1. Can you review and briefly summarize the existing arrangements between the conference/ meeting of parties to the governing international treaty (e.g. framework agreement) and the conference/meeting of parties to a subsidiary legal instrument (e.g. Biodiversity Convention/Biosafety Protocol, Vienna Convention on the Protection of the Ozone Layer/Montreal Protocol) with regard to the subsidiary international legal instrument’s (e.g. the protocol’s) financial mechanisms?
2. Are there instances where the COP/MP of the subsidiary international legal instrument has to formally submit its guidance to the operating entities of its own financial mechanism via the supreme body or another body of the governing convention/treaty?
1. Question 1
a) Convention on Biodiversity and protocols
Convention on Biodiversity (CBD): Article 21 of the Convention on Biodiversity establishes a financial mechanism for the purposes of the Convention and states that the mechanism “shall function under the authority and guidance of, and be accountable to” the COP for the purposes of the convention. This financial mechanism is operated by the Global Environment Facility.
Cartagena Protocol and Nagoya Protocol to the CBD: Both protocols, in Articles 28 and 25 respectively, provide that the financial mechanism of the Convention on Biodiversity shall also be the financial mechanism of the protocols. Each protocol refers to the conference of parties serving as the meeting of parties to the relevant protocol (COP-MOP) providing guidance with respect to the financial mechanism regarding capacity building under the protocols, for “consideration by the Conference of Parties“.
Each protocol also states that “the guidance to the financial mechanism of the Convention in relevant decisions of the Conference of Parties, including those agreed before the adoption of this Protocol, shall apply, mutatis mutandis, to the provisions of this Article“.
Taking the above provisions together, a clear inference can be drawn that guidance to the financial mechanism under the Convention on Biodiversity and the two protocols is to be provided to the mechanism by the COP, although the COP-MOP may make recommendations on aspects of the same relevant to the protocols. This is substantiated by decisions of the COP and COP-MOP relating to the financial mechanism (see response to question 2 below).
b) Vienna Convention and Montreal Protocol
Vienna Convention: The Vienna Convention on the Protection of the Ozone Layer differs from the Convention on Biodiversity and the UNFCCC in that it does not create a financial mechanism as such (although two trust funds have been established by decisions of the COP).
Montreal Protocol: The Montreal Protocol similarly differs from the protocols to the Convention on Biodiversity and the Paris Agreement in that the protocol itself required the parties thereto to establish a financial mechanism, rather than providing that the financial mechanism of the convention would serve the protocol. The mechanism was to include a multilateral fund which “shall operate under the authority of the Parties [defined the parties to the protocol rather than the parties to the convention] who shall decide on its overall policies“.
The financial mechanism (including the multilateral fund), together with its executive committee, was established by Decision IV/18 of the parties to the Montreal Protocol. The same decision adopted terms of reference of the executive committee and the multilateral fund. This all occurred independently from the COP of the Vienna Convention. Various further decisions were taken in relation to the financial mechanism by the parties to the Montreal Protocol, including reviews and evaluations, measures to improve its functioning, decisions on budgets and contributions, and decisions on the executive committee.
c) UNFCCC, Kyoto Protocol and Paris Agreement
UNFCCC: The financial mechanism of the UNFCCC was established by article 11 of the UNFCCC, which further states that “it shall function under the guidance of and be accountable to the Conference of Parties, which shall decide on its policies, programme priorities and eligibility criteria related to this Convention“.
Kyoto Protocol: The financial mechanism of the UNFCCC also serves the Kyoto Protocol. Article 11 of the Kyoto Protocol provides for provision of financial resources from developed country parties to developing country parties “through the entity or entities entrusted with the operation of the financial mechanism of the Convention“. The entities currently entrusted with such role are the Global Environment Facility (GEF) and Green Climate Fund (GCF).
The Kyoto Protocol does not refer to the provision of guidance to the financial mechanism by the CMP, but does state that the guidance contained in relevant decisions of the COP will apply to Article 11 (see Article 11(2)) This applies to decisions of the COP both before and after the coming into force of the Kyoto Protocol.
It should be noted that the Adaptation Fund, which was established by the COP (Decision 10/CP7) to finance adaptation projects in accordance with Article 12(8) of the Kyoto Protocol (and which is itself funded by a share of the proceeds from the clean development mechanism), falls under the guidance of the CMP rather than the COP (COP Decision 10/CP.7, paragraph 4). The CMP provided its initial guidance in respect of the Adaptation Fund in Decision CMP 28/CMP1, and has also taken a number of further decisions in this regard. However, the CMP has not passed decisions relating to guidance for the financial mechanism.
Article 11 of the Kyoto Protocol can also be usefully contrasted with article 13, which created the clean development mechanism (which is therefore a creature of the Kyoto Protocol itself). Unlike for the financial mechanism, article 12(4) provides that the clean development mechanism shall be subject to the authority and guidance of the CMP.
Paris Agreement: Article 9(8) of the Paris Agreement makes clear that the financial mechanism of the UNFCCC will serve as the financial mechanism of the Paris Agreement. However, the agreement itself is silent as to the question of guidance, including whether the CMA will be empowered to provide guidance to the GEF and GCF directly or such guidance will need to pass through the COP.
The answer appears to be contained in the COP decision relating to implementation of the Paris Agreement (Decision 1/CP.21). Paragraph 61 states that the COP recommends that the CMA shall provide guidance “to the entities entrusted with the operation of the Financial Mechanism of the Convention on the policies, programme priorities and eligibility criteria” relating to the Paris Agreement “for transmission by the Conference of the Parties” (emphasis added). This wording appears to envisage that although the CMA may formulate guidance, that guidance will ultimately be transmitted to the GEF/GCF by the COP rather than being provided directly by the CMA.
Paragraph 62 of the same decision, in wording echoing that used under other conventions, provides that guidance issued by the COP to the entities entrusted with the operation of the financial mechanism, including by decisions agreed before the adoption of the Paris Agreement, shall apply mutatis mutandis to the Paris Agreement.
The wording of the decision arguably appears to put the CMA in a slightly stronger position vis-à-vis the COP than the COP MOP vis-à-vis the COP under the Convention on Biodiversity since the implication is that the CMA is free to develop guidance to be transmitted by the COP, as opposed to making only recommendations to the COP in respect of the same. Nonetheless, in our view it does not provide for guidance to be issued directly by the CMA to the GEF and GCF.
By way of contrast, the sustainable development mechanism established by article 6 of the Paris Agreement is stated to be established “under the authority and guidance” of the CMA. This wording echoes that in relation to the clean development mechanism of the Kyoto Protocol.
In summary, our view is that the CMA may create guidance for the operating entities of the financial mechanism (which is also the financial mechanism of the Convention), but it appears that such guidance must be formally transmitted through the COP.
2. Question 2
Yes – this is evident in numerous decisions of the COP-MOP of the Cartagena Protocol and the Nagoya Protocol which contain recommendations to the COP to include in its guidance to the GEF (as operating entity of the financial mechanism under the Convention on Biodiversity).
Refer to COP-MOP Decisions BS-I/15, II/5, III/5, IV/5, VI/5 and VIII/5 under the Cartagena Protocol and Decisions NP-1/6 and 2/6 under the Nagoya Protocol.