Indigenous Peoples’ Free, Prior and Informed Consent’s Integration in Investment Standards

Stéphanie de Moerloose

Humboldt University

Editors’ note: as stated in our mission statement, the IACL-AIDC Blog aims at engaging in selected collaborations with global leaders in the field of constitutional law and foster new partnerships. As part of this strategy, the IACL-AIDC has entered a partnership with the journal World Comparative Law / VRÜ, whereby WCL/VRÜ editors will select one article from each of the journal’s quarterly editions to be converted into a Blog post. Today, we are pleased to publish the following post by Stéphanie de Moerloose. The full article has been published in VRÜ, Vol. 53, No. 3 (2020)

The question of the free, prior and informed consent (hereinafter also “FPIC”) of indigenous peoples is at least as old as colonization itself. Indeed, colonization was undertaken through wars and occupation, but also through the law. Indigenous peoples and colonial settlers signed many treaties, and the question of the consent of indigenous peoples was at the heart of these negotiations. Generally, as time passed, indigenous peoples’ ability to negotiate or resist binding agreements over their territories diminished, and the terms of these agreements became increasingly oppressive and regularly violated by settlers.  

About thirty years ago, the question of the consent of indigenous peoples re-emerged in international law and, more recently, in investment standards. The question at stake here is whether we are  witnessing the consolidation of an emerging human rights norm or its appropriation by international financial institutions. 

FPIC in International Human Rights law 

The first mention of indigenous peoples’ consent was the ILO Convention No. 169 in 1989. Later, the United Nations Declaration on the Rights of Indigenous Peoples (hereinafter “UNDRIP”) spelled out the FPIC requirements. Consent can be understood to comprise both the decision-making process leading to the consent, and the granting or withholding of consent. Indigenous peoples’ right to self-determination is recognized by the Charter of the United Nations (UN) as well as both the International Covenant on Civil and Political Rights and the International Covenant on Economic, Social and Cultural Rights. This applies to all indigenous peoples, as affirmed in the UNDRIP. It is important to note that self-determination does not necessarily mean the right to claim sovereignty and secede, which can be defined as “external self-determination”. Indeed, self-determination also entails “internal self-determination”, which is the right to a degree of political autonomy within the existing State, and which also includes the right to elect a group’s own representatives according to its traditions. FPIC is interpreted in human rights law as grounded in the right to internal self-determination.  

The UNDRIP recognizes indigenous peoples’ right to self-government in matters relating to their internal and local affairs, as well as their right to maintain their own political institutions. It demands that States consult with indigenous peoples through their own representative institutions in order to obtain their FPIC. Internal self-determination is also enshrined  in numerous other instruments. The 2005 UN Permanent Forum on Indigenous Issues’ report on methodologies regarding FPIC, the 2014 Good Practice Note endorsed by the UN Global Compact Human Rights and Labour Working Group and the Convention on Biological Diversity’s 2016 “Mo’otz Kutzal Voluntary Guidelines”, all recommend the recognition of the competent authorities of indigenous peoples and the respect of community protocols and customary law. Treaty supervisory bodies have also associated FPIC with internal self-determination. For instance, the OHCHR declared that the consent of indigenous peoples should be determined according to their customary laws and practices.  

Similarly, regional human rights systems recognize internal self-determination as the cornerstone for the FPIC. In Saramaka v. Suriname, for instance, the Inter-American Court held that the State must ensure the right of the Saramaka people to be effectively consulted, in accordance with their traditions and customs, and recognized their right to withhold consent. This principle has been reaffirmed in other cases, such as Lhaka Honhat v. Argentina, Endorois v. Kenya and Ogiek v. Kenya. 

Indigenous peoples’ FPIC as internal self-determination has, therefore, gradually consolidated in human rights instruments. Nonetheless, the debate remains open as to FPIC’s binding character under international law. Indeed, the instruments mentioning FPIC carry different weights. The ILO Convention has been ratified by only a limited number of States. The remaining instruments and decisions cited here are generally non-binding, except for decisions of the Inter-American Court and the African Court on Human and Peoples’ Rights which only bind States Parties. Furthermore, State practice still differs on the participation of indigenous peoples, rarely requiring their FPIC. However, at a minimum, the need to obtain FPIC can be regarded as an emerging customary norm, especially in certain cases such as resettlement. Evidence of the emergence of this norm can be found in its integration within the instruments cited here as well as in investment standards, such as the new World Bank safeguards.  

FPIC as a Safeguard of the World Bank 

Multilateral Development Bank (hereinafter “MDB”) safeguards delimit the eligibility of a State or company (hereinafter a “Borrower”) for funding, and then, during project implementation, define the Borrower’s obligations with respect to social and environmental matters. These safeguards, as a result, translate into conditionality in loan agreements. Discrepancies between the safeguards and Borrowers’ national systems are common. Interestingly, protections for indigenous peoples are often weaker under a Borrowers’ national law than under the World Bank safeguards. 

The World Bank’s new Environmental and Social Framework (hereinafter also “ESF” or the “new safeguards”) came into effect in 2018 and now includes FPIC. One important objective was the harmonization of safeguards across several financing institutions, especially the IFC. Indeed, FPIC is now a necessary condition for resettlements under  the ESF, the IFC’s Performance Standards and the Equator Principles. 

The interpretation of indigenous peoples’ consent in the ESF merits a closer examination. It declares that there is no universally accepted definition of FPIC, that consent refers to collective support reached through a culturally appropriate process, which may be achieved even when groups explicitly disagree. This terminology is rather vague and appears to leave a margin of appreciation to the World Bank. The ESF also states that the Borrower will document the process to carry out “good faith negotiations that has been agreed by the Borrower and Indigenous Peoples” and the outcome of that process. The ESF Guidance Note for Borrowers states that barriers to the participation of women, youth, the poor, and persons with disabilities should be addressed. Thus, the ESF implies that the consultation process and the representatives’ identification will not be self-determined but negotiated and supervised. The more the process and expression of consent are negotiated between the Borrower and the indigenous peoples, the less it constitutes a political process of self-governance and thus of internal self-determination.  

The Danger of Fragmentation in FPIC’s Interpretation 

Conflicting interpretations of FPIC carry a significant risk of potential fragmentation and operationalization of the concept. The World Bank and the IFC’s safeguards, in combination with the Equator Principles, may have a broad impact on the practical understanding of FPIC. There is, as a result, a risk of competition with and even weakening of this emerging human rights norm. By virtue of the ongoing process of emulation in international law, investment standards can, in fact, influence how FPIC is interpreted worldwide. Moreover, such interpretation dynamics could result in a fragmentation between “theoretical” human rights interpretation and “operational” investment interpretation. The practice of integrating human rights standards into investment standards can be assimilated to an appropriation mechanism, or even a distortion mechanism, as criticised by certain postcolonial scholars. This would undermine FPIC’s internal self-determination quality and deprive indigenous peoples of an important resistance tool.  

Only time will tell if the World Bank’s inclusion of FPIC can be considered part of a “race-to-the-top”, integrating human rights norms in investment safeguards. A “race-to-the-bottom”, which would operationalize, appropriate and, in fine, water down the level of protection of certain human rights norms, such as the FPIC, is a particularly dangerous alternative.  

Dr. Stéphanie de Moerloose is a Swiss National Science Foundation Post-Doctoral Scholar at Humboldt University in Berlin and a member of the academic faculty at the Escuela de Gobierno, Universidad Austral (Argentina). 

Suggested citation: Stéphanie de Moerloose, ‘Indigenous Peoples’ Free, Prior and Informed Consent’s Integration in Investment Standards’ IACL-AIDC Blog (9 February 2021) https://blog-iacl-aidc.org/2021-posts/2021/2/9/indigenous-peoples-free-prior-and-informed-consents-integration-in-investment-standards.