a manner that is transparent, non-adversarial and non-punitive” (Committee). The modalities and procedures of the Committee remain under discussion by the APA, with discussions continuing earlier this year at APA 1.3[1] and, at the time of writing, at APA 1.4[2], prior to which states parties were invited to submit (and a number did submit) submissions relating to the substance of discussions.

This note seeks to suggest some ways in which the Article 15 mechanism might be able to play a role in promoting compliance with developed country parties’ financial commitments under the Paris Agreement, while acknowledging significant limitations in the same regard.

2.             Financial Mechanism

It is important to remember that the requirement for developed country parties to provide financial resources to developing countries (Article 9) has been aligned with the existing Financial Mechanism under the Convention, which, in accordance with Article 9.8, also serves as the financial mechanism of the Paris Agreement.  The Financial Mechanism in its current form (including the various funds for particular purposes) is accountable to the COP. The COP itself has established a standing committee on finance (SCF), which (among other things) publishes biennial reports on climate finance flows (most recently in 2016). The technical report sections of the biennial reports are primarily prepared by external experts appointed by the SCF, in recognition of the technical difficulty of assessing climate finance data, and the uncertainties inherent in such data. In our view (and the general view set out in recent submissions), it would not be necessary or beneficial for the Committee to attempt in any way to duplicate this work.

Also to be noted is the fact that Article 9.5 of the Paris Agreement requires developed country parties to biennially communicate information regarding their provision of financial resources and efforts to mobilise climate finance. This information will be rolled into the five-yearly global stocktake of implementation of the Paris Agreement in accordance with Article 14. Regular provision of information of financial support provided is also required by Article 13.9.

3.             Article 15 Committee – possible expertise, modalities and procedures

3.1          Key issues

It is submitted, based primarily upon:

(A)            the context described above, including the existing operation of the Financial Mechanism;

(B)            a review of the co-facilitators’ informal note of discussions of the Article 15 Mechanism at APA 1.3;

(C)            a review of states parties’ submissions on the issue ahead of APA 1.4; and

(D)           the drafting of Article 15 itself,

that the issues under the following bold headings are likely to be pertinent to the modalities, procedures and expertise that may be necessary to empower the Article 15 mechanism to promote compliance with developed parties’ financial commitments (and to determine the extent of such ability). The discussion accompanying each point attempts to suggest arguments that may be made, or have been made, during the course of negotiations. The list is intended as a starting point and does not purport to be a comprehensive analysis of all relevant issues.

It is further submitted that the relationship between the Committee and other elements of the Paris Agreement (and the Convention) is an issue of overriding importance, and the various elements of the Paris Agreement therefore need to be developed in close coordination.

3.2          Scope

The APA appears to be of the view that the Committee should have oversight of implementation of and compliance with the Paris Agreement as a whole (thereby including climate finance obligations under Article 9), although there has been some discussion as to whether, for example, mandatory provisions should be treated differently to non-binding ones. Article 9.1, which requires developed countries to provide financial resources to assist developing countries, is a mandatory provision.

One particular relevant consideration is how collective obligations should be treated (including certain provisions of Article 9). It may be difficult to assess individual compliance with collective obligations. The view of APA 1.3 appears to have been that such obligations should not be excluded from the scope of the Committee. However, it was also argued at APA 1.3 that the Committee ought to prioritise legally binding provisions on individual obligations (noting the small size of the Committee).

Suggestion: Given the collective nature of certain Article 9 obligations, it is submitted that concerned parties should argue that the modalities and procedures of the Committee should expressly state that the entirety of Article 9 is within scope of the Committee’s work.

3.3          Structure and personnel

It is our understanding that, per decision of the COP, the Committee will consist of 12 individual members with “recognised competence in relevant scientific, technical, sociological or legal fields”, to be elected by the CMA for 3-year terms, on the basis of equitable geographical representation[3] (1/CP21 paragraph 102).

Presumably, “technical” experts could include financial experts with expertise relevant to climate finance, if required according to the agreed modalities of the Committee. However, this is uncertain. Furthermore, the limitation of the size of the Committee to 12 persons would not necessarily preclude the Committee from seeking advice and opinions from third party experts if required and permitted by the governing documents of the Committee (as the SCF relies on third party experts for compilation of its biennial reports). However, the technical difficulties in assessing climate finance data should not be underestimated, nor (as mentioned elsewhere in this note) should the Committee attempt to duplicate work that has been carried out by other bodies.

Suggestion: It is submitted that the modalities for the Committee should expressly state that the Committee may (or, perhaps, must) include at least one expert with sufficient expertise and knowledge in climate finance issues. Given the linkages to other bodies and mechanisms of the Paris Agreement and Convention, it would be preferable for such person(s) to also have a thorough understanding of such other bodies and mechanisms.

3.4          Relationship between the Article 15 Mechanism and the Financial Mechanism

The relationship between the Article 15 Mechanism and the Financial Mechanism (and other arrangements under the Paris Agreement or the Convention, including the Global Stocktake and the Technology Mechanism) was expressly identified as an issue of discussion during APA 1.3. APA 1.3 also noted the need to avoid duplication of effort or functions of other bodies. This sentiment has been echoed by states parties’ recent submissions. The point was given significant emphasis by the EU’s submission dated 9 October 2017, which stated that the Committee should complement other bodies serving the Paris Agreement, and emphasised that its modalities and procedures should developed with particular attention being paid to its relationships with the other elements of the Paris Agreement.

Australia has sensibly suggested in its recent submission (September 2017) that the Committee should not interfere with the independence and governance of other bodies and processes.


In light of the above, it is submitted that it may beneficial for the modalities and procedures for the Committee to expressly enable (perhaps with the consent of the state party concerned):

(A)            the Committee to draw upon the biennial climate finance reports of the SCF, together with other work product related to the Financial Mechanism, when required in order to assess or promote compliance with developed country parties’ financial commitments under the Paris Agreement;

(B)            other bodies serving the Paris Agreement or the Convention (including climate Finance bodies, such as the SFC, GEF and GCF) to participate in dialogue between states parties and the Committee;[4]

(C)            the Committee to consult with other bodies and to use the information shared during such consultation in its own deliberations; and/or

(D)           other bodies serving the Paris Agreement to draw on the outputs of the Committee[5].

3.5          Mode of functioning

It is unclear whether “facilitate implementation” and “promote compliance” will be treated as separate functions. Much more certain, however, is that the Committee will not have punitive or judicial powers, since it is envisaged by Article 15.2 as being “facilitative in nature”. APA 1.3 appears to have agreed that the Committee will not be able to impose penalties or take other hard enforcement actions. Further, in line with its “non-adversarial” nature, it will not act as a mechanism for the settlement of disputes, and should respect national sovereignty.

The facilitative nature of the Committee significantly restricts its potential modes of operation.  It appears to be out of the question that the Committee will be able to enforce developed states parties’ financial obligations (or indeed any other obligations under the Paris Agreement), at least in any “hard” or legal sense. Instead, the Committee might be geared to providing assistance and guidance, perhaps through a process of consultation with the party concerned. It is highly unlikely to be able to operate as a kind of complaints mechanism by which countries affected by developed countries’ non-compliance with their financial obligations would be able to seek redress.

Possible outputs of the Committee following referral of matters may therefore include (per discussion at APA 1.3):

(A)            advice/recommendations/suggestions;

(B)            technical assistance;

(C)            requests for compliance;

(D)           assistance in developing implementation/compliance action plans, or requiring submission of the same

(E)            sharing information and experience;

(F)            facilitating access to financial support;

(G)           contribution to the global stocktake (Article 14)

(H)           recommendations to the CMA and to other subsidiary bodies of the Paris Agreement and/or Convention, including the bodies of the Financial Mechanism (SCF, GEF and GCF);[6]

(I)             providing information in relation to other support bodies, possibly including the GEF and GCF;

(J)             statements of concern or findings of non-compliance (although this may be inconsistent with the Committee’s non-adversarial nature; such outputs have however been suggested by AOSIS and EU, amongst others).

The Committee is also required to deliver routine annual reports on its activities to the CMA (Article 15.3).

Suggestion: It is submitted that the ability of the Committee to promote compliance with financial obligations in particular may be enhanced by its modalities/procedures permitting the Committee to make reports and/or recommendations to the bodies of the Financial Mechanism, including the SCF, GEF and GCF.

                      (This ability may, however, be contested during negotiations, in particular by developed countries keen to emphasise the facilitative, non-adversarial nature of the Committee).

3.6          Initiation of Committee activity

The question of the possible triggers to Committee activity was considered at APA 1.3. This is a key issue in determining the operational nature of the Committee. Parties’ submissions have diverged significantly on this issue.

In order to maximise the Committee’ ambit and enhance its ability to promote compliance with financial obligations, concerned parties might argue for the following triggers. It is submitted that developing countries in particular would be well advised to argue for making the referral process as open as possible, while being mindful of the Committee’s non-adversarial nature:

–       Self-referral. This is uncontroversial and agreed upon by all submissions. Self-referrals alone would be unlikely to result in the Committee being consulted in all appropriate cases – an issue noted by various states parties in their submissions. However, Saudi Arabia (on behalf of the Arab Group) has argued that self-referral should be the sole trigger for the Article 15 Mechanism.

–       Referral by another party (or parties). This trigger would theoretically allow a country adversely affected by developed countries’ non-compliance with financial obligations to refer the party at fault to the Committee. It would be unlikely to be agreed since there is a perceived risk of politicizing the Committee or using referrals as an adversarial tool.

Suggestion: It may be beneficial for the modalities and procedures for the Committee to permit such third country referrals where appropriate, with relevant safeguards. For example, referrals may be allowed with the consent of the party concerned, or perhaps following consultation (or attempted consultation) between the parties, or where an issue of general significance is raised (such as interpretation).

–       Objective triggers. Recent submissions by Japan and AILAC have argued that automatic, objective triggers should apply based on outputs from the review process under Article 13 (enhanced transparency framework).

Suggestion: if the modalities/procedures for the Committee include automatic triggers, such triggers might include non-compliance with Article 9 obligations insofar as this is identifiable from information provided under Article 13 (especially Article 13.9).

It is a moot point whether the global stocktake (Article 14) should also be capable of triggering Committee activity. Australia has argued against a linkage between Article 14 and Article 15, and China has suggested caution. Indonesia, meanwhile, has suggested the global stocktake as a “source of reference” for the Committee.

–       Trigger by Committee. Arguments have been made for and against the Committee’s right to make referrals on its own accord, with some states parties preferring objective triggers, or self-referrals alone.

Suggestion: it may be beneficial for the Committee to have the right of self-referral and for non-compliance with developed countries’ Article 9 financial obligations to be an express ground of such referral.

–       Trigger by other bodies/mechanisms.

Suggestion: It is submitted that it would also be beneficial for bodies relating to the Financial Mechanism to be given an express right of referral to Committee (including the SCF and GEF).

It should be noted that the discussions to date do not appear to envisage the Committee of its own accord undertaking periodic reviews of the implementation of the Paris Agreement as a whole. The global stocktake provisions of Article 14 place this duty on the CMA itself.

3.7          Procedures

Discussions regarding procedures for the Committee have been held by the APA and also feature in states parties’ submissions to date. It is not proposed to cover detailed procedural issues (other than those referred to elsewhere in this note) as these tend to be of general relevance to the operation of the Committee rather than of specific relevance to the above question in relation to financial commitments. Furthermore, the detailed procedures may eventually be elaborated by the Committee itself following a decision on its modalities (as suggested by New Zealand’s recent submission).


[1] Bonn, May 2017.
[2] Bonn, November 2017.
[3] (1/CP21 paragraph 102).
[4] This was suggested in AOSIS’ submission dated 17 October 2017
[5] Given the non-adversarial nature of the Committee (see below), this is likely to require the prior consent of the party concerned.
[6] As suggested by Mali’s recent submission on behalf of the African Group).