CAN HUMAN RIGHTS BE TAKEN INTO ACCOUNT IN CONTRACTS FUNDED BY THE WORLD BANK? - Sope Williams-Elegbe, October 2019

The World Bank (the Bank) is a development finance institution established by the 1944 Bretton Woods agreement to provide reconstruction aid to the countries devastated by World War II. The Bank has had a fractious relation with human rights. Whilst the Bank long ago recognised that it had some role to play in protecting and promoting human rights, this role was conceived as ensuring that “human rights are fully respected in connection with the projects it supports”.[1] The Bank has however been less forthcoming about articulating its role in promoting human rights in countries in which it operates, and there has been reluctance by the Bank to use human rights to advance “an agenda that could present an obstacle for disbursement or increase the cost of doing business.”[2] In other words, the Bank would not take human rights into account if this had adverse financial implications.

In terms of the way it operates, when the Bank loans money to fund projects in developing countries, the project is implemented through a procurement process conducted by public agencies in the borrower country. This process is regulated by the Bank’s procurement rules, as it is a condition of the loan agreement with the borrower that the procurement process is conducted in accordance with the Bank’s procurement regulations.[3] Thus, the Bank provides the agreed funds to the borrower, and the borrower spends these funds in accordance with the Bank’s procurement rules, whilst the Bank supervises, but does not conduct the procurement process.[4] In 2011, the Bank revised its procurement policies, practices and procedures. This led to the adoption of a new procurement framework, effective from 1 July 2016. The procurement framework includes new Procurement Regulations, containing instructions to borrowers implementing funded procurements.

In this blog, I argue that the Bank is obliged to do more to advance a human rights agenda in funded contracts. By virtue of Principle 10 of the UNGPs, states are obliged to ensure that the multilateral institutions of which they are members do not limit states ability to respect and uphold human rights, and are by Principle 1, to encourage such multilateral institutions to promote business respect for human rights. As such, it is arguable that the Bank must promote the issues that are important to its member states, and further, states borrowing from the Bank should not be constrained from upholding human rights considerations in funded procurements.

The Bank’s own policies also impose an obligation to advance human rights in the procurement context. An important change to the Bank’s procurement framework was the articulation of the Bank’s procurement vision, which puts sustainable development at the core of funded procurements and imply a commitment that the Bank will operationalise the principles of sustainable development in the procurement context. Human rights cannot be divorced from sustainable development, and if the Bank is serious about achieving its goals, it is required to do more to promote human rights across all its operations.

The 2016 regulations further introduce a provision for sustainable procurement, which may cover borrower policies on economic, social, and environmental sustainability. The regulations provide:

“If agreed with the Bank, Borrowers may include additional sustainability requirements in the Procurement Process, including their own sustainable procurement policy requirements, if they are applied in ways that are consistent with the Bank’s Core Procurement Principles”.[5]

Sustainability requirements are defined broadly to include borrowers sustainable procurement practices. Although the Bank’s procurement regulations do not explicitly refer to human rights, a non-mandatory guidance note issued by the Bank provides that sustainable procurement covers the three pillars of sustainable development, which include human rights issues.

Although the Bank does not undertake the selection of contractors in funded procurements, the Bank retains a supervisory role through a system of prior review, whereby borrowers must seek Bank assent at major points in the procurement process. Prior reviews ensure that the procurement process is undertaken to the satisfaction of the Bank and could be utilised to ensure that borrowers meet their human rights obligations and that corporations delinquent in relation to human rights are excluded from Bank-financed contracts.

Finally, the Bank’s sanctions system may be used to promote human rights within its current strictures. The Bank has developed mechanisms that deny funded contracts to corrupt contractors through debarment. Debarment is a sanction and a deterrent against breaches of Bank anti-corruption norms, and future approaches to human rights in Bank-funded procurement may rely on debarment in order to secure and promote contractor compliance with human rights norms. Although the MDBs have resisted calls for broadening debarment beyond breaches of their anti-corruption rules, in the EU and USA, debarments are applied to offences which include breaches of human rights norms.

Other support for this approach may be drawn from the recent United Nations Committee on Economic, Social and Cultural Rights General Comment Number 24, where the Committee recommends that States, in fulfilling their obligations under the ICESCR, “deny the awarding of public contracts to companies that have not provided information on the social or environmental impacts of their activities or that have not put in place measures to ensure that they act with due diligence to avoid or mitigate any negative impacts on the rights under the Covenant.” [6]

[1] The World Bank, Development and Human Rights: The Role of the World Bank (1998). Available at http://siteresources.worldbank.org/BRAZILINPOREXTN/Resources/3817166-1185895645304/4044168-1186409169154/08DHR.pdf.

[2] Ana Palacio, “The Way Forward: Human Rights and the World Bank” (2006) Development Outreach (World Bank Institute) 35.

[3] Sope Williams-Elegbe, Public Procurement and Multilateral Development Banks: Law, Practice, Problems (Bloomsbury/Hart, 2017), 55-58.

[4] Williams-Elegbe, ibid, ch 5.

[5] World Bank, Procurement Regulations for IPF Borrowers: Procurement in Investment Project Financing: Goods, Works, Non-Consulting Services and Consulting Services (July 2016), para 5.12

[6] Committee on Economic, Social and Cultural Rights, General comment No. 24 (2017) on State obligations under the International Covenant on Economic, Social and Cultural Rights in the context of business activities (10 August 2017).