Legal Status of the Adaptation Fund

Legal assistance paper

All reasonable efforts have been made to ensure the accuracy of this information at the time the advice was produced. However, the materials have been prepared for informational purposes only and may have been superseded by more recent developments. They do not constitute formal legal advice or create a lawyer- client relationship. To the extent permitted any liability is excluded. Those consulting the database may wish to contact LRI for clarifications and an updated analysis.

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Date produced: 04/12/2011

1. Does the Adaptation Fund have international legal personality? If not, what status does it have under international law?

2. How is the Adaptation Fund recognised by domestic legal systems around the world? Do these domestic systems grant direct access to the Adaptation Fund and if so is this automatic or at the discretion of the State?

3. Is the fact that the Adaptation-Fund allows for direct access a direct or indirect result of the fact that the Fund’s Secretariat is hosted by the GEF/the World Bank?

Summary

1. The Adaptation Fund probably does not have international legal personality, but it is a legal person under German law. Such status fully enables it to carry out its purposes (as established in Decision 1/CMP.3.) and it is highly unlikely that lack of international legal personality could inhibit the Adaptation Fund’s ability to carry out its functions.

2. Direct Access is determined not by the policies of domestic legal systems, but by the organizational principles of the Adaptation Fund, which were established pursuant to Decision 1/CMP.3.

3. The GEF serves as the interim Secretariat of the Adaptation Fund. The International Bank for Reconstruction and Development (an arm of the World Bank) serves as the interim trustee of the Adaptation Fund. Such interim functions have no relation to the ability of governments to directly access the Adaptation Fund and direct access would not be affected if the Adaptation Fund establishes its own secretariat or its own capability to manage funds, etc.

Advice

1. Legal Status

The Adaptation fund is an independent international legal entity established under German law. A German lawyer should be consulted to advise whether there are any limitations in the capabilities and powers of an independent international legal entity so established under German law. However, given the time sensitive nature of the request, I will summarize what a German lawyer would probably confirm.

Establishment under German Law as an independent international legal entity clearly vests in the Adaptation Fund legal capacity to enter into contracts, to own moveable property (including bank accounts) and immovable property (land) in Germany and to pursue its rights in German courts. Pursuant to the municipal laws of most other jurisdictions (including under the laws of the State of New York), such status vests in it the ability to own moveable property (including bank accounts). In some but not all jurisdictions such status would enable the Adaptation Fund to own immovable property (land). Some jurisdictions (including the State of New York) would enforce agreements to resolve contractual disputes in the courts of such jurisdiction.

Originally, only nation states were generally recognized to have international legal personality. In the second half of the last century, certain international organizations have come to be generally recognized as having characteristics, capabilities, and rights similar to nation states, and therefore deserving of international legal personality. Presently, there is not sufficient court precedent or consistent scholarly analysis that enables one to objectively state with confidence the factors that must be satisfied for an international organization to have international legal personality. But we can state with confidence that the UN is generally recognized to have international legal personality, while noting that such recognition is not universal. The United Nations was created by treaty with a high level of formality and has functions (such as providing troops for peace keeping operations) that arguably require legal recognition similar to a nation state. In contrast, the Adaptation Fund was established by delegates of states who are contracting states to the Kyoto Protocol and ratification of the creation of the Adaptation Fund did not have the same formality of an international treaty. Moreover, the Adaptation Fund’s purposes are limited to the management and distribution of funds and does not participate in activities where international legal personality would be useful or necessary.

2. Domestic Legal Systems

Direct Access is determined not by the policies of domestic legal systems, but by the organizational principles of the Adaptation Fund, which were established pursuant to Decision 1/CMP.3. See paragraph 29 of Decision 1/CMP.3, which establishes direct access.

However, organizations must meet fiduciary standards established by the Board of the Adaptation Fund before such organizations are eligible to contract with the Adaptation Fund. Governments seeking AF funding that intend to establish such an organization, also known as a ‘national implementing entity’, will need to understand and be capable of meeting those fiduciary standards in order to be accredited by the Adaptation Fund to enable direct access. In this respect, domestic legal systems can affect whether a country can in fact directly access the Adaptation Fund.

3. Effect of GEF and IBRD interim roles on direct access

The GEF serves as the interim Secretariat of the Adaptation Fund. The International Bank for Reconstruction and Development (an arm of the World Bank) serves as the interim trustee of the Adaptation Fund. Such interim functions have no relation to the ability of governments to directly access the Adaptation Fund and direct access would not be affected if the Adaptation Fund establishes its own secretariat or its own capability to manage funds, etc.