What are the conditions for granting international juridical/legal personality to the Green Climate Fund? Can this happen through a COP decision, which would be the easiest and most rapid option? Or would this mean certain limitations of the functions? What are the key differences in terms of scope of the functions between legal capacity and international juridical personality?
Summary: In looking at examples of several international Funds, including the Adaptation Fund Board, the Global Fund and the Multilateral Fund, it does not appear that the Green Climate Fund would be required to establish its legal capacity under international law in any one particular way. Each of the funds mentioned was formed under different circumstances, each which resulted in a distinct legal entity with a differing legal capacity and personality. The elements of legal character obtained by the GCF will depend in a large part on the willingness of the COP or individual member states to afford it a broad identity as well as on the key operational attributes of the Fund. Yet, the examples provided below provide important insight into the implications of the various methods of fund formation.
1. Elements of Legal Status
In accordance with international law, the legal status of an international organisation determines the rights, privileges, duties, and powers with which the organisation operates at the international level. This is also the case with international funds and financing institutions. Such legal status is distinct and separate from, yet runs in parallel with, that of its Member States. The legal status of a fund determines the extent to which the fund or funding institution can operate independently to achieve its purposes and objectives and fulfil its functions. As a result, international legal status is functional in nature. Funds and funding institutions are empowered to exercise only those rights, privileges, duties, and powers which have been conferred on them explicitly or implicitly by their Member States.
There are different ways for an international fund or funding institution to acquire or be conferred with its legal status, with the four main ways being through:
(a) Its constituent instrument(s) (for example a treaty or international agreement);
(b) A decision of the supreme organ of an intergovernmental body (a COP decision);
(c) The national laws of one or more Member States;
(d) The national laws of all Member States
In addition to the differing ways a fund can acquire its legal status, there are several key elements of that legal status that define what role the fund can play in the international arena. The funds discussed below may have some or all of the following components:
(a) International Juridical or Legal Personality
International juridical or legal personality is defined under international law as the capacity to enjoy legal rights, duties and powers on the international plane, and having the capacity to maintain its rights by bringing international claims. The classical attributes of international juridical or legal personality of an international fund or financial institution are: (1) The right to negotiate and conclude international agreements or treaties; (2) The right to put forth international claims and appear before international courts and international tribunals; (3) The right to entertain bilateral diplomatic relations with States and other international actors.
(b) Legal Capacity
Legal capacity usually refers to specific acts that the institution can undertake in the discharge of its functions. Legal capacity is distinct from international legal personality. International legal personality encompasses certain rights, privileges, duties and powers on the international plane. Legal capacity, on the other hand, is limited to only those specific legal acts that the institution is empowered to undertake. These acts normally include the legal capacity to: (1) contract; (2) acquire and dispose of immovable and movable property; and (3) institute legal proceedings. The Global Environmental Facility is the only institution of the type discussed in this document that has no explicit legal capacity or legal personality.
(c) Privileges and Immunities
Privileges and immunities are designed to permit international institutions to undertake their activities without hindrance by national governments. The central component of the privileges and immunities clause is jurisdictional immunity from legal claims in national courts against the institution, representatives of Member States and officials of the institution. In return, the institution is required to provide for an alternative means to address claims and settle disputes against the institution.
2. Legal Status Conferred Through Treaty or International Agreement: The Example of the IDA, IMF and The World Bank
The International Development Association (IDA), the International Monetary Fund (IMF) and the International Bank for Reconstruction and Development (The World Bank) derive their international legal status, privileges and immunities from the treaties or constituent instruments of these three institutions. The Articles of Agreement of the IDA, IMF and The World Bank state that each of these institutions “shall possess full juridical personality, and, in particular, the capacity (i) to contract; (ii) to acquire and dispose of immovable and movable property; (iii) to institute legal proceedings.”
The Articles further define the immunities and privileges accorded to the IDA, IMF and World Bank, their assets and officials. The IDA for example, was afforded international legal personality and legal capacity by its governing treaty and has concluded and signed international treaties and agreements with States and international organisations. Furthermore, the United Nations General Assembly has granted authority to a number of financing institutions, including the IDA, IMF and World Bank, to request advisory opinions from the International Court of Justice in accordance with the Charter of the United Nations.
It should be noted that in addition to the IDA, IMF and World Bank being granted legal status through a treaty, these organisations are also granted legal status in each of their participating Member States in accordance with the provisions of their respective constituent instruments. Each Member State of the IDA, as well as the IMF and the World Bank, are required to take necessary action under their national laws to make effective the legal status of these institutions in accordance with the Articles of Agreement of these entities. Article VIII, Section 10, of the IDA Articles of Agreement states that “[e]ach member shall take such action as is necessary in its own territories for the purpose of making effective in terms of its own law the principles set forth in this Article and shall inform the Association of the detailed action which it has taken.” Such action was deemed necessary “[t]o enable the [IDA] to fulfill the functions with which it is entrusted, the status, immunities and privileges set forth in this Article shall be accorded to the [IDA] in the territories of each member.” It should be noted that although international juridical personality has been granted in accordance with applicable national laws of each Member State, the Articles of Agreement serve as the basis for the creation of these entities and their international legal status.
3. Legal Status Conferred Through a Decision of the Supreme Organ of an Intergovernmental Body: The Example of the Multilateral Fund
International funds or financing institutions may also acquire their international legal status through a decision of the supreme decision-making organ of an intergovernmental body of the Member States. One example of such an approach is the Multilateral Fund, which was established under Article 10 of the Montreal Protocol through the London Amendment of the Montreal Protocol of 1990. The original Protocol provided no mechanism to assist developing countries in meeting control measures. Due to the dissatisfaction expressed by developing countries, in June 1990 the London Amendment revised the Protocol, thus giving birth to the Multilateral Fund and providing a financial mechanism for covering the agreed incremental compliance costs. However, that Protocol did not specify the legal status of the Multilateral Fund.
In order to clarify the nature, legal status and privileges of the Fund as a body under international law, at the sixth session of the Meeting of the Parties of the Montreal Protocol, the Parties adopted decision VI/16 which conferred international juridical and legal personality on the Multilateral Fund. The decision stated: “Juridical personality: The Multilateral Fund shall enjoy such legal capacity as is necessary for the exercise of its functions and the protection of its interests, in particular the capacity to enter into contracts, to acquire and dispose of movable and immovable property and to institute legal proceedings in defense of its interests.” It further defined the privileges and immunities of the fund and the officials of the secretariat of the Fund.
The international legal character of the Multilateral Fund was further confirmed by the Government of Canada in its national legislation and in the Headquarters Agreement concluded between the Government of Canada and the Multilateral Fund. The Agreement provides that “[t]he Multilateral Fund shall possess juridical personality. It shall have the capacity (a) to contract; (b) to acquire and dispose of immovable and movable property; and (c) to institute legal proceedings.” As such, the Multilateral Fund has concluded and signed international treaties and agreements with States and international organisations. Thus, the international legal personality of the Multilateral Fund was accorded by both the Meeting of the Parties of the Montreal Protocol expressed in decision VI/16, as well as by Agreement of the Protocol’s host government, Canada, and thus, its legal status has been recognised and accepted by both Member and non-Member States.
Furthermore, the Fund and its officials were conferred with the following privileges and immunities through a decision of the Meeting of the Parties of the Montreal Protocol: “Privileges and immunities: (i) The Fund shall, in accordance with arrangements to be determined with the Government of Canada, enjoy in the territory of the host country, such privileges and immunities as are necessary for the fulfilment of its purposes; (ii) The officials of the Fund Secretariat shall similarly enjoy such privileges and immunities as are necessary for the independent exercise of their functions in connection with the Multilateral Fund.” The Headquarters Agreement further defines the privileges and immunities accorded to the Multilateral Fund by the Government of Canada. The result of these agreements is that the Multilateral fund benefits from the following privileges and immunities: inviolability and protection of its office premises; immunity of property, funds and assets from legal process, search, requisitions, confiscation, expropriation and any form of interference; exemption from taxes and duties of the property, funds and assets; and privileges and immunities for representatives of Member States, experts and officials.
4. Legal Authority Through the National Laws of One or More Member States: The Example of The Global Fund
In the case where no treaty provision or decision of an intergovernmental body explicitly accords international legal status on a fund or financing institution, one or more States may decide unilaterally to confer international legal status on the fund or financial institution. In 2002, the Government of Switzerland adopted legislation to establish the Global Fund to Fight AIDS, Tuberculosis and Malaria as a private non-profit foundation under Article 80 of the Civil Code of Switzerland. With this, the Global Fund acquired international juridical and legal personality under Swiss Law. This status was further confirmed in the Headquarters Agreement concluded between the Global Fund and the Government of Switzerland in 2004, which stated that “[t]he Swiss Federal Council recognizes for the purposes of this Agreement the international juridical personality and legal capacity in Switzerland of the Global Fund to fight Aids, Tuberculosis and Malaria.”
The Global Fund’s legal status as an international organisation has also been recognised by the United States, through an Executive Order by the President of the United States of America in 2006 designating the Global Fund as a Public International Organisation Entitled to Enjoy Certain Privileges, Exemptions, and Immunities in accordance with the International Organisations Immunities Act of the United States. While the Global Fund has been afforded juridical and legal personality by one Country-Switzerland – its legal status has been recognised and accepted by both Member and non-Member States. As such the Global Fund has concluded and signed international treaties and agreements with States and international organisations.
The Headquarters Agreement of the Global Fund specifies the privileges and immunities of the Fund. The Global Fund also enjoys privileges and immunities in the United States of America by virtue of its designation as an International Organisation in accordance with the International Organisations Immunities Act of the United States. In accordance with the Trustee Agreement between the Global Fund and the World Bank, the Trust Fund of the Global Fund is accorded the privileges and immunities of the World Bank, which serves as Trustee of the Global Fund. The Global Fund enjoys privileges and immunities only in Switzerland and the United States of America, although its operations are global. This gap leaves the Global Fund subject to legal claims in countries where it conducts its operations and where it does not have privileges and immunities. To address this gap, the Global Fund has prepared an Agreement on Privileges and Immunities for the Global Fund. Yet, so far only one State, Moldova, has signed this Agreement.
5. The Adaptation Fund Board
The Adaptation Fund Board was established by a decision of the Parties to the Kyoto Protocol to finance concrete adaptation projects and programs in developing countries that are Parties to the Kyoto Protocol. The legal basis for the establishment of the Adaptation Fund stems from Article 12.8 of the Kyoto Protocol which states that: “The Conference of the Parties serving as the meeting of the Parties to this Protocol shall ensure that a share of the proceeds . . . is used to . . . assist developing country Parties that are particularly vulnerable to the adverse effects of climate change to meet the costs of adaptation.” As a result, at the seventh session of the Conference of the Parties to the UNFCCC, held in Marrakech, Morocco (COP7 2001), the Parties agreed to the establishment of the Adaptation Fund. In Montreal, Canada in November 2005 and in Nairobi, Kenya in December 2006, the Conference of the Parties serving as the Meeting of the Parties to the Kyoto Protocol (CMP), decided on specific approaches, principles and modalities to be applied for the operationalisation of the Fund.
In Bali, Indonesia, in December 2007, the CMP decided that the operating entity of the Fund would be the Adaptation Fund Board (the Board), serviced by a Secretariat and a Trustee. The Parties invited the Global Environment Facility to provide secretariat services to the Board (the Secretariat), and the World Bank to serve as the trustee (the Trustee) of the Fund, both on an interim basis. In particular, Decision 1/CMP.3, paragraph 5(b), lists among the functions of the Board to develop and decide on specific operational policies and guidelines, including programming guidance and administrative and financial management guidelines, in accordance with decision 5/CMP.2, and to report to the CMP.
Then, in December 2008, the Conference of the Parties serving as the Meeting of the Parties of the Kyoto Protocol (CMP) in Poznan, Poland, decided that the Board of the Adaptation Fund should be conferred with legal capacity through Decision 1/CMP.4. Decision 1/CMP.4 afforded the Adaptation Fund Board such legal capacity “as necessary for the execution of its functions with regard to direct access by eligible developing country Parties.” Further, in decision 4/CMP.4, paragraph 1, the Parties endorsed the Board decision to accept the offer of Germany to confer legal capacity on the Board. The German Act of Parliament which conferred legal capacity to the Board entered into force of February 8, 2011. The resulting “operational policies and guidelines” outlines the policies and guidelines for eligible developing country Parties to access resources from the Fund.
Thus, the result is that the Adaptation Fund Board has legal capacity but not an international legal personality and its legal capacity is derived through the Government of Germany under its national laws. As such, the Adaptation Fund Board possesses in Germany, the capacity to contract, to acquire and dispose of moveable and immovable property, and to institute legal proceedings. With legal capacity, the Adaptation Fund Board has authority to conclude and sign legal agreements with implementing entities (multilateral, and national institutions) for funding of adaptation fund projects from the Adaptation Fund.
However, unlike the IDA, the Multilateral Fund and the Global Fund, the Adaptation Fund Board has no international legal personality and cannot conclude and sign treaties or international agreements with governments or international organisations, nor appear before international courts. The members and alternate members of the Adaptation Fund Board have privileges and immunities in Germany in accordance with Act of Parliament to establish the legal capacity of the Adaptation Fund Board in Germany. As in the case of the Global Fund, the Trust Fund of the Adaptation Fund established by the World Bank, in its role as trustee, is accorded the privileges and immunities of the World Bank. The Adaptation Fund itself has neither legal capacity nor privileges and immunities.
In reviewing the examples of the various funds mentioned above, it is clear that there are a variety of ways in which the Green Climate Fund could establish its legal personality under international law. The source of its legal status will determine the extent to which the Green Climate Fund has an international juridical or legal personality, legal capacity, and privileges and immunities. Were the Green Climate Fund to achieve the support necessary to have a treaty ratified, that treaty could afford the GCF with the full array of legal rights. However, achieving the support and agreement for a treaty is both challenging and could take years to achieve. Furthermore, any subsequent changes to the GCF would require further agreement of the signatories.
On the other hand, using the example of a COP decision as in the case of the Multilateral Fund, the GCF could still achieve the protections of legal status while significantly curtailing the time involved in forming and ratifying a treaty. The LRI query raised the question of the soundness of the legal precedent for a COP decision as the basis for the GCF as some lawyers have argued that this COP decision only became legally sound through the ex-post ratification of the Montreal Protocol and thus does not serve as a solid example. However, the vast body of literature available on the formation of the Multilateral Fund concludes that its authority derives from the decision itself, and does not attribute its authority to the ex-post ratification of the protocol.
Finally, when looking at the example of the Global Fund, which derives its authority from a member state, it is clear that while the Fund’s authority is relatively broad, with a juridical and legal personality based on Swiss law and recognition of rights in the United States and elsewhere, the Fund lacks privileges and immunities outside of Switzerland and the United States. The Adaptation Fund provides another example of a member-sponsored fund, but one whose authority is more circumscribed. In that case a CMP decision was reached to confer legal capacity, but that capacity was limited to affording legal status to the Adaptation Fund Board under German Law. Ultimately, the Adaptation Fund lacks juridical personality and its Board only has legal capacity in Germany. Thus, were the GCF to look to a member state to “adopt it,” it could in theory achieve a relatively broad legal status, but only to the extent that the “host” country would be willing to confer such status on the GCF.
7. Key difference between legal capacity and international legal personality
The difference between an international organisation’s (‘IO’) international legal personality and its legal capacity to act under domestic law is fairly straightforward. The former concept refers to the organisation’s standing in the international arena. Thus, an organisation endowed with international legal personality is normally capable of (1) concluding international agreements or treaties; (2) appearing before international courts and tribunals to bring claims (insofar as the Statutes of these courts and tribunals allow for it). International legal personality also implies that the organisation will benefit from a minimum core of privileges and immunities under customary international law (e.g. officials of the organisation are immune from legal process in respect of all acts performed in their official capacity). These privileges and immunities can further be strengthened by means of explicit provisions in the organisation’s constituent treaty, in a separate multilateral treaty or bilateral treaty (HQ agreement), or even through national legislation.
Legal capacity to act under domestic law by contrast pertains to the capacity of IOs to conclude various contracts (such as lease agreements or employment agreements (hiring personnel)) and to bring claims before national courts.
Conditions for granting international legal personality and legal capacity: The second question is less straightforward. First, there is some doctrinal controversy as to the underlying legal basis of IOs international legal personality (re. the question whether this personality finds its basis in international law as such or in a constituent instrument). Second, the recognition of legal capacity is to considerable degree a matter of national law (in other words, there may be subtle differences between various Member States).
Clearly, if both international legal personality and legal capacity are firmly enshrined in a constituent treaty, there will normally not be further room for questioning the capacity to act of an IO at the national or international level (as long as the IO stays within its mandate). This, however, is not to say that an explicit provision to this end in a constituent treaty is absolutely necessary to avoid limitations on the organisation’s capacity to act.
Indeed, as far as international legal personality is concerned, the ICJ’s Reparations for Injuries case illustrates that an explicit provision in a constituent treaty is not indispensable. Thus, if an organisation objectively qualifies as an ‘international organisation’ (in that it entails a permanent association of States, equipped with organs, and is endowed with functions exercisable on the international plane, distinct of those of its Member States) it is sufficient if it can be established that its Member States intended it to have legal personality on the international plane. In light hereof, a plausible argument can be made that if this intention is expressed through a COP decision, rather than through a constituent treaty, this should be sufficient for endowing the IO with international legal personality.
In addition, as far as legal capacity to act under domestic law is concerned, constituent treaties are not sacrosanct either. Thus, in dualist countries, such as the UK (where international law must be transformed into national law to generate effects in the national legal order), national legislation is normally needed to ensure legal capacity at the domestic level. In a similar vein, the treaty itself will not ascertain the recognition of legal capacity to act under the domestic law of non-Member States. Thus, as the House of Lords held in Arab Monetary Fund (AMF) v Hashim & others: ‘when sovereign States enter into an agreement by treaty to confer legal personality on an international organisation, the treaty does not create a corporate body. But when the AMF Agreement was registered in the United Arab Emirates by means of Federal Decree No. 35 that registration conferred on the international organisation legal personality and thus created a corporate body which the English courts can and should recognise.’ The above statement moreover illustrates that, as a matter of comity, when the legal capacity to act of an entity is explicitly recognised by the national law of one State, other States will normally accept likewise.
In light of the foregoing, if the conclusion of a separate constituent treaty would create practical problems (cf. timing), in order to secure a proper functioning of the Green Climate Fund it would appear sufficient to have:
– (1) a COP decision reflecting the will of the Member States to confer international legal personality on the fund, together with;
– (2) a Headquarters Agreement with (or national law of) the Member State where the Fund will be located, confirming the legal capacity to act under domestic law and identifying the privileges and immunities of the Fund (other than those guaranteed by customary international law).