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The ECGD and the Human Rights Act

by Kerim Yildiz, Kurdish Human Rights Project, and Nicholas Hildyard, The Corner House

first published 23 May 2002

Summary

As a public authority, the UK Export Credits Guarantees Department (ECGD) is bound by the UK Human Rights Act, which became law in October 2000. Although the ECGD is committed to taking into account the human rights impacts of the projects it supports, many of its procedures potentially conflict with the Act’s key provisions. For example, the ECGD’s failure to require the release of Environmental Impact Assessments is a potential breach, argues this presentation at an NGO Seminar on Export Credit Reform, House of Commons, London.

Contents

 


Good governance comprises the rule of law, effective state institutions, transparency and accountability in the management of public affairs, respect for human rights and the participation of all citizens in the decisions that affect their lives.

Kofi Annan, "We the Peoples: The Role of a United Nations in the 21st Century", New York, United Nations, 2000.

1. The Human Rights Act - A New Legal Landscape

As from October 2000, the European Convention on Human Rights (ECHR) has been given direct application in the UK, through the passage into law of the Human Rights Act 1998 (HRA).

As a public authority, the ECGD is bound by the HRA. The HRA makes it unlawful for a public authority to act in a way which is incompatible with Convention rights. The Act places two primary duties on ECGD officials and the ministers who oversee their activities: first, that they do not take decisions which will result in violations of rights itemised and described in the Convention; and, second, and in some instances this involves positive obligations to uphold Convention rights.1

Critically, the European Convention may have extra-territorial application, both through Article 12 and ECHR case law. Thus, even if the ECGD backs a project in a non-Convention country, Convention rights will still come into play by dint of the obligations of the HRA.

This has altered the landscape for decision-makers in the UK when acting in the role of "a public authority". They are now under a duty to ensure that human rights violations do not flow from any decision they take regarding the public financing of projects abroad.

Under the HRA, decisions which breach this duty may be challenged immediately in the domestic courts. The court itself is required by HRA to act in a way which is compatible with Convention rights, whilst applying the principles which underlie the jurisprudence of the European Court of Human Rights in Strasbourg, and taking account of the case law from that court.

2. Current ECGD Practice and the Human Rights Act - Potential Violations

Since January 2001, the ECGD has committed itself to taking account of human rights when assessing project risks.3 All civil projects - regardless their value - are now subject to an "impact questionnaire" and screened in order "to identify and thereafter analyse, any adverse or beneficial ... human rights aspects". The aim is to ensure that "its activities accord with the other government objects, including those on ... human rights".

Whilst this development is to be welcomed, the procedures introduced by the ECGD not only fall far short of international best practice4 but are also in potential violation of a number of the HRA's key provisions. These are detailed below.

Lack of transparency

The right of citizens to participate in the decisions which affect their lives and livelihoods is at the heart of the ECHR. For that right to be respected, it is critical that citizens are informed in advance of such decisions and have opportunities to challenge the decision if their rights are violated. A pre-requisite for compliance with this set of rights would appear to be the timely disclosure of applications received by the ECGD and their outcome.

Under the present procedures, however, the ECGD does not require such disclosure. All Projects covered by the ECGD's Overseas Investment Insurance (OII) facility, which has increased fivefold in value over the past 5 years, are treated as 'commercial-in-confidence' - for fear of offending the host countries. In the case of buyer credits, disclosure requires the consent of the applicants and is entirely discretionary.

Such lack of transparency, denies affected parties, notably project affected people, the opportunity:

  • to assess the impacts of a possible credit or guarantee on their rights and to influence the decision-making process prior to support being agreed. This may act as an obstacle to the ECGD fulfilling its positive obligations under the HRA, since it may not be in receipt of relevant information that would enable it to ensure that its decision upholds Convention rights;
  • to have any decision to support an undisclosed application re-examined before the domestic courts under the Human Rights Act, since the decision remains secret. It is arguable that this denial of the right to redress may in itself amount to a violation of Convention Rights.

At a minimum, the ECGD should:

  • Make it a pre-condition of applying for support that companies are willing to have their applications made public;
  • Make public on receipt of an application the type of project, the amount and nature of the support requested, the companies involved, the country involved and likely human rights, environmental and development impacts;
  • Make public the outcome of any decision as soon as the decision is made.

Failure to Require Release of Key Project Documents

Article 8 of the ECHR states: 'Everyone has the right to respect for his private and family life, his home and his correspondence'. Ministers have a positive obligation to ensure that violations under Article 8 do not flow from their decisions. Critically, they are also obliged to provide or ensure the provision of information which enables a group of affected people to assess an environmental hazard (see also Article 10 on this point). This 'information' may include Environmental Impact Assessments, Resettlement Impact Assessments (RAPs), Social Impact Assessments (SIAs) and, in the case of projects involving extractive industries such as oil exploitation, Production Sharing Agreements.5

Public access to environmental information and participatory consultation with stakeholders is a sine qua non of best international development practice. World Bank standards, for example, require both the submission and the disclosure of Environmental Impact Assessments and Resettlement Action Plans (in projects where forced evictions are involved) prior to project appraisal.

The ECGD, however, makes no such requirements.6 Even where support is made conditional on an EIA and a RAP, their disclosure is at the discretion of the project applicants, not the ECGD. In two recent cases - Yusufeli and Ilisu - the ECGD has refused to release both the RAP for the project and the draft EIA.

The failure to require EIAs and RAPs and to make them public prior to assessment is potentially a violation of the HRA on two counts:

  • It denies affected parties the information to which they should be entitled on the impacts of a project on their rights;
  • It limits the exposure of Ministers to the views of affected parties on project impacts and thus acts as an obstacle to Ministers making a fully informed decision with regard to whether or not support for a project would violate the Convention.

The ECGD should:

  • Require that an EIA which meets international best practice, and, where relevant, a RAP to similar standards is submitted and released prior to project assessment.
  • Require that the public in the project country, the ECA country and any affected country (for example downstream states in the case of dams) have a least 120 days to assess the impact of projects on their rights under the Convention and to submit comments prior to any final commitment being made by the ECGD.
  • Require the release of other project documents that contain information pertinent to the assessments by affected parties of the impacts of a project on their rights.

Failure to disclose standards on which decisions are based.

The ECGD's project assessment procedures are not subject to any mandatory, ex-ante standards. The ECGD decides what standards should be applied on a case-by-case basis - an approach known as "benchmarking" - encouraging an ad hoc approach that is bureaucratic, unwieldy and potentially open to abuse. There is no requirement to reveal the basis on which such standards are chosen.

The deficiencies of such an approach in terms of protecting human rights - a key duty under the HRA - have been highlighted by International Development Committee in its Sixth Report, ECGD, Developmental Issues and the Ilisu Dam:

"There is good reason for the expectation that relevant international criteria should be met before a proposal is agreed and cover sought - it is a sign of political will, institutional capacity, development commitment and good faith. The shotgun wedding approach to export credit that we find in the case of the Ilisu Dam does not in our view bode well for the implementation of commitments but is rather the worst form of export credit practice."7

In addition, the refusal to disclose the standards that are used to assess a given project, the current procedures limit the ability of affected parties to participate in, and influence, decision-making, arguably a breach of the European Convention.

The ECGD should:

  • ECGD adopt clear, ex-ante standards that apply to all its projects. Such standards should reflect best international practice, as exemplified, for example, by the recommended guidelines of the World Commission on Dams, and should cover human rights (UN Universal Declaration and assorted Conventions plus the Core Labour Convention of the ILO), environment, cultural heritage, gender and development impacts. At a minimum, the ECGD should adopt standards based on those of the World Bank/IFC, EBRD and European Union.

Reputational Risk

The ECGD's current procedures with regard to human rights invite a number of potential challenges under the HRA. As such, the procedures not only fail to meet the ECGD's stated commitment to ensuring that its practice "accord with other government objectives, including those ... on human rights" but also threaten to incur reputational risks for the Department that are detrimental to the interests of UK exporters.

The ECGD's current business practices fail to provide a coherent strategy for managing such reputational risks. At present, for example, the Department operates an "open door" policy under which all applications are considered without any pre-appraisal conditions. Inevitably, this exposes the Department to an association with projects where human rights violations are likely. Ilisu and Yusufeli are cases in point. The current procedures fail to provide a coherent or effective strategy for containing the attendant reputational risks: on the contrary, the policy of "constructive engagement", whereby conditions are imposed as potential violations are identified, merely prolongs the agony.

Indeed, it is testament to the weakness of the ECGD's risk management procedures that its most recent involvement in both Ilisu and Yusufeli only ceased when the companies took the initiative and withdrew their applications. Were new applications to be made, the ECGD would even now consider both projects, despite their evident failure to meet basic human rights standards.

The Department's argument that it would be obliged to do so under the Export and Investment Guarantees Act 1991 would appear to be at odds with its powers under Section 3 of the Act to "make any arrangements considered to be in the interests of the proper management of the ECGD portfolio."8

To contain the reputational risks associated with such projects, the ECGD should invoke its power under the Act and adopt:

  • Pre-appraisal conditions that require companies to have a human rights policy and demonstrable procedures for enforcing it;
  • An exclusion policy for projects which are in countries with poor human rights records (a similar exclusion policy operates with respect to countries considered uncreditworthy);
  • Evidence that programmes for protecting human rights, such as resettlement action plans, have been drawn up by project developers before applications are considered.

Notes and References

1 Article 6: Human Rights Act

2 Article 1: ECHR requires States to 'ensure to all persons subject to its jurisdiction the free and full exercise of human rights and freedoms".

3 ECGD Business Principles: "The ECGD undertakes to "look not only at the payment risks but also at the underlying quality of the project, including its environmental, social and human rights impacts";

4 The ECGD's failure to comply with international best practice has been highlighted in a series of Memoranda submitted by NGOs to the government, none of which, to the regret of NGOs, has ever received a reply. For copies of the Memoranda, contact The Corner House

5 Increasingly the implementation and operation of oil extraction/pipeline projects are governed by Production Sharing Agreements (PSAs) drawn up between the host country and the oil companies. Generally, such PSAs have the status of international treaties and are not governed by domestic law. As a result, the PSAs may deny those affected by a project the right to have any compensation claims or other legal challenges heard by domestic courts. Instead, such claims would be adjudicated by a tribunal consisting (in the case we have researched) of a representative of the company, the government and a third party. Accordingly, there may be a case that such a tribunal is not 'impartial' and that a claimant's rights under Article 6 of the European Convention have therefore been violated. Article 6 states: 'In the determination of his civil rights and obligations ... everyone is entitled to a fair and public hearing within a reasonable time by an independent and impartial tribunal established by law ...'

6 In cases of forced resettlement, for example, there is no mandatory requirement to submit and make public a social impact assessment or a resettlement action plan. The Impact Questionnaire which applicants are required to fill in merely states that, in cases with human rights impacts, "the ECGD is likely to require an SIA". The same is true for environmental impact assessments, the other major source of information available to project affected people on human rights impacts. Even the "expectation" that project developers comply with the laws of the host country is entirely discretionary.

7 International Development Committee, Sixth Report, ECGD, Developmental Issues and the Ilisu Dam, House of Commons, The Stationery Office, 6 July 2000, p.vii.

8 ECGD, Annual Report and Resource Accounts 2000/01, London, 2002, p.46