The World Bank's Inspection Panel: Promoting True Accountability through Arbitration

Enrique R. Carrasco, University of Iowa College of Law

Abstract

In September 1993, the World Bank created the Inspection Panel. At the time, it was hailed as an unprecedented effort to increase the Bank’s accountability. Prior to the establishment of the Panel, the Bank had engaged in a number of projects that devastated local populations and caused significant environmental damage. After unrelenting pressure from environmental and human rights non-governmental organizations (“NGOs”), the World Bank established the Inspection Panel with hopes of bringing transparency to the Bank’s project lending. Generally, the Panel is charged with investigating complaints filed by parties in borrower countries who believe that the Bank is violating its policies or procedures in the design, preparation, or implementation of a Bank-funded project. Despite its novelty when it was established in 1993, there are many critiques of the Panel. In general, critics question whether the Panel truly increases the accountability of the World Bank on the whole. Critics often point out that it has a limited substantive mandate and no ability to grant relief. Furthermore, the mechanism fails to give affected people a true voice in the outcome of an investigation. After the Panel receives the claim, the Bank rarely considers the affected communities’ desires for resolution. In essence, the Panel is compliance-oriented, and problem-solving is not a principal focus. This paper proposes an alternative to the current Inspection Panel process that would offer real and meaningful accountability. Our proposal envisions a two-stage process that first would require claimant communities to file a Request for Claim Resolution with a newly created Office of Claims Resolution (“OCR”) at the World Bank. The Director of the OCR would appoint an independent Intermediator who would attempt to solve the problem created by the Bank’s alleged noncompliance with its own policies and procedures. We expect that most claims would be resolved at the administrative level. If, however, the Intermediator failed to resolve the claim or if the Bank agreed to corrective measures but failed to abide by them, claimant communities would have the option to institute arbitration proceedings against the Bank. The proceedings would be conducted based on a modified version of the Optional Rules for Arbitration between International Organizations and Private Parties produced by the Permanent Court of Arbitration. The tribunal’s decision would be public, final, and binding upon the parties. Its award could set forth corrective measures that the Bank would be required to take to bring it into compliance with its policies and procedures. The tribunal could also award damages to the claimant community.