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ADB immunity from suit is vital to promoting economic dev't

Following calls for the Asian Development Bank (ADB) to lose its immunity from suit, the Manila-based multilateral lender highlighted the importance of being able to fulfill its mandate independently while serving its member countries.

"The Asian Development Bank (ADB) has a vital role – to promote economic development and prosperity in the Asia-Pacific. To do it well, ADB must be able to operate independently, while being accountable to the countries and communities that it serves," Christopher Stephens, general counsel of ADB, said in an emailed statement to GMA News Online.

"This is especially important in relation to any non-compliance with ADB policies ... In short, it must balance the need for both immunity and accountability," Stephens said.

His statement was issued after the NGO Forum on ADB, a civil society organization, claimed the multilateral lender must be stripped of its immunity status and held liable for all the environmental destruction caused by projects funded under its portfolio.

The ADB was established under a treaty which exempts the bank and its personnel from processes in local courts and agencies, Stephens noted.  This was signed by 67 countries which joined the bank.

"It provides that, '[t]he Bank shall enjoy immunity from every form of legal process'. In addition, Bank personnel are 'immune from legal process with respect to acts performed by them in their official capacity'," he said.

Such immunities were also given to other institutions such as the World Bank, the United Nations, and the World Health Organization.


"Immunities are considered necessary for these organizations to fulfill their public service roles and function independently and free from the unilateral actions of a member country," Stephens said.

"Immunities are an implicit recognition of the fact that these organizations are a collective of member countries pursuing beneficent public actions on a multilateral basis," he added.

The NGO Forum on ADB said it wanted the ADB stripped of immunity and to take responsibility for the projects it funded which caused environmental damage such as the Marcopper Mining Corp. whose open pit broke in 1996, causing the mine waste leakage to drain into the Boac River.

"But immunity does not mean that people adversely affected by ADB-assisted projects are without recourse or that their rights and concerns are ignored. Quite the contrary," Stephens said.

"It's important to remember that ADB does not actually own projects. Instead, ADB provides financial support and technical assistance to countries for projects that are owned and undertaken by ministries or agencies, or by private companies in those countries," he added.

Stephens noted that borrowers who accept financial support from the ADB are bound to comply with the national laws of the host country, on top of the ADB policies, rules, and procedures which cover project design, planning, implementation and operation.

ADB funding is sourced by capital contributed by its member countries, funds generated from the issuance of public bonds, as well as income from interest payments.


"Therefore, ADB has a special responsibility to ensure these funds are managed and loaned responsibility. To safeguard the funds and the Bank's operations, ADB has a Board comprised of 24 Directors and Alternative Directors, including one of the Philippines," Stephens said.

"Unlike boards of private companies who may meet quarterly or semi-annually, the role of an ADB director is a fulltime job. They live in Manila and work at the Bank," he added.

The NGO Forum on ADB, however, said that reviews of the ADB on its projects could take at least nine years and at times even longer.

Currently, the Manila-based lender oversees 800 projects in over 40 countries, with some of the projects said to be "too risky" and "unsuitable" for commercial banks or private sector investors to undertake.

"These challenges also mean that the risk of error is greater ... [T]he combination of project complexity and the fact that staff and contractors are human and therefore fallible, means that mistakes sometimes happen," Stephens said.

"The systems provide recourse and remedy to affected people and accountability to communities and shareholders. They also deliver essential lessons that help the Bank to learn from its errors, and to improve the efficiency and efficacy of future projects," he said.

Since its founding 1966, the ADB said it has invested some $270 billion in the region's development. — Jon Viktor Cabuenas/VDS, GMA News