PRIVATE COMPLAINANTS AND INTERNATIONAL ORGANIZATIONS: A COMPARATIVE STUDY OF THE INDEPENDENT INSPECTION MECHANISMS IN INTERNATIONAL FINANCIAL INSTITUTIONS

I. INTRODUCTION

It is a general principle that those with power must be accountable for the way in which they exercise it.1 The form of the accountability can vary, depending on the circumstances. The holders of power can be held accountable through legal, political, administrative or financial means.

Applying this general principle to international organizations is complicated because international organizations are the creations of their member states and have organizational immunity.2 As a result, international organizations are usually viewed as being accountable to only a limited range of actors. They are directly accountable to their member states for the way in which they implement the mandates that the member states have given them.3 Member states can hold international organizations accountable through the various governance structures that exist in the organization and through whatever dispute settlement forums might be available to the member states and the organization. In addition, such organizations are directly accountable to those states and international organizations with whom they have concluded treaties or other international agreements and to those private legal and natural persons with whom they enter into contractual relations (usually only after they have waived their immunity).4 These actors can hold the organizations accountable through the dispute settlement mechanisms established in the agreements. International organizations also have some international legal responsibility to non-member states that are harmed by their actions and decisions. Such non-member states may be able to hold the organizations accountable through either formal or informal means.5

The one group that historically has not been able to hold international organizations accountable is non-state actors who are adversely affected by the actions of an international organization but who have no contractual relationships with it.6 In principle, there are four possible means through which these actors can try and hold the international organization accountable.7 First, the non-state actors can seek to persuade their home state to exercise its diplomatic protection and to hold the organization accountable on their behalf. second, they can try and persuade the international organization to waive its immunity and agree to submit to suit in one of its member states. Third, they can try and persuade a court that the international organization has acted ultra vires or with such gross negligence or willful recklessness that it should set aside the organization's immunity and hear their case. Fourth, they can seek to persuade a domestic or international court to "pierce the veil" of the international organization and hold the member states responsible for the acts of the international organization. None of these options are likely to be successful, except in the most unusual of circumstances. The result, therefore, has been that, in fact, non-state actors have not been able to hold international organizations accountable.

This gap in international organizational accountability was not perceived to be significant until the last quarter of the twentieth century when two parallel developments began to change this view. The first development was that the scope of the activities of international organizations broadened. The impact of this change is seen most clearly in the case of the international financial institutions (IFIs), particularly the World Bank Group (World Bank) and the International Monetary Fund (IMF). The World Bank began to expand its range of operations beyond financing physical infrastructure projects to include such matters as providing both financing and advisory services related to the structural adjustment of its member states' economies and to improving the governance of their societies.8 Similarly, the IMF began to get involved in poverty alleviation and the governance of its member states.9 This "mission creep," combined with changes in the international financial system, altered the nature of the IFIs' relations with their developing country member states, shifting the balance of bargaining power between international financial institutions and their client states in favor of the IFIs.10 This meant that the developing countries had limited scope to negotiate over the conditions that the IFIs attached to their financing and could not ignore the policy advice from the IFIs. The net effect was that, de facto, the IFIs became important participants in the policy-making process of their member states. However, because of the organizations' immunity and their member states' lack of interest in holding them accountable, the international organizations, unlike most actors in the policy-making process, were not directly accountable to those most affected by their decisions and actions.11

The second development was that perceptions began changing about the responsibilities of decision-makers in large-scale projects and development programs. The change was happening because of developments in human rights law and changing views about the environmental and social responsibilities of key decision-makers and actors.12 The result was that those who were adversely affected by the projects began to advocate more vigorously that all decision-makers, including funding sources, be held accountable for their decisions relating to these projects. Since the World Bank and the regional development banks were often key lenders and providers of technical assistance for projects, they were the first targets of these calls for greater accountability.