- How is the establishment of a dialogue to discuss arrangements for funding Loss & Damage (as per the CMA Pact-Decision in para.73)[1] different from establishing a funding facility?
- What are the legal implications (if any) of the decision taken by the CMA under the Paris Agreement to establish such a dialogue for the potential scope and establishment of a funding facility in the future or any other outcomes, findings or results of the dialogue?
Advice:
1. Difference between establishing a dialogue and a funding facility
In Glasgow, during the last days of the conference, developing countries (led by AOSIS and G77 & China) introduced a proposal for a Glasgow Loss and Damage Facility to be established to provide finance for loss and damage (L&D) to vulnerable developing countries. This proposal was blocked by developed countries, however, and as a compromise, the Glasgow Dialogue was established.
Paragraph 73 of the CMA Pact-decision states that the Conference of the Parties serving as the meeting of the Parties to the Paris Agreement:
“Decides to establish the Glasgow Dialogue between Parties, relevant organizations and stakeholders to discuss the arrangements for the funding of activities to avert, minimize and address loss and damage associated with the adverse impacts of climate change, to take place in the first sessional period of each year of the Subsidiary Body for Implementation, concluding at its sixtieth session (June 2024)”.
The CMA Pact-decision further “Requests the Subsidiary Body for Implementation to organize the Glasgow Dialogue in cooperation with the Executive Committee of the Warsaw International Mechanism for Loss and Damage associated with Climate Change Impacts” (para.74).
The Glasgow Dialogue created by paragraph 73 is essentially a discussion forum or platform to talk about funding arrangements for addressing L&D. The Dialogue is the result of a political compromise reached in the final days of the conference. It is a procedural approach to further consider and discuss the issue of funding for L&D caused by climate change.
The CMA Pact-decision does not prescribe the outcomes that are expected from the Dialogue. In particular, there is nothing in the decision to suggest that the establishment of a funding facility will be the outcome, or one of the outcomes, from the Dialogue. The Dialogue’s remit is “(…) to discuss the arrangements for the funding of activities … to address loss and damage …”
The Cambridge dictionary defines “arrangement” as “a plan or preparation for how something will happen”. Paragraph 73 does not provide any further detail on the nature, form or scope of these “arrangements”. The decision, therefore, doesn’t prejudge any particular outcome, but limits itself to setting out the process (a dialogue to discuss plans or arrangements) which may result in funding L&D.
Given the context, some parties will try to use the Dialogue as a tool for moving the agenda forward and to, for example, discuss a potential mechanism, institutional arrangements, modalities for funding and available sources. Other parties are likely to engage less constructively and with a view to preventing or delaying the creation of an institutionalized arrangements.
The decision does not go as far as to expressly require that arrangements be put in place, nor does it provide any indication as to the timeframe under which these arrangements might be put in place. The only requirements under paras.73 and 74 are for the Dialogue to meet at the first sessional meeting of the Subsidiary Body on Implementation (SBI) each year to June 2024, and for it to be organised in cooperation with the Executive Committee of the Warsaw International Mechanism for Loss and Damage associated with Climate Change Impacts (WIM). This means that the Glasgow Dialogue in effect involves three annual meetings in May/June 2022, 2023 and 2024 respectively, and is to conclude its work at the June 2024 session. But it does not state that the Dialogue must have agreed or put in place the arrangements by the conclusion of the Dialogue in June 2024. It is possible that the Dialogue may simply make recommendations on funding arrangements that are to be developed thereafter.
So for the time being, parties have only agreed to start talking about what could be done in terms of funding arrangements. They are still a long way from establishing an actual vehicle for funding. Whilst this could be considered a rather vague compromise, the text in the decision sets as least an expectation for some tangible outcome from the Dialogue.
2. Legal implications of the Decision to establish the Dialogue being taken by the CMA
The decision to establish the Dialogue was taken by the CMA, and the corresponding COP Pact-decision under the UNFCCC simply “endorses” that decision (at para.43). The question here is whether legal consequences might follow from the fact that the CMA took the decision – rather than the COP or both the CMA and COP. Does this mean that the content of the Dialogue and its outcomes (e.g. the establishment of a future funding facility) are somehow confined by the scope of the Paris Agreement (PA) and its adopting decision 1/CP.21 which (in paragraph 51) states that Article 8 on L&D “does not involve or provide a basis for any liability or compensation”?
Some developed country parties may use the text in paragraph 51 of the 1/CP.21 to argue that the issue of state responsibility or compensation for climate change is excluded from the Dialogue. In their view the Paris Agreement has moved away from the strict binary differentiation between Annex I and non-Annex I countries based on their historical responsibility for climate change. As a result, current capabilities and national circumstance are more important in determining parties’ expected conduct under the Paris Agreement.
Under this argument, parties would still be entitled to establish a funding facility that provides money to countries that have suffered L&D as a result of climate change as such. But criteria such as state responsibility for the climate change effects that have caused the L&D could not form part of the structure, modalities or functioning of the facility.
The opposing legal assessment is that the COP decision cannot be construed as an express waiver of rights and does not abrogate the general rules of international law on state responsibility. It may, to some extent, limit the future work of the WIM under Paris Agreement but does not confine countries wider rights and obligations in the context. So they could talk about liability and compensation as part of the Dialogue.
In practice, however, those legal positions are of limited relevance. The climate negotiations are a political process and outcomes largely depend on inter-governmental dynamics and power constellations. Because the CMA decision was also formally endorsed by the COP, there appears to be little room to argue that, in the light of paragraph 51 in 1/CP.21, parties’ rights to address questions of liability and compensation as part of the Dialogue will be limited.
However, should the Dialogue actually lead to the establishment of a funding facility that includes elements of reparation or compensation payments, state responsibility or liability for climate change induced damages, paragraph 51 of 1/CP.21 might prevent parties from placing such a facility under the wider governance of the WIM. But this is a different question, and the answer will also depend on the permanent governance arrangements for the WIM parties still need to decide upon (CMA or COP or both).
[1] Currently at: https://unfccc.int/sites/default/files/resource/cma3_auv_2_cover%20decision.pdf