Guidance to the Green Climate Fund

Legal assistance paper

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Date produced: 02/06/2015

Is the COP entitled to give guidance to the GCF on issues other than matters related to policies, programme priorities and eligibility criteria?

Summary:

The COP has the discretion to give guidance to the GCF on issues other than matters related to policies, programme priorities and eligibility criteria. This interpretation of the relevant provision contained in the ‘Arrangements between the Conference of the Parties and the Green Climate Fund’ conforms with the literal meaning of the text, as well as with other similar and applicable formulations contained in other COP decisions and the Governing Instrument of the GCF.

The identification of such additional matters stands ultimately within the discretion of the COP, in accordance with its functions under the Convention, the principles and functions of the GCF, and the underlying rationale of guidance provision which is the one of guaranteeing the accountability of the Fund.

Advice:

This query is about interpreting the object and extent of the guidance that the Conference of the Parties (COP) can provide to the Green Climate Fund (GCF). In particular, it is asked whether the COP can extend such guidance to matters not expressly mentioned in the Arrangements between the COP and the GCF (policies, programme priorities and eligibility criteria).[1] This is an issue of legal interpretation of the applicable norms, which include the UNFCCC and the relevant decisions of the COP.

The COP formally established the GCF with a decision in 2010,[2] which also designates such Fund as an operating entity of the Financial Mechanism of the Convention.[3] The same decision states that the GCF shall be accountable and “function under the guidance of the COP”,[4] according to arrangements to be agreed between the COP and the GCF. Following this, the COP has adopted a Governing Instrument,[5] which structures and defines the principles, functions, and governance of the GCF. In 2013, the COP provided initial guidance[6] and agreed to the Arrangements, which state that “[t]he GCF shall receive guidance from the COP, including on matters related to policies, programme priorities and eligibility criteria.”[7] Finally, at its last session in 2014, the COP provided its first guidance to the GCF based also on the Arrangements.[8]

There are three arguments confirming an interpretation of the Arrangements and the relevant legal framework allowing the COP to provide guidance beyond the objects of policies, programme priorities and eligibility criteria. However, such discretion by the COP should be still exercised in accordance with the provisions of the Convention and other relevant decisions:

1. Literal interpretation of the Arrangements: paragraph 2 of the Arrangements state that “[t]he GCF shall receive guidance from the COP, including on matters related to policies, programme priorities and eligibility criteria.” [emphasis added]

According to the definition of the Oxford English Dictionary[9] it is possible to interpret the verb ‘including’ as to mean either “to shut or close in; to enclose within material limits”; or “[t]o contain as a member of an aggregate, or a constituent part of a whole; to embrace as a sub-division or section”. From a literal interpretation of the English text, it is possible to arrive at both a positive and negative answer to this query’s question. By adopting the first meaning, the COP would be restrained from guiding the GCF on objects not listed in the paragraph; the opposite would happen, if the second meaning would be adopted, because the listed objects would be just part of a wider set of objects of guidance.

Given the ambivalent meaning, it is worth resorting to an analysis of the French and Spanish text of the same decision. Respectively, ‘notamment sur’ (‘such as’, ‘in particular’) and ‘entre otras’ (‘inter alia’) are used as parallel versions to the word ‘including’. A literal interpretation that would read in conformity with the three versions must therefore adopt the view that the COP can provide guidance to the GCF on matters which include, but are not limited to, policies, programme priorities and eligibility criteria.

2.  Other relevant texts:

In addition to the literal interpretation, other related texts contain a somewhat more defined formulation of the guidance process.

  •  Decision 3/CP.17, which annexes the Governing Instrument, states at paragraph 5, that the COP:

Decides to provide guidance to the Board of the Green Climate Fund, including on matters related to policies, programme priorities and eligibility criteria and matters related thereto, taking into account the Board’s annual reports to the Conference of the Parties on its activities” [emphasis added]

  •  Also the Governing Instrument offers a similar wording, when it states that the Board of the GCF shall “[r]eceive guidance from the COP, including on matters related to policies, programme priorities and eligibility criteria, and matters related thereto;”.[10]

The emphasised expression ‘and matters related thereto’, which is not present in the formula of the Arrangements, further defines that, despite the fact that the COP can provide guidance beyond the objects identified in the text, its indications should be still linked to the objects of policies, programme priorities and eligibility criteria. The identification of such ‘further’ objects of guidance stands ultimately within the discretion of the COP, in accordance with its functions under the Convention, the principles and functions of the GCF, as well as the underlying rationale of guidance provision which is the one of guaranteeing the accountability of the Fund.

3. Non-conflict with UNFCCC, Article 11(1):

In the query it is noted that some negotiators are of the view that the interpretation confirmed here would be in conflict with the wording of the Convention in the provisions concerning the Financial Mechanism. Therefore, the provisions of the UNFCCC should prevail. Article 11(1), in fact, states:

“A mechanism for the provision of financial resources on a grant or concessional basis, including for the transfer of technology, is hereby defined. It shall function under the guidance of and be accountable to the Conference of the Parties, which shall decide on its policies, programme priorities and eligibility criteria related to this Convention. Its operation shall be entrusted to one or more existing international entities.” [emphasis added]

Whilst the wording hardly suggests that the COP can only decide on the express matters in the provision, it is important to stress that this provision sets up the process to define the Financial Mechanism of the Convention and not the guidance framework between the COP and the GCF. The two entities must be distinguished: the Financial Mechanism is a process under the Convention, while the GCF is an international institution, established by the COP, and appointed as the operative entity of the Financial Mechanism. Therefore, any conflict between the provisions on the COP guidance to the GCF and the Convention can be excluded.

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[1] Dec. 5/CP.19, Annex [hereafter ‘the Arrangements’].

[2] Dec.1/CP.16 paragraph 102.

[3] UNFCCC, Article 11.

[4] Dec.1/CP.16 paragraph 102.

[5] Dec. 3/CP.17, Annex [hereafter ‘the Governing Instrument’].

[6] Dec. 4/CP.19.

[7] The Arrangements, paragraph 2 [emphasis added].

[8] Dec. 7/CP.20.

[9] Online version: http://www.oed.com/.

[10] Governing Instrument, paragraph 6(a) [emphasis added].