The European Investment Bank Complaints Mechanism as an Accountability Mechanism

Res. Asst. Ayşegül Kula*

The infrastructure projects, funded by multilateral development banks (MDBs) to contribute to the development of the countries, sometimes cause negative externalities on the social lives of people and/or the environment. Such externalities led to calls for accountability of MDBs. Consequently, they adopted substantive and procedural norms and subjected themselves to take into consideration the social and environmental concerns. Yet, the failure of MDBs to observe their norms required another tool: accountability mechanisms. The European Investment Bank Complaints Mechanism (EIB CM) was established in 2008 as an accountability mechanism of the European Investment Bank (EIB), one of the largest MDBs.

I had a chance to publish my articleThe European Investment Bank Complaints Mechanism: Its Potential and Limitations” in the Journal of World Investment & Trade. My article focuses on the complaints investigation function of the EIB CM, where the EIB CM reviews whether the EIB ‘fails to act in accordance with a rule or principle that is binding upon it’ (i.e. the maladministration) and issues reports regarding its findings and recommendations. The article benefits from the operating documents of the EIB CM and reviews the case law since November 2018 when the operating procedures were amended (“Relevant Cases”).

The article, after discussing the mandate and obligations of the EIB in general, evaluates the EIB CM as an accountability mechanism in detail. The article considers three aspects: the complaint process, the review process itself, and the outcome of the review. In this blog post, I will be sharing my conclusion on the potential and limitations of the EIB CM on these aspects. The analysis indicates that, despite several shortcomings, the EIB CM review has significant potential.

The Complaint Process

In terms of the complaint process, the questions of who has access, how access is regulated, and when access is possible should be analyzed to understand the potential of the EIB CM since accountability mechanisms can be effective if they are accessible. As regards accessibility, the EIB CM accepts a complaint from any natural or legal person without requiring the complainant to establish any individual interest or harm. There is also no threshold requirement as regards the nature/quality of a project’s alleged impact. It is seen that the EIB CM complies with the best accountability practices enabling a wide range of methods (e.g. forms of written complaints, including by e-mail, using an online complaint form, direct delivery or fax to the EIB CM) to submit complaints. The question of when a complaint must be submitted, i.e., the cut-off date, is also significant in terms of accessibility. The operating documents foresee that the complaints “must be submitted within one year from the date on which the facts upon which the allegation is based could reasonably be known by the complainant.” Therefore, the cut-off date which depends on the possibility of the knowledge of the complainant provides an opportunity to apply for a review regardless of the project’s completion date. However, despite possible simplifications in the application process, it is questionable whether all people affected in a country can reach the EIB CM. Apart from the fact that the EIB CM’s website is only in English, French and German, a part of the public may not even have access to the internet to initiate the complaint process.

The Review Process

In terms of the review process itself, it is important to evaluate the scope of the review and the tools available to the EIB CM. EIB CM reviews the complaints without requiring any threshold for the impact of the projects and this constitutes a potential in terms of determining the maladministration of the EIB. It pursues its review by analyzing the relevant laws, including national and international law, and applying the most protective law among applicable laws. The EIB CM’s investigatory tools such as site visits, although the EIB CM faced hurdles during the Covid-19 disease, are particularly important for an effective review of alleged maladministration that the EIB CM makes specific use of.

Moreover, in terms of the review, it is seen that the EIB CM has certain other significant characteristics. It pursues a real-time review, allowing for the initiation of an investigation not only after a project’s completion but also before the execution of the finance contract or the completion of disbursements. This is particularly important since although a project’s negative impact may be remedied through restitution/compensation, the prevention of such effects should be prioritized. Additionally, the complaint process for the EIB is not limited to the EIB CM as it is possible to apply to the European Ombudsman (EO) against the decisions of the EIB CM. This two-tiered nature of review distinguishes it from other accountability mechanisms and enables not only a more effective review of allegations of maladministration, but may also urge the EIB CM to pursue a more thorough review of EIB-funded projects.

The Outcome of EIB CM Reviews

At the end of its review, the EIB CM may provide recommendations and/or suggestions, although it lacks the authority to directly decide on the financing of a project. Here, the EIB CM’s authority to impose recommendations and suggestions separately from the management of the EIB is a great step towards an independent and impartial review. An analysis of the Relevant Cases exemplifies possible recommendations/suggestions.[1] For instance, the EIB CM recommended that the EIB engage with the promoter to update relevant documentation or information or address the risks of the projects; involve experts or provide technical guidance concerning certain project matters; ensure sufficient compensation; monitor judicial proceedings; and request the promoter to communicate with stakeholders. It is important to note that the EIB CM monitors the implementation of given recommendations/suggestions.

However, despite the existence of a monitoring process and examples showing that the recommendations/suggestions are implemented, the implementation of the recommendations/suggestions given is solely within the authority of the EIB. The primary limitation that could undermine the significance of the review process is the risk of non-enforceability of the outcomes. Yet, the two-tiered review mechanism may help to overcome the problem as it can be assumed that the EIB will be cooperative in terms of the implementation of the outcome of the review. Additionally, public pressure exercised by NGOs and the citizens of EU Member States may foster the EIB’s commitment to the outcome of compliance review. After all, EU Member States are the shareholders of the EIB and they influence the constitution of the EIB’s governing bodies.

In conclusion, the EIB CM has the potential to address cases of maladministration of the EIB. Although compliance review before the EIB CM may not succeed in preventing and resolving all negative impacts of the projects, it can be concluded that it constitutes a promising tool as any solution it provides is valuable for the environment and the public.

[1] Please refer to Kula, A. (2023). The European Investment Bank Complaints Mechanism: Its Potential and Limitations. The Journal of World Investment & Trade, 24(6), p. 934-935.

* Koç University Law School, Department of Administrative Law